Gujarat High Court
Akash Infra Projects Ltd vs Gujarat Industrial Development Corp. on 6 December, 2019
Author: S.R.Brahmbhatt
Bench: S.R.Brahmbhatt
C/IAAP/177/2018 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/PETN. UNDER ARBITRATION ACT NO. 177 of 2018
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AKASH INFRA PROJECTS LTD
Versus
GUJARAT INDUSTRIAL DEVELOPMENT CORP.
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Appearance:
MR.CHIRAG K SUKHWANI(6603) for the Petitioner
NOTICE SERVED BY DS(5) for the Respondent No. 2
SHOKAT B KESHWANI(8413) for the Respondent No. 1
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CORAM: HONOURABLE MR.JUSTICE S.R.BRAHMBHATT
Date : 06/12/2019
ORAL ORDER
1. The present arbitration petition is filed under Section 11 of The Arbitration and Conciliation Act, 1996 for the following reliefs:
(a) Your lordships will be pleased to appoint the arbitrator to resolve the disputes between the parties.
(b) Your Lordships will be pleased to grant any other and further relief as may be deemed just and proper under the facts and circumstances of the case.
2. Facts in brief, as could be culled out from the memo of petition deserves to be set out as under:
Page 1 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER2.1 The petitioner Company was originally incorporated on 14.05.1999 as Akash Infra Projects Pvt. Ltd. under the Companies Act, 1956. Thereafter, Akash Infra Project Pvt. Ltd.
was converted into the Public Ltd. Co. under Section 18 of the Companies Act, 2013 and approved by Central Government on 27.09.2016. The Government of Gujarat by letter dated 15.05.2017 approved the change of name instead of Akash Infra Projects Pvt. Ltd. Gandhinagar to Akash Infra Projects Ltd. and accordingly issued the 'Paripatra' dated 24.05.2017 and informed all the concerned departments in the State of Gujarat. The petitioner is registered Government approved Contractor having the registration as class "AA" contractor. The petitioner is provided the key for submitting the tender online till the State of Gujarat approved the change of name. It is submitted that Akash Infra Projects Pvt. Ltd., or Akash Infra Projects Ltd. is one and the same company having two directors. It is stated that the rights and liabilities of Akash Infra Projects Pvt. Ltd. are taken over by Akash Infra Pronects Ltd.
2.2 By tender notice No.14/2016, the tenders were invited for up-gradation of existing road, approach, SWD, Slab Culvert and water supply @ GIDC, Modasa Industrial Estate under A.I.I. Scheme. The estimated cost of the work was Rs.3,44,87,726/-. The cost of the petitioner's tender was Rs.3,14,45,280/- i.e. 8.6876% below the estimated cost which was accepted vide letter dated 04.08.2017.
2.3 It is stated that as per the direction the security deposit of Rs.8,60,930/- by way of FDR dated 23.08.2017 of Page 2 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER Oriental Bank of Commerce as well as Performance Bond of Rs.17,21,860/- were furnished along with the letter dated 23.08.2017 and request was made to issue the work order. It is stated that since the work order was not issued, by letters dated 27.09.2017, 13.11.2017, 02.12.2017 and 10.01.2018 the respondent no.2 was requested to issue the work order. The respondent no.2 by letter dated 06.02.2018 informed that the tender for the work of up-gradation of existing road was invited and petitioner stood as L1, based on which the tender was approved and acceptance was issued vide letter dated 04.08.2017, meanwhile as per the instructions from the head office, the tender was to be treated as cancelled.
2.4 It is stated that the respondent no.2 by letter dated 19.02.2018 apprised the Chairman about the black listing of the petitioner by AMC. It is stated that by further letter dated 20.02.2018, the respondent no.2 requested the Chairman to consider the letter dated 19.02.2018 and decide the matter accordingly.
2.5 It is stated that by communication dated 01.06.2018, the respondent no.1 was apprised with the facts of the case with the request of compensate Rs.48,88,977/- together with interest @ 18% p.a. within 30 days or Arbitrator may be appointed within 30 days, failing which the petitioner shall be compelled to initiate the action. It is stated that by further communication dated 06.08.2018, the respondent no.1 was again apprised of the same. It is stated that neither the requirements of 01.06.2018 nor the requirements of 06.08.2018 are complied with, therefore, the petitioner is Page 3 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER compelled to file the present petition.
3. Learned counsel for the petitioner relied upon the judgment in cases of:
(i) M/s. Unissi (India) Pvt. Ltd. v. Post-Graduate Institute of Medical Education and Research, reported in AIR 2008 SC (Supp)407, and laid emphasis upon following, which read as under:
"Section 7 - Arbitration agreement (1) In this Part, "arbitration agreement"
means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in-
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or
(c) an exchange of statements of claim and Page 4 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract is in writing and the reference is such as to make that arbitration clause part of the contract."
12. Keeping the aforesaid principles, as quoted hereinabove, in the aforesaid decisions of this Court in kind, in fact what constitutes an arbitration agreement between the parties, we have to examine whether there exists an arbitration agreement between the parties or not in the facts and circumstances of the case. Let us, therefore, consider the gist of the facts involved in this case. A tender enquiry No.2PGI/OGL/2K/6281 dated 21.12.2000 for purchase of Pulse Oxymeters was floated by the PGI. It is an admitted position that the appellant submitted their tender vide their offer No.UIPL/331177/00-01 dated 15.2.2001. The tender of the appellant was accepted by the PGI vide their letter No.PGI/P-61/02/477/11936-51 dated 29.9.2002 for supplying 41 Pulse Oxymeters to their different departments. The tender documents itself contain an arbitration clause and by reason of Page 5 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER acceptance of the tender of the appellant by the PGI, it must be held that there was a valid arbitration agreement between the parties. The appellant supplied 41 Pulse Oxymeters and the receipt thereof was duly acknowledged on behalf of the PGI on the delivery challans. The service/installation reports of the aforesaid machines were duly signed on behalf of the PGI. In the letters issued by the PGI, there was an apparent acknowledgement of supply of the aforesaid meters by the appellant and also reference to the aforementioned tender enquiry number. It is an admitted position that the appellant had sent the agreement containing the arbitration clause, as per the format provided by the PGI, after duly signing the same on requisite value of stamp paper for signing of the same by the PGI. The PGI though admittedly received the same, did not send back the agreement to the appellant after signing it as per the agreement between the parties. The PGI admittedly had used the machines for about an year and thereafter returned the same to the appellant.
