Model Public School (MPS) is a very reputed school in Delhi having its branches across all the major cities in India. Praj is engaged in the business of providing transport services and carries on his business under the

CS Professional · Arbitration, Mediation and Conciliation · PYQS · June 2024
Model Public School (MPS) is a very reputed school in Delhi having its branches across all the major cities in India. Praj is engaged in the business of providing transport services and carries on his business under the name and style M/s. Triumphant Transports ('TT'), a proprietorship concern. MPS had floated a tender calling for quotes, for contracting services relating to driving, managing its buses and to provide additional transportation services, as and when needed. Praj had some contact in the senior management of MPS and was able to put in a good word about himself and his track record before the committee of the school. After a detailed evaluation, the management of the school approved TT's proposal and he was empaneled as the transport provider for the school. Accordingly, on April 1, 2018 the parties entered into an Agreement, whereby TT agreed to provide transport services to MPS. The school owned twenty-two buses, which TT agreed to operate and maintain. TT was required to provide conductors, drivers, supervisors, cleaners, full-time mechanics, and other personnel. In addition, TT also agreed to provide additional buses for the purposes of picking up and dropping off the students and the employees of MPS. The Agreement was for a term of eight years that is, from April 1, 2018 till March 31, 2026 with the first five years as a lock in period. Further, TT agreed to strictly abide by the obligations stipulated in the Agreement such as, adhering to the timing for transportation of students; regular maintenance of the buses, maintaining motorable conditions of the buses; complying with the safety guidelines issued by the Supreme Court of India; limiting the number of students transported in each bus to the permissible limit; and, in the event of breakdown of buses, providing alternate vehicles etc. For the initial year, the services were provided without any issues and the payments were also received by TT in a timely manner. However, after the first year, there was a considerable delay in payments made to TT and he was having challenges, as the working capital was getting struck. In September 2019, TT sent a communication to the Principal of the school to release the outstanding payments as per terms of the Agreement. He further stated that even though the school was collecting the transportation fee from the students well in advance, the school was making payments to him in small instalments after a substantial delay. The Principal of MPS responded by an e-mail, alleging deficiencies in the services provided by TT. He also informed that MPS would be compelled to take strict action against TT, if the said deficiencies were not rectified within a period of two weeks. In first week of November 2019, through a communication MPS terminated the Agreement with TT. Aggrieved by the termination of Agreement, TT invoked the arbitration clause in terms of Clause 36 of the Agreement. Subsequently, the Court, by an order dated April 6, 2020, directed the Delhi International Arbitration Centre (DIAC) to appoint an arbitrator to adjudicate the disputes between the parties. During the arbitration, MPS also produced evidences including the complaints filed by parents of the students against TT. In the background of above facts, answer the following: (d) While invoking arbitration clause, TT sent a notice of arbitration to MPS indicating certain claims, however, it did not mention those claims in its statement of claim during arbitration proceedings. Later, during the pendency of the proceedings, TT wanted to include those claims in its claim statement, but the school called it as time barred. Is the contention of the school valid ?

Answer & Explanation:

The statements made by each party serve as the foundation for their respective arguments. As a result, the parties must appropriately construct their statements. The High Court of Delhi in the case of M/s. Cinevistaas Ltd. V. M/s. Prasar Bharti, O.M.P. (COMM) 31/2017 held that claims that have already been raised in the notice of arbitration are not time-barred by limitation, even if they are not included in the statement of claim, in a case involving a petition brought under Section 34 of the Arbitration and Conciliation Act, 1996 ("Act") challenging an arbitrator's decision. The analysis of the law regarding arbitral orders that are subject to challenge under Section 34 of the Act, which deals with requests to vacate arbitral judgements, makes the ruling noteworthy as well. It is also established that if the respondent wished to make changes in the statement of defense, they are permitted to do so via section 23(3) of the Arbitration and Conciliation Act, 1996, the Respondent may be permitted to amend the statements, but only under certain conditions, such as: The parties have not set any constraints on themselves regarding the amendment of the statements; The amendment may be permitted by the arbitral tribunal if the request for such amendment/ supplementing has been made without any unreasonable delay; the amendment may be rejected if they fall under the ambit of the arbitration agreement and can be made without manifest and grave justice to the party seeking the amendment; and the amendment will be allowed if the arbitral proceedings are still ongoing. In view of the above, it can be said that the claim quantified in the letter invoking Arbitration cannot be held to be barred by limitation and the contention of the school is not valid.

Topics: Arbitration Proceedings

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