STIC TRAVELS PRIVATE LIMITED Vs. ETHIOPIAN AIRLINES

JUDGEMENT

(1.) The controversy that has arisen in this present dispute centres upon the interpretation that is to be given to Section 10 of the Arbitration Act, 1940. Ethiopian Airlines had appointed Messers Stic Travels (P) Ltd. (STIC) as their General Sales Agents (GSA) but this engagement was ended by the Airlines with effect from 20.12.1994. The disputes which consequently arose were to be resolved through arbitration. Since Ethiopian Airlines did not react appropriately, STIC filed Suit No 2713 of 1994 under Section 20 of the Arbitration Act, 1940. In the course of these proceedings, late Justice G.C. Jain was appointed as an Arbitrator by Ethiopian Airlines and Mr. C.S. Agarwal as an Arbitrator by STIC. Justice Avadh Behari Rohtagi was thereafter agreed upon as the Third Arbitrator and Chairman. These persons thereupon constituted the Arbitral Tribunal. Proceedings commenced on 16.9.1995 and claims were preferred and evidence by way of affidavits was led by both sides before this Arbitral Tribunal. The numerous hearings held thereafter have virtually been frustrated after the demise of Justice G.C. Jain, who was eventually succeeded by Justice H.L. Anand. Although learned Counsel for STIC has vehemently argued that the demurrer to be decided herein, was instigated by Counsel for Ethiopian Airlines, it was Justice Anand who on 30.12.1998, in terms of his letter dated 30.12.1998, raised the question of the appointment of Presiding Arbitrator. As a consequence of this stalemate no further hearings of the Arbitral Tribunal took place. Succinctly stated. Justice Anand would have further hearings to proceed under Section 10(1), the effect being that Justice Avadh Behari Rohtagi would not be a constituent of the Arbitral Tribunal. If selected by the two nominated Arbitrators, i.e. Justice Anand and Shri C.S. Agarwal, Justice Avadh Behari Rohtagi would be the Umpire; his participation in the decision-making would arise only if there was no unanimity between the two nominated Arbitrators. Of course it is also possible that these two Arbitrators may not appoint Justice Avadh Behari Rohtagi as the Umpire at all.

(2.) The Arbitration Clause is Article XVI of the General Sales Agreement dated 5.1.1990 and reads as follows:

(3.) It is the contention of learned Counsel for the respondent, Ethiopian Airlines, that a reading of the Arbitration Clause leads to the conclusion that Subsection