In a highly contested arbitration proceeding between Proactive In & Out Advertising Ltd. v.
Jaipur City Transport Services Ltd., the sole Arbitrator Justice J.N. Ranka (retd) pronounced
an award heavily in favor of the Claimant/Petitioner (Proactive In and Out Advertising Ltd).
About 70% of the claimed amount was awarded to the Claimant and 5 out of 7 Claims laid
before the tribunal were accepted.
Case: S.B. Arbitration Application No. 10/2019
Order dated: 30.06.2022
SKV Commercial Law Offices team headed by Adv Varun Singh represented the ClaimantM/s Proactive In and Out Advertising Ltd.
FACTUAL OVERVIEW
On 04.03.2015, the Respondent in the case, Jaipur City Transport Services Ltd., issued a
Request for Proposal (RFP) inviting bids for the display of advertisements on 150 newly
constructed Bus-Q-Shelters (BQS). The Claimant, Proactive In & Out Advertising Ltd.
participated in the bidding process and was declared the winner. Consequently, a Letter of
Acceptance (LoA) was issued in favor of the Claimant on 06.04.2015.
However, once the agreement commenced, the Claimant unearthed several deviations in
details of the RFP and the ground reality.
For instance, the Ld. Counsel of the Claimant highlighted multiple faulty data in RFP
vis-a-vis the number of BQS, their construction status, number of routes, number of buses
plying these routes, etc. A Technical Expert report by Chartered Accountant Shri. Mayank
Bhimsaria was also laid before the tribunal to evince the said mismatch. This report was laid
under Section 19 of the Rajasthan ADR Manual and Section 26 of the Arbitration and
Conciliation Act of 1996.
Such discrepancies in details and delivery of the promised agreement by the Respondent led
to this dispute between the two parties.
RULING
Based on the aforementioned discrepancies, the Ld. Counsel of the Claimant formulated 7
pertinent Claims and 7 Issues. The said Claims were heard by learned Arbitrator Justice J.S.
Ranka (Retd), who vide the order dated 30.06.2022, administered the following award(s).
● The very first issue was whether the Licence Fees be applied from 01.06.2015 to
30.09.2015 (i.e. the date mentioned as per the LoA/RFP) or from 08.09.2015 ( i.e. the
date when Claimant finally received the duly executed agreement).
The Ld Counsel for Claimant mentioned numerous arguments to establish that the
Respondent was categorically responsible for the delay in agreement’s execution. This
was reflected in the delayed intimation about the need for a Non-Judicial Stamp Paper
of Rs. 5000/- instead of Rs. 500; changing of dates in LoA by the managing director
of the Respondent by hand, etc.
The Hon’ble Arbitrator took full cognizance of these arguments and agreed
08.09.2015 as the starting date for the Licence fee. This secured the entirety of Claim
I ( Rs. 63,56,736) for the Claimant.
● On the issue of the transfer of 18 BQS to an outside agency (Jaipur Municipal
Corporation), the Ld. Counsel firmly emphasized a clear breach of contract. The
Counsel also explained severe losses incurred by the Claimant as already agreed
advertising orders had to be cancelled. The popular location of these BQS and the
peak festive season further compounded the losses.
The tribunal court agreed with this contract violation and announced a partial
acceptance of Claim II for the Claimant. A sum of Rs. 20,00,000 was awarded to the
Claimant including a rebate of the Licence Fee for the time period in concern.
● Moreover, a summary overview of the reasons causing heavy losses for the Claimant
was presented in Issues (3-5). For instance, the non-operation of 40 BQS; loss of
business on 18 BQS for two months on which electricity bills were outstanding;
non-availability of distribution panel in 14 BQS, etc.
On these issues, the Tribunal held that the Claimant should have scrutinized the
pre-existing damages to the BQS before the bidding process. However, the damages
incurred to the BQS by the third party while installing the Public Information System
(PIS) needed to be compensated. Thus, the tribunal awarded Rs. 4,00,000 of the
claimed 8,00,000 amount to the Petitioner.
● Also, the Tribunal took cognizance of the arbitrary removal of 3 of the 150 BQS,
announcing partial acceptance of Claim No. IX. This awarded a sum of Rs. 7,50,000
to the Claimant.
● On the issue of interest to be paid on the amount payable under this reward, the
Learned Arbitrator accepted the Claimant’s request under Hyder Consulting Ltd (UK)
v Governor, State of Orissa (2015) and MSK Projects v State of Rajasthan
judgements.
However, the rate of interest was decided to be 9% as per the market trends and not
24% as suggested by the Claimant.
● Finally, on the Claim for cost of proceedings to the Claimant, the Hon’ble Adjudicator
ruled that this Claim can not be allowed as costs are incurred by both the parties on
legal proceedings.
In aggregate, the Claimant M/S Proactive In and Out Advertising was awarded a sum of Rs.
95,06,736 along with an interest on this amount as 54,90,138. The Claimant was entitled to a
total amount of 1,49,96,874.
SKV Comment
“The team at SKV Commercial Law Offices is elated to apprise everyone that in a recent
and highly contested Arbitration Proceedings between Proactive In & Out Advertising Ltd.
v. Jaipur City Transport Services Ltd., our team headed by Adv. Varun Singh has had
Arbitral Award passed in favor of our Client, Proactive In & Out Advertising Ltd. The
proceedings culminated in the utilization of 18 case laws to substantiate our clients
position. The Arbitration Award was partly allowed, inclining majorly in the favour of our
client. Our team was successful in having 5 out of the 7 claims to be awarded in favor of
our Client. Herein approximately 70% of the claimed amount by our client was awarded to
the Claimants.”
