{"id":191640,"date":"2011-11-21T00:00:00","date_gmt":"2011-11-20T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/vf-services-uk-limited-vs-union-of-india-anr-on-21-november-2011"},"modified":"2015-07-31T19:47:39","modified_gmt":"2015-07-31T14:17:39","slug":"vf-services-uk-limited-vs-union-of-india-anr-on-21-november-2011","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/vf-services-uk-limited-vs-union-of-india-anr-on-21-november-2011","title":{"rendered":"Vf Services (Uk) Limited vs Union Of India & Anr. on 21 November, 2011"},"content":{"rendered":"
Delhi High Court<\/div>\n
Vf Services (Uk) Limited vs Union Of India & Anr. on 21 November, 2011<\/div>\n
Author: S. Muralidhar<\/div>\n
   IN THE HIGH COURT OF DELHI AT NEW DELHI\n\n                       OMP No. 658 of 2011\n\n                            Date of order: November 21, 2011\n\nVF SERVICES (UK) LIMITED                   ..... Petitioner\n              Through: Mr. Neeraj Kishan Kaul, Senior\n              Advocate with Mr. Neeraj Malhotra, Mr. J.\n              Sivanandaraaj, Mr. Shourjyo Mukherjee and\n              Ms. Trishna Mohan, Advocates\n\n              versus\n\nUNION OF INDIA & ANR                       ..... Respondents\n              Through: Mr. Ruchir Mishra, Advocate\n\n\nCORAM: JUSTICE S. MURALIDHAR\n\n1. Whether Reporters of local papers may be\n   allowed to see the judgment?                          No\n2. To be referred to the Reporter or not?                Yes\n3. Whether the judgment should be reported in Digest?    Yes\n\n                        JUDGMENT\n<\/pre>\n
                         21.11.2011<\/p>\n
1. This is a petition under Section 9 of the Arbitration & Conciliation
\nAct, 1996 (\u201eAct\u201f) by VF Services (UK) Limited having its office in
\nLondon seeking a stay of the operation of a letter dated 8th August
\n2011 issued by the Embassy of Government of India at Netherlands,
\nterminating the Visa Outsourcing Contract [\u201eVOC\u201f] dated 26th
\nNovember 2010 entered into between the Embassy of India, The
\nHague, Respondent No. 2 herein. 4. At the hearing on 3rd October<\/p>\n
OMP No. 658\/2011                                            Page 1 of 9<\/span>
\n 2011 learned counsel for the Respondent placed reliance on certain
\nadditional documents which had not been placed along with the reply.
\nWhile adjourning the case to enable the Petitioner to respond to the
\nsaid documents, this Court ordered the termination notice would not
\ntake effect till the next date.\n<\/p>\n
2. The relevant facts are that in terms of the VOC dated 26th
\nNovember 2010 the Petitioner was to provide range of services at
\nthree locations i.e., The Hague, Amsterdam and Rotterdam. These
\nincluded distribution of visa\/OCI card\/PIO card\/passport application
\nforms, assistance to applicants, sending\/ collection of Visa\/OCI
\ncard\/passport,     ensuring   applications   are   complete,   return        of
\ndocuments to applicants, reporting of fraud, and provision of other
\nincidental internal facilities. In terms of the VOC, Visa\/Consular
\nService Centres were to be opened for the public by the Petitioner on
\nor before 90 days from the date of signing of the agreement. In the
\nrequest for proposal (\u201eRPF\u201f) issued by the Respondents inviting bids,
\nit was indicated that service providers would be required to start
\noperations within three months from the signing of the agreement and
\nfull operations would have to commence within one month from the
\nstart of operations. Further it was provided in the RPF that either party
\ncould terminate the contract by giving two months\u201f advance notice of
\nbeing unable to carry on the services any longer. Clause 11 of the
\nVOC provided for termination and read as under:\n<\/p>\n
       “11. Termination<\/p>\n
       a. Either party may terminate the contract by giving two
\nOMP No. 658\/2011                                               Page 2 of 9<\/span>
\n          months\u201f advance notice of being unable to carry on the services
\n         any longer. In such circumstances, the process of smooth
\n         takeover of services will deem to begin from the date of receipt
