Delhi High Court - Orders
Aushta Consulting Engineers (I) Pvt Ltd vs Manipur Tribal Development ... on 7 February, 2024
Author: Anup Jairam Bhambhani
Bench: Anup Jairam Bhambhani
$~5
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 1456/2022
AUSHTA CONSULTING ENGINEERS (I) PVT LTD ..... Petitioner
Through: Mr. Abhishek Birthray and Mr.
Chandan Sharma, Advocates.
versus
MANIPUR TRIBAL DEVELOPMENT CORPORATION
LIMITED ..... Respondent
Through: Mr. David A & S. Gunabanta Meitei,
Advocate for R-1.
Mr. Pinaki Addy, Advocate for R-2.
CORAM:
HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI
ORDER
% 07.02.2024 By way of the present petition under section 11(6) of the Arbitration & Conciliation Act 1996 ('A&C Act'), the petitioner seeks appointment of a nominee arbitrator on behalf of respondent No.1, to adjudicate upon disputes that are stated to have arisen with the said respondent from Agreement dated 19.04.2018.
2. Mr. Chandan Sharma, learned counsel for the petitioner has drawn the attention of this court to clause 28.2, which comprises the arbitration agreement between the parties; and contemplates reference of disputes between them to arbitration in accordance with the A&C Act; with the 'venue' of arbitration being at New Delhi.
3. For completeness, it may be recorded that a separate 'territorial jurisdiction' provision is also contained in clause 28.3, which also ARB.P. 1456/2022 Page 1 of 6 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/02/2024 at 21:16:41 subjects the contract between the parties to the jurisdiction of the courts of law at New Delhi.
4. As per the record, the petitioner had invoked arbitration vide notice dated 10.10.2022 addressed to respondent No.1, claiming approximately Rs.87 lacs from the said respondent; to which notice however, respondent No.1 has not sent a reply. A copy of notice dated 10.10.2022 was also marked to respondent No.2.
5. Notice on this petition was issued on 11.01.2023. However, the respondents have not filed any reply to the petition so far.
6. Mr. David Ahongsangbam, learned counsel appearing for respondent No.1 submits, that in terms of clause 4 of the agreement, the liability to pay the consultancy fee to the petitioner is of the 'competent authority', which is defined in clause 1(f) thereof as M/s Braithwaite Burn and Jessop Construction Company Limited, Calcutta, which has subsequently been impleaded as party-respondent No.2 vide order dated 14.08.2023 made in the present proceedings.
7. Mr. Pinaki Addy, learned counsel appearing for respondent No.2 however submits, that as clearly seen from the record, respondent No.2 is not a signatory to the agreement; and that merely by incorporating a clause in the contract placing certain obligations upon respondent No.2, the petitioner and respondent No.1 cannot bind respondent No.2 to the arbitration agreement.
8. Upon being queried, Mr. Addy submits, that the 'Group of Companies' doctrine also does not apply as between respondents Nos. 1 and 2; and nothing in the transaction would show that respondent No.2 had any intention to be part of the contractual ARB.P. 1456/2022 Page 2 of 6 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/02/2024 at 21:16:41 arrangement between the petitioner and respondent No.1; nor did respondent No.2 have any intention to be bound by the arbitration clause. It is argued that respondent No.2 was in no way connected with the negotiation or performance of the underlying contract, nor did it have any connection with the agreement from which the disputes are stated to have arisen.
9. Accordingly, it is submitted that even on the touchstone of the principles laid down by the Supreme Court in Cox & Kings Ltd vs. SAP India (P) Ltd.1, respondent No.2 cannot be referred to arbitration in, or in connection with, the disputes between the petitioner and respondent No.1.
10. Upon being queried Mr. Addy submits, that on another note, respondent No.2 has made the entire payment due to respondent No.1; but it appears from the allegations in the petition, that respondent No.1 has defaulted in paying consultancy fee to the petitioner.
11. On the other hand, learned counsel appearing for the petitioner and respondent No.1 do not oppose being referred to arbitration and submit that their inter-se disputes be referred to arbitration under the aegis of the Delhi International Arbitration Centre ('DIAC'); with respondent No.1 submitting however, that respondent No.2 be also made party to the arbitration proceedings.
