Gujarat High Court
R P Construction vs J P Singhal And Company & 3 on 28 December, 2017
Author: M.R. Shah
Bench: M.R. Shah
O/IAAP/97/2017 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
PETN. UNDER ARBITRATION ACT NO. 97 of 2017
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R P CONSTRUCTION....Petitioner(s)
Versus
J P SINGHAL AND COMPANY & 3....Respondent(s)
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Appearance:
MR NILESH A PANDYA, ADVOCATE for the Petitioner(s) No. 1
MR AKSHAT KHARE, ADVOCATE for the Respondent(s) No. 3
MR.CHIRAG K SUKHWANI,ADVOCATE for the Respondent(s) No. 1
MRS SUMAN KHARE, ADVOCATE for the Respondent(s) No. 3
NOTICE SERVED for the Respondent(s) No. 2 , 4
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
Date : 28/12/2017
ORAL ORDER
[1.0] Present petition under Section 11(6) of the Arbitration Act has been preferred by the petitioner herein requesting to refer the matter to the Arbitration and to appoint the sole Arbitrator to resolve the dispute between the petitioner, respondent no.1 and respondent no.3 herein - ONGC.
[2.0] It is the case on behalf of the petitioner that respondents nos.2 to 4 herein - ONGC had invited E-Tender No.B26SC16005 for Integrated Seismic Job Service (SJS) & Shot Hole Drilling Services for 3D and 3D-3C Seismic Survey for field seasons 2016-17 for geophysical surveys, Vadodara on 26/04/2016, which, as such, was extended up to 24/05/2016. It is the case on behalf of the petitioner that respondent no.1 herein - M/s. J.P. Singhal & Company had approached the Page 1 of 12 HC-NIC Page 1 of 12 Created On Fri Feb 02 23:00:04 IST 2018 O/IAAP/97/2017 ORDER petitioner for bidding the aforesaid tender as he was not having the qualified technical experience. It is the case on behalf of the petitioner that as the petitioner had wide experience with ONGC for similar work and respondent no.1 was aware about the same, in the business meeting held between the petitioner and respondent no.1, the petitioner agreed that respondent no.1 may fill up the tender, and therefore, according to the petitioner, petitioner and respondent no.1 jointly agreed to fill up the tender in the name of respondent no.1 and accordingly respondent no.1 had filled up the tender alongwith the documents of experience, which was required under the tender condition. It is the case on behalf of the petitioner that the petitioner supplied all the experience documents, including the performance certificates issued by the ONGC and the work order and the work received from ONGC and other supporting documents. The petitioner and respondent no.1 executed a MOU as per the said tender condition. It is the case on behalf of the petitioner that respondent no.1 had no technical experience, and therefore, an agreement was executed between the petitioner and respondent no.1 and accordingly respondent no.1 filled up the tender as if it is a commercial bidder. However, with respect to the technical bid, the petitioner's experience certificate as well as the MOU executed between the petitioner and respondent no.1 was submitted alongwith the tender document to ONGC. It is the case on behalf of the petitioner that originally ONGC invited four tenders and after consideration of the tender of respondent no.1, which according to the petitioner was jointly filled up by the petitioner and respondent no.1 and considering the technical experience as required under the tender condition, ONGC awarded three letters of contract in the name Page 2 of 12 HC-NIC Page 2 of 12 Created On Fri Feb 02 23:00:04 IST 2018 O/IAAP/97/2017 ORDER of respondent no.1 on 02/09/2016. It is the case on behalf of the petitioner that thereafter and after the aforesaid three letters of contract awarded in favour of respondent no.1 for the purpose of starting the work as per the understanding and agreement between the petitioner and respondent no.1, the petitioner arranged necessary machinery and labour etc. According to the petitioner, as per the MOU executed between the petitioner and respondent no.1 on 23/05/2016, the petitioner agreed to provide 425 members or more drilling sets with all accessories technical crew and man power for completing the three letters of contract awarded by ONGC. According to the petitioner, the petitioner already managed nearly 325 machineries and 925 manpower and other technical supervisors 75 in number for starting and completing the tender work allotted to respondent no.1. According to the petitioner for the purpose of aforesaid arrangement the petitioner had incurred the expenditure to the tune of Rs.75 lakhs and awaited for instructions from respondent no.1 to start the work. However, since considerable time, respondent no.1 did not respond to the petitioner. The petitioner inquired with respect to the tender work and thereupon the petitioner came to know that respondent no.1 has already started the work through other sub-contractor, who is not technically qualified as per the norms of the ONGC. It is the case on behalf of the petitioner that the petitioner reminded respondent no.1 time and again and also informed the Officers of the ONGC that though on the technical expertise of the petitioner the tender work has been allotted to respondent no.1, however, respondent no.1 is doing the work through unregistered sub- contractor without taking any help of the petitioner. It is the case on behalf of the petitioner that respondent no.1 totally Page 3 of 12 HC-NIC Page 3 of 12 Created On Fri Feb 02 23:00:04 IST 2018 O/IAAP/97/2017 ORDER ignored the grievances of the petitioner and the Officers of ONGC have also not given any response to the grievances voiced by the petitioner. It is the case on behalf of the petitioner that as the dispute has arisen between the petitioner and respondent no.1 arising out of the MOU dated 23/05/2016 the dispute is required to be referred for Arbitration to the sole Arbitrator. It is the case on behalf of the petitioner that in response to the notice to respondent no.1 as well as ONGC, ONGC has replied that as per the letters of contract given to respondent no.1 in the understanding that the petitioner is a qualified person, and therefore, in case of any damages caused, then ONGC will recover from both the parties i.e. the petitioner and respondent no.1 and in the ONGC tender document also there is an Arbitration Clause, and therefore, the relief is sought against respondents nos.2 to 4 - ONGC also.
