Citibank-TLC row goes to arbitration

The Supreme Court has referred for arbitration the row between Citibank and the British life style and travel company, TLC Marketing, 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 was accepted as the companies claimed that they were world leaders in consumer propositions, helping clients to meet their objectives such as customer retention and loyalty.

Under the scheme, eligible credit card customers of the bank were entitled to free return flight vouchers on fulfilling certain criteria. The two 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. The scheme went well initially. 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 not commercially viable. They proposed new terms in the agreement, entailing increased payment. Citibank thus terminated the agreement 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 bank's allegations and the choice of arbitrator. Therefore, the bank requested 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 Justice Sujata Manohar, former judge of the Supreme Court, as the sole arbitrator to settle the dispute.

He did so, "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."