The Supreme Court has allowed the arbitration plea of Swiss Timing Limited against Organising Committee (OC) of the 2010 Commonwealth Games and also nominated two of its former judges as chairman of the Arbitral Tribunal and second arbitrator for resolving the disputes.
A bench of Justice S S Nijjar said Swiss Timing Ltd has already nominated former apex court judge, Justice S N Variava as their arbitrator and nominated its former judges, Justice Kuldip Singh and Justice B P Singh as chairman of the Arbitral Tribunal and second arbitrator respectively to adjudicate the disputes that have arisen between Swiss Timing Ltd and OC on such terms and conditions as they deem fit and proper.
"The Registry is directed to communicate this order to the Chairman of the Arbitral Tribunal, as well as, to the second arbitrator to enable them to enter upon the reference and decide the matter as expeditiously as possible," the bench said while allowing the arbitration petition of Swiss Timing.
The bench, however, rejected the contention of OC that since a criminal case has been registered against the OC's former Chairman Suresh Kalmadi and some other officials of Swiss Timing, the apex court would have no jurisdiction to make a reference to arbitration.
It said "the balance of convenience is tilted more in favour of permitting the arbitration proceedings to continue rather than to bring the same to a grinding halt."
Switzerland-based Swiss Timing Ltd approached the apex court pleading to appoint the nominee arbitrator of OC and to further constitute the arbitral tribunal, by appointing the presiding arbitrator in order, to adjudicate the disputes that have arisen between the parties.
Swiss Timing said that it entered an agreement on March 11, 2010, with the OC for providing timing, score and result (TSR) systems as well as supporting services required to conduct the Commonwealth Games and in consideration of its services as stipulated in the agreement, Swiss Timing was to receive Swiss Francs 24,990,000 (over Rs 164.09 crore).
It was also stipulated that five per cent of the total service fees was to be made upon completion of the Commonwealth Games.
Swiss Timing had also paid to OC Rs 15 lakh as Earnest Money Deposit (EMD), for successfully completing the TSR services as provided in the agreement, the firm said.
According to the petitioner, OC defaulted in making the payment without any justifiable reasons.
OC, in its reply, denied the contentions of Swiss Timing and raised objections saying that no efforts were made by the firm to resolve the dispute.
"The contract stands vitiated and is void ab initio in view of Clauses... of the Agreement dated March 11, 2010. Hence, the petitioner is not entitled to any payment whatsoever in respect of the contract and is liable to reimburse the payments already made. Therefore, there is no basis to invoke arbitration clause," OC contended.
The bench, however, rejected OC's contention saying the correspondence placed by Swiss Timing on record showed that not only the firm but also the ambassadors of the various governments had made considerable efforts to resolve the issue without having to take recourse to formal arbitration.
But, it was when all these efforts failed, the firm communicated its intention to OC to commence arbitration.
"I must also notice here that the defence of the contract being void is now-a-days taken routinely along with the other usual grounds, to avoid/delay reference to arbitration. In my opinion, such ground needs to be summarily rejected unless there is clear indication that the defence has a reasonable chance of success.
"In the present case, the plea was never taken till the present petition was filed in this court. Earlier, the respondents (OC) were only impressing upon the petitioners (Swiss Timing) to supply certain information. Therefore, it would be appropriate, let the Arbitral Tribunal examine whether there is any substance in the plea of fraud now sought to be raised by the respondents," the bench said.