[3.0] In response to the notice issued by this Court, Shri K.G. Sukhwani, learned advocate has appeared on behalf of respondent no.1 and Shri Akshat Khare, learned advocate has appeared on behalf of respondents nos.2 to 4.
[3.1] So far as the prayer sought against respondent no.1 is concerned, Shri K.G. Sukhwani, learned advocate appearing on behalf of respondent no.1 has stated at the Bar that as there is a dispute between the petitioner and respondent no.1 arising out of the MOU dated 23/05/2016 as per the Arbitration Agreement contained in the said MOU, any dispute between the parties is required to be referred for Arbitration. He has stated at the Bar that respondent no.1 is bound by the terms Page 4 of 12 HC-NIC Page 4 of 12 Created On Fri Feb 02 23:00:04 IST 2018 O/IAAP/97/2017 ORDER and conditions of the MOU, more particularly, Arbitration Agreement. Respondent no.1 has no objection if the dispute between the petitioner and respondent no.1 arising out of the MOU dated 23/05/2016 is referred to the sole Arbitrator, and therefore, as such, the prayer sought in the present petition is not opposed by the learned advocate appearing on behalf of respondent no.1 herein.
[4.0] However, the present petition is opposed by the respondent - ONGC. An affidavit-in-reply is filed on behalf of respondents nos.2 to 4 opposing the present petition and the reliefs sought against respondents nos.2 to 4. It is vehemently submitted by Shri Akshat Khare, learned advocate appearing on behalf of the respondent - ONGC that as such the dispute has arisen between the petitioner and respondent no.1 with respect to the MOU dated 23/05/2016 executed between the petitioner and respondent no.1 only and ONGC is not a party to the MOU dated 23/05/2016 and as the dispute has arisen between petitioner and respondent no.1 arising out of the MOU dated 23/05/2016, present petition against respondents nos.2 to 4 deserves to be dismissed, more particularly, when ONGC is not a party to the Arbitration Agreement and /or the MOU containing the Arbitration Agreement.
[4.1] It is further submitted by Shri Sukhwani, learned advocate appearing on behalf of respondent no.1 that the entire cause of action pleaded in the petition is the dispute between the petitioner and respondent no.1 and according to the petitioner, respondent has not acted as per the MOU dated 23/05/2016 and has proceeded further with the contract Page 5 of 12 HC-NIC Page 5 of 12 Created On Fri Feb 02 23:00:04 IST 2018 O/IAAP/97/2017 ORDER awarded to it by the ONGC on its own and /or through the sub- contractor and not through the petitioner. It is submitted that as such in the bid documents the petitioner has not been impleaded as a joint venture partner in the bid. However, the petitioner was supposed to provide technical assistance to the actual bidder i.e. respondent no.1. It is submitted that therefore the petitioner is neither the bidder not the contractor of ONGC and there is no privity of contract between the petitioner and ONGC as claimed in paragraph nos.4, 9 and 12 of the petition. It is submitted that therefore as the dispute has arisen between the petitioner and respondent no.1 with respect to the MOU dated 23/05/2016 to which the ONGC is not a party and as on today there is no claim by ONGC against the petitioner herein, it is requested to dismiss the present petition.
