Indian Kanoon - Search engine for Indian Law

Delhi High Court - Orders

Techno Industries Pvt Ltd vs Iic Formerly Indiabulls ... on 17 January, 2022

Author: Sanjeev Narula

Bench: Sanjeev Narula

                          $~2 & 3
                          *     IN THE HIGH COURT OF DELHI AT NEW DELHI
                          +     ARB.P. 633/2021
                                TECHNO INDUSTRIES PVT LTD                                ..... Petitioner
                                                        Through:   Mr. Shaurya Sahay, Advocate.

                                                        versus

                                IIC FORMERLY INDIABULLS INFRASTRUCTURE COMPANY
                                LIMITED AND ORS.                         ..... Respondents
                                             Through: Mr. Abhishek Anand, Mr. Prateek
                                                      Kushwaha, and Mr. Samriddh Bindal,
                                                      Advocates for Respondent No. 1.

                          +     ARB.P. 634/2021
                                TECHNO INDUSTRIES PVT LTD                                ..... Petitioner
                                                        Through:   Mr. Shaurya Sahay, Advocate.

                                                        versus

                                IIC FORMERLY INDIABULLS INFRASTRUCTURE COMPANY
                                LIMITED AND ANR.                         ..... Respondents
                                             Through: Mr. Abhishek Anand, Mr. Prateek
                                                      Kushwaha, and Mr. Samriddh Bindal,
                                                      Advocates for Respondent No. 1.

                               CORAM:
                               HON'BLE MR. JUSTICE SANJEEV NARULA
                                       ORDER

                          %            17.01.2022
                          [VIA VIDEO CONFERENCING]

1. The present petitions have been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 [hereinafter, 'the Act'], seeking Signature Not Verified Digitally Signed By:AKANSHA SINGH ARB.P. 633/2021 & ARB.P. 634/2021 Page 1 of 6 Signing Date:19.01.2022 23:01:14 appointment of an Arbitrator for resolution of disputes between Petitioner and Respondents, concerning:

(a) In ARB. P. 633/2021: a Letter of Award dated 3rd March, 2011 for installation and commissioning of four passenger elevators and five passengers cum goods elevator at Nasik, Maharashtra, and

(b) In ARB. P. 634/2021: a Letter of Award dated 1st March, 2011 for installation and commissioning of four passenger elevators and five passengers cum goods elevator at Amravati, Maharashtra.

2. The Respondents in ARB.P. 633/2021 are: (1) IIC Limited (IICL) [formerly known as Indiabulls Infrastructure Company Ltd.], (2) Rattan India Nasik Limited (RINL), and (3) Rattan India Power Limited (RIPL); whereas, in ARB.P. 634/2021, the Respondents are only: (1) IICL, and (2) RIPL. It is averred that IICL and RINL are both wholly-owned subsidiaries of RIPL, and for the purposes of the subject Letters of Award, were acting as agents of RPIL.

3. At the outset, Mr. Shaurya Sahay, counsel for the Petitioner states that Corporate Insolvency Resolution Proceedings are pending under the Insolvency and Bankruptcy Code, 2016 qua IICL; a resolution professional has been appointed; and a moratorium is in place. In these circumstances, he submits that at this stage, Petitioner is not pressing the petition qua Respondent No. 1 and arbitration is sought qua RINL and RIPL, who are arrayed as co-respondents as mentioned in para 2 above.

4. At this juncture it must also be noted that since the above-mentioned Respondents did not appear before court, despite service, they have been proceeded against ex-parte. Therefore, there is no contest by the said Respondents.

5. Nevertheless, Mr. Sahay has been heard, to see if there is a prima facie case made out for referring RINL and RIPL to arbitration, who are non- signatories to the Letters of Award. As the facts in both petitions are similar, Mr. Sahay makes the following submissions in respect of ARB. P. 633/2021:

(i) In 2010, RIPL sought to establish a power plant at Nasik, for which, RINL was entrusted/employed for development of the plant, and named as the "owner" of the plant, in which capacity, RINL employed IICL to act as its agent for execution of project works.

(ii) Therefore, IICL was to act as agent of RIPL and RINL within the meaning of Section 182 of the Indian Contract Act, 1872, and was representing RIPL and RINL while dealing with the Petitioner.

(iii) RIPL and RINL were also the direct beneficiaries of the works to be executed by the Petitioner.

(iv) He places reliance on a Letter of Award dated 3rd March, 2011, sent by IICL, acting on behalf of RIPL and RINL to the Petitioner, which specifically recorded that the award of work by IICL to the Petitioner is for the "owner" i.e., RINL.