Subsequently, the bank guarantee
furnished by the appellant for
Rs.2,13,160/- and the earnest money
deposit of Rs.45,000/- was encashed and forfeited by the PGI. In view of the aforesaid facts and the correspondences between the parties, particularly the tender offer made by the appellant dated 15.1.2001 and supply order of the PGI Page 6 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER dated 29.9.2002, and, in our view, to constitute an arbitration agreement between the parties and the action taken on behalf of the appellant and in view of Section 7 of the Act and considering the principles laid down by the aforesaid two decisions of this Court, as noted herein earlier, we are of the view that the arbitration agreement did exist and therefore the matter should be referred to an Arbitrator for decision. That apart, as we have already noted herein earlier that in this case, the documents on record, in our view, apparently show supply of materials by the appellant and acceptance thereof by the PGI in pursuance of the tender enquiry by the PGI, wherein tender of the appellant containing an arbitration clause was admittedly accepted by the respondent. In that view of the matter, it cannot be said that the PGI should now be allowed to wriggle out from the arbitration agreement between them.
Para 14: Therefore, considering the above aspects of the matter in this case, we must come to this conclusion that although no formal agreement was executed, the tender documents indicating certain conditions of contract contained an arbitration clause. It is also an admitted position that the appellant gave his tender offer which was accepted and the appellant acted upon it. Accordingly, we Page 7 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER are of the view that the learned Additional District Judge, Chandigarh erred in holding that there did not exist any arbitration agreement between the parties and, therefore, the order passed by him is liable to be set aside."
(ii) In case of Indian Hume Pipe Company Ltd. Vs. Gujarat Indus. Development Cor., decided on 21.01.2000 in Petn. Under Arbitration Act No.36 of 1998 with Petn. Under Arbitration Act No.38 of 1998, and laid emphasis upon following paras, which read as under:
"A preliminary objection was raised on behalf of learned counsel for the respondent that the claim of the petitioner is time barred. In this connection, my attention was invited to an affidavit in reply. Another objection was also taken that the petitioner has to approach the Gujarat Public Works Contract Disputes Arbitration Tribunal in accordance with the provisions of the Gujarat Public Works Contract Disputes Arbitration Tribunal Act, 1992 (hereinafter referred to as " Act of 1992").
So far as preliminary objection regarding limitation is concerned, as held by me in IAAP No.30 of 1998 decided on November 05, 1999, such question can be raised before an arbitrator but a petition cannot be dismissed by the Chief Justice on that ground.Page 8 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER
Regarding availability of remedy under the Act of 1992, it was contended by the learned counsel for the petitioner that a similar question is already decided by the Tribunal holding that in respect of such contracts, the Tribunal has no jurisdiction. I do not express any opinion on that aspect. Said question also can be agitated before an arbitrator."
(iii) In case of Gaurav Enterprises Vs. Guru Teg Bahadur Hospital And Anr. decided on 14.05.2018, reported in 2018(4) Arb. LR 194 (Delhi), and laid emphasis upon following paras, which read as under:
"Head Note-... Petitioner accepted award of contract - Petitioner also submitted performance security - Respondent no.1 issued final award of contract - Petitioner accepted final award of contract - Disputes arose between parties - Petitioner filed writ petition which was disposed of by this Court....."
"... Court finds no merit in contention that terms and conditions of contract did not for a part of contract between parties - Petitioner's bid included said terms and acceptance of bid resulted in contract of which terms and conditions were an integral part - Arbitration clause also formed a part of contract...."Page 9 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER
Para-18.- In view of the above, this Court finds no merit in the contention that the terms and conditions of the contract did not form a part of the contract between the parties. The petitioner's bid included the said terms and the acceptance of the said bid resulted in the contract of which the terms and conditions were an integral part. The arbitration clause also formed a part of the contract.
19 - This Court is unable to accept that merely because the formal agreement was not executed, the terms and conditions of the contract did not form a part of the contract between the parties. The execution of a formal agreement was only a ministerial act and merely because respondent no.1 had failed to execute the same, cannot detract from the fact that the contract between the parties had come into existence.
23. - Similarly, the decision in the case of Bharat Sanchar Nigam Limited is also not applicable as, in that case, the Instructions to Bidders expressly provided that the purchase order would be deemed to be a contract and since the purchase order had not been issued, the court held that the contract had not come into existence.
24.- In view of the above, the contention that Page 10 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER an arbitration agreement does not exist between the parties is rejected. There is no dispute that the petitioner had invoked the arbitration clause and the concerned authority had not appointed an arbitrator. In the circumstances, a sole arbitrator is required to be appointed to adjudicate the disputes falling within the scope of the arbitration clause.
25.- Accordingly, this court appoints Justice R.C. Jain (Retired), Delhi High Court (Mobile No.9818000380) as the sole arbitrator to adjudicate all the disputes falling within the scope of the arbitration clause as quoted above. This is subject to the arbitrator making the necessary disclosure under Section 12 of the Act and not being ineligible under Section 12(5) of the Act.
26.- The arbitrator shall fix his fees in consultation with the learned counsel for the parties and having regard to Fourth Schedule of the Act. The parties are at liberty to approach to the arbitrator for further proceedings."
(iv) In case of Bholasingh Jayprakash Construction Limited Vs. Sardar Sarovar Narmada Nigam Limited, decided on 14.10.2011, in Petn. Under Arbitration Act No.85 of 2011 with Petn. Under Arbitration Act No.87 of 2011;
Page 11 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER(v) In case of Om Construction Company Vs. Ahmedabad Municipal Corporation And Another, reported in (2009) 2 Supreme Court Cases 486, and laid emphasis upon following para nos.19, 20, 21 and 22, which read as under:
"Para 19:- We have carefully considered the submissions made on behalf of the respective parties and it appears that we are called upon to decide two questions in order to decide this appeal. The first and possibly basic question is whether in the absence of a Notification in the Official Gazette, the Municipal Corporation can at all be considered as a Public Authority for the purpose of Section 2(1)(k) of the Gujarat Tribunal Act, 1992. The other question is whether the absence of a procedure for appointment of an Arbitrator in the Arbitration Agreement itself, would constitute a bar for the appointment of an Arbitrator under Section 11(6) or any other provision of the 1996 Act, when not only the parties to these proceedings, but the High Court as well, had arrived at a conclusion that the provisions of the Gujarat Tribunal Act, 1992, would not be applicable in the instant case.
20. In this regard, we are inclined to accept the submissions of Mr. Gambhir notwithstanding the fact that the Ahmedabad Municipal Corporation had not been notified to be a "Public Undertaking" as defined in Page 12 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER Section 2(1)(iii) of the Gujarat Tribunal Act, 1992. There is no dispute that the Ahmedabad Municipal Corporation is a local authority and it could assume the garb of a "Public Undertaking" only pursuant to a Notification published in that regard in the Official Gazette. On the other hand, even if Form B-I loses its relevance as far as the present contract is concerned, since the parties have agreed to resolution of their disputes by arbitration, the provisions of Sub-section (5) of the 1996 Act can be pressed into service to enable the parties to invoke the powers of the Chief Justice to appoint an Arbitrator. The stand taken by Mr. Divan is highly technical and is not in aid of resolution of the disputes between the parties by an Arbitral Tribunal.