12. On a careful consideration of the submissions made, and in light of paras 164 and 165 of Cox & Kings (supra), this court is of the view 1 2023 SCC OnLine SC 1634 ARB.P. 1456/2022 Page 3 of 6 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/02/2024 at 21:16:41 that the mandate of the Supreme Court is that the referral court should leave it to the arbitral tribunal to decide whether a non- signatory party is indeed a party to the arbitration agreement on the basis of the factual evidence and application of legal doctrine.
13. In the opinion of this court, on a plain reading of Agreement dated 19.04.2018, it is seen that respondent No.2 is not alien to the transaction, inasmuch as respondent No.2 has been designated as the 'competent authority' in clause 1(f) of Terms & Conditions of the Assignment given in Annexure-B to the agreement, which bears the liability to pay consultancy fee to the petitioner in terms of clause 4 thereof. Whether or not respondent No.2 is to be excluded from the scope of the arbitration agreement, for the reason that it is not a signatory to the agreement or for any other reason, would require closer consideration of the evidence in the matter to parse-out the role of respondent No.2 in the transaction. It cannot however be said at this stage, that respondent No.2 should not be referred to arbitration.
14. In view of the above, at this stage, Mr. Addy urges that this court may also refer respondent No.2 to arbitration, however leaving it open to the learned Arbitrator Tribunal to take a final decision as to whether respondent No.2 being a non-signatory party, is bound by the arbitration agreement. Mr. Addy further submits that his right to contend that respondent No.2 is not bound by the arbitration agreement and has no obligation towards the petitioner be also left open.
ARB.P. 1456/2022 Page 4 of 6This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/02/2024 at 21:16:43
15. Upon a conspectus of the averments contained in the petition, the stand taken by the parties, and the submissions made, this court is satisfied that there is a valid and subsisting arbitration agreement between the parties; that this court has territorial jurisdiction to entertain and decide the present petition; and also that the disputes that are stated to have arisen between the parties, as set-out inter-alia in invocation notice dated 10.10.2022, do not appear ex-facie to be non-arbitrable.
16. Learned counsel for the parties also jointly request that instead of the 03-member arbitral tribunal as contemplated in the arbitration agreement, the parties be referred to a sole arbitrator for adjudication of their inter-se disputes; and that this court may appoint an arbitrator; and then refer the matter for arbitration under the aegis of DIAC, keeping all their respective factual and legal contentions open.
17. Accordingly, the present petition is allowed and Mr. Ramesh Singh, Senior Advocate (Cellphone No.: +91 9810071712) is appointed as the learned Sole Arbitrator to adjudicate upon the disputes between the parties; with arbitration proceedings to be conducted under the aegis of the DIAC, in accordance with applicable rules.
18. The learned Sole Arbitrator would furnish to the parties requisite disclosure as required under section 12 of the A&C Act; and in the event there is any impediment to the appointment on that count, the parties are given liberty to file an appropriate application in this court.
ARB.P. 1456/2022 Page 5 of 6This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/02/2024 at 21:16:43
19. The learned Arbitrator shall then proceed with the arbitral proceedings in accordance with the rules and regulations of DIAC and subject to arbitrator's fee and arbitration costs, as may be applicable.
20. All rights and contentions of the parties in relation to the claims/counter-claims are kept open, to be decided by the learned Arbitrator on merits, in accordance with law.
21. It is reiterated that all rights and contentions of the parties, including in particular the contention raised on behalf of respondent No.2 that they are neither bound by the arbitration agreement, nor do they owe any obligation to the petitioner, are left open to be decided by the learned Arbitrator, in accordance with law. It is made clear that this court has not expressed any opinion on the merits of the aforesaid contentions.
22. A copy of this order be communicated forthwith to the Co-ordinator, DIAC, for information and compliance.
23. A copy of this order be communicated by the Registry via e-mail to the learned Sole Arbitrator, as also to learned counsel for the parties.
24. The petition stands disposed-of in the above terms.
25. Pending applications, if any, also stand disposed-of.
ANUP JAIRAM BHAMBHANI, J FEBRUARY 7, 2024 ARB.P. 1456/2022 Page 6 of 6 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/02/2024 at 21:16:43