R. Subbiah, J.@mdashO.A. No. 39 of 2012 is filed by the Applicants/Plaintiffs to pass an order of interim injunction retraining Respondents 1 to 3-Association and its members from modifying the remittance i.e. payment frequency of the Applicants from fortnightly to any shorter period, pending disposal of the above Suit.
Application No. 1255 of 2012 is filed by the Applicants/Defendants 1 to 3 to refer the parties to arbitration and consequently dismiss the Suit.
Application No. 1630 of 2012 is filed by the Applicant/proposed 5th Defendant, namely, Austrian Airlines, to implead them as 5th Defendant in the Suit.
The brief facts, which are necessary to decide all the Applications, are as follows:
According to the Plaintiffs, they are engaged, inter alia, in the business of providing travel services including air ticketing of all airlines, such as Air India, Lufthansa, Jet Airways, etc. The Plaintiffs are International Air Transport Association (IATA) accredited agent having office at Chennai and conducting their business in Chennai. The 1st Defendant-Association incorporated under a special Act of the Canadian Parliament on 18.12.1945 is a world organization of scheduled airlines and it has some 230 members/airline entities from 126 Nations in every part of the globe. The members of the 1st Defendant Association carry the bulk of the world''s scheduled International and domestic air traffic. The 1st Defendant inter alia, provides a platform for coordination as between airline entities and travel agents. The membership is available only for airline entities and the travel agents are given approval through IATA accreditation programme. Only IATA accredited agents are permitted to act as agents of member airlines for the reservation, issuance, cancellation, etc. of their air tickets. The 2nd Defendant is the country office in India. The 3rd Defendant is the Chennai office of the 1st Defendant. For the last 30 years, the 1st Defendant has billed the Plaintiffs twice every month thereby granting a credit period of 15 days for the payment of the sale proceeds. This system has worked effectively and the Plaintiffs have been prompt in making the payment to the 1st Defendant.
2. It is the further case of the Plaintiffs that few years ago, with the advent of the internet, many passengers started directly purchasing airline tickets through the internet from the airlines directly or through travel portals such as makemytrip.com, yatra.com., etc. While so, three members of the 1st Defendant-Association submitted a proposal to the 1st Defendant''s Conference to vary the payment frequency to weekly from fortnight. Based on the same, the 1st Defendant has circulated a mail vote for approval of the members not present in the Conference for their approval of the proposed modification. Thereafter, the 1st Defendant has attempted to modify the remittance frequency in breach of the resolutions to the prejudice of the Plaintiffs. Hence, they filed the Suit as against the 1st Defendant for injunction restraining them from modifying the remittance i.e. payment frequency of the Plaintiffs from fortnightly to any shorter period in breach of the Passenger Agency Conference Resolutions.
3. On appearance, Defendants 1 to 3 filed an Application in A. No. 1255 of 2012 u/s 8 of Arbitration and Conciliation Act, stating that the Plaintiffs trade relationship with the Defendants is governed by the separate passengers Sales Agency Agreements (PSA) dated 1.9.1997, 2.12.1999, 27.10.1995 & 9.1.2004 signed respectively by each of the Plaintiffs I to 3 with Defendants 1 to 3. Clause 14 of the Agreement contains the Arbitration clause. Clause 2.1(a) of the PSA stipulates that the terms and conditions governing the relationship between the Carrier and the Agent are as set forth in the Resolutions contained in the Travel Agent''s Hand Book as published from time to time under the authority of the Agency Administrator. Resolution 820-e provides for review of all disputes by the Travel Agency Commissioner, in the first instance, followed by a review by arbitration as per the Arbitration and Conciliation Act, 1996. Therefore, the present Suit filed by the Plaintiffs with regard to the agency in frequency of the remitted times is not maintainable. It has been further averred in the Affidavit that where an agent is aggrieved by any impending amendment to the Passengers Sales Agency Agreement (Section 1.1.9), he can initiate a case before the Travel Agency Commissioner and Clause 14 of the PSA Agreement mandates the agent to invoke the arbitration procedure. Thus, it is prayed by Defendants 1 to 3 to refer the matter to arbitration and consequently dismiss the above Suit.