21. While recognizing the right of the appellant to approach the Chief Justice or the Designated Court under Section 11(6) of the 1996 Act, the stand of the respondent Corporation has been that the party should be relegated to suit, which is quite contrary to the stand taken by it in the case of other employees.
22. Section 11 of the 1996 Act deals exclusively with the appointment of Arbitrators. Sub-section (2) provides that the parties are free to agree on a procedure for appointing the Arbitrator or Arbitrators but Page 13 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER subject to Sub-section (6) which provides that if an agreed procedure had not been acted upon, the parties could approach the Chief Justice or his Designate for appointment of an Arbitrator. Sub-sections (3), (4) and (5) contemplate different situations in which the Chief Justice or his Designate could be requested to appoint an Arbitrator. In our view, in the facts of this case, the answer to the question thrown up in this appeal lies in Sub-clause (5) of Section 11 of the 1996 Act, which reads as follows :-
"11. (5) Failing any agreement referred to in sub-section (2), in an arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within thirty days from receipt of a request by one party from the other party to so agree the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him."
4. Learned counsel for the respondent relied upon the judgment in case of:
(i) In case of Raj Trishul Construction Company Vs. State of Gujarat through Special Secretary and 4 Ors., decided on 16.09.2011, in First Appeal No.2590 of 2011 and laid emphasis upon following paras, which read as under:
"3. The relevant facts are that a tender was Page 14 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER floated for giving contract by the respondent no.1 and its officers. As per the appellant, thereafter vide letter dated 15.04.2000, the tender was accepted. But before the formal contract was entered into vide communication dated 13.03.2001, the appellant was informed by the respondents 1 and 2 that as the Government itself is desirous to undertake the process of tax collection, the tender is cancelled. Under these circumstances, the appellant raised the dispute under the Arbitration and Conciliation Act, 1996 ("the Act" for short). It appears that the matter was thereafter carried before this Court for appointment of the arbitrator and as per the appellant, this Court directed for appointment of the arbitrator with the specific observation that the question of maintainability of the arbitration shall also be decided including on the aspect as to whether there was any concluded contract or not.
"6. .... 20......was no formal contract executed by duly autorised person was not in writing and in AIR 1964 SC 1714, it was held that in these circumstances, that is not binding an absolutely void and here in this case also, learned arbitrators have very widely discussed all this chapter and learned D.R.C. Has discussed all these correspondence and document of tender in which para 1 offer was invited, para 6 validity was for six months....."Page 15 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER
9. The reliance placed upon the decision of Trimex International FZE Ltd. (supra) is ill founded inasmuch as in the said case, as it appears from the facts of the said matter, at paras 3,4 and 5, the contract was not only accepted, but the parties to the contract by their implied conduct acted upon the same. Such is lacking in the present case inasmuch as the first step in furtherance with the contract was to make the payment of the security deposit which was not even performed. Under the circumstances, the said decision is of no help to the appellant."
(ii) In case of PSA Mumbai Investments Pte. Limited Vs. The Board of Trustees of the Jawaharlal Nehru Port Trust and Ors., decided on 11.09.2018, in Civil Appeal No.9352 of 2018 (Arising out of SLP (C) No.8166 of 2018), and laid emphasis upon following paras, which read as under:
"Case Note: Arbitration - Arbitration clause
-Non existence of - Disputes arose between parties to arbitration and Respondent No.1, claimed sum by way of damages against Consortium, and sent arbitration notice stating that, draft Concession Agreement would be arbitration clause governing parties - Application was then filed before sole Arbitrator by Appellant and Respondent No.2, in which they argued that there was no arbitration Clause entered into by way of Page 16 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER agreement between parties - Arbitrator agrred with Appellant - Appeal against said order was filed before High Court in which Arbitrator's order was set aside by holding that there was concluded contract between parties as Letter of Award had been accepted by Appellant, and that since arbitration Clause forms part of bid document between parties, arbitration Clause would govern parties - Hence, present appeal
- Whether arbitration clause entered into by way of agreement between parties"
(i) A conjoint reading of provisions of RFP make it clear that a Disclaimer at the forefront of the RFP makes it clear that there was only a bid process that is going on between the parties and that there was no concluded process would subsume a Letter of Award to be issued by the Respondent No.1 with two further steps under the Schedule to be gone into before the Respondent No.1 and the Special Purpose Vehicle that is constituted by the Consortium for this purpose, thirdly, throughout the stage of the bid process, the forum for dispute resolution is exclusively with the Courts at Agreement, the bid process may be annulled without giving any reason whatsoever by the Respondent No.1.
(ii)....
(iii) Under Section 7 of the Indian Contract Act, 1872 in order to convert a proposal into a promise, the acceptance must be absolute and unqualified. It was clear on the fact of this Page 17 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER case that there is no absolute and unqualified acceptance by the Letter of Award -two or theree very important steps have to be undergone before there could be said to be an agreement which would be enforceable in law as a contract between the parties.
12. Having heard learned counsel on behalf of both parties, it is important to set out some of the important provisions of the RFP.
DISCLAMIER The information contained in this Request for proposal document (the "RFP") or subsequently provided to Bidder(s), whether verbally or in documentary or any other form by or on behalf of the Authority or any of their employees or advisors, is provided to Bidder(s) on the terms and conditions set out in this RFP and such other terms and conditions subject to which such information is provided.
This RFP is not an agreement and is neither an offer nor invitation by the Authority to the prospective Bidders or any other person. The purpose of this RFP is to provide 18 interested parties with information that may be useful to them in making their financial offers pursuant to this RFP (the "Bid"). This RFP includes statements, which reflect various assumptions and assessments arrived at by the Authority in relation to the Project. Such assumptions, assessments and statements do not purport to contain all the information that each Bidder may require. This RFP may not be appropriate Page 18 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER for all persons, and it is not possible for the Authority, its employees or advisors to consider the investment objectives, financial situation and particular needs of each party who reads or uses this RFP. The assumptions, assessments, statements and information contained in this RFP, especially the {Feasibility Report}, may not be complete, accurate, adequate or correct. Each Bidder should, therefore, conduct its own investigations and analysis and should check the accuracy, adequacy, correctness, reliability and completeness of the assumptions, assessments, statements and information contained in this RFP and obtain independent advice from appropriate sources.
Information provided in this RFP to the Bidder(s) is on a wide range of matters, some of which depends upon interpretation of law. The information given is not an exhaustive account of statutory requirements and should not be regarded as a complete or authoritative statement of law. The Authority accepts no responsibility for the accuracy or otherwise for any interpretation or opinion on law expressed herein.
