One97 Communications Limited vs. Nightstary Travels Private Limited & Anr.

Held

The Court held that an Arbitrator should be appointed to adjudicate the disputes between the parties. The Court noted that Respondent No. 1 had been duly served through publication, and Respondent No. 2 did not dispute the existence of an arbitration agreement. The primary issue was the alleged failure of Respondent No. 1 to deposit the GST collected from the Petitioner, which constituted a dispute arising from the Deed of Assignment. The Court found it apposite to allow the petition for the appointment of an Arbitrator, as the arbitration agreement was not in dispute. Mr. Omar Ahmad, Advocate, was appointed as the Sole Arbitrator, subject to making the necessary disclosures and not being ineligible under Section 12(5) of the A&C Act. The parties were granted liberty to approach the Arbitrator for further proceedings, and all rights and contentions regarding the disputes were left open.

Facts

One97 Communications Limited (Petitioner) filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of an Arbitrator. The dispute arose from a Deed of Assignment dated 14.12.2018, wherein Nightstay Travels Private Limited (Respondent No. 1) assigned Intellectual Property Rights to the Petitioner. Respondent No. 1 was to bear all taxes and ensure compliance with the Central Goods and Service Tax Act, 2017. Respondent No. 1 issued a tax invoice for ₹6,49,00,000/-, including ₹99,00,000/- for SGST and CGST, which the Petitioner paid. The Petitioner alleged that Respondent No. 1 failed to deposit the GST with the authorities. Consequently, the Petitioner demanded a refund of ₹99,00,000/- with interest. After the Respondent failed to comply, the Petitioner invoked the arbitration clause.

Key Issues

1. Whether an Arbitrator should be appointed under Section 11 of the Arbitration and Conciliation Act, 1996, to adjudicate disputes arising from the Deed of Assignment dated 14.12.2018, concerning the alleged non-deposit of GST by Respondent No. 1. Petitioner's arguments: The Petitioner contended that a dispute had arisen concerning the non-deposit of GST by Respondent No. 1, despite the Petitioner having paid the amount. The Petitioner had invoked the arbitration clause as per Clause 12.3 of the Deed of Assignment and sought the appointment of an Arbitrator to resolve the matter. The Petitioner relied on the existence of the arbitration agreement. Respondent No. 2's arguments: Respondent No. 2, a promoter of Respondent No. 1, stated that he had sold his interests and was no longer in control of the company. He alleged that new promoters had siphoned off funds, including the GST amounts received from the Petitioner. Respondent No. 2 did not dispute the existence of an arbitration agreement.