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2020 Supreme(Bom) 1190
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
DIPANKAR DATTA, G.S. KULKARNI, JJ.
M/s. MEP-RGSL Toll Bridge Pvt. Ltd. and Another – Petitioners
Versus
Maharashtra State Road Development Corporation Ltd. and Others – Respondents
Writ Petition Nos. 1699, 2337 of 2019
Decided On : 06-11-2020
Advocate Appeared:
For the Petitioners: Abhishek M. Sanghvi, Sachin Datta, Rajiv Dvivedi, Azeem Samual, Shyamsundar Solanke.
For the Respondents: Milind Sathe, Arun Siwach, Vinamra Kopariha, Prachi Vasudeo, Cyril Amarchand Mangaldas, Laxmikant Satelkar.
An arbitration agreement is a consensual remedy, and parties cannot be forced to arbitrate.
Headnote:
Writ petitions filed by two companies seeking direction to the Maharashtra State Road Development Corporation Limited (MSRDC) to provide for arbitration in respect of toll collection contracts that had expired. The petitioners contended that the MSRDC was required to follow the State Government's policy of institutional arbitration and that Clause 36 of the agreement between the parties constituted an arbitration agreement. The MSRDC opposed the petitions, arguing that there was no arbitration agreement between the parties and that the State's policy was not mandatory.
Fact of the Case:
The petitioners, MEP-RGSL Toll Bridge Pvt. Ltd. and Raima Toll and Infrastructure Pvt. Ltd., were awarded toll collection contracts by the MSRDC. The contracts had expired, and there were no outstanding claims between the parties. However, the MSRDC raised a demand for revenue share based on a traffic survey conducted by it. The petitioners contended that the demand was incorrect and requested arbitration. The MSRDC refused, stating that there was no arbitration agreement in the contracts.
Finding of the Court:
The Court held that the petitioners' claims were not maintainable. It found that there was no arbitration agreement between the parties and that the State's policy on institutional arbitration was not mandatory. The Court also noted that the petitioners had not raised any claims against the MSRDC and that the MSRDC's demand for revenue share was not a dispute that could be referred to arbitration.
Issues: 1. Whether there was an arbitration agreement between the parties. 2. Whether the State's policy on institutional arbitration was mandatory. 3. Whether the petitioners had any claims against the MSRDC that could be referred to arbitration.
Ratio Decidendi: 1. An arbitration agreement is a consensual remedy, and parties cannot be forced to arbitrate. An arbitration agreement must be in writing and must satisfy the requirements of Section 7 of the Arbitration and Conciliation Act, 1996. 2. The State's policy on institutional arbitration was not mandatory and could only be applied to existing contracts with the consent of the parties. 3. The petitioners had not raised any claims against the MSRDC, and the MSRDC's demand for revenue share was not a dispute that could be referred to arbitration.
Final Decision: The Court dismissed the petitions with costs.
JUDGMENT :
G.S. KULKARNI, J.
1. These are two petitions invoking the jurisdiction of this Court under Article 226 of the Constitution of India. The first petition is by M/s. MEP-RGSL Toll Bridge Pvt. Ltd. (for short “MEP-RGSL”) the second petition is by Raima Toll and Infrastructure Pvt. Ltd. (for short “Raima”). Both the petitioners (collectively referred as “petitioners”) are stated to be Special Purpose Vehicles of one MEP Infrastructure Developers Limited. The petitioners were beneficiaries of ‘toll contracts’ awarded by respondent no. 1-Maharashtra State Road Development Corporation Limited (for short “MSRDC”) which were at different locations and for different periods. The contract period in regard to both these contracts, has long expired. There is no relation between these two contracts, however as the cause of action being common, these petitions are tagged together.
2. On the above prefatory lines, we note that the prayers as made by the petitioners are quite peculiar, which are inter-alia of a nature, that the MSRDC, be directed by a writ of this Court, to provide for an ‘arbitration’ qua these toll collection contracts entered by the MSRDC with the petitioners. There is also a somewhat incongruous prayer in the first petition, namely for a declaration that Clause 36 of the agreement dated 29 January 2014 entered between the MSRDC and the petitioner, is itself in the nature of an arbitration agreement. It would be appropriate to note the prayers in both the petitions which read thus:
In Writ Petition No. 1699 of 2019
(a) Issue a writ in the nature of mandamus to Respondent No. 1 and 2 to act in consonance with Notification No. Shashan Nirnay 2016/PK-20/KA-19 dated 13.10.2016 and thereby take necessary steps to provide for a dispute resolution mechanism through Arbitration under the auspices of an Arbitration Institute (such as the Respondent No. 5 institute) duly recognized by the Govt. of Maharashtra.
(b) Declare and direct the Clause 36 of the Agreement dated 29.01.2014 between the Petitioner and Respondent No. 1 is itself in the nature of arbitration agreement.
In Writ Petition No. 2337 of 2019
(a) That this Hon’ble Court be pleased to issue an appropriate writ order and direction directing the Respondent No. 1 and 2 follow, observe and obey the policy guidelines as well as directors of the central government as well as the state government (as detailed and annexed in the writ petition) and take a fresh decision on the offer of the petitioner to go for an arbitration for redressal of the grievances.
(b) That this Hon’ble Court be pleased to issue an appropriate writ order and directions directing the Respondent No. 1 and 2 to follow the same procedure of alternative dispute redressal that they have adopted in Clause No. 63 (Vol-III) of the Project Implementation and Securitization of toll at Five Mumbai Entry Points along with maintenance of flyover and Allied Structure.
3. The factual conspectus in the first petition filed by MEP-RGSL, would briefly be thus:
Respondent No. 1-MSRDC is a corporation established and fully owned by the Government of Maharashtra. It was incorporated as a limited company under the Companies Act, 1956 on 2 August 1996. Some of the major functions of the MSRDC are to promote and operate road projects, to plan, investigate, design, construct and manage, identified road projects and their area development, to invite tenders, bids, offers and enter into contracts for the purposes of all the activities of the corporation, to undertake schemes or works, either jointly with other corporate bodies or institutions, or with Government or local authorities, or on agency basis, to undertake any other project and other activities entrusted by the State Government.
4. The State Government is impleaded as respondent no. 3, as it is the petitioners case that the State Government by its notification dated 13 O