\n         of the notice by the other party or from the date as stated in the
\n         notice, whichever is later and the process of termination\/smooth
\n         takeover will be completed in a reasonable period of time or not
\n         more than two months.\n<\/p><\/blockquote>\n
         b. In the event of implementation of \u201eVisa Free\u201f regime agreed
\n         to mutually between the Government of India and the
\n         Government of the Netherlands, the Government of
\n         India\/Mission will not have any liability to compensate the
\n         Service Provider.\n<\/p><\/blockquote>\n
         c. In the unlikely event of break-up of diplomatic relations
\n         between the Government of India and the Government of the
\n         Netherlands the Government of India\/Mission will terminate
\n         this Agreement at one week\u201fs notice without any liability to the
\n         Government of India\/Mission.\n<\/p><\/blockquote>\n
3. Clause 14 of the VOC set out the term of agreement and read as<\/p>\n
under:\n<\/p>\n
         14. Term of Agreement<\/p>\n
         14.1 This agreement, which commences on 26th November
\n         2010, would be valid for a three year period expiring on 25th
\n         November 2013 subject to performance based annual review
\n         that could lead to its termination before the three year deadline.\n<\/p><\/blockquote>\n
         14.2 The Government of India and\/or the Mission shall have the
\n         option to extend the operation of this Agreement for a period to
\n         be mutually agreed upon on such terms and conditions as are
\n         agreed to by giving the Service Provider notice of eight weeks
\n         prior to the date on which it is due to expire”.\n<\/p><\/blockquote>\n
OMP No. 658\/2011                                                Page 3 of 9<\/span><\/p>\n
 4. Clause 10 of the VOC provided that any dispute or difference
\nregarding the interpretation of the provisions of the VOC should be
\nresolved amicably between the parties. If the dispute was not resolved
\nthrough mutation consultations within a period of six months, either
\nparty may refer the dispute to the arbitration in accordance with the
\nAct. There was to be a sole arbitrator and the place of arbitration was
\nNew Delhi, India. The applicable law was the law of India.\n<\/p>\n
5. Mr. Neeraj Kishan Kaul, learned Senior counsel appearing for the
\nPetitioner submitted that although by an interim order, particularly in
\nview of the legal bar under Section 14 (1) (c) read with Section 41 (e)
\nof the Specific Relief Act 1963 (\u201eSRA\u201f), the Court would normally
\nnot be inclined to grant any interim stay of the order terminating the
\ncontract which by its very nature was determinable, this Court had in
\nseveral decisions including Pioneer Publicity Corporation v. Delhi
\nTransport Corporation<\/a> 2003 (2) Raj 132 (Del) and Atlas Interactive
\n(India) Private Limited v. Bharat Sanchar Nigam Limited 2005 (4)
\nRaj 585 (Del), explained that an entity of State could not be seen to
\nbe acting arbitrarily or unreasonably even in the realm of contract and
\nthat in appropriate cases this Court would grant such interim relief.
\nAccording to him, this was one such case. Referring to the
\ncorrespondence exchanged between the parties prior to the letter of
\ntermination dated 8th August 2011 it was submitted by Mr.Kaul that
\nthe reasons adduced by Respondent No. 2 did not justify the abrupt
\ntermination of the contract. The Petitioner had always expressed its
\nwillingness to cure any deficiencies. Some of the complaints were
\nOMP No. 658\/2011                                             Page 4 of 9<\/span>
\n anonymous and could have been engineered by the Petitioner\u201fs
\ncompetitors. In terms of the VOC an annual review was due. The
\nshort-comings pointed out were far too few and in any event not
\nserious enough to warrant the disproportionate measure of termination
\nof the contract. The letter of termination gave no reasons whatsoever.
\nThe facts contained in the additional affidavit filed by Respondent No.
