AASTHA TELECOM Vs. MAHANAGAR TELEPHONE NIGAM LTD

JUDGEMENT

(1.) This arbitration petition challenges an award passed by a sole arbitrator in an arbitration reference arising out of disputes between the parties under a distributorship agreement.

(2.) By a distributorship agreement dated 14 May 2007, entered into between the Respondent, Mahanagar Telephone Nigam Ltd. and the Petitioner, Aastha Telecom, the former appointed the latter as a distributor for distribution and sale of its products and services including phone cards and internet cards. The range of products to be distributed and sold was described in the agreement. The agreement provided for a defined territory allocated to the distributor, within which to operate and set up a retail network and provide services for sale of the Respondent's specified products and services. Under the agreement, the distributor was entitled to compensation/commission for sales brought by him at such rates as were to be notified by the Respondent from time to time. (The current rates of commission for products were described in Annexure-F to the agreement.) Under the agreement, the Respondent had the option to fix/vary the distributor's commission or the share or minimum share of it which the distributor might pass on to the retailers. Disputes arose between the parties as a result of withholding the Petitioner's commission for sales effected by it. It was the case of the Petitioner that having sold, supplied and delivered about 71,439 cards, the Petitioner was entitled to receive commission of Rs.1,19,59,346/-; out of this commission, the Respondent had paid only a sum of Rs.46,61,596/-, leaving a balance of Rs.72,97,750/- as due and payable to the Petitioner. In its statement of claim, the Petitioner sought an award in the sum of Rs.72,97,750/- along with interest at the rate of 12% per annum, or such other rate as the arbitrator may deem fit and proper with effect from the due date of the commission until payment or realisation. The learned arbitrator, by his impugned award dated 6 October 2012, partly allowed the Petitioner's claim, whilst partly rejecting it. The rejection forms the subject matter of the present challenge.

(3.) It is seen from the record of the case that the sum of Rs.72,97,750/- claimed by the Petitioner comprises of three elements, the first being what are described as "no recharge cases". A sum of Rs.24,73,050/- had been withheld from the commission payable to the Petitioner against these no recharge cases. It is the case of the Respondent that by communications dated 21 May 2008 and 22 May 2008, the commission structure for a particular product known as "Trump" was revised on introduction of a new category in the product range, namely, Trump Sim-75; a slab-wise commission, according to sales effected per month, was introduced with a condition of minimum recharge of Rs.100/- on activation for entitlement of the commission. It was the case of the Petitioner that by a circular dated 24 May 2008, this condition of minimum recharge of Rs.100/- was withdrawn, and, in the premises, no recovery could be made on account of non-fulfillment of the condition. The second component of the claim related to the slab-wise payment itself. It was the case of the Respondent before the arbitrator that slab-wise payment introduced by the circulars of 21 May 2008 and 22 May 2008 was unauthorised. It was submitted that these circulars were issued without the approval of Executive Director of MTNL, who was the competent authority for fixing of the commission structure/s, and were in fact contrary to the approval granted by Executive Director of MTNL for commission payable to the distributors, the approved rate being Rs.150/- for Trump Sim-75 and Trump Sim-150. It was submitted that there was a CBI inquiry ordered against the particular officers, who had issued the two circulars altering commission structure. This case accounted for a recovery of Rs.21,10,150/-. The third component of the total claim of the Petitioner concerned what are described as IDLE and IMEI cases. IDLE cases were those, where sims were not inserted in mobile handsets and not even first calls were made by customers, whereas IMEI cases were those where multiple sims were activated through the same mobile handset. It was the case of the Respondent that the Petitioner had recorded multiple bookings in the same name and address in these IDLE/IMEI cases and that no commission was payable for these cases. A total amount of Rs.24,04,550/- was withheld from the commission payable to the Petitioner towards these cases.