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Judgment
The applicant claims to be the largest satellite service operator in India, engaged in the business of offering satellite based interactive on-site
learning educational courses via VSAT/other telecom media network. The applicant had entered into Annexure C agreement dated 20.12.2001 with
the respondent based on which the respondent institute was conducting an executive postgraduate programme (EPGP) in Management on interactive
on-site learning platform at various locations through the applicant's VSAT and multimedia network. Certain provisions in the agreement were
amended on 30.08.2002 and 4.6.2004, which are also part of Annexure C. It is stated that the 2 years' programme is conducted in 4 semesters on
interactive online learning platform, utilising the programmes developed by the applicant.
It is stated that a programme description sheet (PDS) was signed between the parties on 22.06.2012 for the EPGP batch 5 of the respondent No.5,
in tune with the terms of agreement between them. The applicant raised Annexure E invoice dated 14.09.2015 for a sum of Rs.33,00,300/- upon the
respondent towards the infrastructure based charges for the second year electives. Since the respondent did not pay the charges as claimed, the
applicant issued Annexure H lawyer notice on 28.03.2017 demanding the balance payment of a sum of Rs.28,28,340/-. But the Chief Administrative
Officer of the respondent by Annexure I reply dated 18.4.2017 informed that payment was made in accordance with the provisions in the PDS. The
applicant states that there was an inadvertent mistake in the PDS as the break up of IOL hours and in-campus hours for second year were not given
in it though it was evident from academic hand book published by the EPGP. Thereafter, another notice Annexure J was issued on 09.06.18
demanding payment due to the applicant. The respondent did not respond to it. On 11.7.2018 the applicant sought for initiation of conciliation
proceedings for settlement of the issue in tune with Article 12.3 of the Annexure C agreement, issuing Annexure K notice. But the respondent did not
respond to that also. Thereupon, the applicant issued Annexure D notice on 11.9.2018 requesting for appointment of an Arbitrator in accordance with
Article 12.3 of Annexure C agreement within a period of 30 days. The respondent thereupon issued Annexure L reply stating that Annexure C
agreement expired in the year 2006 and each EPGP is governed by the provisions in the respective PDS executed between the parties and payment
due to the applicant is already made in tune with the PDS. The applicant has thereupon filed this application under Section 11(6) of the Arbitration and
Conciliation Act,1996, for appointment of an Arbitrator stating that the respondent failed to appoint an Arbitrator in accordance with Article 12.3 of
Annexure C agreement.
The respondent filed a counter affidavit stating that there is no provision for arbitration in the PDS governing the EPGP 5 and that Annexure C
agreement in which provision for arbitration available in Article 12.3 was in force only till 2006 and it does not govern the programme conducted in
2012 for which the applicant had submitted Annexure E invoice in 2015. It is stated that for each programme conducted by the applicant for the
respondent a programme description sheet (PDS) is executed between the applicant and the respondent and the transactions between them are
governed by the terms and conditions contained in each of the PDS. It is stated that Annexure R1(a) was the PDS executed between them on
22.6.2012 in respect of the EPGP Batch 5. According to the respondents, Annexure R1(a) PDS provides for the programme description, target
segment, programme USP, duration, fees payable, course scheduled and revenue share; the disputes which arose with respect to the invoice dated
14.09.2015 pertain to infrastructural charges as per the PDS dt.22.6.2012 for the specialisation programmes EPGP 5 only. It is stated that the
arbitration request is not maintainable since there is no provision for arbitration in the agreement Annexure R1(a) governing the transaction in dispute.
Annexure C agreement based on which the Arbitration request is filed, ceased to have any effect on completion of 5 years in the year 2006. It is
stated that the amount due to the applicant in accordance with Annexure R1(a) is already paid towards the service rendered by it, as stated in
Annexure L reply to the applicant.
