| Citation | Arbitration Petition (Civil) No. 12 of 2019 |
| Date of Judgment | 25th January, 2022 |
| Court | Supreme Court of India |
| Bench | CJI N.V. Ramana, Justice Surya Kant, and Justice Hima Kohli |
| Petitioners | Intercontinental Hotels Group(India) Pvt. Ltd. & Anr. |
| Respondent | Waterline Hotels Pvt. Ltd. |
FACT OF THE CASE
The Intercontinental Hotels Group(India) Pvt Ltd(Petitioner 1) and Intercontinental Hotels Group(Aisa) Pvt Ltd(Petitioner 2) , both are subsidiaries of Intercontinental Hotels Group PLC (IHG Group), hailing from India and Singapore, each one respectively . IHG Group, which is the parent company, is a British multinational hotel in UK(hereinafter Petitioners).The respondent, an Indian company is in the hospitality industry, agreed to manage and oversee the operations of the Holiday Inn & Suites Bengaluru in Whitefield and entered into a Hotel Management Agreement (HMA). This HMA gives the rights and obligations for a period of 10 years to the parties and subsequent renewals. The HMA also includes that Respondent has to pay to the Petitioners various fees including ‘investment management fee’, and ‘technology service fee’. The Petitioners argued that the Respondent failed to meet their responsibilities and also addressed an email on 12th October, 2018 (Notice) and terminated the HMA.
The Petitioners, feeling wronged by the Notice, turned to section 9 of the 1996 Arbitration and Conciliation Act for remedy and requested interim relief from the High Court in Kolkata. On 23rd October, 2018, an ad-interim order passes by the High Court which directs the Respondent not to evict the Petitioners from the Hotel without due process of law and wait until further orders. The Petitioners argued that the Respondent failed to follow the orders. The Petitioners call for the Arbitration clause under the HMA on 21st January, 2019 (Arbitration Notice). The Respondent didn’t response to the Notice.
After the response of the Respondent, the Petitioners appealed Singapore International Arbitration Centre (hereinafter SIAC) to appoint a three-member tribunal, asper the HMA. Despite receiving a notification from SIAC on 15th February, 2019 requesting for appointing an arbitrator, the Respondent rejected the Notice, deeming it irreparable. This action of Respondent pressured the Petitioners to take legal action by filling a petition under Sections 11(6) and 11(12)(a) of the Arbitration Act, in Supreme Court to constitute the Tribunal, also known as Section 11 Proceedings.
ISSUES RAISED
- Whether the issue of insufficient stamping indicated an unworkable Arbitration agreement under section 11(6) of the Act ?
ARGUMENTS
- Petitioners’ Argument:
The Petitioners argued that there’s certain rules in HMA which Respondent is bound to follow but the Respondent illegally and wrongfully purported to terminate the Management Agreement by its email. The Petitioners asked for damages due to the wrongful termination of HMA and awards of cost from the Respondent and interest of cost awarded, till payment.
- Respondent’s Argument:
The Respondent don’t accept IHG’s proposal and denied of the fact that they did something wrong by terminating the agreement. Further, the Respondent don’t agree on Arbitration by a tribunal of 3 arbitrator for the same reason.
JUDGMENT
The Supreme Court Of India observed that Courts had limited jurisdiction under Section 11(6) of the A&C Act, which is limited to examining issues related to the existence of the Arbitration agreement. Therefore, the Court is unable to entertain the raised questions of validity in as much as these matters to be adjudicated upon by the arbitrators.
However, the Court made an exception to this rule, and drawing from N.N. Global, determined that in cases where an agreement has not been stamped at all, there may be a possibility for a Court to review the matter under a petition filed under Section 11 of the A&C Act for the appointment of arbitrator(s).
Mr. Justice A.V. Chandrashekhara ( retired Judge of Hon’ble High Court of Karnataka) was appointed as a sole arbitrator by the Court.
Analysis
Through the Intercontinental Judgment, the Hon’ble Supreme Court brought to light the fact that frequency of stamp duty payments can be addressed at a later point in time, regardless of whether they were insufficiently paid or not. The court further acknowledged that if the documents in question were originally unstamped, the concerns raised in the case of N.N Global would have been examined. Yet, surprisingly, this statement doesn’t align with the SCI’s stance in the N.N Global case.
REFERENCES
https://indiankanoon.org/doc/163266171/
This article is written by Apoorva Anand of Lloyd Law College, Intern at Legal Vidhiya.
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