SC refers Citibank-TLC row for arbitration

The Supreme Court has referred for arbitration the row between Citibank and the British lifestyle and travel company, TLC Marketing,  to arbitration by an ex-judge of the court.

TLC and its Indian partner Wunderman India of Mumbai had approached Citibank with an offer to promote its credit cards linking them to a scheme called "free return flight voucher' or 'world for free destinations'. The plan were accepted on the strength of the claim of the two companies that they were world leaders in consumer propositions which helped their clients to meet their objectives such as customer retention and loyalty.

Under the scheme, eligible credit card customers of the bank, having fulfilled certain criteria, were entitled to free return flight vouchers. When a customer met the criteria, he would get a voucher from the bank. Then the two other companies would help the customer to choose the destination and date of travel. The bank bought one lakh vouchers for its customers.

According to Citibank, 35,000 card members were found eligible for the return flights. Initially the scheme went well.

Later, the bank started receiving complaints from its customers regarding breach of commitments by the travel companies. When the bank complained to them, they alleged that  the scheme was oversold and was not commercially viable. They proposed new terms in the agreement entailing more payment to them. Citibank then terminated the agreeement and was compelled to provide air tickets to its card holders.

The bank then invoked the arbitration clause and appointed a former Chief Justice of India as the sole arbitrator. The travel companies rejected the claims of the bank and the choice of the sole arbitrator.  Therefore, the bank approached the Chief Justice of India to appoint a sole arbitrator under the Arbitration and Conciliation Act.

Justice L S Panta, nominee of the CJI, examined the agreement and then appointed Mrs Justice Sujata Manohar, former judge of the Supreme Court, as the sole arbitrator to settle the dispute. This he did, "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."