(v) The works were executed by the Petitioner on joint instructions of all Respondents. Reliance is placed on emails dated 21st June, 2017 and 2 nd January, 2020, to argue that both RIPL and RINL were directly involved in the execution of agreement obligations and were direct beneficiaries of the contract works.

(vi) Further, invoices for the work done were raised by the Petitioner on RIPL, which validated the same before making payment.

(vii) In 2015, certain disputes regarding unpaid invoices arose, constrained Petitioner to invoke arbitration against RIPL (being the principal and Signature Not Verified Digitally Signed By:AKANSHA SINGH ARB.P. 633/2021 & ARB.P. 634/2021 Page 3 of 6 Signing Date:19.01.2022 23:01:14 parent company of IICL and RINL). A petition under Section 11 of the Act was filed before this Court,1 seeking appointment of an Arbitrator, qua disputes arising from the Letter of Award dated 3 rd March, 2011.

In the said petition, vide Order dated 7 th December, 2015, this Court noted RIPL's appearance and consent to arbitration. In the ensuing arbitration proceedings, RIPL had filed its statement of defence dated 11th March 2016 and has not objected to the existence of an arbitration agreement. Further, the Tribunal therein had passed an award by way of settlement on 24 th September 2016, based on terms agreed by RIPL on behalf of, and binding, IICL and RINL as well. On the strength of such facts, it is contended that its acceptance to arbitrate constitutes a valid arbitration agreement qua RIPL under Section 7(4) of the Act, and it cannot be permitted to deny the existence of an arbitration agreement in the instant proceedings as well. Therefore, it cannot now be said that RIPL is an unrelated party. It is clarified that above circumstances are relevant to ARB. P. 633/2021.

(viii) RINL is the named "owner" of the project and therefore a beneficiary of the contract. Thus, the requirement under Section 7(3) and 7(4) regarding the existence of the Arbitration Agreement should be seen as fulfilled.

(ix) Reliance has been placed on the Supreme Court's decision in MTNL v.

Canara Bank,2 and of this court in Shapoorji Pallonji and Co. Pvt. Ltd. v. RIPL & Anr.3 1 Arb. P. No. 549/2015. 2 (2020) 12 SCC 767 3 2021 SCC OnLine Del 2875.

6. In respect of ARB. P. 634/2021, that the facts noted above are similar, except for the fact that there were no previous arbitration proceedings initiated by the Petitioner, under the said Letter of Award.

7. In view of the afore-noted facts, in the opinion of the Court, the prima facie test for the Court to refer Respondents No. 2 & 3 to arbitration, is clearly met. Having regard to the facts noted above, it prima facie appears that RINL and RIPL are inextricably interlinked and directly involved in the contracts despite being non-signatories. They are also direct beneficiaries of the contracts. In fact, IICL seems to be an alter-ego of the non-signatory beneficiaries. In view of the above, and having regard to the principles which guided this court in Shapoorji (supra), the present petitions are allowed.

8. That said, it is clarified that should the Respondents join the arbitration proceedings, they would be free to raise any objections or counter claims, including with respect to the existence of the arbitration agreement, before the Arbitrator, if so advised. Final adjudication on the question regarding the existence of an arbitration agreement qua Respondents No. 2 and 3 is left open

- to be urged before and adjudicated by the Arbitral Tribunal, on the basis of the contentions urged, documents evidenced and averments made therein.

9. In view of the above, the present petitions are allowed and accordingly, Mr. Nakul Dewan, Senior Advocate [Contact No.: +91 9891325005] is appointed as the common sole Arbitrator to adjudicate the disputes arising between the Petitioner, RINL, and RIPL, out of the afore-noted Letters of award.

10. The parties are directed to appear before the learned Sole Arbitrator as and when notified. This is subject to the learned Arbitrator making necessary disclosure(s) under Section 12(1) of the Act and not being ineligible under Signature Not Verified Digitally Signed By:AKANSHA SINGH ARB.P. 633/2021 & ARB.P. 634/2021 Page 5 of 6 Signing Date:19.01.2022 23:01:14 Section 12(5) of the Act.

11. The learned Arbitrator will be entitled to charge his fee in terms of the provisions of the Fourth Schedule appended to the Act.

12. The present petitions are allowed, in the above terms.

SANJEEV NARULA, J JANUARY 17, 2022 as Signature Not Verified Digitally Signed By:AKANSHA SINGH ARB.P. 633/2021 & ARB.P. 634/2021 Page 6 of 6 Signing Date:19.01.2022 23:01:14