4. The said Application was resisted by the Plaintiffs by filing Counter. It has been stated that the provision pertaining to arbitration u/s 13 of Resolution 800 of Passenger Agency Conference Resolution read with Clause 14 of the PSA Agreement can be set in motion only if a review is conducted by the Travel Agency Commissioner as per Resolution 820e of the Pacon Resolutions. Section 1 of Resolution 820e mandates the Travel Agency Commissioner to review and rule on cases initiated by an accredited agent or an Applicant subject to the exceptions contained in Section 1.4 of the said Resolution in the event the agent initiates a case in respect of the issues referred to in Section 1.1. The said resolution does not compel Respondents 1 to 4 as agents to approach the Travel Agency Commissioner. In fact, the Travel Agency Commissioner is not an authority set up under the Arbitration and Conciliation Act, 1996. As per Section 13 of the Passenger Sales Agency Rules, initiating a case with the Travel Agency Commissioner is not mandatory. Unless and until a decision is rendered by a Travel Agency Commissioner, that too, on initiation of a case filed by the agent, the said authority in respect of the matters set forth in Section 1.1 and subject to the exceptions set forth in Section 1.4 of Resolution 820e, the arbitration clause does not come into play. In short, it is the defence of the contention of the Plaintiffs that approaching the Travel Agency Commissioner is not a mandatory and only in the event of rendering a decision on initiation of the case by the agents/Defendants, then only the agent shall have the right to challenge the Travel Agency Commissioner''s decision to de novo review by arbitration. In the instant case, the Plaintiffs have not chosen to approach the Travel Agency Commissioner, which is not a mandatory as per the resolutions. Thus, they opposed the Application filed by Defendants 1 to 3.
5. Defendants 1 to 3 also filed a reply to the Counter filed by the Plaintiffs stating that the interpretation of arbitration clause can be gone into only under the Arbitration Act and not in a Civil Court. When there is an Arbitration clause, the parties shall be referred to an Arbitrator as per Section 8 of the Arbitration and Conciliation Act. Thus, they prayed for the dismissal of the Suit.
6. Among the Applications, this Court feels that it would be appropriate first to deal with Application No. 1255 of 2012 i.e. the Application filed by Defendants 1 to 3 to refer the parties to arbitration, since the decision that is going to be rendered in the said Application will have a bearing on the other Applications.
7. Learned Counsel for Defendants 1 to 3/Applicants in A. No. 1255 of 2012 submitted that clause 14 of the PSA Agreement, to which the Defendants are parties, contains the provision for arbitration. In this regard, by inviting the attention of this Court to Clause 2 of the PSA Agreement, the learned Counsel submitted that Clause 2 clearly says that the Sales Agency Rules, the Bank Settlement Plan rules, IATA Resolutions and other provisions as amended from time to time are deemed to be incorporated in this Agreement and made part thereof. Section 1.1 of Resolution 820(e) says that subject to paragraph 1.4, the Travel Agency Commissioner shall review and rule on cases initiated by an accredited agent i.e. the Plaintiffs/Respondents. Any party to a dispute aggrieved over the decision of the Travel Agency Commissioner, shall have the right to submit the Travel Agency Commissioner''s decision to de nono review by arbitration in accordance with Section 12.1.1 of the Travel Agent''s Handbook. Further, Section 1.1.9 of Resolution 820e says that an Agent who is aggrieved by an impending amendment to its Passenger Sales Agency Agreement shall invoke the arbitration clause.
8. In the instant case, the main grievance of the Plaintiffs is that there was a modification of remittance i.e. payment frequency from fortnightly to a shorter period. Under such circumstances, they ought to have taken up the matter to the Travel Agency Commissioner as per Section 12 of the Travel Agent''s Handbook and as per Section 1.1 of Resolution 820e to the Arbitrator. Thus, the learned Counsel submitted that a conjoint reading of PSA Agreement along with the T.A. Handbook and the Resolution No. 820e would show that there is a provision to refer the matter to arbitration. When that being the position, the Suit filed by the Plaintiffs bypassing the Arbitration proceedings is not maintainable. Hence, by referring the parties to the arbitration, the Suit filed by the Plaintiffs has to be dismissed. In this regard, the learned Counsel has relied on the judgment delivered by the Delhi High Court in the case of Delhi Express Travels Pvt. Ltd. v. International Air Transport Association & others, I.A. No. 13094 of 2007 in CS (OS) No. 1044 of 2007, and submitted that in the identical set of facts, the Delhi High Court has referred the matter to the arbitration by disposing the Suit.