The applicant has filed a reply/rejoinder refuting the contentions in the counter affidavit. It is stated that the conduct of the parties would show that
the programmes have been conducted in deference of the terms of the Annexure C agreement. It is stated that there is no mention in the PDS about
infrastructure charges or hourly rate to be levied. Based on the disputed invoice the respondent has made part payment towards infrastructure charges
only and that charges are calculated on the basis of the number of hours agreed upon in the PDS and it was being revised from time to time based on
oral understanding between the parties to continue the obligations as per successive PDS; PDS does not provide anything about the manner in which
the services are to be provided by the applicant; it can only be treated as a supplementary agreement or additional work order. The respondent
continued to avail the services of the applicant beyond the period of the basic agreement of 2001; neither party has considered at any point of time that
the agreement is to be terminated; the applicant continued to provide its services and the respondent continued to avail the same even after 2006; the
PDS only defines revenue share between the parties, provides for number of hours required for a programme and defines the obligations of applicant
and respondents qua the students. The PDS can only be found to be an additional work order and it cannot be segregated from the parent agreement,
as the obligation of the parties is given only in the attachments B and C of the agreement, where procedure, role and responsibilities of the
programmes are stated; PDS does not provide for the rate for infrastructure charges, the procedure for conducting the courses; PDS is part of the
programmes listed in Annexure A to the parent agreement and it was being executed even during the currency of the parent agreement; the meaning
of the key terms like certification, effective date, programme, registered participants etc. is given only in the parent agreement and the provisions in
the PDS can be construed only with the help of the parent agreement for which it should continue to be in force; PDS does not provide for a right of
terminating the agreement; PDS is silent over various terms which can be understood from the basic agreement only; the intention of the parties was
to continue the agreement and their subsequent conduct was also in tune with that; therefore, PDS as well as the agreement are to be read together.
Referring to Article 3 which provides for the manner in which programme ordering, delivery and acceptance, rejection and correction are to be done,
Article 4 which provides for Attachment C where procedure, role, responsibilities and obligations of the parties for the applicant conducting the
programme are given, which provides for the provision for the applicant to enroll the registered participants etc., the attachment A which comprises
the list of programmes, Attachment B which provides for the payment of charges payable to the applicant for different services, fees, revenue share,
expenses, infrastructure expenses, etc. It is stated that in the absence of Annexure C agreement, there is no independent existence for the PDS. It is
claimed that the notices dated 11.6.2018 and 11.7.2018 were never responded and the contents of those notices which referred to the agreement
dt.20.12.2001 are not refuted.
According to the learned counsel for the applicant, if at all there is any dispute with reference to the existence of the agreement or the non
applicability of the agreement, it is for the Arbitrator to decide the same. Relying on the judgments in Uttarakhand Purv Sainik Kalyan Nigam Ltd. v.
Northern Coal Field Ltd: (2020) 2 SCC 455 and Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman: (2019) 8 SCC 714 Sri. Ankur Mahindro, the
learned Counsel for the applicant, argued that since the execution of Annexure C agreement is not disputed, it is necessary that an Arbitrator is
appointed.
At the same time, the definite case of the respondent is that after 2006, the agreement does not have any force and there is no provision for
arbitration in the Annexure R1(a) PDS, which alone governs the dispute in question. Relying on the judgment in M/s Brightstar Tele Communications
India Ltd. v. M/s Iworld Business Solutions Pvt Ltd: 2018 SCC Online Del 13071 the learned Counsel for the respondent argued that the Annexure C
agreement does not have any connection with the transaction covered by Ext.R1(a) PDS and in the absence of any provision for arbitration therein or
any reference to the relevant provision contained in the parent agreement, the Arbitration Request is to be rejected.
I have considered the contentions raised by both sides. The dispute raised by the respondent is over the enforceability of Annexure C agreement
between the parties at the relevant point of time when the EPGP 5 was conducted pointing out the expiry of period of agreement. The invoice in
dispute was raised by the applicant in the year 2015 claiming payment in respect of a PDS issued in 2012. The only agreement which provides for
arbitration in the event of disputes between the parties is Annexure C and the provision for arbitration is Article 12.3 therein. The execution of the said
agreement is not under dispute. Article 12.3 reads as follows:
“12.3: Arbitration: In the event of any dispute or difference arising out of or in connection with this Agreement as to the interpretation or any other
matter then in such event the Parties shall resolve such dispute or difference first by mutual discussions and if any dispute or difference arising out of
this agreement or interpretation of this agreement, it shall be referred to Arbitration to be conducted in accordance with the Indian Arbitration and
Conciliation Act, 1996.
The arbitration shall be referred to a mutually acceptable arbitrator whose decision shall be binding upon both the parties.
In case the parties are unable to agree upon a mutually acceptable arbitrator then the dispute or difference shall be referred to an Arbitration Panel of
three arbitrators; one each to be appointed by both the parties and the third arbitrator to be appointed by the two arbitrators and the third arbitrator so
appointed shall act as the chairman of the Arbitration panel.
