Jammu & Kashmir High Court
Savronik Bccjv Construction Pvt. Ltd. vs Savronik Sistem India Pvt. Ltd & Anr on 9 April, 2018
Equivalent citations: AIRONLINE 2018 J AND K 627
Author: Dhiraj Singh Thakur
Bench: Dhiraj Singh Thakur
HIGH COURT OF JAMMU AND KASHMIR
AT JAMMU
CREV No. 23/2017 and MP No. 1/2017
Date of order: 09.4.2018
Savronik BCCJV Construction Pvt. Ltd. Vs. Savronik Sistem India Pvt. Ltd. & anr
Coram:
Hon'ble Mr. Justice Dhiraj Singh Thakur, Judge.
Appearing Counsel:
Mr. Parimoksh Seth, Advocate for the petitioner.
Mr. Vishal Sharma, Advocate with Mr. Arvind Khajuria, Advocate for respondent No. 1
Whether approved for press/journal/Media Yes/No Whether approved for Digest/journal Yes/No
1. This Civil Revision Petition has been preferred against the judgment and order dated 01.07.2017 passed by the learned Principal District Judge, Udhampur whereby the application filed by the petitioner in terms of Sections 5 and 8 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997 has been dismissed.
2. Briefly stated the material facts are as under:
3. Respondent No. 2 i.e., IL&FS Transportation Networks Ltd is a company, which was awarded the 'Chenani-Nashri Tunnel Project' in the state of Jammu and Kashmir. The petitioner is a joint venture company formed between respondent No. 1 i.e., Savronik Sistem India Pvt. Ltd and M/s Beigh Construction Company Pvt. Ltd. The petitioner-company was C Rev No. 23/2017 Page 1 of 8 registered as a private limited company for purposes of jointly carrying out the construction work of the 'Chenani-Nashri Tunnel Project'. A detailed Joint Venture Agreement was executed in that regard between the two companies which is not in dispute. Clauses 21.1, 21.2, 21.3 and 21.4 of the Joint Venture Agreement pertained to arbitration, which read as under:
"21.1 Amicable Solution: All disputes, questions or differences whatsoever which may arise at any time between the Parties out of or in connection with or touching of concerning this Agreement including any dispute, question or difference regarding its existence, validity or termination (except as otherwise specified in this Agreement) shall be settled amicably in accordance with the provisions of this Agreement.
21.2 Arbitration: Upon falling such resolution, all disputes arising out of or in connection with the present contract shall be submitted to the International Court of Arbitration of the International Chamber of Commerce and shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.
21.3 The arbitration of any dispute, question or difference shall take place in New Delhi-INDIA in accordance with the Indian Lal and the language of the proceedings will be in English.C Rev No. 23/2017 Page 2 of 8
21.4 Neither of the Parties shall be released from performing its obligations hereunder because arbitration proceedings have been initiated."
4. According to Clause 11.2 of the Joint Venture Agreement dated 14.10.2015, it was envisaged that a joint venture bank account would be open wherein payments would be released by respondent No. 2, IL & FS Transportation Networks Ltd. Clauses 11.2.2 and 11.2.3 inter alia prescribe as under:
"11.2.2 As soon as practicable after the effective date of the contract (or previously if the Executive Committee shall so decide) the Executive Committee shall cause to be opened such back accounts in the name of the Joint Venture (hereinafter called the Joint Venue Bank Accounts) which such bankers and at such places as the Executive Committee may direct."
11.2.3 Payments made by Developer as determined in the Contract, and any payments from third parties including without limitation insurance claim proceeds, damages, claims etc. under or in connection with the contract shall be paid into the bank account of the JV opened in accordance with Article 11.2.2.
Monies from time to time required from the purpose of the contract execution shall be drawn or paid from the Joint Venture Bank Accounts by such persons or persons and in accordance with such procedure, as ;the Executive Committee shall decide."
C Rev No. 23/2017 Page 3 of 85. After the formation of the Joint Venture Company, the respondent No. 2 i.e., IL&FS Transportation Networks Pvt. Ltd entered into a contract with the petitioner-company for construction work of the CNTP project. An agreement dated 21.3.2015 was accordingly signed between the two. According to the agreement dated 21.3.2015 (supra), the parties had agreed to refer the disputes to arbitration in terms of Clause 18.3, which is reproduced hereunder:
"In the event that the parties are unable to resolve any dispute, controversy, or claim in accordance with 18.1 or 18.2 such dispute controversy or claim shall be finally settled by a panel of arbitrators (The "Arbitration Panel") in accordance with the Arbitration and Conciliation Act, 1996. The Arbitration Panel shall consist of three parties. Developer and Contractor shall appoint one arbitrator each and such arbitrators shall within seven days of their appointment, designate a third person to act as arbitration in order to organize an Arbitration Panel. The arbitral proceedings shall take place in Mumbai and shall be conducted in the English language. The award of the arbitrators shall be a reasoned one giving reasons for each claim allowed or disallowed.