The Authority, its employees and advisors make no representation or warranty and shall have no liability to any person, including any Applicant or Bidder under any law, statute, rules or regulations or tort, principles of restitution or unjust enrichment or otherwise Page 19 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER for any loss, damages, cost or expense which may may arise from or be incurred or suffered on account of anything contained in this RFP or otherwise, including the accuracy, adequacy, correctness, completeness or reliability of the RFP and any assessment, assumption, statement or information contained therein or deemed to form part of this RFP or arising in any way in this Bid Stage.
xxx The Authority also accepts no liability of any nature whether resulting from negligence or otherwise howsoever caused arising from reliance of any Bidder upon the statements contained in this RFP.
The issue of this RFP does not imply that the Authority is bound to select a Bidder or to appoint the Selected Bidder or Concessionaire, as the case may be, for the Project and the Authority reserves the right to reject all or any of the Bidders or Bids without assigning any reason whatsoever.
The Bidder shall bear all its costs associated with or relating to the preparation and submission of its Bid including but not limited to preparation, copying, postage, delivery fees, expenses associated with any demonstrations or presentations which may be required by the Authority or any other costs incurred in connection with or relating to its Bid. All such costs and expenses will remain with the Bidder Page 20 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER and the Authority shall not be liable in any manner whatsoever for the same or for any other costs or other expenses incurred by a Bidder in preparation or submission of the Bid, regardless of the conduct or outcome of the Bidding Process."
xxx 1.1.2 The selected Bidder, who is either a company incorporated under the Companies Act, 1956 or undertakes to incorporate itself as such prior to execution of the Concession agreement (the "Concessionaire"), shall be responsible for (Designing, engineering), financing, procurement, construction, operating and maintenance of the Project under and in accordance with the provisions of a long term Concession agreement (the "Concession Agreement") to be entered into between the selected Bidder and the Authority in the form provided by the Authority as Part of the Bidding Documents pursuant hereto.
xxx 1.1.5 The Concession Agreement sets forth the detailed terms and conditions for grant of the concession to the Concessionaire, including the scope of the Concessionaire's services and obligations (the "Concession").
1.1.6 The statements and explanations contained in this RFP are intended to provide a proper understanding to the Bidders about the subject matter of this RFP and should not be construed or interpreted as limiting in any Page 21 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER way or manner the scope of services and obligations of the Concessionaire set forth in the Concession Agreement or the Authority's rights to amend, alter, change, supplement or clarify the scope of work, the concession to be awarded pursuant to this RFP or the terms thereof or herein contained. Consequently, any omissions, conflicts or contradictions in the Bidding Documents including this RFP are to be noted, interpreted and applied appropriately to give effect to this intent, and no claims on that account shall be entertained by Authority.
xxx 1.2.3 The Bidding Documents include the draft Concession Agreement for the Project. The Feasibility Report prepared by the Authority/consultants of the Authority (the "Feasibility Report") is also included. Subject to the provisions of Clause 2.1.3, the aforesaid documents and any addenda issued subsequent to this RFP Document, but before the Bid Due Date, will be deemed to form part of the Bidding Documents.
xxx 1.2.6 During the Bid Stage, Bidders are invited to examine the Project in greater detail, and to carry out, at their cost, such studies as may be required for submitting their respective Bids for award of the Concession including implementation of the Project.
1.2.7 Bids are inviting for the Project on the Page 22 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER basis of percentage of revenue to be shared with Authority by a Bidder for implementing the Project. The Concession Period is pre- determined, as indicated in the Concession Agreement. The revenue share shall constitute the sole criteria for evaluation of Bids. Subject to Clause 2.16, the Project will be awarded to the Bidder quoting the highest revenue share.
xxx 1.3 Schedule of Bidding Process The Authority shall endeavour to adhere to the following schedule:
Event Description Date
1. Last date of receiving queries To be specified
2. Authority response to queries To be specified
latest by
3. Pre-bid meeting - 1 To be specified
4. Pre-bid meeting - 2 To be specified
5. Bid Due Date(s) 22nd July 2010
6. Opening of Bids On Bid Due Date
7. Letter of Award (LOA) Within 30 days of
Bid Due Date
8. Validity of Bids 120 Days of Bid Due
Date
9. Signing of Concession Within 30 days of
Agreement award of LOA
xxx
2.1.4 Notwithstanding anything to the contrary contained in this RFP, the detailed terms specified in the draft Concession Agreement shall have overrriding effect; provided, Page 23 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER however, that any conditions or obligations imposed on the Bidder hereunder shall continue to have effect in addition to its obligations under the Concession Agreement.
xxx 2.2.1 Where the Bidder is a Consortium, change in composition of the Consortium may be permitted by the Authority during the Bid Stage only where: 22
a) the Lead Member continues to be the Lead Member of the Consortium;
b) the substitute is at least equal, in terms of Technical Capacity and Financial Capacity, to the Consortium Member who is sought to be substituted and the modified Consortium shall continue to meet the pre-qualification and short-listing criteria for Applicants; and
c) the new Member(s) expressly adopt(s) the Application already made on behalf of the Consortium as if it were a party to it originally, and is not an Applicant/Member of any other Consortium bidding for this Project.
2.2.2 Approval for change in the composition of a Consortium shall be at the sole discretion of the Authority and must be approved by the Authority in writing.
xxx 2.5.2 It shall be deemed that by submitting a Bid, the Bidder has:
a. made a complete and careful examination of Page 24 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER the Bidding Documents;
b. received all relevant information requested from the Authority;
c. acknowledged and accepted the risk of inadequacy, error or mistake in the information provided in the Bidding documents or furnished by or on behalf of the Authority relating to any of the matters referred to in Clause 2.5.1 above;
d. satisfied itself about all matters, things and information including matters referred to in Clause 2.5.1 hereinabove necessary and required for submitting an informed Bid, execution of the Project in accordance with the Bidding Documents and performance of all of its obligations thereunder;
e. acknowledged and agreed that inadequacy, lack of completeness or incorrectness of information provided in the Bidding Documents or ignorance of any of the matters referred to in Clause 2.5.1 hereinabove shall not be a basis for any claim for compensation, damages, extension of time for performance of its obligations, loss of profits etc. from the Authority; or a ground for termination of the Concession Agreement; and, f. agreed to be bound by the undertakings provided by it under and in terms hereof.
xxx 2.6.1 Notwithstanding anything contained in this RFP, the Authority reserves the right to Page 25 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER accept or reject any Bid and to annul the Bidding Process and reject all Bids at any time without any liability or any obligation for such acceptance, rejection or annulment, and without assigning any reasons therefor.
xxx 2.7.2 The draft Concession Agreement to be provided by the Authority as part of the Bid Documents shall be deemed part of this RFP.
xxx 2.11.2 The documents accompanying the Bid shall be placed in a separate envelope and marked as "Enclosures of the Bid". The documents shall include:
i. Bid Security in the prescribed format (Appendix - II);
ii. in the prescribed format (Appendix - IV); and iii. A copy of the Concession Agreement with each page initialled by the person signing - b) Power of Attorney for signing of Bid in the prescribed format (Appendix - III);
iv. If applicable, the Power of Attorney for Lead Member of Consortium the Bid in pursuance of the Power of Attorney referred to in Clause (b) hereinabove.
xxx 2.14 Contents of the Bid 2.14.1 The Bid shall be furnished in the format at Appendix - I and shall consist of a revenue Page 26 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER share to be quoted by the Bidder. The Bidder shall specify (in Indian Rupees) the revenue share offered by him to undertake the Project in accordance with this RFP and the provisions of the Concession Agreement.