9. Per contra, the learned Senior Counsel appearing for the Plaintiffs submitted that there is no valid clause under the PSA Agreement to refer the matter to arbitration. In this regard, by inviting the attention of this Court to Clause 14 of the PSA Agreement, the learned Senior Counsel submitted that the wordings envisaged in Clause 14 do not say that all the disputes shall be referred to Arbitrator and there is no assertion in the wordings used in Clause 14 of the Agreement mandates the party to refer the matter to arbitration. In this regard, the learned Senior Counsel relied on Section 12 of T.A. Handbook and submitted that in the event of dispute settled in accordance with Resolution 820e by the Travel Agency Commissioner, the parties shall refer the matter to de novo review by arbitration. There is no direct provision to refer the matter to the Arbitrator. Further more, the Travel Agency Commissioner is not an authority set up under the provisions of Arbitration and Conciliation Act, 1996. In this regard, the learned Senior Counsel relied on Section 1.4 of Resolution 820e and submitted that Section 1.4 deals with the matters outside the purview of the Travel Agency Commissioner. Section 1.4.1 says, any matter in litigation in a Court of competent jurisdiction will fall outside the purview of the Travel Agency Commissioner. So far as the present issue is concerned, already the Plaintiffs have filed the Suit before this Court. Therefore, u/s 1.4, now the issue is outside the purview of the Travel Agency Commissioner. Therefore, the present Application filed by Defendants 1 to 3 to refer the matter to the arbitration is not legally sustainable and the same is liable to be dismissed. In support of his contentions, the learned Senior Counsel has relied on the decision reported in
10. By way of reply, the learned Counsel for Defendants 1 to 3 submitted that the judgment relied upon by the Plaintiffs had been delivered u/s 11 of the Arbitration Act, 1996, which deals about the appointment of Arbitrators. In that case, the Hon''ble Supreme Court while dealing with the aspect of exercising power to appoint an Arbitrator by the Chief Justice or his designate, has held that it is not permissible to appoint an Arbitrator to adjudicate the dispute between the parties in the absence of valid Arbitration clause. The said judgment cannot be made applicable to the facts on hand because the present Application has been filed u/s 8, stating that when there is an Arbitration clause, the Suit filed by the Plaintiffs is not maintainable. In support of this contention, the learned Counsel has relied upon a judgment delivered in the case of
11. The Court has considered the submissions made by the learned Counsel on either side and perused the materials available on record.
12. It is the submission of the learned Counsel for the Defendants that PSA Agreement provides a clause, namely, Clause 14 contains the provision of referring the matter to arbitration. In this regard, the learned Counsel for the Defendants relied on Section 12 of T.A. Handbook and Resolution 820e of PSA Agreement and submitted that the Plaintiffs ought to have initiated review if they have aggrieved over the decision in changing the remittance period from fortnight to a shorter period. On rendering a decision by the Travel Agency Commissioner, if the party aggrieved on the same, they will have a right for Arbitration proceedings. Therefore, the Suit filed by the Plaintiffs, without availing the remedy available under the clauses in the said agreement and the resolution is not legally sustainable. Therefore, by dismissing the Suit, the matter can be referred to the arbitration.
13. Per contra, it is the submission of the learned Senior Counsel for the Plaintiffs that there is no definite clause either in the agreement or in the resolution to refer the parties to arbitration proceedings. The wordings used in Clause 14 of PSA Agreement are vague in nature. In the absence of any definite clause to refer the matter for arbitration, no infirmity could be found in the Suit filed by the Plaintiffs. It is the further submission that as per Section 12 of T.A. Handbook, the parties will have a right to refer the arbitration only in the event of rendering a decision by the Travel Agency Commissioner in accordance with resolution 820e. Moreover, initiating the proceedings against the Travel Agency Commissioner before the Arbitrator is not a mandate under the resolution. It is the further submission of the Plaintiffs that as per Section 1.4.1 of T.A. Handbook, any matter in litigation, before the Court of jurisdiction will fall outside the purview of Travel Agency Commissioner. In the instant case, already the Suit has been initiated by the Plaintiffs and the same is pending before this Court. Therefore, as per Section 1.4.1 of T.A. Handbook, the issue between the parties falls outside the purview of Travel Agency Commissioner. Therefore, the Application filed by Defendants 1 to 3 is liable to be dismissed.