[4.2] In reply to the above submissions made by Shri Akshat Khare, learned advocate appearing on behalf of the respondent - ONGC, Shri Nilesh Pandya, learned advocate appearing on behalf of the petitioner has relied upon the decisions of the Hon'ble Supreme Court in the case of Rajesh Verma Vs. Ashwani Kumar Khanna reported in (2016) 12 SCC 678; in the case of Duro Felguera, S.A. Vs. Gangavaram Port Limited reported in (2017) 9 SCC 729 and in the case of EMM ENN Associates Vs. Commander Works Engineer and Others reported in (2016) 13 SCC 61
61. [5.0] Shri Pandya, learned advocate appearing on behalf of the petitioner has also heavily relied upon Section 11(6A) of Page 6 of 12 HC-NIC Page 6 of 12 Created On Fri Feb 02 23:00:04 IST 2018 O/IAAP/97/2017 ORDER the Arbitration Act and has submitted that as per Section 11(6A) of the Arbitration Act at this stage the Court while exercising the powers under Section 11(6) of the Arbitration Act is required to see the jurisdiction of the Court exercising the powers under Section 11(6) of the Arbitration Act is confined to the existence of the Arbitration Agreement. It is submitted that therefore any other questions, including whether the dispute arises between the petitioner and respondents nos.2 to 4 - ONGC or not shall be left to the sole Arbitrator to be appointed.
Making the above submissions and relying upon Section 11(6A) of the Arbitration Act, it is requested to appoint the sole Arbitrator to resolve the dispute between the petitioner and respondents herein.
[6.0] Heard the learned Advocates appearing on behalf of the respective parties on preliminary objection /objection raised by the respondent herein - ONGC.
[6.1] At this stage, it is required to be noted that even considering the averments made in the petition it is the case on behalf of the petitioner that petitioner and respondent no.1 had entered into /executed the MOU dated 23/05/2016 under which according to the petitioner the contract /work, which was awarded to respondent no.1 by ONGC was required to be done through the petitioner and despite the MOU dated 23/05/2016 respondent no.1 has started execution of the contract /contracts awarded by the ONGC on its own by appointing its own sub-contractor. It is the case on behalf of the petitioner Page 7 of 12 HC-NIC Page 7 of 12 Created On Fri Feb 02 23:00:04 IST 2018 O/IAAP/97/2017 ORDER that in the meantime the petitioner had already incurred huge expenses, and therefore, the petitioner suffered huge loss. It is the case on behalf of the petitioner that therefore as per the Arbitration Agreement contained in the MOU, the dispute is required to be referred to the sole Arbitrator for Arbitration, and therefore, as such, the dispute is between the petitioner and respondent no.1 arising out of the MOU dated 23/05/2016 executed between the petitioner and respondent no.1 only. ONGC is neither party to the MOU nor party to the Arbitration Agreement contained in the MOU. It is also required to be noted that the contract is awarded in favour of respondent no.1 by ONGC and there is no privity of contract between the petitioner and ONGC. The petitioner is also not party to the contract between the ONGC and respondent no.1. Even, as on today, there is no claim made by ONGC against the petitioner. At the cost of repetition and as observed hereinabove as such the cause of action pleaded in the present petition is the dispute between the petitioner and respondent no.1 arising out of the MOU dated 23/05/2016. Under the circumstances, when the respondent - ONGC is neither party to the MOU executed between the petitioner and respondent no.1 nor the respondent - ONGC is party to the Arbitration Agreement and the dispute is as such between the petitioner and respondent no.1 only, present petition against respondents nos.2 to 4 shall not be maintainable and the same is required to be dismissed against respondents nos.2 to 4 herein.
[6.2] Now so far as the reliance placed upon the Hon'ble Supreme Court in the case of EMM ENN Associates (Supra) relied upon by Shri Nilesh Pandya, learned advocate appearing Page 8 of 12 HC-NIC Page 8 of 12 Created On Fri Feb 02 23:00:04 IST 2018 O/IAAP/97/2017 ORDER on behalf of the petitioner is concerned, on considering the facts before the Hon'ble Supreme Court this Court is of the opinion that the said decision shall not be applicable to the facts of the case on hand. In the case before the Hon'ble Supreme Court while exercising the powers under Section 11(6) of the Arbitration Act, the High Court had undertaken a detailed examination as to whether the claim was time barred /barred by limitation or not. To that Hon'ble Supreme Court has observed and held that considering the nature of jurisdiction of Chief Justice to decide the preliminary objection whether time barred by limitation is to be left to the Arbitrator. It is further observed that exhaustive pleadings on merits of claim and limitation held is not required under Section 11 application. Therefore in the case before the Hon'ble Supreme Court the dispute was not whether a party, who is not a party to the contract /Arbitration Agreement, can be relegated to the arbitration proceedings with respect to the dispute between other parties.