2.14.2 The Project will be awarded to the Bidder quoting the highest revenue share.
2.14.3 The opening of Bids and acceptance thereof shall be substantially in accordance with this RFP. 2.14.4 The proposed Concession Agreement shall be deemed to be part of the Bid.
2.14.4 The proposed Concession Agreement shall be deemed to be part of the Bid.
xxx 2.20.7 The Bid Security shall be forfeited and appropriated by the Authority as mutually agreed genuine pre-estimated compensation and damages payable to the Authority for, inter alia, time, cost and effort of the Authority without prejudice to any other right or remedy that may be available to the Authority hereunder or otherwise, under the following conditions:
a) If a Bidder submits a non-responsive Bid;
b) If a Bidder engages in a corrupt practice, fraudulent practice, coercive practice, undesirable practice or restrictive practice as specified in Clause 4 of this RFP;
(c) If a Bidder withdraws its Bid during the Page 27 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER period of Bid validity as specified in this RFP and as extended by the Bidder from time to time;
d) in the case of Selected Bidder, if it fails within the specified time limit -
i. to sign the Concession Agreement and/or ii. to furnish the Performance Security within the period prescribed therefor in the Concession Agreement; or
e) in case the Selected Bidder, having signed the Concession Agreement, commits any breach thereof prior to furnishing the Performance Security.
Xxx 3.3.5 After selection, a Letter of Award (the "LOA") shall be issued, in duplicate, by the Authority to the Selected Bidder and the Selected Bidder shall, within 7 (seven) days of the receipt of the LOA, sign and return the duplicate copy of the LOA in acknowledgement thereof. In the event the duplicate copy of the LOA duly signed by the Selected Bidder is not received by the stipulated date, the Authority may, unless it consents to extension of time for submission thereof, appropriate the Bid Security of such Bidder as mutually agreed genuine pre- estimated loss and damage suffered by the Authority on account of failure of the Selected Bidder to acknowledge the LOA, and the next eligible Bidder may be Page 28 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER considered.
3.3.6 After acknowledgement of the LOA as aforesaid by the Selected Bidder, it shall execute the Concession Agreement within the period prescribed in Clause 1.3. The Selected Bidder shall not be entitled to seek any deviation in the Concession Agreement.
xxx 6.1 The Bidding Process shall be governed by, and construed in accordance with, the laws of India and the Courts at Mumbai shall have exclusive jurisdiction over all disputes arising under, pursuant to and/or in connection with the Bidding Process."
13. On a conjoint reading of the aforesaid clauses, a few things become clear - (i) first and foremost a Disclaimer at the forefront of the RFP makes it clear that there is only a bid process that is going on between the parties and that there is no concluded contract between the same (ii) it is equally clear that such bid process would subsume a Letter of Award to be issued by the Respondent No.1 with two further steps under the schedule to be gone into before the draft Concession Agreement finally becomes an agreement between Respondent No.1 and the Special Purpose Vehicle that is constituted by the Consortium for this purpose (iii) that through out the stage of the bid process, the forum for dispute resolution is exclusively with the Courts at Mumbai and (iv) that right uptil the Page 29 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER stage of the entering into the Concession Agreement, the bid process may be annulled without giving any reason whatsoever by the Respondent No.1
14. In addition, it may also be pointed out, on a reading of the Letter of Award itself dated 26.09.2011, as acknowledged by the appellant, that:
"3. You are required to incorporate a Special Purpose Vehicle solely for the purpose of implementing the project (the 'Concessionarie") as per Clause 2.2.6 of RFQ document.
4. As per Clause 2.20.5 of RFP document, your Bid Security shall remain in force and effect till the Concessionarie furnishes the Performance Guarantee of a sum equal to Rs.3350 million (Rupees Three Thousand Three Hundred Fifty million), not later than 90 days from the date of signing of the Concession Agreement.
6. Please note that the Concession Agreement is expected to be signed within 30 days of the issue of this Letter of Award."
This would show that even after the Letter of Award, a Special Purpose Vehicle solely for the purpose of implementing the project would have to be set up, and that this Special Purpose Vehicle would be called the Concessionarie. Further, the bid security given by the appellant shall remain in force till the Page 30 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER Special Purpose Vehicle furnishes the Performance Guarantee for a sum equal to Rs. 3350 million, and that the Concession Agreement is expected to be signed within 30 days of the issue of this Letter of Award.
21) We may hasten to add that this judgment would have no manner of application on the facts of this case for the reason that it has been found by us that there is no agreement between the parties at all in the facts of the present case, making it clear, therefore, that the arbitration clause contained in the draft Concession Agreement would not apply. Further, even the without prejudice argument of Mr. Sibal is worthy of acceptance. Mr. Sibal argued, relying strongly upon M.R. Engineers and Contractors Private Limited (supra), that assuming that there was an arbitration clause which governs the parties, the said clause would be wholly inapt as it would only cover disputes between a Special Purpose Vehicle and the Respondent No.1 arising from the Concession Agreement not yet entered into, and not between the Respondent No.1 and the appellant and Respondent No. 2. He is correct, and we agree with this contention as well.
5. The Court has heard learned counsel for the parties and perused the documents. Few indisputable aspects emerging therefrom deserves to be set out as under:
Page 31 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER(i) The tender notice no.14/2016 was issued by the Respondent for up-gradation of existing road, approach, SWD, Slab Culvert and water supply @ GIDC, Modasa, Industrial Estate. The said tender document contain the following Arbitration Clause:
CLAUSE 30: (1) Disputes to be referred to Tribunal: The dispute relating to this contract, so far as they relate to any of the following matters, Whether such disputes arise during the progress of the work or after the completion or abandonment thereof, shall be referred to the Arbitration Tribunal, Gujarat State.
(i) The rates of payment under Clause 5 for any tools, materials and stores, in or upon the works of the site thereof or belonging to the contractor or procurred by him and intended to be used for execution of the work or any part thereof possession of which may have been taken by the Engineer-In-charge under the said clause-5.
(ii) The reduction in rates made by the Engineer-in-charge under clause 9 from the items of works not accepted as completed fully in accordance with the sanctioned specifications.