14. Before dealing with the submissions, it would be appropriate to extract the relevant clauses from the P.S.A. Agreement, Travel Agent''s Handbook and Resolution 820e as under:
Travel Agent''s Handbook
Section 11 - Reviews by the Travel Agency Commissioner:
The jurisdiction of the Travel Agency Commissioner is set out in Resolution 820e as are the procedures for conducting reviews.
Section 12 - Arbitration
12.1.1. Any party to a dispute settled in accordance with Resolution 820e shall have the right to submit the Travel Agency Commissioner''s decision to de novo review by arbitration in accordance with this Section.
12.1.2 Where the Travel Agency Commissioner has granted interlocutory relief, such relief and any bank of other guarantee shall remain in effect pending the outcome of the arbitration. The Arbitrators, however, will have the power to vary the terms of the bank or other guarantee as they deem appropriate including requesting additional guarantees from the Appellant.
Passenger Sales Agency Agreement (P.S.A. Agreement)
Section 14. Arbitration
If any matter is reviewed by arbitration pursuant to the Sales agency Rules, the Agent hereby submits to arbitration in accordance with such Rules and agrees to observe the procedures therein provided and to abide by any arbitration award made there under.
Resolution 820e
Reviews by the Travel Agency Commissioner:
Section 1 - Review initiated by Agent or Applicant:
1.1 Subject to paragraph 1.4, the Commissioner shall review and rule on cases initiated by:
1.1.1 an Applicant whose Application to become an Accredited Agent has been disapproved by the Agency Administrator, or has been disapproved upon reconsideration.
1.1.8 an Agent who considers that its commercial survival is threatened by a Member''s individual decision preventing it from acting as Agent for, or from issuing Traffic Documents on behalf of, such Member;
1.1.9 an Agent who is aggrieved by an impending amendment to its Passenger Sales Agency Agreement;
1.4 Matters outside the purview of the Travel Agency Commissioner:
The Commissioner shall decline to act on any of the following:
1.4.1 any matter in litigation in a Court of competent jurisdiction;
1.4.2 claims arising under restraint of trade law/regulations of the state or International Authority having jurisdiction;
15. A combined reading of the above provisions would show that the accredited agent can initiate case with the Travel Agency Commissioner if the agent considers that his commercial survival is threatened or if an agent is aggrieved by impending amendment to P.S.A. Agreement. So far as the present case is concerned, it is the grievance of the Plaintiffs that by modifying the payment frequency from fortnight to a shorter period, Defendants 1 to 3 breached the Passenger Agency Conference Resolutions. Hence, they have filed the present Suit. But, according to the Defendants, if the agent felt aggrieved over the Notification made by the Plaintiffs, as per Section 1.1.9 of Resolution 820e, the dispute has to be placed before the Travel Agency Commissioner. On rendering a decision by the Travel Agency Commissioner, the aggrieved party will have the right for arbitration. Now, according to the Plaintiffs, there is no direct or definite clause for arbitration and, hence, the Application filed by Defendants 1 to 3 is not maintainable, whereas according to Defendants 1 to 3, when there is a remedy for arbitration, in the P.S.A. Agreement and the resolution, the parties ought to have availed the same. Therefore, the Suit is not maintainable. Now the question that has to be decided in this case is, whether, by virtue of the wordings used in the clause for arbitration in the P.S.A. Agreement as well as from the provisions of T.A. Handnook and the resolution, whether this Court can refer the parties to the arbitration proceedings or not ?