[6.3] Similarly the decision of the Hon'ble Supreme Court in the case of Rajesh Verma (Supra), which has been relied upon by Shri Nilesh Pandya, learned advocate appearing on behalf of the petitioner also shall not be applicable to the facts of the case on hand, more particularly, the issue referred to hereinabove. Even considering the said decision while exercising the jurisdiction of the Court under the Arbitration Act, the Court is confined to examine the questions as to whether there is Arbitration Agreement between the contract party and if so whether any dispute has arisen between the said parties out of that agreement, which may call for an Page 9 of 12 HC-NIC Page 9 of 12 Created On Fri Feb 02 23:00:04 IST 2018 O/IAAP/97/2017 ORDER appointment of the Arbitrator to decide that dispute, and therefore, even as per the said decision while exercising the jurisdiction under Section 11 of the Act the Court can examine the questions as to whether there is an Arbitration Agreement between the contracting party and /or if there is any dispute arising between the parties that may call for appointment of the Arbitrator to decide the dispute, and therefore, this Court can and as such is required to examine the questions whether there is an Arbitration Agreement between the petitioner and the respondent - ONGC or not and /or whether any dispute has arisen between the petitioner and the respondent - ONGC out of the agreement (MOU dated 23/05/2016) which may call for appointment of Arbitrator to decide that dispute. Therefore, in view of the aforesaid facts and circumstances of the case, when there is no existence of MOU between the petitioner and the respondent - ONGC and /or ONGC is not a party to the Arbitration Agreement and that the dispute has not arisen between the petitioner and the respondent - ONGC arising out of the MOU dated 23/05/2016, which contains the Arbitration Agreement, no relief is required to be granted in favour of the petitioner against respondents nos.2 to 4 herein - ONGC.
[6.4] Now so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of Duro Felguera, S.A. Vs. Gangavaram Port Limited (Supra) is concerned, on facts the said decision shall not be applicable. In the case before the Hon'ble Supreme Court the issue was with respect to appointment of Arbitrators with respect to the dispute arising out of the distinct contracts for different works but pertaining to the same project /bid and between the same Page 10 of 12 HC-NIC Page 10 of 12 Created On Fri Feb 02 23:00:04 IST 2018 O/IAAP/97/2017 ORDER parties and the issue was whether the dispute arising out of the distinct contract for different works but pertaining to the same project /bid and between the same parties can be dealt with by a composite reference /single Arbitral tribunal or not. Under the circumstances, on facts, the said decision shall not be applicable.
[6.5] Now so far as the reliance placed upon Section 11 (6A) of the Arbitration Act by Shri Nilesh Pandya, learned advocate appearing on behalf of the petitioner is concerned, it is required to be noted that as per Section 11 (6A) of the Arbitration Act the jurisdiction of the Court while exercising the powers under Section 11(6A) of the Arbitration Act would be confined to the examination of the existence of the Arbitration Agreement, and therefore, the Court can examine whether there is any existence of the Arbitration Agreement or not. Even considering Section 11(6) and Section 11(6A) of the Arbitration Act and while exercising the powers under Section 11 of the Arbitration Act, this Court is required to refer the parties to the Arbitrator with respect to the disputes between the parties to the Arbitration Agreement, and therefore, there shall not be bar under Section 11(6A) of the Arbitration Agreement to examine whether there exist an Arbitration Agreement between the parties or not. While referring the parties to the Arbitration in exercise of powers under Section 11 of the Arbitration Act, party, who is not party to the Arbitration Agreement, cannot be referred to the Arbitration and petition under Section 11 of the Arbitration Act against such a party, who is not a party to the Arbitration Agreement and /or contract /MOU is required to be dismissed.
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O/IAAP/97/2017 ORDER
[7.0] In view of the above and for the reasons stated
hereinabove, the objection /preliminary objection raised by the respondent - ONGC with respect to the maintainability of the present petition against respondent nos.2 to 4 is hereby upheld and /or sustained and the present petition seeking relief against the respondents nos.2 to 4 is required to be dismissed and is hereby dismissed.
[7.1] Now the dispute between the petitioner and respondent no.1 arising out of the MOU dated 23/05/2016 is required to be referred to Arbitration and sole Arbitrator is required to be appointed.
Learned advocates appearing on behalf of the petitioner and respondent no.1 prays for time to suggest the name of the sole Arbitrator in case there is a consensus between them. Stand over to 19/01/2018.
(M.R. SHAH, J.) Siji Page 12 of 12 HC-NIC Page 12 of 12 Created On Fri Feb 02 23:00:04 IST 2018