(iii) The rate of payment for any class of work which is included in the additional or altered work carried out by the contractor in Page 32 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER accordance with the instructions of the Engineer-in-charge under Clause 14 and the rates for which is to be determined under the said clause 14.
(iv) The rates of payment for materials already purchased or agreed to be purchased by the contractor before receipt of notice given by the Engineer-in-charge under Clause 15, and/or the amount of compensation payable to the contractor under the said clause for loss in respect of such materials.
(v) The amount of compensation which the contractor shall be liable to pay under clause 17 in the event of his failure to rectify, remove or reconstruct the work within the period specified in the written intimation or the amount of expenses incurred by the Engineer-
in-charge under the said clause 17 in rectifying, removing or re-executing the work or in removing and replacing the materials or articles complained of.
(vi) The reduction of rates as may be fixed by the Engineer-in-charge under clause 17 for the inferior work or materials as accepted or made use of.
(vii) The amount of compensation payable by the contractor or damages as estimated and assessed under clause 23.
Page 33 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER(viii) The amount payable to the contractor for the work carried out under clause 33 in accordance with the instruction and the requirements of the Engineer-in-charge in a cfase where there are no specifications.
(2) The provision of Section-21 of the GPW dispute Arbi. Tribunal Act - 92 & order issued by the Govt. in connection with this act will now apply for Arbitration (As per Government N. & W.R.D. Letter No.SUT/1090/2679/K2 dtd. 9/2/94.
(3) The provision of Arbitration Act., shall in so far as they are in consistent with the provision of this Act cease of to apply to any dispute arising from a works contract and all arbitration proceedings in relation to such dispute before an arbitrator court of authority shall stand transferred to the Tribunal.
(4) The awards declared by the arbitrator should be speaking award, giving reasons and calculations for every item of claims. The decision will have to be implemented by all the departments of the State Government and Public Sector Enterprises of Gujarat.
(Resolution F.D. No.PB/1088/735/KT/Sachivalaya/Gandhinagar 5th October 1988).
(5) In case of dispute leading to the contractor or Government of Gujarat Page 34 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER approaching to Court of Law, it shall be within the jurisdiction where the site of work is situated.
(6) The reference to arbitration proceeding under this clause shall not:
(i) affect the right of the Engineer-in-charge under clause 5 to take possession of all or any tolls, plants, materials and stores in or upon the works of site thereof belonging to the contractor or procured by him and intended to be used for the execution of the work or any part thereof.
(ii) Preclude the Engineer-in-charge from utilising the materials purchased by the contractor in any work or from removing such materials to other places, during the period the work is stopped or suspended in pursuance of notice given to the contractor under clause 15.
(iii) Entitle the contractor to stop the progress of the work or the carrying out the additional or altered work in accordance with the provisions of clause 14 or as the case may be, of clause 33.
(iv) CLAUSE 31- Deleted.
(v) CLAUSE-32 - Lump sum in estimates :
When the estimate on which a tender is made includes lump sum in respect of part of the work, the contractor shall be entitled to Page 35 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER payment in respect of the items of wwork involved or the part of the work in question at the same rates as are payable under this contract for such items, or if the part of the work in question is not in the opinion of the Engineer-in-charge capable of measurement, the Engineer-in-charge may, as his discretion, pay the"
(ii) The respondents have not disputed the existence of the aforesaid clause in tender document. They have contended that the said clause would not be operative, as there was no execution of contract in law and hence there exists no justified claim for seeking appointment of Arbitrator.
(iii) The tender of the petitioner was accepted by the respondent and a communication of acceptance was sent to the petitioner vide letter dated 04th August, 2017 calling upon the petitioner to furnish security deposit (5% rupees) 17,21,860/- in the form of Bank Guarantee of nationalized bank in favour of the Executive Engineer, GIDC, Ahmedabad.
This acceptance and the required security deposit and performance guarantee were supplied by the petitioner under communication dated 23rd August, 2017, which came to be accepted by the respondent. There were reminders sent for further action to be taken by the respondent, but without any avail.
(iv) On 06.02.2018, the respondent sent a communication. It was informed that as per the instructions of head office the tender acceptance was treated to have been Page 36 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER cancelled. This document at page 129 in the compilation does not disclose any reason at all.
(v) The reason for cancellation, as indicated by the respondent appears to be the petitioner being black listed by the Ahmedabad Municipal Corporation, though there was no any grievances in respect to the petitioner with respondent or vice-versa.
(vi) The respondents have filed Affidavit-in-Reply resisting the prayer in this petition. The respondents have relied upon page-16 of the tender document and condition no.1.2 and they were reproduced in the affidavit-in-reply, which are reproduced herein for the sake of ready reference hereinbelow:
"Para 7: It is most humbly submitted that this respondent also relies on following specific condition printed in the Tender itself (Page 16 of the Tender, condition no.1.2) wherein it is stated that, "GIDC reserves the right, without any obligation or liability, to accept or reject any or all the bid at any stage of the process, to cancel or modify the process or any part thereof or to vary any of the terms and conditions at any time, without assigning any reasons whatsoever".
Similarly, on Page 9 condition no.11.0 (1), it is provided that "right is reserved by the Page 37 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER Tender Inviting Authority to reject any or all Tender (s) without assigning any reason thereof."
This opponent has produced copy of the Tender document at Annexure-A. ...."
Thus, condition is pressed into service to indicate that the tender document and its acceptance did not create any contract between the parties. But it is required to be noted that the aforesaid condition does not indicate that the same power is exercisable after the issuance of acceptance letter.
(vii) The respondents have also reproduced condition no.9 in paragraph no.8, which is required to be reproduced as under:
8. It is most respectfully submitted that the respondent also relies on condition no.9(ii) (Pate 23) of a Technical Bid (Part-I) of the Tender document wherein it is provided that, "The contractor document shall include the original Tender papers of GIDC, submission of contractor negotiation letter, letter of acceptance, agreement in 2 form and the work order."....Page 38 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER
(viii) The respondents have also produced Clause 30 of the agreement in paragraph 10, which is reproduced as under:
"10...."The disputes relating to this contract, so far as they relate to any of the following matters, whether such disputes arise during the progress of the work or after the completion or abandonment thereof, shall be referred to the Arbitration Tribunal, Gujarat State."
Ever of this Clause provides for "Disputes which arise either during the progress of the work or after the completion or abandonment thereof...."
This clause has been reproduced to laid emphasis upon the fact that the tender document did contain Clause 30 for arbitration. Though, it has been urged by the respondents that the dispute arbitrable is only the dispute arising during progress of the work and not before the work actually starts. In this place respondents have attempted to question the arbitrability of the dispute.