The arbitration will be held in Calicut and conducted in the English language. The Parties to the dispute will instruct the Arbitrators to render a decision
within 30 days of the date of their appointment. The cost of arbitration shall be shared equally by both the parties and the decision of the arbitration
shall be final and binding on the parties.â€
It is relevant to note that applicant had sent Annexure K notice on 11.07.2018 initiating conciliation proceedings specifically referring to Clause 12.3 of
Annexure C agreement informing the respondent that on failure to resolve the dispute the applicant would invoke the arbitration clause. The
respondent did not respond to that notice. It is only after Annexure D notice requesting for appointment of Arbitrator was issued, the respondent chose
to inform the applicant in Annexure L notice that the agreement of 2001 is not in force. The same contention is raised before this Court also.
However, in view of the contentions raised by the respondent it is necessary to have a look at clause 9 of Annexure C dated 20.12.2001, which
determined the validity period, which reads as follows:
“Article 9: Term Unless terminated pursuant to Article 10 hereof, this agreement shall come into force from the date of its execution and remain in
force for a term of five (5) years from the effective date as defined herein above. The agreement may be renewed for further period on such terms
and conditions as may be mutually decided by the parties. However commercial terms may be revised upwards every twelve months from the
effective date in tune with escalation of cost in real terms, on mutual cost.â€
Article 10 deals with termination for breach of covenants in the agreement or for convenience within the validity period of the agreement. As stated
by the respondent, the validity period of the agreement was for 5 years which expired in 2006. At the same time, it permitted renewal on agreement
between parties. The contention of the applicant is that it was mutually agreed to renew and that the intention of the parties and the conduct of the
parties would show that the parties continued to act upon it, discharging each other's obligations by providing/availing the services in tune with the
parent agreement. However, this is denied by the respondent in Annexure L notice and in the counter affidavit. It is seen that renewal of Annexure C
agreement is not made in writing. But it would appear that the respondent continued to provide the EPGP availing the services of the applicant even
after the expiry of 5 years though PDS was being executed.
Under Section 11(6A) this Court is required to see only whether an arbitration agreement is in existence between the parties. Section 11 (6A) of
the Arbitration and Conciliation Act, 1996 reads as follows:
“11(6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or
sub-section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration
agreement.â€
A three Judge Bench of the Apex Court in the judgment in Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman: (2019) 8 SCC 714 held that after the
2015 amendment the requirement under Section 11(6A) is confined to the examination of the existence of an arbitration agreement. While reiterating
the same, the Apex Court in the judgment in Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd: (2020) 2 SCC 455, held that all
other preliminary issues are left to be decided by the arbitrator under Section 16. It was further held as follows:
“7.11. The doctrine of “kompetenz-kompetenzâ€, also referred to as “compétence-competenceâ€, or “compétence de la
recognizedâ€, implies that the Arbitral Tribunal is empowered and has the competence to rule on its own jurisdiction, including determining all
jurisdictional issues, and the existence or validity of the arbitration agreement. This doctrine is intended to minimise judicial intervention, so that the
arbitral process is not thwarted at the threshold, when a preliminary objection is raised by one of the parties. The doctrine of kompetenz-kompetenz is,
however, subject to the exception i.e. when the arbitration agreement itself is impeached as being procured by fraud or deception. xxxâ€
In the present case, the existence of Annexure C is admitted. But whether it continued to exist after a period of 5 years is disputed, stating that
PDS is executed by the parties. On a perusal of the Annexure R1(a) which relates to the EPGP 5, it is doubtful whether it can have an independent
existence without the support of any other agreement like Annexure C defining and fixing the terms between the parties, stipulating the procedure for
providing the services etc. In the judgment in Iworld Solutions' case (supra) relied on by the respondent, the issue raised was entirely different. In the
present case the question of independent existence of Ext.R1(a) requires consideration for determining the issue arising in this case. Therefore, I am
of the view that whether Annexure C and the provision for arbitration therein would be applicable for resolving the dispute should be a matter for the
Arbitrator to consider as a preliminary issue, in the peculiar circumstances of the case.
Therefore, Sri. Amir Ali, Former District Judge, DD Silverstone Apartments, Flat No.13 D, Vaduthala P O, Kochi â€" 682 023, is appointed as the
Arbitrator to resolve the disputes between the parties. The applicant shall obtain a disclosure statement from the Arbitrator as provided in Section
11(8) of the Arbitration and Conciliation Act, 1996, original of which shall be retained by the Registry. Certified copy of this order need be issued only
on production of the disclosure statement. A copy of the same shall be appended to the certified copy of this order.
The Arbitration Request is allowed accordingly.