M/S Take Solutions Limited v. Bharat Sanchar Nigam Ltd

ORDER o

18.11.2011 AltB. P. No. 158/2011 and OMP No. 391i20I1

¶1Arbitration Petition No. 158 of .2011 under Section 11(6) of the Arbitration and Conciliation Act, 1996 ('Act') has been filed by M/s Tal<e Solutions Ltd. 1"ISL') against the Respondent Bharat Sanchar Nigam Ltd. ('BSNL') prayer, inter alia, for the appointmerrt of an Arbitrator, who is either a retired judge of the Sulrreme Court or of this Court. Arh. P. No. 158/2011 & OMP No.39l of 2011 tuge I oJ'6 $

¶2O.M.P. No. 391 of 20lI is by TSL, against BSNL, under Section 9 of the Act seeking interim relief to restrain the BSNL from exercising its rights under a contract dated 3'd November 2010 pertaining to financial conditions of the franchisee agleements of that date and further restrain the BSNL fi'om invoking/encashment three performance bank guarantees forwarded to it by TSL.

¶3In O.M.P. No. 391 of 2011 this Court passed an interim order on 20'h May 2011 against the enOashment of bank gualantees provided by the TSL to the RSNL: "Accordingly, subject to the petitioner keeping the said banlr guararrtees alive .tjll further orders, the encashment of the following bank-guarantees shall remain stayed till the next date:

i) Bank Guarantee No. 053410IGPER0081 'dated 03.11 .2010 in the sum of Rs. 10,00,00,000/- furnished by the petitioner under the franchisee agreement for provision of WiMAX (IEEE 802.16e-2005) Based Wireless Broadband Services in the urban areas of Tamil Nadu LSA (except Chennai) being No. B SNL COA{''i/P-WiMNVE oIl 20 lti - I I /Asreernent/Take-Tarnil Nadu.

ii) Bank Guarantee No. 053410IGPER0082 dated 03.11.2010 in the sum of Rs. 7,50,00,000/- fuinished by the petitioner under the franchisee agreement for provision of WiMAX (IEEE 802.I6e-2005) Based Wireless Broadband Services in the urban areas of Uttar Pradesh (Wes) LSA being No. BSNL COAIWP-WiMA)VE oIl20l 0-I 1/Agreement/Take-Up (West). Arb. P. No. 158/201I & OIVII' No. 391 of 201 I Puge 2 of6 v

iii) Bank Guarantee No. 053410IGPER0083 dated 03.11 .2010 in the sum of Rs. 5,00,00,000/- fumished by the petitioner under the franchisee agreement for provision of WiMAX (IEEE 802.I6e-2005) Based Wireless Broadband Services in the urban areas of Orissa LSA being No. BSNL CoAtrWP-WiMAX/E oU 201 0-1 1 /Agreement/Take-Orissa."

¶4As far as Arbitration Petition No. 158 of 20II is concerned notice was directed to issue on 20th May 201L On 6th September 2011 learned Senior counsel for the BSNL sought time to take instructions regarding the appointment of an Arbitrator.

¶5However, at the hearing on 18'n October 2011 Mr. H.S. Phoolka, learneci Senior counsel appearing for the BSNL informed the Court that the BSNL has already appointed the named Arbitratol in three of the connected petitions and, therefore, was not agreeable to the matters being referred to an Arbitrator other than one named in the arbitration clause of the agreement.

¶6Mr. Neeraj Kishan Kaul, learned Senior counsel appearing for the Petitioner submitted that in view of the conduct of the BSNL in dealine with the Petitioner, and the stand taken by it, the Petitioner was not confident that a nominee of the Managing Director ('MD') of BSNL would be irnpartial in adjudicating the dispute. He fuither submitted that to the Arb. P. No. 158/201 I & OMP No. 391 of 201 I Page 3 o.f 5 best information of the Petitioner, the BMW Spectmm allotted to BSNL had been suffendered by BSNL. This contention was, of course, disputed by Mr. Phoolka, learned Senior counsel for Respondent BSNL. Mr. Kaul further ret-erred to the decisions in Datsr Switchgears v. Tata Finence Ltd.

(2000) 8 SCC 151, ACE Pipeline Contracts (P) Ltd. v. Bhqrat Petroleum Corporution Ltd. (2007) 5 SCC 304 and Union of India v. Bharat Battery Manufactwring Co. (P) Ltd. (2007) 7 SCC 684 and submitted that this Court did not have to necessarily appoint the named arbitrator.

¶7As regards the petition under Section 9 of the Act, it is submitted by Mr. Kaul that this wouid be a remedy independent of the remedy available to the Petitioner before the arbitrator under Section 17 of the Act and, therefore, the interim relief should be made absolute during the pendency of the proceedings before the learned arbitrator.