16. In this regard, it would be useful to refer the judgment relied upon by the learned Counsel for Defendants 1 to 3 rendered by the Delhi High Court in Delhi Express Travels Pvt. Ltd. v. International Air Transport Association & others, I.A. No. 13094 of 2007 in CS (OS) No. 1044 of 2007, on the similar set of facts, wherein the Delhi High Court has held as follows:
18. The main contention of the Counsel for the Plaintiff is that the arbitration under the agreement has been provided only against the decision of the Travel Agency Commissioner; the Travel Agency Commissioner is entitled to take a decision only on the matter specified in Section 1 (Supra) of Resolution 820e in the Handbook I.A. No. 13094/2007 in CS (OS) 3094/2007 Page 11 of 18 aforesaid and which does not contain any express power to take decision on the matter of accounts.
19. However, that in my view is not a correct reading of the agreement. The Preamble of Resolution 820e provides that the Travel Agency Commissioner shall conduct reviews with respect to all decisions affecting agents. Such decisions would include the decision of the Airlines acting through IATA claiming sum of Rs. 1,38,35,897/- being due from the Plaintiff as well as the decision declining the sum of Rs. 30,35,752/- to be due from the Airlines through IATA to the Plaintiff. The Plaintiff could certainly apply to the Travel Agency Commissioner in this regard and if dissatisfied with the decision of the Travel Agency Commissioner, for arbitration of such disputes. The language of Section 1.1.4 of Resolution 820e is again very wide and covers any action or impending action by the Agency Administrator with respect to the agent and which unreasonably diminishes the agent ability to conduct business in a normal manner. The action of the Agency Administrator claiming Rs. 1,38,35,897/- crore from the Plaintiff and/or declining to pay the claim of Rs. 30,35,752/- of the Plaintiff would certainly unreasonably diminish the Plaintiff''s ability to conduct business in a normal manner.
20. Even otherwise I find the relationship/ transaction subject matter of the suit to be of a specialized nature. The said transaction/relationship is governed by norms/rules peculiar to the business and which are not/may not be found in respect of any other business. The agreement provides its own mechanism for resolution of the disputes by experts from the field. The said experts are competent/better equipped to resolve the said disputes I.A. No. 13094/2007 in C.S. (OS) 3094/2007 Page 12 of 18 expeditiously. Having thus found the Agreement of Resolution of disputes by arbitration, even otherwise Section 8 of the Arbitration Act becomes applicable immediately.
21. The contention of the Counsel for the Plaintiff of the disputes being not subject matter of arbitration for the reason of no decision having been given by the Travel Agency Commissioner is also misconceived. Merely because the agreement between the parties provides for a precursor to the arbitration, arbitration cannot be avoided on the ground of the pre-requisite step having not been taken. A party cannot be permitted to renegate out of the Arbitration Agreement by contending that owing to its own default or otherwise the precursor event to arbitration has not occurred. In the present case it was open to the Plaintiff to have applied to the Travel Agency Commissioner for review of the decision of the Agency Administrator with which the Plaintiff was aggrieved. The Plaintiff having not done has itself to blame for not adopting the course leading to arbitration and cannot maintain a suit on that basis. Even otherwise the only requirement of Section 8, is that the subject matter of the dispute brought before the Court is the subject matter of an arbitration. Once the Court finds so, the Court has no option but to refer the parties to arbitration. The Court is not to go into the question whether the party which has applied u/s 8 of the Act has been ready and willing to proceed with the arbitration or not. That is one of the drastic changes made in the 1996 Act from the 1940 Act. Thus even if there had been a default of the Travel Agency Commissioner not attributable to the Plaintiff, the disputes raised by the Plaintiff against the Defendant No. 1 in the present suit would still be governed by the Arbitration Agreement and hence this Court has no jurisdiction to entertain the Suit.
