12 October 2021 | Airone Charters Pvt. Ltd v. Jetsetgo Aviation Services Pvt. Ltd. | Arb. P. 245 of 2020 | Delhi High Court | C Hari Shankar J | 2021 SCC OnLine Del 4693

The Delhi High Court has allowed an arbitration to proceed rejecting the respondent’s argument that its claims ought to have been much earlier

Jetsetgo initiated arbitration in April 2018. The tribunal set a schedule in December that year. Airone filed its counterclaim beyond the time allotted and the tribunal in July 2019 said it could not take it on record unless Airone obtained at least six months’ extension. Airone applied to the court for extension but withdrew it (in September 2019) with liberty to pursue appropriate remedy available in law.” Airone again applied to the tribunal, but this time it “struck off” the counterclaim observing that Airone had liberty to pursue another remedy.

In May 2020, Airone issued a notice of arbitration and proposed the same tribunal be appointed. Jetsetgo refused. Then, Airone applied to the court for the appointment of an arbitrator. It was sent to the extension-court for containing clarifications. The extension-bench disposed of the application for clarification, stating that its order was crystal clear. However, with a view to put a quietus to the controversy, it clarified that the court had not foreclosed any remedy that Airone may avail.

Now, Airone brought another application for an appointment. Hari Shankar J first addressed the argument that the High Court had in the other proceedings disallowed Airone's initiation of arbitration. He noted that that was not so and cautioned that while referring to judicial orders, parties should ensure that no words not contained in the order are read into it.

Then, examining the merits, he relied on the Latin expression ubi jus ibi remedium to say that allowing Jetsetgo’s argument impinges on Airone’s right to legal redress.

He next examined if the claims were time-barred and found that they were not.

Jetsetgo’s main arguments were that:

1. Because the arbitration clause required “all disputes” to be referred to arbitration, Airone should also have referred its counterclaim at the same time Jetsetgo referred its claims (rather than filing it late before the tribunal).
2. Airone was estopped from invoking arbitration in absence of any explanation why it did not raise its claim when the tribunal did not take the counterclaim on record or when the extension was not allowed.

Rejecting this, Hari Shanker J distinguished Supreme Court’s Dolphin Drilling v. ONGC (2010) 3 SCC 267. He noted that in Dolphin, the agreement required a party to refer all existing disputes in the notice of arbitration, but there was no such condition in this case. All that was required was all disputes should be arbitrated.

He also referred to the principles enunciated by a co-ordinate bench judgment in Gammon India Ltd. v. NHAI, 2020 SCC OnLine Del 659 relying on Dolphin, but said those should be read with the understanding of the facts of Dolphin and would apply where, as in Dolphin, invocation of the arbitration at the first instance is required, per contract, to embrace all existing claims (“all disputes”).

However, that principle would not apply where two sets of claims being sought to be referred to arbitration are by different parties to the contract.

He also said that in the absence of any inhibiting factor in the ACA or any decision, the request for a reference of the petitioner’s claims to arbitration could not be denied.

He also rejected the argument on not following the pre-arbitral mechanism noting, after discussing precedent, that the clause required an attempt at resolving the dispute by mutual discussion. But because the Jetsetgo had questioned Airone’s claims even on merits, at every stage, relegating the parties to any mutual discussion would be an empty formality.

Lastly, he also rejected the argument that a composite petition under Section 11 ACA was not maintainable. Instead, relying on a decision of the Bombay High Court, he said that though Duro Felguera requires independent arbitrations, the mere fact that a consolidated Section 11 petition was filed is no ground to reject the petition altogether.

However, Airone’s prayer to refer the dispute to the same tribunal was denied in view of party autonomy noting that a party cannot insist on, and the court cannot thrust, a pre-existing tribunal unless the other side consents.

[Ed. Jetsetgo’s argument on delay does not appear to have been specifically examined]

Read the judgment here.