¶8Mr. Phoolka, leaured Senior counsel appearing for the BSNL on the other haud informed the Court that there is no warrant to make an e>lception for the Petitioner when in similar contracts an arbitrator had alreadv been appointed by the BSNL pursuant to the arbitration clause and such appoinhnent had been accepted by those parties. The person so.appointed as Arbitrator was not an employee of the BSNL as alleged by the Petitioner. The arbitrator lv{t. J.M. Mishra was a retired senior officer of the Depattment of Telecommunications ('DoT'), Ministry of Comrnunications Arb. P. No. 158/201I & OMP No. 3ltl of 201I Hrye 4 o.f 6 *\.\ and Information f".f,notbgy, who had worked as Mernber (Production) and ex-officio Chainnan of the Telecom Cornmission. He was earlier also the Chief General Manager in the Assam Telecom Ciqcle and, therefole, highly qualified and experienced to act as an arbitrator. He submitted that it would be open to the Petitioner to seek appropriate interim relief before the learned arbitrator under Section 17 of the Act.

¶9Having considered the submissions of the learned counsel for the parties, it appears to this Court that in the present case there is no warrant to presume that the nominee of the MD, BSNL would fail to act itrrpaftially olrly on that score. It has been explained by the Supreme Court recently in lndisn Oil Corporation Ltd. v. Raja Tronsport Privute Ltd. (2009) I SCC 520, in the context of a named arbitrator under the arbitration cla,.rse, that "the Chief Justice or his designate while exercising power under sub-section (6) of Section 11 shall endeavour to give effect to the appointrnent procedure prescribed in the arbitration clause."

¶10Consequently, this Cour-t appoints VIr. J.M. Mishra, a retired Senior Offrcer of the DoT, Ministry of Communications and IT as the Sole Arbitrator to adjudicate the disputes between the parties. His fees will be governed by the tenns and conditions applicable to the arbitrators nominated by the MD, BSNL in terms of the arbitration clause. Arb. P. No. 158/2011 & OMP No. 391 of 201 I Page 5 of6 ,( 1 1. As regards the interim relief, this Court directs that the interim orders passed in OMP No. 39I12OI1 by this Court on 20ih May 20ll will continue for a period of eight weeks or till the disposal of the application being filed by the Petitioner under Section 17 of the Act by the iearned arbitrator whichever is earlier and further subject to the oondition that the Petitiorrer should file such an application before the learned arbitrator within a period of two weeks fiom today.

¶12With the above directions. the AP No. 20ll are disposed of. NOVEMBER 4(. 18,2011 of 201 I and OMP 391 of S. MURALIDHAR. J. - F{r)'h F ft t1olfl tr f4Jrec}a Cf^ g hr* w I Arb. P. '\a. I 58/201 I & OfiIP No. 391 of 201 I Page ri oJ'6 IT *IN THE HTGH COURT OF DELHI AT NEW DELHI #20 + o.M.P. 39Il20It l\OS TAKE SOLUTIONS LIMITED ..... Petitioner Through: Vk. N.K. Kaul, Senior Advocate with Ms. N. Shobha with Mr. V. Adhirnohan and VIr. J. Srirarn. Advocates. versus BHARAT SANCHAR NIGAM LTD ..... Respondent Through: VIr. H.S. Phoolka, Senior Advocate with Mr. Sharat Kapoor, Advocate. CORAM: JUSTICE S. MURALTDHAR ORDER L7.01.20t2 IA No. 10L8/2012 (for directions)

¶1This application seeks extension of the interirn order passed by this Court on 20th May 2011 in OMP No. 391 of 2011 till the disposal of the arbitration pro ceedings. oh

¶2Havtng heard the cotrnsel for the parties, the interirn order passed by 1g this Court on 20tr'May 2011 in OMP No. 391 of 2011 is continued till the disposal of Section 17 application by the learned Arbitrator.

¶3The application is disposed of.

¶4Order dasti to the parties.

S. MURALIDHAR, J. JANUARY 17,2012 akg

N *IN THE HIGH COURT OF DELHI AT NEW DELHI #13 + ARB.P. l5gt20tl X/VS TAKE SOLUTIONS LIMITED ..... Petitioner Through: Mr. N.K. Kaul, Senior Advocate with Mr. Kapil Rastogi, Advocate. . VCTSUS BHARAT SACHAR NIGAM LIMITED ..... Respondent Through: Mr. H.S. Phoolka, Senior Advocate with Mr. Sharat Kapoor and Mr. Kanwar Faisal. r\dvocates. #r4+ 9.M.P.391120r1 ,.a - I\,{/S TAKE SOLUTIONS LIMITED ..... Petitioner T'hrough: Mr. N.K. Kaul, Senior'.r\dvocate rvith Mr. Kapil Rastogi, r\rlvocate. VETSUS BHARAT SANCHAR NIGAM LTD Respondent Thlough: Mr. H.S. Phoolka, Senior Advocate with Mr. Sharat Kapoor and Mr. Kanwar Faisal" Aclvocates. CORAM: JTTSTICE S. MURALIDHAR