9911796707
TMI Blog2007 (10) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... uant to licences and approvals from relevant authorities including Reserve Bank of India, inter alia, issues Credit and Debit Cards collectively [hereinafter referred to as 'Citibank Cards']. 3. The respondent No.1-TLC Marketing PLC (for short 'TLC'], is a company incorporated under the provisions of the laws in force in the United Kingdom having its registered office at 54, Banker Street, London WIU 7BU. TLC is a company engaged in the business of marketing and selling inter alia leisure, lifestyle and travel services. 4. The respondent No.2-Wunderman India Pvt. Ltd. (for short 'WIPL'] is an Indian company incorporated under the provisions of the Companies Act, 1956 and has its registered office at Kalpataru \026 Synergy, 2nd Floor, Opp. Grand Hyatt, Off Western Highway, Vakola, Santa Cruz (East), Mumbai. Respondent No.2-WIPL is an exclusive marketing and fulfilling agent of respondent No.1-TLC for the Indian sub-continent. 5. The applicant-Citibank states that the respondents-TLC and WIPL are the alter ego of each other and their interests are identical, co-existent and co-terminus and for all practical purposes they are one party and their obligations are joint and several in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to preferences and sending confirmation to customers of their preference of travel date/destination. The applicant-Citibank and the respondents - TLC and WIPL agreed to the Scheme called the "Fly for Sure" programme, which was envisaged by the applicant-Citibank to be effective from 01.10.2005 until 31.12.2005. The applicant- Citibank contracted for buying 1,00,000 return air-ticket vouchers from the respondents-TLC and WIPL in anticipation of the success of the Scheme for a consideration of ₹ 432/- plus applicable taxes per voucher and, accordingly, had paid for the same in accordance with Appendix-II of the agreement. According to the applicant-Citibank, it was the responsibility of the respondents-TLC and WIPL to ensure fulfillment of the Scheme to the satisfaction of the customers. It is stated that under the Scheme, 35,000 card members of the applicant- Citibank were found to be eligible for availing of the 'free return air-ticket' to be provided by the respondents-TLC and WIPL. The applicant-Citibank forwarded the vouchers completed by the eligible and interested card members to respondent No.2-WIPL in accordance with the procedure agreed to by the parties. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ially unviable to honour the commitments and there was a clear indication in the said responses of abdication on the part of the respondents-TLC and WIPL of their responsibilities and obligations under the agreement inasmuch as new conditions to perform the obligations were set out which suggested payment of further amount which was de hors the terms of the agreement itself. It is also submitted that in the circumstances created by the respondents-TLC and WIPL, the applicant-Citibank vide its letter dated 10.05.2006 informed the respondents-TLC and WIPL of the termination of their involvement under the agreement w.e.f. 10.05.2006 which was necessitated due to the acts of omission and commission on their part and continued loss of goodwill and reputation of the applicant- Citibank. The applicant-Citibank, subsequent to the termination of the involvement of the respondents-TLC and WIPL under the agreement, was compelled to take the remedial action of providing return air-tickets to its eligible customers/card holders. In view of the failure of the respondents-TLC and WIPL to perform their respective obligations in terms of the agreement and in order to resolve the disputes, the appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitration clause in existence on and with effect from 10.05.2006, i.e. the date of wrongful repudiation of contract by the applicant-Citibank, which was accepted by the respondents, therefore, there exists no dispute that needs reference to the arbitration. It is contended that the respondents-TLC and WIPL are separate and different companies incorporated in different jurisdictions, with different ownership and control and under no circumstances can they be treated as one party. It is clarified that the applicant-Citibank did not strictly incorporate the terms of Appendix-V to the agreement in its offer to its card members, but offered a Scheme in material variation without the consent of respondent No. 1-TLC, a fact which came to its knowledge only after the offer was sent out by the applicant-Citibank. Further, it is stated that the conditions required for satisfaction of Sections 11(5), 11(10) and 11(12) of the Act are not satisfied by the applicant-Citibank and, therefore, on the above-stated premises, the application is liable to be dismissed. 11. Shri T. R. Ramachandran, Business Manager-Credit Cards of the applicant-Citibank in rejoinder affidavit has reiterated and reass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant-Citibank was compelled to take the remedial action of providing return air tickets to its eligible customers/card members, the expenses of which were, of course, to be borne by both the respondents as provided in the agreement and the circumstances created by the respondents-TLC and WIPL manifestly provided grounds for termination of the agreement under Clause 23 and having invoked the arbitration Clause 10, the applicant-Citibank had issued notices under Clause 24 to both the respondents requesting them to resolve the disputes/differences under the Act through a sole Arbitrator in terms of Section 10(2) of the Act. 15. Mr. A. K. Ganguli, learned Senior Advocate appearing on behalf of respondent No.1-TLC, resisted the