Indian Kanoon - Search engine for Indian Law

M/s Jobs S.p.A and the Union of India entered into a contract for supply etc. of equipment, machines etc. to Rail Coach Factory, Kapurthala (for short RCF). The contract agreement has been placed on record as R-1 found at page 135 of the paper book. The contract has been signed by a representative of Jobs S.p.A and one Mr. R.L.Pawar, Deputy Controller of Stores-V for and on behalf of the President of India on 3.9.2001 duly executed on acceptance of tender No.13Y96940 H0150013. It is thus a contract protected by Article 299 of the Constituition of India. The contract agreement shows the appellant company as an agent of M/s Jobs S.p.A, a foreign company. It has not been disputed before this Court that the appellant is not a party or signatory to the contract agreement and has been named only as an agent by M/s Jobs S.p.A, the foreign company enlisted to accomplish the contract at RCF as experts chosen in the field of activity involved for implementing public purpose in India, to serve the objects of the government contract. The contract has not been signed by M/s Batliboi Limited and is not privy to the contract signed between the RCF and the foreign company.

3. Mr.Naresh Markanda, learned senior counsel appears before this Court for M/s Jobs S.p.A. Submits that a fresh clause was inserted in the claim stating that M/s Jobs S.p.A and M/s Batliboi Limited are both equally liable to pay the alleged loss in the aforesaid claimed amount allegedly suffered by the railway administration.

4. Mr Aashish Chopra appears for the appellant and submits that M/s Batliboi Limited is not a signatory to the contract agreement which has been executed by M/s Jobs S.p.A and the Union of India. There is no arbitration clause involving the appellant and the RCF/Union of India. RCF has on its own twisted the cause title by arraying M/s Jobs S.p.A through M/s Batliboi Limited. The appellant was not a party to the proceedings before the previous arbitrator and was introduced by sleight of hand of RCF to bring it to unnecessarily face arbitration proceedings to compel an award against it.

46) as being a document coming from the claimant RCF informing that the Indian agents of the respondent M/s Batliboi Limited tried to rectify the defect but their efforts remained fruitless and ultimately, they left the RCF on 30th May, 2006 when the machine was under complete break down condition. He would then point to document at page 59 being the reply to para. 8 by M/s Jobs S.p.A to the application, pointing out that their engineers were at site and the machine was found working properly and was not under breakdown condition as stated by the claimant/RCF. It was stated that the engineers of the respondent (M/s Jobs S.p.A.) were assisting to solve the issues pertaining to the "C" Axis. What is inferred is that the appellant was at site acting as engineer on behalf of the foreign company trying to repair the problem. Counter to this, it is urged by Mr. Chopra that the appellant can at best be viewed as a sub service contractor of M/s Jobs S.p.A. for the foreign company to service machinery at site but this would not mean that they are party to the contract, in order to bring them within the fold of the contract signed between the foreign company and the RCF/Union of India.

11. After hearing the learned counsel for the parties at length, I have no doubt that the appellant at best was an agent of M/s Jobs S.p.A., Italy to be its technical support entity at site and merely because they carried out repair jobs at site, would not make them liable under a contract not executed by them consciously with the respondent RCF. It is so fundamental to arbitration that in the absence of an arbitration contract signed between the parties, only the signatories are amenable to arbitration jurisdiction and not third parties with no privity of contract. There is no contract, muchless binding between the appellant and the Union of India. If Union of India with all available legal expertise at its command did not make the agent a part of the contract, it can do nothing now except to litigate through arbitration against the foreign company which was the sole party to the proceedings before the first arbitrator and therefore the new arbitrator fell in serious error in dealing with M/s Jobs S.p.A. through M/s Batliboi Limited as its front man. In the totality of facts and circumstances I have no hesitation in setting aside the impugned order/award/interim award, whatever it may be called, passed by the arbitrator on 23rd May, 2011 and resultantly, the order passed by the learned District Judge, Kapurthala both being contrary to law and facts is not tenable. As a result, the appellant company will be kept out of the arbitration proceedings and anything said in the impugned order would not be binding on them in the final determination culminating in the final award, whenever made. Resultantly, the arbitration proceedings would now go on between M/s Jobs S.p.A., Italy and the claimant-RCF. Since the arbitrator has acted contrary to the fundamental principles of arbitration in roping in the appellant without just cause or legal justification, this Court is satisfied that further arbitration proceedings before him should be discontinued as he has not shown a judicious approach and therefore I called upon Mr. Bal to take instructions from the RCF and provide reasons as to why further arbitration proceedings should not be withdrawn from the present arbitrator and handed over to an independent and senior person in RCF to carry on with further proceedings restricted between M/s Jobs S.p.A. and the claimant. Mr.Bal, on instructions, informs this Court that his client would have no objection to a change in the arbitrator and to replace the present one by any another senior officer of RCF who is independent, fair and impartial, suitably acquainted with arbitration law and procedure. If one such arbitrator is not available then to out source the decision maker, including a person who may have held judicial office at its discretion or by consent. This Court appreciates the sensitivity displayed by Mr. Bal to remove the anxiety of this Court so that with the new arbitrator in place, justice would be seen to be done between the parties in accordance with law.