(B) Any dispute, controversy or claim referred to the Arbitration Panel in accordance with sub section (a) above shall be considered a commercial dispute arising under the Arbitration and Conciliation Act, 1996."
6. It appears that an Assignment Agreement dated 29.4.2016 was also executed between the petitioner herein and respondent No. 1-Savronik Sistem India Pvt. Ltd. whereby the assignor (the petitioner) had agreed to C Rev No. 23/2017 Page 4 of 8 pass on the payments received from the developer-respondent No. 2 in the proportion mentioned in the Assignment Agreement in favour of respondent No. 1. This was done to secure the payments made by respondent No. 1-Company to the Joint Venture Company-petitioner herein, details whereof have been more elaborately mentioned in the Assignment Agreement.
7. It needs to be noticed that in the assignment Agreement, although IL & FS Transportation Networks Pvt. Ltd from whom payments were to be received, as per the deed of assignment was shown as a party to the agreement, yet according to the petitioner, the same was not signed by any authorized signatory of the said company.
SUIT FOR SPECIFIC PERFORMANCE
8. Since there was some violation in the terms of the assignment agreement dated 29.4.2016, respondent No. 1 feeling aggrieved filed a suit for specific performance against the defendants i.e., the petitioner and the respondent No., 2 herein.
9. The petitioner herein instead of filing a written statement, questioned the jurisdiction of the civil court to proceed with the trial on the premise that the parties were to be governed by the arbitration Clause No. 18.3 contained in contract agreement dated 21.3.2015 to which the defendants were parties inasmuch as the plaintiff was one of the constituents of defendant No. 2 in the civil suit.
C Rev No. 23/2017 Page 5 of 810. The Court below having considered the matter dismissed the application filed by the petitioner inter alia holding that there was no arbitration clause in the assignment agreement. The petitioner feeling aggrieved of the said judgment and order dated 1.7.2017 has thus challenged the same in the present revision petition.
11. It was urged that the court below had erred in rejecting the plea of the petitioner and that the arbitration clause No. 18.3 contained in the agreement dated 21.3.2015 was clear and specific and, therefore, in the light of the same, the suit was not maintainable.
12. Learned counsel for the respondent No. 1, on the other hand, supported the view taken by the court below. It was urged by him that the assignment agreement dated 29.4.2016 was a separate agreement, which governed the rights and obligations of the parties to the assignment agreement, which was distinct from the earlier agreement dated 21.3.2015.
13. It was further urged by the learned counsel for the respondent No. 1 that that assignment agreement did not contain any arbitration clause and therefore, the court below was within its jurisdiction to proceed with the suit.
14. Heard learned counsel for the parties.
15. The only point, which falls for consideration in the present case is as to whether there exists any arbitration clause between the plaintiff-
C Rev No. 23/2017 Page 6 of 8respondent No. 1 herein on the one hand and the petitioner herein i.e., Joint Venture Company, which would oblige the court below to exercise its powers in terms of Sections 5 and 8 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997, which would warrant reference of the parties to the suit for arbitration. Section 8 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997 envisages as under:
"8. Power to refer parties to arbitration where there is an arbitration agreement.
(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.
(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.
(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, arbitration may be connected or continued and in arbitral aware made."
16. Admittedly, the suit was filed by the plaintiff-respondent No. 1 herein for specific Performance of the Agreement dated 29.4.2016 i.e the Assignment Agreement. The said agreement does not specifically contain any arbitration clause. It needs to be highlighted here that the assignment agreement is executed between respondent No. 1-Savronik Sistem India Pvt. Ltd which is a company registered under the Companies Act and the petitioner-Savronic BCCJL construction Private limited which is also a company registered under the companies Act. Both are separate legal entities.
C Rev No. 23/2017 Page 7 of 817. While it may be true that Savronic BCCJB construction Private Limited was formed as a joint venture between M/s Beigh Construction Company Private Limited and M/s Savronik Sistem India Private Limited, yet the Joint Venture Company after its incorporation under the Companies Act as Savronik BCCJB Construction Private Limited is a separate legal entity in the eyes of law. The rights and obligations of the Joint Venture petitioner company would not, therefore, create any rights or obligations on its erstwhile constituents which are separate companies and, therefore, separate legal entities unless otherwise envisaged as per the Joint Venture Agreement.
18. The arbitration clause as envisaged in terms of Clause 18.3 contained in the agreement dated 21.3.2015 therefore, would not govern the parties to the Assignment Agreement.
19. The view taken by the learned District Judge, Udhampur in the order impugned that there is no arbitration clause in the Assignment Agreement is, therefore, legally justified and calls for no interference.
20. For the reasons mentioned above, the petition is found to be without any merit and is accordingly dismissed along with connected application(s).
( Dhiraj Singh Thakur ) Judge Jammu 09.04.2018 Naresh C Rev No. 23/2017 Page 8 of 8