The Apex Court on 22.11.2018, in South Delhi Municipal Corporation v SMS AAMW Tollways Private Ltd.,[1] allowed the appeals filed by  the Appellant  who had contested the order that had been passed by the Single Judge of the Hon’ble High Court of Delhi, who had allowed the Respondent’s petition filed under the Arbitration and Conciliation Act, 1996.

FACTS: The National Highways Authority of India had entered into an agreement with ‘Concessionaire’ for designing, engineering, sponsoring , procurement, constructing , completing, operating, maintaining along with the collection  of toll  of specific  sections of the NH-8 highway. The arrangement  was that  the Concessionaire of NHAI shall  along with the collecting of toll shall also collect the entry toll  that was  levied by the Appellant,  upon the  entry of certain commercial vehicles into the territory .

The Appellant,  in order to collect toll tax from all  the entry points of the border  engaged  a contractor by  floating a tender,  wherein it invited bids  from amongst which the Respondent became the successful bidder and was assigned the duty to collect  the  toll tax for a term of three  years along with that both the parties has entered into a bilateral agreement as well . According to the agreement, a sum of twenty six crores had to be paid by the Respondent on a monthly basis to the Appellant, for the collection of tax collected.

Unfortunately, the particular toll plaza had to be dismantled, due to an understanding   being reached between the parties to the agreement.  The Respondent was compelled forced to bear the expenses for arranging the collection of the Appellant from the concerned toll plaza thereby suffering a massive loss of around rupees eight crores. As such , a notice was  sent by the Respondent ,  to the Appellant including  the  other parties describing the disputed arising out of  the  Clause of  the agreement. The Appellant demanded an amount of   Rs. 97,08,76,449/- wherein the respondents had responded by giving clarity upon the computation mistake, by the Appellant. Subsequently, the Appellant, made a reduction in their demand to an amount of Rs.80, 46, 31,504/-   

Being unsatisfied with the decision, an appeal under the Clause of the Agreement was made by the Respondent. Eventually, the Appellant made intimation to the Respondent about the non-existence of an arbitration clause between the parties resulting in the unacceptability of the clause. Further, an Arbitration Petition was filed by the Respondent in the High Court of Delhi for appointing of an Arbitrator .The petition was allowed and an arbitrator was appointed.

ISSUE: Whether the High Court had the entitlement to appoint an arbitrator?

DECISION HELD BY THE SUPREME COURT OF INDIA:

The Apex Court while setting aside the decision of the High Court upheld that the clause contained in the aforesaid agreement from nowhere mentions about the appointment of an arbitrator for settling the disputes between the parties under the Arbitration and Conciliation Act, 1996 and likewise the appeal was allowed

For Judgment Refer: