Holding

The arbitration agreement is valid and, under Section 10(2) of the Arbitration and Conciliation Act, 1996, a sole arbitrator must be appointed.

Summary

Citibank entered into a tripartite agreement with TLC Marketing PLC (UK) and Wunderman India Pvt Ltd (WIPL) to run a "Fly for Sure" scheme offering free return flight vouchers to its credit‑card customers. After numerous complaints that TLC and WIPL failed to honour the vouchers, Citibank terminated the agreement and issued a notice under Clause 10 invoking arbitration, proposing Justice S.P. Bharucha as sole arbitrator. The respondents rejected the sole arbitrator and sought a three‑member tribunal, also contending that the notice was vague and that no valid arbitration clause existed post‑termination. The Supreme Court examined whether the arbitration agreement was enforceable, whether the dispute fell within the definition of international commercial arbitration, and whether Section 10(2) of the Arbitration and Conciliation Act, 1996 required appointment of a sole arbitrator. The Court held that the arbitration clause was wide enough to cover the dispute, the parties had an arbitration agreement under Section 7, and the lack of a specified number of arbitrators triggered Section 10(2), mandating a sole arbitrator. Accordingly, Justice Sujata V. Manohar was appointed as the sole arbitrator and the arbitration application was disposed of.

Issues considered

The existence and enforceability of the arbitration clause in the tripartite agreement.
Whether the notice invoking arbitration was valid and sufficiently specific to constitute a dispute.
Whether the dispute falls within the definition of international commercial arbitration under the Act.
Whether a sole arbitrator or a three‑member tribunal should be appointed under Section 10 of the Act.

Legislation cited

Arbitration and Conciliation Act, 1996s. 10, s. 11(10), s. 11(12), s. 11(5), s. 21, s. 2(f), s. 2(j), s. 7

Subjects

ArbitrationAppointment of arbitratorInternational commercial arbitrationArbitration clauseBreach of contractTripartite agreementSole arbitratorSection 10Section 11

Judgment

A CITIBANK, N.A.
v.
TLC MARKETING PLC AND ANR.

OCTOBER 5, 2007
B
[LOKESHWAR SINGH PANTA, J.]

"-k
Arbitration and Conciliation Act, 1996:
C ss. 2(j), 7, 11(5),JJ(JO) and 11(12) rlw ss.10 and 21-
'Jnternational Commercial arbitration '-Application for appointment
ofsole arbitrator-A tripartite agreement amongst parties for ''free
return flight vouchers" to eligible credit card customers ofapplicant
Bank-Violation of-Notice by applicant-Bank invoking arbitration
D clause of agreement and suggesting a name for appointment as sole
arbitrator-Respondent repudiating claim and declining to accept the
nomination suggested-Application by Bank ulss. 11 (5), 11(10) and
11 (12) read withs. l 0 ofthe Act for appointment ofsole arbitrator in
'international commercial arbitration '-Application resisted on
E grounds that notice was vague as no particular dispute was sought to
be referred and terms of agreement were limited to obligations of
parties arising prior to expiration ofagreement-Alternative plea of
appointment ofarbitral tribunal comprising three arbitrators-HELD:
Disputes arising out ofthe arbitration agreement between parties are
F covered under the definition of"international commercial arbitration"
in terms ofs.2(/)-Parties entered into an arbitration agreement as
provided uls 7-The contract is a commercial document and must be
interpreted in a manner to give efficacy to contract rather than to
invalidate it-Narrow technical approach is not proper-On facts,
existence of arbitration agreement was accepted and matter was
G
suggested to be referred to an arbitral tribunal-Requirement ofs. l 0(2)
is fully attracted, there being arbitration agreement deemed to be one
providing for a sole arbitrator-A composition of arbitral tribunal
comprising three arbitrators is not necessary or expedient nor can it

H 710
J
CITIBANK, N .A. v. TLC MARKETING PLC 711

be said to be fair and reasonable in larger interest ofparties keeping A
in view the objectives of Act to make arbitral proceedings less
expensive and more efficacious-In the circumstances, taking into
consideration the fact that disputes and differences between parties
emanating from the contract are required to be resolved through
arbitration, sole arbitrator is appointed-Credit cards-Agreementfor B
''free return flight vouchers" to cardholders-Violation of-Remedy--
Deeds and Documents-Commercial documents-Interpretation of
Major (Retd.) lnder Singh Rekhi v. Delhi Development Authority,
[1988] 2 sec 338, held inapplicable. c
CIVIL ORIGINAL JURISDICTION : Arbitration Petition/
Application No.I of 2007.
(Under Section 10(2) read with Sections 2(f), 11(5), 11(10) and
11(12) of the Arbitration and Conciliation Act, 1996. D
--' R.S. Suri for the Petitioner.
A.K. Ganguly, Soli J. Sorabjee, Nikhil Nayyar, Anl<it Singha, TVSR
Sreyas and N. Ganpathy for the Respondents.
E
The following Order of the Court was delivered
ORDER
1. The applicant-Citibank, N.A. preferred this application under
Sections 11(5), 11(10) and 11(12) read with Section 10 of the Arbitration F
and Conciliation Act, 1996 [hereinafter referred to as 'the Act'] praying
for appointment of sole Arbitrator in an 'international commercial
arbitration' in terms of Section 2(f) of the Act, to adjudicate the dispute
between the parties.
G
2. The applicant-Citibank, is a national banking association duly
constituted, registered and in existence in accordance with the laws of
the United State of America now in force and having its head office at
399 Park Avenue, Borough of Manhattan, City of New York and having
an office in India among other places at Citigroup Centre, G. C-61, H
Bandra-Kurla Complex, Bandra (East), Mumbai. The applicant-Citibank,
-\_
712 SUPREME COURT REPORTS [2007] 10 S.C.R.

A being engaged in banking business in India pursuant to licence~ and --1.,
approvals from relevant authorities including Reserve Bank of India, inter
alia, issues Credit and Debit Cards collectively [hereinafter referred to
as 'Citibank Cards'].

B 3. The respondent No.I-TLC Marketing PLC (for short 'TLC'],
is a company incorporated under the provisions of the laws in force in
the United Kingdom having its registered office at 54, Banker Street,
London WIU 7BU. TLC is a company engaged in the business of ---l:'
marketing and selling inter alia leisure, life-style and travel services.

C 4. The respondent No. 2-Wunderman India Pvt. Ltd. (for short
'WIPL'] is an Indian company incorporated under the provisions of the
Companies Act, 1956 and has its registered office at Kalpataru -
Synergy, 2nd Floor, Opp. Grand Hyatt, Off Western Highway, Vakola,
Santa Cruz (East), Mumbai. Respondent No. 2-WIPL is an exclusive
D marketing and fulfilling agent of respondent No.1-TLC for the Indian sub-
continent.

5. The applicant-Citibank states that the respondents-TLC and
WIPL are the alter ego of each other and their interests are identical,
E co-existent and co-terminus and for all practical purposes they are one
party and their obligations are joint and several in respect of the subject-
matter of the present application. It is the case of the applicant-Citibank
that in September, 2005, both the respondents-TLC and WIPL had
approached the Citibank and made a series of claims and representations
F about their expertise, background, financial wherewithal and intent to
associate with the applicant-Citibank to implement a Scheme to reward
and acknowledge the valued association of loyal customers of the
applicant- Citibank. The respondents-TLC and WIPL represented to the
applicant-Citibank that they were the promoters and incentive companies
G operating in various markets around the world and they could offer their
clients fabulous consumer propositions and the corresponding service to
support such promotions in order to help their clients to meet their
objectives such as customer retention, loyalty, etc. etc. Respondent No.2-
WIPL further represented to the applicant-Citibank that its proposition
H was designed to meet the expectations desired to be achieved by the
CITIBANK,N.A. v. TLCMARKETINGPLC 713

applicant-Citibank. It is pleaded by the applicant-Citibank that relying A
upon the said claims, assurances and representations made by the
respondents-TLC and WIPL, as regards their expertise in handling such
arrangements, a tripartite agreement was entered into between the parties
on 04.10.2005. The agreement became operational w.e.f. 01.10.2005
and was to be valid till 31.08.2006. B
6. It is pleaded by the applicant-Citibank that under the Scheme it
was agreed to by the parties to the agreement that the eligible credit card
customers of the applicant-Citibank, having fulfilled certain specific criteria,
were entitled to 'Free return flight vouchers' on air routes within India C
subject to the applicable terms and conditions. As and when, any of the
customers of the applicant-Citibank qualified/fulfilled the eligibility criteria
he/she would get a voucher from the applicant-Citibank. The customers,
after the receipt of the vouchers, had the option to voluntarily complete
the details required in the voucher including the choice of three destinations D
and three dates of travel but not earlier than 30 days from the date of
signing the voucher and sending the same to the applicant-Citibank. The
respondent No.2-WIPL was required to perform various tasks including,
but not limited to contacting the customer, checking seat availability,
confirming the booking request according to preferences and sending E
confirmation to customers of their preference of travel date/destination.
The applicant-Citibank and the respondents-TLC and WIPL agreed to
the Scheme called the "Fly for Sure" programme, which was envisaged
by the applicant-Citibank to be effective from 01.10.2005 until
31.12.2005. The applicant-Citibank contracted for buying 1,00,000 return F
air-ticket vouchers from the respondents-TLC and WIPL in anticipation
of the success of the Scheme for a consideration of Rs.432/- plus
applicable taxes per voucher and, accordingly, had paid for the same in
accordance with Appendix-II of the agreement. According to the
applicant-Citibank, it was the responsibility of the respondents-TLC and G
WIPL to ensure fulfillment of the Scheme to the satisfaction of the
customers. It is stated that under the Scheme, 35,000 card members of
the applicant-Citibank were found to be eligible for availing of the 'free
return air-ticket' to be provided by the respondents-TLC and WIPL. The
applicant-Citibank forwarded the vouchers completed by the eligible and H
-\__
714 SUPREME COURT REPORTS [2007] 10 S.C.R.

A interested card members to respondent No.2-WIPL in accordance with ~
the procedure agreed to by the parties. The vouchers/requests forwarded
by the applicant-Citibank were to be honoured by the respondents-TLC
and WIPL by conducting themselves in a manner as stipulated under.the
agreement. It is further stated that the respondents-TLC and WIPL could
B only have offered alternative dates or destinations to the customer(s) after
having obtained the consent of the said customer(s) towards such
alterations.
. --k-"
7. It is also stated that at the initial stage the operation and
c implementation of the Scheme progressed as per the agreement between
the parties. However, since January, 2006 the applicant-Citibank started
receiving complaints from its eligible customers indicating deficiencies on
the part of the respondents-TLC and WIPL. Both the respondents seemed
to have started indulging in a number of questionable practices, such as
D deliberately not fulfilling/honouring their commitments which they had made
to the eligible customers/card members in the 'booking confirmation' by
calling them on the dates close to their travel dates and forcing them to .,.....
postpone dates of travel and further pressurizing the customers/card
members into opting for destinations and dates not preferred/requested
E for and cancelling the original 'booking confirmations'. The applicant-
Citibank through various communications has brought all the complaints
to the notice of the respondents-TLC and WIPL and repeatedly requested
both of them to discharge their commitments as contained in the agreement
It is stated that in spite·of repeated communications being sent by the ,___
F representatives and officials of the applicant-Citibank to the respondents-
TLC and WIPL, they merely gave assurances and no actual measures
were undertaken by the respondents to solve such complaints of the
ClL"1:omers. The applicant-Citibank indicated various instances of breaches
of the terms of the agreement which were being repeatedly committed
G by the respondents-TLC and WIPL that needed to be remedied, failing
which the applicant-Citibank stood in a position of incurring irreparable
losses, loss of goodwill and reputation along with the possibility of being
subjected to various proceedings that were being threatened by the
affected customers. The responses dated 30.04.2006 and 04.05.2006
H received from the legal counsel of respondent No. 1-TLC indicated that
CITIBANK,N.A.v. TLCMARKETINGPLC 715

the respondents have found the Scheme to be 'over sold' and allegedly A
to be commercially unviable to honour the commitments and there was a
clear indication in the said responses of abdication on the part of the
respondents-TLC and WIPL of their responsibilities and obligations under
the agreement inasmuch as new conditions to perform the obligations were
set out which suggested payment of further amount which was de hors B
the terms of the agreement itself. It is also submitted that in the
circumstances created by the respondents-TLC and WIPL, the applicant-
Citibank vide its letter dated 10.05.2006 informed the respondents-TLC
and WIPL of the termination of their involvement under the agreement
w.e.f. 10.05.2006 which was necessitated due to the acts of omission c
and commission on their part and continued loss of goodwill and reputation
of the applicant-Citibank. The applicant-Citibank, subsequent to the
termination of the involvement of the respondents-TLC and WIPL under
the agreement, was compelled to take the remedial action of providing
return air-tickets to its eligible customers/card holders. In view ofthe failure D
of the respondents-TLC and WIPL to perform their respective obligations
in terms of the agreement and in order to resolve the disputes, the
applicant-Citibank issued a legal notice dated 15.07.2006 through its
counsel to the respondents-TLC and WIPL, thereby invoking the
provisions of Clause 10 of the agreement dealing with the resolution of E
disputes which have arisen between the parties. The applicant-Citibank
in the said notice suggested the name of Hon'ble Mr. Justice S. P.
Bharucha, Former Chief Justice oflndia, to act as the sole Arbitrator.
8. In response to the legal notice dated 15.07.2006 of the applicant-
Citibank, respondent No. I-TLC vide its communication dated F
14.08.2006 and respondent No. 2-WIPL vide its communication dated
11.08.2006 not only repudiated the claim of the applicant-Citibank, but
also declined to accept the nomination of Hon'ble Mr. Justice S. P.
Bharucha, Former Chief Justice oflndia, as the sole Arbitrator. They
recommended the disputes to be referred to arbitration comprising of three G
arbitrators, one nominated by each of the three parties to the agreement.
They proposed the name ofHon'ble Mr. Justice M. H. Kania, Former
Chief Justice of India, to be appointed as an Arbitrator.
9. In the above stated premises, the applicant-Citibank has now filed H
716 SUPREME COURT REPORTS [2007] 10 S.C.R.

A the present application praying for the appointment of sole Arbitrator in
terms of the agreement and the law.
10. In response to the application, respondent No. 1-lLC submitted
that the Scheme offered by the applicant-Citibank to its qualified card
members was not the Scheme contracted for in the agreement and,
B therefore, in any event there could be no liability on respondent No.1-
TLC for any alleged loss or damage under the agreement. It is stated
that the application is riot maintainable inasmuch as no valid notice invoking . ,1;.--
arbitration under Section 21 of the Act has at all been issued and notice
dated 15.07.2006 does not even state as to what are the losses alleged
C to have been suffered which the applicant-Citibank seeks to claim in the
arbitration proceedings. The said notice is very vague as no particular
dispute or claim is sought to be referred to and it does not state what, if
any, losses were caused to the applicant as a result of the alleged breach
of the agreement. It is also submitted that the terms of the agreement are
D limited to the provisions of warranties, confidentiality, indemnification,
governing law and obligations of parties arising prior to the expiration or
termination. There is no valid or binding arbitration clause in existence
on and with effect from 10.05.2006, i.e. the date of wrongful repudiation
of contract by the applicant-Citibank, which was accepted by the
E respondents, therefore, there exists no dispute that needs reference to
the arbitration. It is contended that the respondents-TLC and WIPL are
separate and different companies incorporated ~ different jurisdictions,
with different ownership and control and under no circumstances can they
be treated as one party. It is clarified that the applicant-Citibank did not
F strictly incorporate the terms of Appendix-V to the agreement in its offer
to its card members, but offered a Scheme in material variation without
the consent of respondent No. 1-lLC, a fact which came to its knowledge
only after the offer was sent out by the applicant-Citibank. Further, it is
stated that the conditions required for satisfaction of Sections 11(5),
G 11(10) and 11(12) of the Act are not satisfied by the applicant-Citibank
and, therefore, on the above-~tated premises, the application is liable to
be dismissed.
11. Shri T. R. Ramachandran, Business Manager-Credit Cards of
H the applicant-Citibank in rejoinder affidavit has reiterated and reasserted
CITIBANK,N.A. v. TLC MARKETING PLC 717

~r the averments made in the arbitration application and repudiated the A
defence pleaded by respondent No. 1-TLC in its counter affidavit. It is
submitted that notwithstanding the obligations of the respondents-TLC and
WIPL as provided for in the agreement, they had repeatedly refused to
take action to correct the breaches of the agreement as intimated by the
applicant-Citibank. Further, in the e-mail dated 21.04.2006 sent by Mr. B
Sean Langley (Operations Director), followed by communication dated
-.l . 04.05.2006 sent through counsel, respondent No. 1-TLC had offered
two "options" for proceeding, each of which would have modified
substantially the prior agreement without addressing or correcting the
breaches cited by the applicant-Citibank, i.e. failing to rectify their failure c
to provide return tickets to the eligible customers/card members as
envisaged under the agreement and as such the offer in question per se
tantamounts to a fundamental breach of the agreement on the part of the
respondents-TLC and WIPL. It is also stated that irrespective of the
number of the customers who would have redeemed their vouchers, in D
.,,.,.., terms of Clause 7 and, in particular, Appendix-I to the agreement, it was
clearly the responsibility of the respondents-TLC and WIPL to ensure
fulfillment of the Scheme to the satisfaction of the customers.
12. No counter has been filed by respondent No.2-WIPL.
E
13. I have heard learned counsel for the parties and perused the
record.
_ "'( 14. Mr. R. S. Suri, learned counsel appearing for the applicant
contended that Citibank had received various complaints from thousands
of its eligible customers indicating series of deficiencies on the part of the F
respondents-TLC and WIPL in implementation of the Scheme offering
'Free return flight voucher' and 'World for free destinations' to such
Citibank card- members, who have fulfilled certain specified criteria on
selective domestic air routes in India and the applicant-Citibank taking
serious note of the said complaints, sent various communications and G
repeatedly requested the respondents-TLC and WIPL to comply with
the terms of the agreement, but both the respondents have failed to settle
the dispute amicably. He submitted that in order to save its goodwill,
reputation and high standards of service and to mitigate the damages
H
718 SUPREME COURT REPORTS [2007] 10 S.C.R.

A directly resulting from the breach of the terms of the agreement, the
applicant-Citibank was compelled to take the remedial action of providing
return air tickets to its eligible customers/card members, the expenses of
which were, of course, to be borne by both the respondents as provided
in the agreement and the circumstances created by the respondents-TLC
B and WIPL manifestly provided grounds for termination of the agreement
under Clause 23 and having invoked the arbitration Clause I 0, the
applicant-Citibank had issued notices under Clause 24 to both the
respondents requesting them to resolve the disputes/differences under the
Act through a sole Arbitrator in terms of Section I 0(2) of the Act.
c I5. Mr. A. K. Ganguli, learned Senior Advocate appearing on behalf
of respondent No. I-TLC, resisted the aforesaid submissions of Mr. R.
S. Suri. According to Mr. Ganguli, the applicant-Citibank has made vague
assertion of existence of dispute and has not identified or pointed out as
to what exactly is the dispute or precise claim, which has arisen for invoking
D the arbitration clause, but despite the communications and representations
made by respondent No. I-TLC to the applicant-Citibank to spell out the
disputes which are referable to arbitration, no valid notice invoking
arbitration clause has at all been issued to the respondent. He submitted
that notice dated 15.07.2006 issued by the applicant-Citibank is vague
E as it does not state as to what are the obligations which were breached
and what, if any, loss was caused as a result of such alleged breaches to
the applicant-Citibank. He next contended that the respondents-TLC and
WIPL are separate and different companies incorporated in different
jurisdictions, with different ownership and control and under no
r-
F circumstances can they be treated as one party as contended by the
applicant-Citibank. He finally prays for the dismissal of the application.
In support of the submission that there must be a precise dispute raised
by the parties, reliance is placed in the case of Major (Retd) Inder Singh
Rekhi V. Delhi Development Authority [I 988] 2 sec 338. I have the
G advantage of going through the said judgment in which it is held by this
Court that the existence of dispute is essential for appointment of an
arbitrator under Section 8 or a reference under Section 20 of the
Arbitration Act, I 940. There can be a dispute only when a claim is
asserted by one party and denied by other on whatever grounds. Mere
H
I- CITIBANK, N .A. v. TLC MARKETING PLC 719,

failure or inaction to pay does not lead to the inference of the existence A
of dispute. Further, it is observed that whether in a particular case a dispute
has arisen or not has to be found out from the facts and circumstances of
the case. The proposition of law is well known and well-settled in the
cited case but the said decision does not fully advance the case of the
respondents-TLC and WIPL, in any manner, in the facts and B
circumstances of the present case.
--~. · 16. :Mr. Soli J. Sorabjee, learned senior counsel appearing on behalf
of respondent No.2-WIPL, has sought to support the arguments of Mr .
. Ganguli. He made an alternative argument that if this Court is inclined to
accept the prayer of the applicant-Citibank, then the dispute, if any, arising C
out of the agreement dated 04.10.2005 may be referred to an arbitral
tribunal comprising of three arbitrators and selection/appointment of the
third arbitrator may be left to the choice of the two named arbitrators
already nominated by the applicant-Citibank and the respondents-TLC
and WIPL jointly. I am afraid to accept this submission. A composition D
of the arbitral tribunal comprising of three arbitrators, in my considered
opinion, is not necessary or expedient nor it can be said to be fair and
reasonable in the larger interests of the parties because such an order may
lead to burdening the parties to bear extra amounts of money in
prosecuting the arbitral proceedings which as per the objectives of the E
Act are less expensive and more efficacious remedy to the parties to settle
their disputes.
- · 1, 17. In the backdrop of the above narrated factual situation and
respective contentions of the parties, the question that arises for F
consideration of this Court is whether in view of the various
communications followed by reminders and legal notices sent by the
applicant-Citibank to the respondents-TLC and WIPL whereby certain
serious instances of complaints having been received from the eligible
A customers/card members regarding deficiencies in services rendered to G
them and other disputes/differences as set out in Appendix-II of the
agreement and also having failed to provide 'Free return flight voucher'
in relation to "Fly for Sure" programme in accordance with the provisions
of Appendix-I to the agreement, an arbitration clause contained in the
H
720 SUPREME COURT REPORTS [2007] 10 S.C.R.

A agreement could be invoked.
18. The tripartite agreement made by and entered into between the
parties on 04.10.2005 is not in dispute. The agreement came into force
w.e.f. 01.10.2005 and was valid till 31.08.2006, which could be extended
by mutual consent on such terms as parties mutually agree in writing as
B per Clause 3.1 of the agreement. It appears from the record that
respondent No.2-WIPL approached the applicant-Citibank and expressed
its keen desire to be appointed '!S the Fulfillment Agency for implementation · -1::-
of 'Free return flight voucher' and 'World for Free destinations' Scheme
of the applicant-Citibank and providing related services to the customers .
C in terms of Clause 4 of the agreement. Respondent No. 1-TLC had agreed
to ensure the performance by WIPL of its obligations under Clause 6 of
the agreement. In terms of Clause 8, on representation having been made
by the respondents to the applicant-Citibank, the parties had entered into
the agreement on exclusive basis on the terms and conditions contained
D in the Appendix(s) and Enclosures attached and incorporated by reference
as an integral part of the agreement. In order to appreciate the controversy
in this matter, it is, therefore, necessary to refer to the relevant clauses of
the arbitration agreement in relation to the dispute or controversies arising
out of the said agreement. Clause 2.2 deals with "Services" and Clause
E 2.3 defines "Free return flight voucher'', whereas "World for Free
destinations" is defined in Clause 2.4.
19. Clause 4 of the agreement dealing with "Services" reads as
under:- )---
F "4. WIPL shall be liable and responsible to provide services to
the Citibank and its customers in accordance with the provisions
of Appendix-I hereto.
TLC shall be liable and responsible for ensuring that WIPL provides
G the services to Citibank and its customers in accordance with the
provisions ofthis Agreement including Appendix-I hereto."

20. Clause 7 ofthe Agreement envisages General obligation ofWIPL
and TLC.
H 21. Clauses Tl, 7.2 and 7.2.2 read as under:-
CITIBANK, N.A. v. TLC MARKETING PLC 721

"7.1 WIPL shall be solely responsible to provide services to A
Citibank and its customers in accordance with the provisions of
Appendix-I. WIPL shall provide the effective services as per the
Appendix-I to the customers of Citibank and act in the interest of
both Citibank and its customers. WIPL hereby indemnifies
Citibank and shall keep Citibank safe, harmless and indemnified B
from time to time and at all times hereafter, from and ag~ (i) all
loss, harm and injury suffered or incurred by Citibank, (ii) all claims,
demands, customer complaints, suits, actions and/or proceedings
either civil or criminal in nature, made or adopted against Citibank.
and (iii) all costs, charges and expenses suffered or incurred by c
Citibank directly or indirectly on account of or as a consequence
of WIPL failing to fulfill any of its obligations under this Agreement
and/or failing to fulfill all or any of its responsibilities and obligations
-under this Agreement and Appendix-I hereto.
7.2 WIPL and TLC hereby undertake to be solely liable and D
responsible, to the exclusion of Citibank, for all claims, demands,
disputes, suits, actions and/or proceedings either civil or criminal
in nature arising out of non-fulfillment of any of their obligations or ·.
responsibilities arising under this Agreement and the Appendix-I
hereto. E
7.2.2 ............................................................. .
WIPL shall be solely and absolutely responsible for providing the
Services and for issuing the free return flight vouchers in accordance
with the provisions of Appendix-I, to the customers of Citibank F
as also for ensuring that the carriers with which it has entered into
any arrangements in pursuance of this Agreement, strictly comply
with their obligations and accept the honour of all return free flight
vouchers issued to the customers of Citibank in pursuance of this
Agreement." G

22. Clause 10 of the agreement is the arbitration clause, which is to
the following effect:-
"10. The parties hereby agree that any controversy, claim or dispute H
722 SUPREME COURT REPORTS [2007] 10 S.C.R.

A arising out of the interpretation, application or in connection with this ~
Agreement which cannot be resolved amicably, shall be conclusively
resolved by arbitration under Indian Arbitration and Conciliation Act, 1996
and any amendments made thereto. The place of arbitration shall be
Mumbai and the arbitration shall be conducted in English language only.
B This Agreement shall be governed by Indian Laws and shall be amenable
to the exclusive jurisdiction of courts in Mumbai only."
23. Clause 23 deals with "Termination of the Agreement" and reads · ...k-
as under:-
c "23. Termination - Citibank may terminate this Agreement upon
30 days' prior notice to WIPL and TLC in this behalf.
In the event that either Citibank on the one part and WIPL and
TLC on the other part shall, at any time during the tenp. of this
Agreement, commit any material breach of any requirement,
D obligation and covenant and warranty herein contained, and shall
fail to remedy such breach within 7 (seven) days after written notice
thereof, the other party(ies) may at its/their discretion, and in
addition to any other remedy that might be available in law or
equity, terminate this Agreement by written notice to such
E effect. ........ "
24. Clause 24 of the agreement prescribes giving of notice by either
party.
25. The obligations and responsibilities on the part of the parties to
F
the agreement are incorporated in Appendix-I, which inter alia envisaged
that respondent No. 2-WIPL shall be liable and responsible for ensuring
that it would provide the required services to the applicant-Citibank and
its eligible customers/card members in accordance with the terms of the
agreement. The satisfactory service to be rendered by the respondents-
G TLC and WIPL was the material obligation on their part as per the terms
of the agreement and it was a pre-requisite condition that the applicant-
Citibank would pay a commission of cost of tickets in terms of Appendix-
II to the agreement. Further, the respondents-TLC and WIPL jointly and
severally undertook to indemnify the applicant-Citibank from and against
H
CITIBANK, N .A. v. TLC MARKETING PLC 723

all costs, charges and expenses suffered or incurred by the applicant- A
Citibank, directly or indirectly, on account of or as a consequence of the
respondents-TLC and WIPL failing to fulfill any of their responsibilities
and obligations under the agreement read with Appendix-I thereto. Under
the "Fly for Sure" programme envisaged in the agreement, 35,000 card
members of the applicant-Citibank were found to be eligible to avail the B
opportunity of the 'Free return flight voucher' to be provided by
respondents-TLC and WIPL. The applicant-Citibank forwarded the
vouchers completed by the eligible and interested card members to
respondent No. 2-WIPL in accordance with the procedure as agreed by
the parties. The vouchers/requests forwarded by the applicant-Citibank c
were to be honoured by the respondents jointly by conducting themselves
in a manner as stipulated under the agreement, including issuing 'return
air-tickets' towards any one of the three dates, for any one of the three
destinations, as indicated by the customers. The respondents-TLC and
WIPL could only have offered further or other alternative dates or D
destinations to the customers and 35,000 card members after having
obtained their consent towards such alterations. The material documents
placed on record would show that the applicant-Citibank requested the
respondents-TLC and WIPL to comply with the terms of the agreement
in regard to the complaints of eligible customers indicating series of E
deficiencies in services on the part of the respondents-TLC and WIPL.
However, in spite of repeated communications being sent by the
representatives and officials of the applicant-Citibank to the respondents-
- 1 TLC and WIPL, they merely made assurances and no actual measures
were undertaken by them to rectify their acts of omission and commission. F
The applicant-Citibank in various communications (copies whereof are
placed on record of these proceedings) including courier - e-mail notice
dated 10.05.2006 (Annexure A-8) has given specific instances of disputes
and differences that have arisen between the applicant-Citibank on the
one hand and the respondents-TLC and WIPL on the other hand which G
are to be resolved by the arbitral tiibunal in terms of the arbitration Clause
10 of the agreement. Legal notice dated 15 .07.2006 (copy Annexure A-
9) as envisaged under the agreement and the provisions of the Act has
been issued by the legal firm of the applicant-Citibank to the respondents-
TLC and WIPL suggesting the name of Hon'ble Mr. Justice S. P. H
724 SUPREME COURT REPORTS [2007] 10 S.C.R.
~
A Bharucha, Former Chief Justice of India, to be appointed as the sole -../.
Arbitrator. In response thereto, respondent No.2-WIPL vide registered '
A.D. -fax - e-mail - courier dated 11.08.2006 denied all the allegations
of the applicant-Citibank averred in the said communications and notice
dated 15 .07 .2006. Respondent No.2-WIPL also stated that all the alleged
B allegations made in the notice or made by way ofany prior correspondence
shall be dealt with by it by way of a comprehensive reply or by way of a
counter claim, if any arbitration proceedings are likely to be initiated by
the applicant-Citibank. Respondent No.2-WIPL, however, recommended . .J.;:--
that the disputes be referred to an arbitral tribunal comprising of three
c arbitrators to be nominated by all the three parties to the agreement,
namely, the applicant-Citibank and the respondents-TLC and WIPL
respectively. Respondent No.2-WIPL, however, nominated Hon'ble Mr.
Justice M. H. Kania, Former Chief Justice of India, as its nominee.
26. Respondent No. 1-TLC in its reply dated 14.08.2006 to the
D notice dated 15.07.2006 sent by the Solicitors on behalf of the applicant-
Citibank, denied the unsubstantiated allegations of non-fulfillment or breach r-
of any obligation by it under the agreement dated 04.10.2005 entered
into between the parties. In reply, respondent No. 1-TLC states that notice
invoking an arbitration is not valid as the same does not comply with the
E requirement of Section 21 of the Act applicable in India as it is completely
unclear from the contents of the notice as to what disputes the applicant-
Citibank has sought to be referred to the arbitration and the applicant-
Citibank first should provide quantification of its alleged claims and
disputes. However, respondent No.1- TLC agrees to the suggestion of >---
F respondent No.2-WIPL for appointment of arbitral tribunal comprising
of three members, one each to be appointed by the parties to the
agreement.
27. As noticed above, the disputes arising out of the arbitration
G agreement between the parties are covered under· the definition of
"international commercial arbitration" in terms of Section 2(t) of the Act.
The· parties have entered into an arbitration agreement as provided under
Section 7 of the Act. Section 10( 1) of the Act provides that the parties
are at liberty to determine the number of arbitrators provided such number
H shall not b€? an even number. In default of determination referred to in
CITIBANK,N.A. v. TLC MARKETING PLC 725

sub-section ( 1), the arbitral tribunal shall consist of a sole arbitrator in A
terms of Section 10(2) of the Act. Section 21 of the Act lays down that
unless otherwise agreed by the parties, the arbitral proceedings in respect
of a particular dispute would commence on the date on which a request
for that dispute to be referred to arbitration is received by the respondent.
28. The contract is a commercial document and must be interpreted B
in a manner to give efficacy to the contract rather than to invalidate it.
Narrow technical approach is not proper. The above-extracted Clause
I 0 of the arbitration imports in itself all disputes and the arbitration
agreement cannot be said to be as vague or uncertain as to be
unenforceable. In Clause 10 of the agreement, the words "any C
controversy, claim or dispute arising out of the interpretation, application
or in connection with this agreement which cannot be resolved amicably"
could embrace within its fold all matter which can legitimately arise in
connection with the agreement. The arbitration clause does not put any
cap on the powers of the arbitrator to decide any particular claim or D
counter claim, the details of which shall be submitted by the parties in
their pleadings before the arbitrator. The words contained in Clause 10
are wide enough and as the question turned upon the true interpretation
of the contract and the parties have to take recourse to the contract to
establish their claim and counter claim, if any, having regard to the fact E
that the existence of an agreement is not denied and that there has been
an assertion of claim by the applicant-Citibank in the forms of letters and
notices issued to the respondents and responses of TLC and WIPL
thereto, the matter would be arbitrable. The conduct of the respondents-
TLC and WIPL would show that on receipt of the communications and F
notices of the applicant-Citibank, the same were not rejected outright by
them. The existence of arbitration agreement was accepted and the matter,
if any, was suggested to be referred to an arbitral tribunal of three
members, one to be appointed by each party.
G
29. In view of the instances of breaches of the terms and conditions
of the relevant clauses of the agreement coupled with the breaches of
specific obligations and responsibilities contained in the Appendix(s) and
Enclosures attached and incorporated by reference as an integral part of
the agreement and having regard to the words used in Clause 10 of the H
I
. .· --\
726 SUPREME COURT REPORTS [2007] 10 S.C.R. -.

A agreement and having regard to the fact that the parties have failed to
determine an even number of arbitrators as per the provisions of Section
10( 1) of the Act, the requirement of Section 10(2) of the.Act is fully
attracted in the present proceedings, in other words, the arbitration
agreement deemed to be one providing for a sole arbitrator.
B
30. In the above-said circumstances, taking into consideration the
fact that the disputes and differences between the parties emanating from
the contract are required to be resolved through arbitration, Hon'ble Mrs.
Justice Sujata V. Manohar, retired Judge of this Court, is hereby appointed
to act as a sole Arbitrator.
c
31. The Arbitration Application, accordingly, stands disposed of.
There will be no order as to costs.
RP. Arbitration Application disposed of.