Supreme Court - Daily Orders
Wipro Limited vs Excise And Taxation Technical Services ... on 11 December, 2024
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2024
(Arising out of Special Leave Petition (Civil) No.11386 of 2022)
WIPRO LIMITED … APPELLANT
VERSUS
EXCISE AND TAXATION TECHNICAL
SERVICES AGENCY & ANOTHER … RESPONDENTS
O R D E R
Leave granted.
2. The appellant/claimant and the first respondent is engaged in arbitration proceedings. The genesis of the controversy in this case arises from an application filed by the State of Punjab seeking its deletion from the array of parties as respondent No.2 in the Statement of Claim filed by the appellant/claimant. By the said application, the State of Punjab prayed that its name be struck of by the Arbitral Tribunal as it is not a party to the Arbitration Agreement or even otherwise in anyway concerned with the arbitration.
3. By the order of the learned sole Arbitrator dated 09.01.2021, the application filed by the State of Punjab was allowed and deletion of its name from the array of parties in the Statement of Claim was permitted. Consequently, the name of State of Punjab arrayed as respondent No.2 in the Claim Petition was struck of from the array of parties. As a result, another application filed by the claimant under Section 24 of Signature Not Verified the Arbitration and Conciliation Act was disposed of as being Digitally signed by RADHA SHARMA Date: 2024.12.16 10:57:35 IST Reason: otiose. The said order was assailed by the appellant herein before the Court of District Judge, Patiala in Arbitration Case 1 No.41/2021 under Section 37(2)(a) of the Arbitration and Conciliation Act, 1996. The said appeal was considered by the learned District Judge, Patiala and by judgment dated 17.02.2022, the appeal was dismissed, sustaining the order of the learned Arbitrator dated 09.01.2021. Being aggrieved by the aforesaid two orders, this appeal has been preferred before this Court.
4. We have heard learned senior counsel, Mr. Parag P. Tripathi for the appellant and learned AAG/Sr. Advocate, Mr. Shadan Farasat for second respondent-State and learned counsel, Mr. Pradyuman Sewar for respondent No.1 and perused the material on record.
5. During the course of submissions, it was brought to our notice that the earlier decision of judgment of this Court in Chloro Controls India (P) Ltd. vs. Severn Trent Water Purification Inc. (2013) 1 SCC 641 (“Chloro Controls India (P) Ltd.”) was reconsidered by a Constitution Bench of five learned Judges in Cox and Kings Limited vs. SAP India Private Limited & Another, (2024) 4 SCC 1 (“Cox and Kings Limited”). The conclusions in the aforesaid judgment are at ‘paragraph 170’ which is extracted herein for immediate reference:
“170. In view of the discussion above, we arrive at the following conclusions:
170.1. The definition of “parties” under Section 2(1)(h) read with Section 7 of the Arbitration Act includes both the signatory as well as non-signatory parties; 170.2. Conduct of the non-signatory parties could be an indicator of their consent to be bound by the arbitration agreement;2
170.3. The requirement of a written arbitration agreement under Section 7 does not exclude the possibility of binding non-signatory parties;
170.4. Under the Arbitration Act, the concept of a “party” is distinct and different from the concept of “persons claiming through or under” a party to the arbitration agreement;
170.5. The underlying basis for the application of the Group of Companies doctrine rests on maintaining the corporate separateness of the group companies while determining the common intention of the parties to bind the non-signatory party to the arbitration agreement; 170.6. The principle of alter ego or piercing the corporate veil cannot be the basis for the application of the Group of Companies doctrine;
170.7. The Group of Companies doctrine has an independent existence as a principle of law which stems from a harmonious reading of Section 2(1)(h) along with Section 7 of the Arbitration Act;
170.8. To apply the Group of Companies doctrine, the Courts or tribunals, as the case may be, have to consider all the cumulative factors laid down in Discovery Enterprises [ONGC Ltd. v. Discovery Enterprises (P) Ltd., (2022) 8 SCC 42 :
(2022) 4 SCC (Civ) 80] . Resultantly, the principle of single economic unit cannot be the sole basis for invoking the Group of Companies doctrine;
170.9. The persons “claiming through or under” can only assert a right in a derivative capacity;
170.10. The approach of this Court in Chloro Controls [Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., (2013) 1 SCC 641 : (2013) 1 SCC (Civ) 689] to the extent that it traced the Group of Companies doctrine to the phrase “claiming through or under” is erroneous and against the well-established principles of contract law and corporate law; 170.11. The Group of Companies doctrine should be retained in the Indian arbitration jurisprudence considering its utility in determining the intention of the parties in the context of complex transactions involving multiple parties and multiple agreements;
170.12. At the referral stage, the referral court should leave it for the Arbitral Tribunal to decide whether the non-signatory is bound by the arbitration agreement; and 3 170.13. In the course of this judgment, any authoritative determination given by this Court pertaining to the Group of Companies doctrine should not be interpreted to exclude the application of other doctrines and principles for binding non-signatories to the arbitration agreement.