\n2 pertained to events subsequent to the date of termination, i.e., 8 th
\nAugust 2011 and could not be acted upon to justify the termination. It
\nwas further submitted that apart from the Petitioner having a prima
\nfacie case, the balance of convenience in granting a stay of the
\ntermination of the VOC was also in its favour. The term of the
\ncontract was till 25th November 2013. On the question of irreparable
\nhardship, it is pointed out that the Petitioner is at present providing
\nvisa services for the Government of India (\u201eGOI\u201f) at its embassies in
\n17 other countries as well as providing visa services on behalf 37
\ncountries other than India. Given its excellent track record thus far,
\nthe termination of the VOC would adversely affect the Petitioner\u201fs
\nreputation and would cause it severe prejudice in the matter of bidding
\nin the future for visa services not only for the embassies of India but
\nof other countries as well.\n<\/p>\n
6. Mr. Ruchir Mishra, learned counsel for the Respondents on the
\nother hand submitted that Respondent No.2 the letter dated 8th August
\n2011 terminating the VOC clearly indicated that it was Clause 11 of
\nthe VOC which had been invoked and therefore, the termination was
\nnot stigmatic. Also, the termination was not effected all of a sudden.\n<\/p>\n
OMP No. 658\/2011                                            Page 5 of 9<\/span><\/p>\n
 A number of complaints had been received by Respondent No.2 from
\nvisa seekers from The Hague and elsewhere in Netherlands about the
\npoor quality of services offered by the Petitioner. Despite several
\nwarnings and opportunities, the Petitioner failed to improve the
\nquality of services. He referred to the correspondence exchanged
\nbetween the parties, copies of which were enclosed both with the
\nreply and the additional affidavit of the Respondents. The Indian
\nembassy abroad was the first point of contract for visitors to India
\nfrom the concerned country and it was important that the services
\nprovided to such intending visitors were of the highest quality. Mr.
\nMishra submitted that no interim relief that would result in the
\ncontinuation of a contract that stood terminated could be granted by
\nthis Court in terms of Section 14 (1) (c) and Section 41 (e) SRA. He
\npointed out that an arbitrator was likely to be appointed shortly to
\nadjudicate the disputes between the parties.\n<\/p>\n
7. The VOC is a contract which by its very nature is determinable.
\nAlthough in exceptional facts of individual cases involving agencies
\nof the State, this Court has granted interim relief even against the
\ntermination of a contract (for e.g., Pioneer Publicity Corporation v.
\nDelhi Transport Corporation), the<\/a> settled law is that even where a
\ncontract has been illegally terminated the aggrieved party would be
\nable to only claim damages and no interim relief against termination
\nof the contract. In Indian Oil Corporation v. Amritsar Gas Service<\/a>
\n(1991) 1 SCC 533, the Supreme Court explained that even where one
\nof the contracting parties was an agency of state, the constitutional
\nOMP No. 658\/2011                                          Page 6 of 9<\/span>
\n limitations of Article 14 as explained in Dwarkadas Marfatia and
\nSons v. Board of Trustees of the Port of Bombay<\/a>(1989) 3 SCC 293,
\nMahabir Auto Stores v. Indian Oil Corporation<\/a>(1990) 3 SCC 752
\nand Shrilekha Vidyarthi v. State of U.P. (1991) 1 SCC 212 would not
\napply since the case was based only on breach of contract and
\nremedies flowing therefrom. Therefore (SCC, p.541) “the further
\nquestions of public law based on Article 14 of the Constitution do not
\narise for decision in the present case and the matter must be decided
\nstrictly in the realm of private law rights governed by the general law
\nrelating to contracts with reference to the provisions of the Specific
\nRelief Act providing for non-enforceability of certain types of
\ncontracts.” On the facts of that case it was held that (SCC, p.542)
\n“granting the relief of restoration of the distributorship even on the
\nfinding that the breach was committed by the appellant-Corporation is
\ncontrary to the mandate in Section 14(1) of the Specific Relief Act.”\n<\/p>\n
8. Here the VOC dated 26th November 2010 is by its very nature
\ndeterminable. There appear prima facie to be no extenuating
\ncircumstances that warrant a departure from the settled legal position
\nthat the court will not grant an interim relief of continuing a contract
\nthat is by its very nature determinable. In other words, this Court is