aforesaid submissions of Mr. R. S. Suri. According to Mr. Ganguli, the applicant-Citibank has made vague assertion of existence of dispute and has not identified or pointed out as to what exactly is the dispute or precise claim, which has arisen for invoking the arbitration clause, but despite the communications and representations made by respondent No.1-TLC to the applicant-Citibank to spell out the disputes which are referable to arbitration, no valid notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion, is not necessary or expedient nor it can be said to be fair and reasonable in the larger interests of the parties because such an order may lead to burdening the parties to bear extra amounts of money in prosecuting the arbitral proceedings which as per the objectives of the Act are less expensive and more efficacious remedy to the parties to settle their disputes. 17. In the backdrop of the above narrated factual situation and respective contentions of the parties, the question that arises for consideration of this Court is whether in view of the various communications followed by reminders and legal notices sent by the applicant-Citibank to the respondents-TLC and WIPL whereby certain serious instances of complaints having been received from the eligible customers/card members regarding deficiencies in services rendered to them and other disputes/differences as set out in Appendix-II of the agreement and also having failed to provide 'Free return flight voucher' in relation to "Fly for Sure" programme in accordance with the provisions of Appendix-I to the agreement, an arbitration clause contained in the agreement could be invoked. 18. The tripartite agreement m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k safe, harmless and indemnified from time to time and at all times hereafter, from and against (i) all loss, harm and injury suffered or incurred by Citibank, (ii) all claims, demands, customer complaints, suits, actions and/or proceedings either civil or criminal in nature, made or adopted against Citibank and (iii) all costs, charges and expenses suffered or incurred by Citibank directly or indirectly on account of or as a consequence of WIPL failing to fulfill any of its obligations under this Agreement and/or failing to fulfill all or any of its responsibilities and obligations under this Agreement and Appendix-I hereto. 7.2 WIPL and TLC hereby undertake to be solely liable and responsible, to the exclusion of Citibank, for all claims, demands, disputes, suits, actions and/or proceedings either civil or criminal in nature arising out of non-fulfillment of any of their obligations or responsibilities arising under this Agreement and the Appendix-I hereto. 7.2.2 WIPL shall be solely and absolutely responsible for providing the Services and for issuing the free return flight vouchers in accordance with the provisions of Appendix-I, to the customers of Citibank as also for ens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pendix-II to the agreement. Further, the respondents-TLC and WIPL jointly and severally undertook to indemnify the applicant-Citibank from and against all costs, charges and expenses suffered or incurred by the applicant-Citibank, directly or indirectly, on account of or as a consequence of the respondents-TLC and WIPL failing to fulfill any of their responsibilities and obligations under the agreement read with Appendix-I thereto. Under the "Fly for Sure" programme envisaged in the agreement, 35,000 card members of the applicant-Citibank were found to be eligible to avail the opportunity of the 'Free return flight voucher' to be provided by respondents-TLC and WIPL. The applicant-Citibank forwarded the vouchers completed by the eligible and interested card members to respondent No. 2-WIPL in accordance with the procedure as agreed by the parties. The vouchers/requests forwarded by the applicant-Citibank were to be honoured by the respondents jointly by conducting themselves in a manner as stipulated under the agreement, including issuing 'return airtickets' towards any one of the three dates, for any one of the three destinations, as indicated by the customers. The respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Mr. Justice M. H. Kania, Former Chief Justice of India, as its nominee. 26. Respondent No. 1-TLC in its reply dated 14.08.2006 to the notice dated 15.07.2006 sent by the Solicitors on behalf of the applicant-Citibank, denied the unsubstantiated allegations of non-fulfillment or breach of any obligation by it under the agreement dated 04.10.2005 entered into between the parties. In reply, respondent No. 1-TLC states that notice invoking an arbitration is not valid as the same does not comply with the requirement of Section 21 of the Act applicable in India as it is completely unclear from the contents of the notice as to what disputes the applicant-Citibank has sought to be referred to the arbitration and the applicant-Citibank first should provide quantification of its alleged claims and disputes. However, respondent No.1- TLC agrees to the suggestion of respondent No.2-WIPL for appointment of arbitral 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&quo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tribunal of three members, one to be appointed by each party.
29. In view of the instances of breaches of the 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 agreement and having regard to the fact that the parties have failed to determine an even number of arbitrators as per the provisions of Section 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 of this 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. X X X X Extracts X X X X X X X X Extracts X X X X
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