(ix) In rejoinder affidavit, the petitioner has relied upon the decision of the Supreme Court reported in AIR 2008 SC (Supp) 407 and Delhi High Court in 2018(4) Arb. Lr. 194 (Delhi). In rejoinder, the petitioner has taken the following contentions in para 10 based upon the decision of Om Construction Co. (supra), which reproduced as under:
Page 39 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER"para 10.: With respect to Para-10, I say that as held by Hon'ble Supreme Court in case of Om Construction Co. Vs. Ahmedabad Municipal Corporation and another reported in (2009) 2 Supreme Court Cases 486, GIDC is not notified as Public Undertaking therefore, remain outside the purview of the State Act governing the references to Arbitration Tribunal. I say that thus, though clause-30 of the agreement provides for reference to Arbitration Tribunal Gujarat State, however, the reference is not maintainable in the Arbitration Tribunal Gujarat State. I say that since the intention of the parties to refer the disputes to the Arbitration is there in Clause-30 of the tender document, therefore, the disputes are required to be referred to domestic Arbitration Tribunal. I say that the Respondents have abandoned the contract therefore, the disputes which have arisen due to abandonment of the contact are required to be referred to the domestic Arbitral Tribunal."
6. The Court needs to examine the rival contentions against the factual backdrop, as stated hereinabove. The main thrust of submission of the respondents for resisting the prayers for appointment of Arbitrator is non existence of written executed contract in form prescribed and as demanded and for that purpose the reliance is placed upon the various authorities. As against this, the petitioner has contended that the tender document, its acceptance and Page 40 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER acceptance of the subsequent formalities in the form of security deposit acceptance, the performer guarantee acceptance, would amount to establish contractual relationship between the parties so as to bind the arbitration clause. The petitioner has relied upon the decision of Supreme Court in case of M/s. Unissi (India) Pvt. Ltd. (supra), wherein somewhat in similar situation, the Court held that even if there was no formal agreement executed, the tender document when contain arbitration clause and when tender offer was accepted and when tender submitting party acting upon it, the arbitration clause was invocable. This judgment and the ratio thereunder prima facie does help the case of the petitioner for invoking the clause. Similarly, the petitioner has also placed reliance upon the observations of the Court in case of Indian Hume Pipe Company Ltd. (supra), wherein the primary objection qua limitation was also not required to be entertained while considering the application for appointment of Arbitrator and the observations of Delhi High Court, set out hereinabove, also helps the case of the petitioner for seeking appointment of Arbitrator.
7. The respondent have relied upon decision in case of Raj Trishul Construction Company (supra), but fact remains to be noted that there also initially arbitrator was appointed and the observations of the Court were during the examination of the controversy in the First Appeal provisions only. The Court hasten to add here that, that would not preclude the respondents from citing the judgment and relying upon the ratio. Therefore, the observations of the Bench at paragraph no.9, wherein the decision of Trimex International FZE Ltd. was cited, clearly indicate that the Page 41 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER Court decided in the peculiar facts where the parties did not act upon the contract at all. In my opinion, therefore, the said judgment could be of not prima facie much avail to the respondents. It is also required to be noted that the distinguishing feature in PSA Mumbai Investments Pte. Limited (supra) and the facts therein would clearly indicate that, in that case also the Supreme Court was examining the matter on the decision under Section 11 of the Arbitration And Conciliation Act. The Court once again hasten to add that the ratio can well be invoked, but the facts of that case would indicate that the request for qualification (could be said to be an offer) and the contract was to be signed with the Special Performance Vehicle, as could be seen from the observation in paragraph no.21 of the judgment. Thus, the contract was to come into existence with special performance to be created, whereas in the instant case, it was the offerer who submitted his tender which was accepted by the respondents and these facts would, therefore, distinguishable from the facts of the case before the Supreme Court in PSA Mumbai Investments Pte. Limited (supra), in my opinion the said judgment and ratio would not be applicable to the case on hand.
8. The Court needs to be mindful of the fact that the present proceedings are only for the purpose of appointment of Arbitrator and as recently held by the Supreme Court in case of Mayavati Trading Private Limited Vs. Pradyuat Deb Burman, reported in (2019) 8 Supreme Court Cases 714, the Court while examining the matter under Section 11 of the Arbitration Act need not elaborately go into any other aspect except the existence of the arbitration clause. The following observations of the Supreme Court may be extracted Page 42 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER and reproduced hereinbelow for ready reference:
"6. Thus, it can be seen that after the amendment Act of 2019, Section 11(6A) has been omitted because appointment of arbitrators is to be done institutionally, in which case the Supreme Court or the High Court under the old statutory regime are no longer required to appoint arbitrators and consequently to determine whether an arbitration agreement exists.
7. Prior to Section 11(6A), this Court in several judgments beginning with SBP & Co. vs. Patel Engineering Ltd. and Anr., 2005 8 SCC 618 has held that at the stage of a Section 11(6) application being filed, the Court need not merely confine itself to the examination of the existence of an arbitration agreement but could also go into certain preliminary questions such as stale claims, accord and satisfaction having been reached etc.
8. In ONGC Mangalore Petrochemicals Limited vs. ANS Constructions Limited and another, 2018 3 SCC 373, this Court in a case which arose before the insertion of Section 11(6A) dismissed a Section 11 petition on the ground that accord and satisfaction had taken place in the following terms: -
"31. Admittedly, no-dues certificate Page 43 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER was submitted by the contractee company on 21-9-2012 and on their request completion certificate was issued by the appellant contractor.
The contractee, after a gap of one month, that is, on 24-10-2012, withdrew the no-dues certificate on the grounds of coercion and duress and the claim for losses incurred during execution of the contract site was made vide letter dated 12-1- 2013, I.e. after a gap of 3 ½ (three- and-a-half) months whereas the final bill was settled on 10-10-2012. When the contractee accepted the final payment in full and final satisfaction of all its claims, there is no point in raising the claim for losses incurred during the execution of the contract at a belated stage which creates an iota of doubt as to why such claim was not settled at the time of submitting final bills that too in the absence of exercising duress or coercion on the contractee by the appellant contractor. In our considered view, the plea raised by the contractee company is bereft of any details and particulars, and cannot be anything but a bald assertion. In the circumstances, there was full and final settlement of the claim and there was really accord and Page 44 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER satisfaction and in our view no arbitrable dispute existed so as to exercise power under Section 11 of the Act. The High Court was not, therefore, justified in exercising power under Section 11 of the Act."
9. The 246th Law Commission Report dealt with some of these judgments and felt that at the stage of a Section 11(6) application, only "existence" of an arbitration agreement ought to be looked at and not other preliminary issues. In a recent judgment of this Court, namely, Garware Wall Ropes Ltd. vs. Coastal Marine Constructions & Engineering Ltd.,2019 SCCOnLineSC 515, this Court adverted to the said Law Commission Report and held: (Gareware Wall Ropes Ltd. case, SCC paras 8-14)
8...
