CITIBANK, N.A v. TLC MARKETING PLC AND ANR

Citation: [2007] 10 S.C.R. 710

Court: Supreme Court of India

Bench: LOKESHWAR SINGH PANTA

Case summary

CITIBANK, N.A v. TLC MARKETING PLC AND ANR.pdf

Judgment text

CITIBANK, N. A. v. TLC MARKETING PLC AND ANR. OCTOBER 5, 2007 [LOKESHWAR SINGH PANTA, J. ] "-k Arbitration and Conciliation Act, 1996: ss. 2(j), 7, 11(5),JJ(JO) and 11(12) rlw ss. 10 and 21- 'Jnternational Commercial arbitration '-Applicationfor appointment ofsole arbitrator-A tripartite agreement amongst parties for ''free return flight vouchers" to eligible credit card customers ofapplicant Bank-Violation of-Notice by applicant-Bank invoking arbitration clause ofagreement and suggesting a name for appointment as sole arbitrator-Respondent repudiating claim anddeclining to accept the nomination suggested-Application by Bank ulss. 11(5), 11(10) and 11(12) read withs.

l 0 ofthe Actfor appointment ofsole arbitrator in 'international commercial arbitration '-Application resisted on grounds that notice was vague as no particular dispute was sought to be referred and terms ofagreement were limited to obligations of parties arising prior to expiration ofagreement-Alternative plea of appointment ofarbitral tribunal comprising three arbitrators-HELD: Disputes arising out ofthe arbitration agreement between parties are covered under the definition of"international commercial arbitration" in terms ofs. 2(/)-Parties entered into an arbitration agreement as provided uls 7-The contract is a commercial document and must be interpreted in a manner to give efficacy to contract rather than to invalidate it-Narrow technical approach is not proper-On facts, existence ofarbitration agreement was accepted and matter was suggested to be referredto an arbitral tribunal-Requirement ofs.

l 0(2) isfully attracted, there being arbitration agreement deemed to be one providing for a sole arbitrator-A composition ofarbitral tribunal comprising three arbitrators is not necessary or expedient nor can it J be said to befair and reasonable in larger interest ofparties keeping in view the objectives ofAct to make arbitral proceedings less expensive and more efficacious-In the circumstances, taking into consideration the fact that disputes and differences between parties emanating from the contract are required to be resolved through arbitration, sole arbitrator is appointed-Credit cards-Agreementfor ''free returnflight vouchers" to cardholders-Violation of-Remedy-- Deeds and Documents-Commercial documents-Interpretation of Major (Retd. ) lnder Singh Rekhi v. Delhi DevelopmentAuthority, [1988] 2 sec 338, held inapplicable. CIVIL ORIGINAL JURISDICTION : Arbitration Petition/ Application No. I of2007.

(Under Section 10(2) read with Sections 2(f), 11(5), 11(10) and 11(12) ofthe Arbitration and Conciliation Act, 1996. --' R. S. Suri for the Petitioner. A. K. Ganguly, Soli J. Sorabjee, Nikhil Nayyar, Anl --respondent No. 2-WIPL for appointment ofarbitral tribunal comprising of three members, one each to be appointed by the parties to the agreement. 27. As noticed above, the disputes arising out of the arbitration agreement between the parties are covered under· the definition of "international commercial arbitration" in terms ofSection 2(t) ofthe Act. The·parties have entered into an arbitration agreement as provided under Section 7 ofthe Act. Section 10(1) of the Act provides that the parties are at liberty to determine the number ofarbitrators provided such number shall not b€? an even number. In default ofdetermination referred to in sub-section (1), the arbitral tribunal shall consist of a sole arbitrator in terms of Section 10(2) ofthe Act.

Section 21 ofthe Act lays down that unless otherwise agreed by the parties, the arbitral proceedings in respect ofa particular dispute would commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. 28. The contract is a commercial document and must be interpreted in a manner to give efficacy to the contract rather than to invalidate it. Narrow technical approach is not proper. The above-extracted Clause I0 of the arbitration imports in itself all disputes and the arbitration agreement cannot be said to be as vague or uncertain as to be unenforceable. In Clause 10 of the agreement, the words "any controversy, claim or dispute arising out ofthe interpretation, application or in connection with this agreement which cannot be resolved amicably" could embrace within its fold all matter which can legitimately arise in connection with the agreement.

The arbitration clause does not put any cap on the powers of the arbitrator to decide any particular claim or D counter claim, the details of which shall be submitted by the parties in their pleadings before the arbitrator. The words contained in Clause 10 are wide enough and as the question turned upon the true interpretation ofthe contract and the parties have to take recourse to the contract to establish their claim and counter claim, ifany, having regard to the fact that the existence ofan agreement is not denied and that there has been an assertion ofclaim by the applicant-Citibank in the forms ofletters and notices issued to the respondents and responses of TLC and WIPL thereto, the matter would be arbitrable. The conduct ofthe respondents- TLC and WIPL would show that on receipt ofthe communications and notices ofthe applicant-Citibank, the same were not rejected outright by them.

The existence ofarbitration agreement was accepted and the matter, if any, was suggested to be referred to an arbitral tribunal of three members, one to be appointed by each party. 29. In view ofthe instances ofbreaches ofthe terms and conditions of the relevant clauses of the agreement coupled with the breaches of specific obligations and responsibilities contained in the Appendix(s) and Enclosures attached and incorporated by reference as an integral part of the agreement and having regard to the words used in Clause 10 of the I . . · --\ agreement and having regard to the fact that the parties have failed to determine an even number ofarbitrators as per the provisions ofSection 10(1) of the Act, the requirement of Section 10(2) of the. Act is fully attracted in the present proceedings, in other words, the arbitration agreement deemed to be one providing for a sole arbitrator. 30.

In the above-said circumstances, taking into consideration the fact that the disputes and differences between the parties emanating from the contract are required to be resolved through arbitration, Hon'ble Mrs. Justice Sujata V. Manohar, retired Judge ofthis Court, is hereby appointed to act as a sole Arbitrator. 31. The Arbitration Application, accordingly, stands disposed of. There will be no order as to costs. RP. Arbitration Application disposed of.