VF SERVICES UK LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS is a petition under Section 9 of the Arbitration & Conciliation Act, 1996 (,,Act) by VF Services (UK) Limited having its office in London seeking a stay of the operation of a letter dated 8th August 2011 issued by the Embassy of Government of India at Netherlands, terminating the Visa Outsourcing Contract [,,VOC] dated 26th November 2010 entered into between the Embassy of India, The Hague, Respondent No. 2 herein. 4. At the hearing on 3rd October 2011 learned counsel for the Respondent placed reliance on certain additional documents which had not been placed along with the reply. While adjourning the case to enable the Petitioner to respond to the said documents, this Court ordered the termination notice would not take effect till the next date.

(2.) THE relevant facts are that in terms of the VOC dated 26th November 2010 the Petitioner was to provide range of services at three locations i.e., THE Hague, Amsterdam and Rotterdam. THEse included distribution of visa/OCI card/PIO card/passport application forms, assistance to applicants, sending/ collection of Visa/OCI card/passport, ensuring applications are complete, return of documents to applicants, reporting of fraud, and provision of other incidental internal facilities. In terms of the VOC, Visa/Consular Service Centres were to be opened for the public by the Petitioner on or before 90 days from the date of signing of the agreement. In the request for proposal (,,RPF) issued by the Respondents inviting bids, it was indicated that service providers would be required to start operations within three months from the signing of the agreement and full operations would have to commence within one month from the start of operations. Further it was provided in the RPF that either party could terminate the contract by giving two months advance notice of being unable to carry on the services any longer. Clause 11 of the VOC provided for termination and read as under:

(3.) MR. Neeraj Kishan Kaul, learned Senior counsel appearing for the Petitioner submitted that although by an interim order, particularly in view of the legal bar under Section 14 (1) (c) read with Section 41 (e) of the Specific Relief Act 1963 (,,SRA), the Court would normally not be inclined to grant any interim stay of the order terminating the contract which by its very nature was determinable, this Court had in several decisions including Pioneer Publicity Corporation v. Delhi Transport Corporation 2003 (2) Raj 132 (Del) and Atlas Interactive (India) Private Limited v. Bharat Sanchar Nigam Limited 2005 (4) Raj 585 (Del), explained that an entity of State could not be seen to be acting arbitrarily or unreasonably even in the realm of contract and that in appropriate cases this Court would grant such interim relief. According to him, this was one such case. Referring to the correspondence exchanged between the parties prior to the letter of termination dated 8th August 2011 it was submitted by MR.Kaul that the reasons adduced by Respondent No. 2 did not justify the abrupt termination of the contract. The Petitioner had always expressed its willingness to cure any deficiencies. Some of the complaints were anonymous and could have been engineered by the Petitioners competitors. In terms of the VOC an annual review was due. The short-comings pointed out were far too few and in any event not serious enough to warrant the disproportionate measure of termination of the contract. The letter of termination gave no reasons whatsoever. The facts contained in the additional affidavit filed by Respondent No. 2 pertained to events subsequent to the date of termination, i.e., 8 th August 2011 and could not be acted upon to justify the termination. It was further submitted that apart from the Petitioner having a prima facie case, the balance of convenience in granting a stay of the termination of the VOC was also in its favour. The term of the contract was till 25th November 2013. On the question of irreparable hardship, it is pointed out that the Petitioner is at present providing visa services for the Government of India (,,GOI) at its embassies in 17 other countries as well as providing visa services on behalf 37 countries other than India. Given its excellent track record thus far, the termination of the VOC would adversely affect the Petitioners reputation and would cause it severe prejudice in the matter of bidding in the future for visa services not only for the embassies of India but of other countries as well.