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IN THE HIGH COURT OF BOMBAY AT GOA
M.S. SONAK, J.
Qingdao Construction Enginering Group Company Limited - M/s. Venkata Rao Infra Projects Private Limited (JV) – Appellant
Versus
Government of India Through Ministry of Road Transport & Highways represented by the Chief Engineer (NH, R&B) & Another – Respondents .
Stamp Number (Main) No. 4290 of 2019
Decided On : 01-02-2021
Arbitration - Bidding Dispute - Article 26 of the agreement - Clause 6.1 of the RFP bid documents - Courts at New Delhi having exclusive jurisdiction - Bharat Sanchar Nigam Limited v. Telephone Cables Limited (2010) 5 SCC 213, M/s. PSA Mumbai Investments Pte. Limited v. The Board of Trustees of the Jawaharlal Nehru Port Trust & Anr. (2019 (1) ALL MR 960 (S.C.), Dresser Rand S.A. v. Bindal Agro Chem Ltd. & Anr. (2006) 1 SCC 751), National Highways And Infrastructure Development Corporation Limited v. BSCPL Infrastructure Limited
Fact of the Case:
The petitioner, a joint venture concern, submitted a financial bid for a project. A dispute arose regarding the correct bid amount, leading to arbitration proceedings.
Finding of the Court:
The court found that the dispute arose before the parties entered into the contract agreement, and therefore, was not arbitrable under the arbitration clause in the contract agreement. The court rejected the application for arbitration and held that the courts at New Delhi had exclusive jurisdiction.
Issues: Dispute over bid amount, applicability of arbitration clause, jurisdiction of courts
Ratio Decidendi: Disputes arising before the stage the parties enter into the contract were not arbitrable under the arbitration clause existing in the contract entered at a subsequent stage.
Final Decision: The application for arbitration was rejected, and the courts at New Delhi were held to have exclusive jurisdiction.
Case Referred:
Bharat Sanchar Nigam Limited v. Telephone Cables Limited (2010) 5 SCC 213).
JUDGMENT :
1. Heard Mr. A. R. Kantak for the Petitioner and Mr. P. Faldessai, Assistant Solicitor General of India for the Respondents.
2. The petitioner is a joint venture concern comprising of Qingdao Construction Engineering Group Company Limited - M/s Venkata Rao Infra Projects Private Limited (JV). On 23.12.2016, the respondents invited requests for proposals (RFP) for the work of fourlaning of NG-17 from existing km.475.000 to km. 502.500 (Patradevi to Karaswada Section) through an Engineering Procurement and Construction Agreement (EPC) in the State of Goa (said project). The builders were required to submit a technical bid and a financial bid in the format prescribed.
3. The petitioner claims to have submitted a financial bid of INR 472,88,79,000/-, inclusive of taxes and an amount of INR 444,51,46,000/-, exclusive of taxes.
4. It is further the case of the petitioner that the respondent vide communication dated 06.10.2017 conveyed acceptance of the petitioner's bid, albeit for a bid amount INR 444,51,46,000/-.
5. The petitioner, therefore, by communication dated 16.10.2017 requested the respondent to correct the bid amount or the contract price in the LOA from INR 444,51,46,000/- to INR 472,88,79,000/-. On the same date, the petitioner conveyed “conditional acceptance” of LOA, subject to the contract price being revised from INR 444,51,46,000/- to INR 472,88,79,000/-.
6. The respondent, vide communication dated 15.03.2018 informed the petitioner that no conditional acceptance could be considered and the petitioner may, if it so desires, submit an unconditional acceptance/acknowledgment of the LOA.
7. The petitioner thereafter, vide communication dated 23.03.2018 conveyed to the respondent its acknowledgment of LOA without prejudice to its legal rights.
8. Based upon the aforesaid, the parties entered into and executed an agreement dated 08.05.2018 in respect of the execution of the said project. The petitioner relies on Article 26 of the agreement dated 08.05.2018 to submit that a dispute has arisen between the parties on the issue of the correct contract price and the same is liable to be resolved by arbitration in terms of Article 26 of the agreement.
9. The petitioner has pleaded that efforts were made to resolve such dispute through conciliation but since there was no response from the respondent, the petitioner has no option but to invoke the arbitration clause in the agreement and to seek resolution of the dispute through arbitration.
10. Mr. Kantak, the learned counsel for the petitioner submits that the arbitration clause in Article 26 is quite wide and the same encompasses the dispute as to the correct contract price. He, therefore, submits that the respondent is not at all justified in resisting the resolution of such dispute by arbitration.
11. Mr. Kantak submits that the petitioner was required to respond to the RPF by filling up the prescribed forms available on the website. He points out that the petitioner, accordingly, submitted the technical bid and financial bid in the format at Appendix IA and Appendix IB of the RFP respectively. He points out that one of the formats required the bid amount to be stated exclusive of taxes and the other inclusive of taxes. He submits that accordingly in one of the formats, the bid amount was stated at INR 444,51,46,000/- (exclusive of taxes), and in the other format, the bid amount was stated at INR 472,88,79,000/- (inclusive of taxes). He submits that there was no justification for the respondent, in these circumstances, to treat the petitioner's financial bid as INR 444,51,46,000/- inclusive of taxes. He submits that the dispute has arisen between the parties on this score and such a dispute is liable to be resolved by arbitration under Article 26 of the agreement dated 08.05.2018.
12. Mr. Kantak submitted that even the terms and conditions of the RPF have been specifically made a part of
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