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26. The Counsel for the Defendant No. 1 has also relied upon on a recent dicta of the Apex Court in
17. The Principles enunciated in the said decision rendered by the Delhi High Court are squarely applicable to the case on hand. But, it is the contention of the Plaintiffs that as per Section 1.4.1 of Resolution 820e, any matter in litigation in a Court of competent jurisdiction fall outside the purview of Travel Agency Commissioner and in the instant case, since the Plaintiffs have already filed a Suit before this Court, now the dispute between the parties is outside the purview of Travel Agency Commissioner. But in my considered opinion, Defendants 1 to 3 have taken out the Application u/s 8 of the Arbitration Act, 1996 even before filing their statement of defence. Had the written statement been filed by the Applicants, then only it could be said, the matter in litigation falls outside the purview of the Travel Agency Commissioner and as such, the matter cannot be referred to the arbitration. But, in the instant case, since the Plaintiffs have filed the Suit, they cannot take a defence under Clause 1.4.1 of Resolution 820e. Therefore, I am not inclined to accept the submission that since already Suit has been filed by the Plaintiffs, it has to be construed as per Clause 1.4.1 that the matter falls outside the purview of Travel Agency Commissioner.
18. Further, the Plaintiffs have relied upon a judgment reported in
18. That an Arbitration Agreement is not required to be in any particular form has been reiterated in more than one decision, (see:
19. Shri K.K. Venugopal, learned Senior Counsel appearing on behalf of the Respondent submitted that MoU dated 14.2.2005 does not contain any Arbitration clause and further the Agreement dated 15.2.2005 itself is a contingent agreement incapable of being enforced.
20. Dr. Singhvi, learned Senior Counsel for the Applicant in response to the said contention submitted that MoU dated 14.2.2005 culminated in the Agreement dated 15.2.2005 which contained a valid Arbitration clause and there is no legal hindrance to appoint an Arbitrator for resolving the disputes.
21. The crucial question centers around the interpretation of Clause VI of the Agreement dated 15.2.2005. Shri Venugopal, in response to a pointed query from the Court submitted that the intention of the Respondent was to agree for settlement of the disputes through conciliation in accordance with the provisions of the Act in case of failure to settle disputes amicably between the parties. The submission was in a case of arbitration, there is no settlement; the award of an Arbitrator who has to be independent and impartial from the parties is binding by and between the parties not because both the parties finally have settled the matter but because of legal sanctity. There has been no attempt whatsoever to amicably settle the matter which is a pre-condition to invoke the latter limb of Article VI and therefore, the Application u/s 11, is liable to be rejected. The learned Counsel in this regard placed reliance on the decision in
Since the parties here had agreed on a procedure for appointing an Arbitrator for settling the dispute by arbitration as contemplated by Section 11(2) and there is no allegation that any one of the contingencies enumerated in Section 11(6) clause (a) or (b) or (c) had occurred, the Application moved by the Respondent was clearly not maintainable and the Court had no jurisdiction to entertain such an Application and pass any order.
(Emphasis supplied)
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26. The submission is unsustainable for more than one reason. No party can be allowed to take advantage of inartistic drafting of arbitration clause in any agreement as long as clear intention of parties to go for arbitration in case of any future disputes is evident from the agreement and material on record including surrounding circumstances.
The Hon''ble Supreme Court, by considering the judgment reported in
Keeping this Principle in mind, if we go through the clauses in the Agreement, Resolution and T.A. Handbook, I am of the opinion that the intention of the parties is that in case of any dispute, the same has to be referred to the Travel Agency Commissioner and on rendering a decision, the same has to be referred to the Arbitrator. Moreover, the dispute in this case is also only with regard to the period of payment remittance and such a dispute could be decided by the Travel Agency Commissioner himself. Therefore, I am of the opinion that the intention of the parties to the agreement at the time of entering into the contract is only to refer the disputes to the Travel Agency Commissioner and thereafter, to the Arbitration proceedings. Therefore, the Plaintiffs, by taking advantage of the wordings, cannot bypass the remedy available under the said Agreement. Moreover, the judgment relied upon by the Plaintiffs has been delivered u/s 11 of the Arbitration Act in exercising power of the Hon''ble Chief Justice or by his designate. But in the instant case, the present Application has been filed u/s 8 of the Arbitration Act praying this Court to refer the parties to arbitration since there is a clause in the Agreement. This Court could be gathered the intention of the parties to refer the matter to the arbitration in accordance with the procedures stipulated under the clauses of the Agreement and Resolution. Under such circumstances, I am of the opinion that the Suit is not maintainable.
For the reasons stated above, A. No. 1255 of 2012 allowed. Consequently, other Applications are closed.