9...
10...
11. This position was further clarified in Boghara Polyfab as follows:
"22. Where the intervention of the court is sought for appointment of an Arbitral Tribunal under Section 11, the duty of the Chief Justice or his designate is defined in SBP & Co.Page 45 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER
[(2005) 8 SCC 618]. This Court identified and segregated the preliminary issues that may arise for consideration in an application under Section 11 of the Act into three categories, that is, (I) issues which the Chief Justice or his designate is bound to decide; (ii) issues which he can also decide, that is, issues which he may choose to decide; and (iii) issues which should be left to the Arbitral Tribunal to decide.
22.1. The issues (first category) which the Chief Justice/his designate will have to decide are:
(a) Whether the party making the application has approached the appropriate High Court.
(b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement.
22.2. The issues (second category) which the Chief Justice/his designate may choose to decide (or leave them to the decision of the Arbitral Tribunal) are:
(a) Whether the claim is a dead (long-
barred) claim or a live claim.
(b) Whether the parties have Page 46 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection.
22.3. The issues (third category) which the Chief Justice/his designate should leave exclusively to the Arbitral Tribunal are:
(i) Whether a claim made falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration).
(ii) Merits or any claim involved in the arbitration."
12. As a result of these judgments, the door was wide open for the Chief Justice or his designate to decide a large number of preliminary aspects which could otherwise have been left to be decided by the arbitrator under Section 16 of the 1996 Act. As a result, the Law Commission of India, by its Report No. 246 submitted in August 2014, suggested that various sweeping changes be made in the 1996 Act. Insofar as SBP & Co. (supra) and Boghara Polyfab (supra) are concerned, the Law Commission examined the matter and recommended the addition of a new sub- section, namely, sub-section (6A) in Section Page 47 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER
11. In so doing, the Law Commission recommendations which are relevant and which led to the introduction of Section 11(6A) are as follows:
28...
29. The Supreme Court has had occasion to deliberate upon the scope and nature of permissible prearbitral judicial intervention, especially in the context of section 11 of the Act. Unfortunately, however, the question before the Supreme Court was framed in terms of whether such a power is a "judicial"
or an "administrative" power - which obfuscates the real issue underlying such nomenclature/description as to -
-the scope of such powers - i.e. the scope of arguments which a Court (Chief Justice) will consider while deciding whether to appoint an arbitrator or not - i.e. whether the arbitration agreement exists, whether it is null and void, whether it is voidable etc.; and which of these it should leave for decision of the arbitral tribunal.
-the nature of such intervention - i.e. would the Court (Chief Justice) consider the issues upon a detailed trial and whether the same would be decided finally or be left for determination of the arbitral tribunal.
30. After a series of cases culminating in the decision in SBP v. Patel Engineering, (2005) 8 Page 48 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER SCC 618, the Supreme Court held that the power to appoint an arbitrator under section 11 is a "judicial" power. The underlying issues in this judgment, relating to the scope of intervention, were subsequently clarified by Raveendran J. in National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd., where the Supreme Court laid down as follows -
"22.1. The issues (first category) which Chief Justice/his designate will have to decide are:
(a) Whether the party making the
application has approached the
appropriate High Court?
(b) Whether there is an arbitration agreement and whether the party who has applied under section 11 of the Act, is a party to such an agreement?
22.2. The issues (second category) which the Chief Justice/his designate may choose to decide are:
(a) Whether the claim is a dead (long barred) claim or a live claim?
(b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection?
22.3. The issues (third category) which the Page 49 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER Chief Justice/his designate should leave exclusively to the arbitral tribunal are:
(a) Whether a claim falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration)?
(b) Merits of any claim involved in the arbitration."
31...
32...
33. 14. A reading of the Law Commission Report, together with the Statement of Objects and Reasons, shows that the Law Commission felt that the judgments in SBP & Co. (supra) and Boghara Polyfab (supra) required a relook, as a result of which, so far as Section 11 is concerned, the Supreme Court or, as the case may be, the High Court, while considering any application under Section 11(4) to 11(6) is to confine itself to the examination of the existence of an arbitration agreement and leave all other preliminary issues to be decided by the arbitrator."
10. This being the position, it is clear that the law prior to the 2015 Amendment that has been laid down by this Court, which would have included going into whether accord and satisfaction has taken place, has now been Page 50 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER legislatively overruled. This being the position, it is difficult to agree with the reasoning contained in the aforesaid judgment as Section 11(6A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment Duro Felguera, S.A. (supra) - see paras 48 & 59.
11. We, therefore, overrule the judgment in United India Insurance Company Limited (supra) as not having laid down the correct law but dismiss this appeal for the reason given in para 3 above.
12. Mr. Rohatgi now requests us for an extension of the status quo order granted by the trial court for a period of one week from today so that he may adopt other proceedings. This request is granted.
9. In view of these observations of the Supreme Court, this Court need not elaborately dwell upon any aspect when the arbitration clause prima facie appears to be there. This brings the Court to consider that when the forum or tribunal in question under clause-3 being not capable to deal with the dispute in question, as the respondent Corporation is not incorporated into the list of organizations covered by the said Tribunal Act, the course open is to appoint the arbitrator under Section 11 of the Arbitration Act. The Court had an Page 51 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER occasion to deal with such an aspect in case of M/s. Khurana Engineering Limited. Vs. Gandhinagar Urban Development Authority & Ors. in Petn. Under Arbitration Act No.111 of 2018, dated 30.08.2019, wherein after discussion the earlier precedent on this aspect, the Court came to the conclusion that appointment of Arbitrator is to be made under Section 11 and the Clause 30 which also prescribe procedure and when the procedure of the Tribunal would not be available as the Act is not attracted the same, would not deter the Court from appointing the Arbitrator under Section 11 of the Arbitration Act.
10. In view of the aforesaid discussions and the aspect of the judgment rendered by the Supreme Court in case of Mayavati Trading Private Limited Vs. Pradyuat Deb Burman (supra), this Court need not elaborately dwell upon the aspect of contractual relationship when the prima facie documentary evidence available to indicate that the tender document contain the Arbitration Clause, which has not been disputed and when the same is not amenable to the Tribunal prescribed, the dispute, therefore, deserves to be referred to the arbitration, wherein all the questions be kept open and it would be open to the respondents to take out all the available and permissible challenges including that of the execution and contract under Section 16.
11. The Court leaves all the liberty to the respondents and the petitioner to take up all the issues before the Arbitrator that may be appointed.
Page 52 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020 C/IAAP/177/2018 ORDER12. The matter be posed on next week for enabling the parties to indicate their mutual agreed Arbitrator. Put up on 13.12.2019.
(S.R.BRAHMBHATT, J.) Pankaj Page 53 of 53 Downloaded on : Sat Jan 18 01:04:05 IST 2020