\nnot persuaded to overlook the legal bar erected by Section 14 (1) (c)
\nread with Section 41 (e) of the SRA. Clause 11 of the VOC, which has
\nbeen invoked by Respondent No.2, envisages either party terminating
\nthe contract by giving two months\u201f advance notice “of being unable to
\ncarry on the services any longer”. Respondent No. 2 did give two
\nOMP No. 658\/2011                                             Page 7 of 9<\/span>
\n months\u201f advance notice to the Petitioner. There was correspondence
\nexchanged between the parties in relation to the complaints received
\nabout the unsatisfactory quality of the services being provided by the
\nPetitioner to visa seekers. The documents along with the reply of the
\nRespondents are copies of some of the complaints received from visa
\nseekers about the quality of the services at the office of the Petitioner
\nat The Hague. It also appears that the Petitioner did give written
\nassurances about rectifying the deficiencies pointed out by
\nRespondent No. 2. One of the complaints received on 9th July 2011
\nmentions that “the waiting time is very-very long” as a result of which
\n“many clients were frustrated and some even decided to leave without
\nsubmitting their visa application.” The other complaint was “body and
\ncommunication language of staff is not good. They act and react very
\nrude.” Another complaint dated 26th July 2011 from a foreigner
\nvisiting the Petitioner\u201fs office was that “everyone in the room is
\ncomplaining about the turn-around time of service delivery”. Of
\ncourse, the Petitioner on its part has placed on record the feedback
\nforms it has received from several customers who have expressed
\ntheir satisfaction with the services offered by the Petitioner.\n<\/p>\n
9. For the purposes of the present petition this Court does not propose
\nto determine whether the complaints against the Petitioner were
\njustified. This Court is not expected at this stage to sit in appeal over
\nthe decision taken by Respondent No. 2 in light of the complaints
\nreceived by it. It is not possible for this Court to whether the above
\ncomplaints were trivial or substantial. That is something the
\nOMP No. 658\/2011                                                  Page 8 of 9<\/span>
\n Respondent No.2 has to take a call on given the nature of the contract.
\nAll that can be said at this stage is that the quality of the services
\noffered by the Petitioner, and the impact it would have on the image
\nof the country in the eyes of a visitor to India are certainly relevant
\nconsiderations that would go into the process of Respondent No.2
\narriving at a decision whether to continue the contract. The impugned
\ndecision communicated to the Petitioner by Respondent No.2 by its
\nletter dated 8th August 2011 cannot be said to be an impulsive one
\ntaken at the spur of the moment. It is difficult to prima facie conclude
\nthat the decision was arbitrary or unreasonable or disproportionate. It
\nis however emphasised that this is a tentative conclusion for the
\npurposes of the present petition under Section 9 of the Act. It is not
\nintended to influence the final decision in the arbitration proceedings.\n<\/p>\n
10. For the aforementioned reasons, this Court is not inclined to
\ncontinue the interim order passed by this Court on 3 rd October 2011 or
\nto grant any of the reliefs prayed for in this petition. The said interim
\norder is accordingly vacated. The petition is dismissed with no order
\nas to costs.\n<\/p>\n
                                               S. MURALIDHAR, J.\n<\/p>\n
November 21, 2011
\nrk<\/p>\n
OMP No. 658\/2011                                              Page 9 of 9<\/span>\n <\/p>\n","protected":false},"excerpt":{"rendered":"
Delhi High Court Vf Services (Uk) Limited vs Union Of India & Anr. on 21 November, 2011 Author: S. Muralidhar IN THE HIGH COURT OF DELHI AT NEW DELHI OMP No. 658 of 2011 Date of order: November 21, 2011 VF SERVICES (UK) LIMITED ….. Petitioner Through: Mr. Neeraj Kishan Kaul, Senior Advocate with Mr. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[14,8],"tags":[],"class_list":["post-191640","post","type-post","status-publish","format-standard","hentry","category-delhi-high-court","category-high-court"],"yoast_head":"\nVf Services (Uk) Limited vs Union Of India & Anr. on 21 November, 2011 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/vf-services-uk-limited-vs-union-of-india-anr-on-21-november-2011\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Vf Services (Uk) Limited vs Union Of India & Anr. on 21 November, 2011 - 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