6. One of the submissions advanced at the bar was that since the impugned order of the learned Arbitrator was during the regime of the dictum of this Court in Chloro Controls India (P) Ltd. and now in Cox and Kings Limited, there has been a crystallization of the law, therefore, the matter could be remanded to the learned Arbitrator for reconsideration of the application filed by the second respondent-State of Punjab vis- a-vis its deletion from the array of parties in the claim made by the appellant herein.
7. Learned AAG appearing for the second respondent-State of Punjab submitted that without going into the merits of the issue if the matter is to be reconsidered by the learned Arbitrator possibly the State of Punjab may not have any serious objection in that regard.
8. Learned counsel for the first respondent who is a party to the arbitration proceeding also submitted that appropriate orders may be made in the matter.
9. Consequently, we find that interest of justice would be sub-served if the matter is remanded to the learned arbitrator to reconsider the application filed by the second respondent- State of Punjab vis-a-vis its deletion from the array of parties in the Claim Petition filed by the appellant herein in light of the judgments of this Court including the latest 4 judgment of this Court in Cox and Kings Limited. As a consequence of the aforesaid directions, the impugned order passed by the learned Additional District Judge, Patiala, Punjab in Arbitration Case No.41/2021 dated 17.02.2022 as well as the order dated 09.01.2021 passed by the learned Sole Arbitrator, are set-aside with a request to reconsider the said application having regard to the dicta of this Court and in accordance with law.
10. We say that we have not expressed anything on the merits of the application filed by the second respondent seeking deletion from the array of parties in the Claim Statement. All contentions on both sides are left open.
11. Consequently, the application filed by the appellant herein under Section 24 of the Arbitration and Conciliation Act also stands revived and to be disposed of along with the application filed by the State of Punjab, in accordance with law.
This appeal is disposed of in the aforesaid terms. No costs.
Pending application(s), if any, shall stand disposed of.
……………………………………………………..,J.
[ B.V. NAGARATHNA ] ………………………………………………………………,J.
[ NONGMEIKAPAM KOTISWAR SINGH ] NEW DELHI;
DECEMBER 11, 2024.
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ITEM NO.6 COURT NO.8 SECTION IV-B
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Special Leave to Appeal (C) No(s). 11386/2022 [Arising out of impugned final judgment and order dated 17-02-2022 in AN No. 41/2021 passed by the Hon’ble Additional District Judge Patiala Punjab] WIPRO LIMITED Petitioner(s) VERSUS EXCISE AND TAXATION TECHNICAL SERVICES AGENCY & ANR. Respondent(s) (IA No. 22233/2023 - APPLICATION FOR PERMISSION IA No. 142887/2022 - APPLICATION FOR PERMISSION IA No. 132084/2022 - CONDONATION OF DELAY IN FILING COUNTER AFFIDAVIT IA No. 90270/2022 - EXEMPTION FROM FILING C/C OF THE IMPUGNED JUDGMENT) Date : 11-12-2024 This matter was called on for hearing today. CORAM :
HON'BLE MRS. JUSTICE B.V. NAGARATHNA HON'BLE MR. JUSTICE NONGMEIKAPAM KOTISWAR SINGH For Petitioner(s) Mr. Parag P. Tripathi, Sr. Adv.
Mr. Nakul Dewan, Sr. Adv.
Mr. Dhirendra Negi, Adv.
Ms. Pragya Chauhan, Adv.
Mr. Avinash Das, Adv.
Mr. Sidharth Sethi, AOR For Respondent(s) Mr. K. V. Singh, Adv.
Mr. Pradyuman Sewar, Adv.
Mr. Samiron Borkataky, AOR Mr. Shadan Farasat AAG, Sr. Adv. Mr. Vivek Jain, D.A.G. Ms. Natasha Maheshwari, Adv. Mr. Abhishek Babbar, Adv.
Mr. Karan Sharma, AOR UPON hearing the counsel the Court made the following O R D E R Leave granted.6
The appeal is disposed of in terms of the signed order.
Pending application(s), if any, shall stand disposed of.
(RADHA SHARMA) (DIVYA BABBAR)
ASTT. REGISTRAR-cum-PS COURT MASTER (NSH)
(Signed order is placed on the file)
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