Delhi Metro Rail Corporation v. Traffic Media India Pvt. Ltd

NAVIN CHAWLA, J JULY 02, 2019/rv

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 19.11.2018 Date of Decision : 02.07.2019 + O.M.P. (COMM) 104/2018 & I.A. Nos.3004/2018, 13731/2018 DELHI METRO RAIL CORPORATION ..... Petitioner Through: Mr.Sudhir Nandrajog, Sr. Adv. with Ms.Vibha Mahajan Seth, Adv. versus TRAFFIC MEDIA INDIA PVT. LTD. ..... Respondent Through: Mr.Ravi Sikri, Sr. Adv. with Mr.Deepak Yadav, Adv. + O.M.P. (COMM) 117/2018 TRAFFIC MEDIA INDIA PVT. LTD ..... Petitioner Through: Mr.Ravi Sikri, Sr. Adv. with Mr.Deepak Yadav, Adv. versus DELHI METRO RAIL CORPORATION ..... Respondent Through: Mr.Sudhir Nandrajog, Sr. Adv. with Ms.Vibha Mahajan Seth, Adv. CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. These petitions have been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") challenging the Arbitral Award dated 29.11.2017 passed by the Sole Arbitrator adjudicating the disputes that had arisen between the parties in relation to the License Agreement dated 01.07.2010 executed between the parties (hereinafter referred to as the "Impugned Award"). Page 2 2. As both the parties to the arbitration proceedings are aggrieved by the Impugned Award and have filed these petitions challenging the same, the petitions are being disposed of by this common order. In this order Traffic Media India Private Limited shall be referred to as the "petitioner" and the Delhi Metro Rail Corporation Limited shall be referred to as the "respondent". 3. By the License Agreement dated 01.07.2010 (hereinafter referred to as the "License Agreement") the respondent had agreed to provide bare advertising spaces inside ten stations starting from Qutub Minar to HUDA City Centre to the petitioner. The license was for a period of five years. Clause 3.3 of the License Agreement obliged the petitioner to pay a fixed annual license fee of Rs. 4,32,00,000/-, to be paid half yearly in advance. This annual license fee was to increase by 5% after completion of every year on a compounding basis. 4. Clause 3.4 of the License Agreement provides for "Security Deposit" in form of a Bank Guarantee and Cash Deposit. It is reproduced hereinunder:- ―3.4 The licensee may note that all references to ‗Security Deposit' in this agreement and hereafter, will mean, refundable security deposit equivalent to one year license fees in the form of six months bank guarantee and six months cash deposit in the form of bank draft/pay order. The Bank Guarantee shall be kept valid at all times during the currency of the license agreement. The security deposit will be escalated by 5% after every year on compounding basis. Accordingly the bank guarantee will also be enhanced along with the Page 3 cash deposit by the licensee, every year. In case additional areas are approved and taken up by the licensee, then the security deposit will also be increased accordingly on pro rata basis in bank guarantee as well as in cash deposit. The refundable security deposit will only be refunded upon successful completion of the full term of the licensee.‖ 5. Clause 3.7 of the License Agreement further provides that the Security Deposit shall be returned only after completion of the full term of the license period. It is reproduced hereinbelow:- ―3.7 That the LICENSEE has deposited with DMRC an interest free security deposit of Rs. 4,32,00,000/- (Rupees Four Crore and Thirty Two Lakhs only/-) equivalent to one year's license fees (Six Months License fee in cash by way of DD/Pay order and another Six Months in the way of Bank Guarantee) for bare advertisement spaces licensed within 7 (Seven) days of issue of acceptance letter. This amount will only be refunded after completion of the full terms of the license period i.e. Five (5) years from commencement date of license as per clause 8(b). The interest free security deposit will also be increased by 5% (Both shall be increased by 5% i.e. Bank Guarantee as well as cash deposit) after completion of every year on compounding basi