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2016 Supreme(Chh) 285
IN THE HIGH COURT OF CHHATTISGARH, BILASPUR
Sanjay K. Agrawal, J.
Jhansi-Orai Tollyway Pvt. Ltd. - Petitioner
Versus
Bank of India, Bhilai Mid Corporate Branch & Ors. - Respondents
Civil Revision No.26, 21 of 2014
Decided On : 11-11-2016
For the Petitioner:Mr. Prafull N. Bharat, Advocate.
For the Respondents:Mr. Avinash Chand Sahu, Advocate, Mrs. Fouzia Mirza & Mrs. Smita Jha, Advocates.
Headnote:
Arbitration and Conciliation Act, 1996 - Section 8(1) - Specific Relief Act, 1963 - Sections 27, 31 and 38 - Indian Contract Act, 1872 - Section 23 - Indian Evidence Act - Section 76 - Civil Procedure Code, 1908 - Section 115 - Valid arbitration agreement - Dispute to be capable of settlement – Bank - petitioner Jhansi-Orai Tollyway Pvt. Ltd. instituted a suit for declaration and injunction under Sections 27, 31 and 38 of the Specific Relief Act, 1963 read with Section 23 of the Indian Contract Act, 1872 stating inter alia that the petitioner / plaintiff is a company registered under the provisions of the Companies Act, 1956 and is a leading highway contractor engaged in construction of bridges, road works, fabrication, erection of steel structures, Railway works, sanitary and water supply. It has been further pleaded that defendant No.3 therein namely National Highways Authority of India (NHAI) had granted exclusive right, license and authority to operate and maintain Jhansi-Orai Section (Km 90.300 to Km 225.713) a stretch of National Highway-25 (Total Length 135.413 Km) in the State of Uttar Pradesh on Operation Management and Transfer (OMT) under Public Private Partnership (PPP) basis to the plaintiff for a period of nine years vide the Concession Agreement dated 5-2-2013. It was also pleaded that on 1-9-2012, as per clause 2.1.7 read with clause 2.1.8 of the Request for Proposal, the plaintiff obtained and submitted a Bank Guarantee for Bid Security to the extent of Rs.5.10 crores from defendant No.1 Bank of India, Bhilai Mid Corporate Branch to defendant No.3 – Held, contention of Mr. Avinash Chand Sahu, learned counsel appearing for the petitioner, is that Bank of India is a party defendant in the suit filed by plaintiff Jhansi-Orai Tollyway Pvt. Ltd., whereas it is not a party to the arbitration agreement and therefore the judicial authority/trial Court is absolutely unjustified in relegating the defendant Bank also to arbitration by the impugned order. Whereas, according to learned counsel for NHAI, only parties to the arbitration agreement have been referred to arbitration - Trial Court by its impugned order has directed that the parties are referred to arbitration as provided under Section 8(1) of the AC Act, 1996 - I have heard and considered the rival contentions of parties carefully on this issue - In Booz Allen and Hamilton Inc. (supra), the Supreme Court has held that where a suit is filed by one of the parties to an arbitration agreement against the other parties to the arbitration agreement and if the defendant files an application under Section 8 of the AC Act, 1996 that parties should be referred to arbitration, the judicial authority will have to decide five factors including whether all the parties to the suit are parties to the arbitration agreement Supreme Court in Sandeep Kumar (supra), has clearly held that if some of the defendants were not parties to the arbitration agreement, the question of invoking arbitration clause as against those defendants would not arise - From a careful perusal of the plaint and accompanying documents, it is quite vivid that there is valid enforceable arbitration agreement between plaintiff Jhansi-Orai Tollyway Pvt. Ltd. and defendant No.3 NHAI. The real dispute is only between the plaintiff (Jhansi-Orai Tollyway Pvt. Ltd.) and defendant No.3 (NHAI) and only parties to the arbitration agreement can be referred to arbitration. The order of the trial Court is clarified and it is directed that only parties to the arbitration agreement namely plaintiff Jhansi-Orai Tollyway Pvt. Ltd. and defendant No.3 NHAI are referred to arbitration. Thus, the impugned order passed by the trial Court is clarified and the revision is disposed of accordingly - Civil revision dismissed
1. Oppugning legality, validity and correctness of the order dated 10-2-2014 passed by the trial Court (judicial authority) in Civil Suit No.207-A/2013 by which that Court in exercise of power conferred under Section 8(1) of the Arbitration and Conciliation Act, 1996 (hereinafter called as the ‘AC Act, 1996’) relegated the parties to arbitration finding prima facie valid arbitration agreement existed between the parties and the dispute to be capable of settlement by arbitration, these two revision petitions have been preferred under Section 115 of the Code of Civil Procedure, 1908, one by the plaintiff and another by defendant No.1 Bank stating the impugned order to be unsustainable in law.
[Parties will hereinafter be referred as per their status shown in the suit before the trial Court.]
2. Essential facts, shorn of all paraphernalia, requisite to adjudge the correctness of the order impugned are as under: -
3. The petitioner Jhansi-Orai Tollyway Pvt. Ltd. instituted a suit for declaration and injunction under Sections 27, 31 and 38 of the Specific Relief Act, 1963 read with Section 23 of the Indian Contract Act, 1872 stating inter alia that the petitioner / plaintiff is a company registered under the provisions of the Companies Act, 1956 and is a leading highway contractor engaged in construction of bridges, road works, fabrication, erection of steel structures, Railway works, sanitary and water supply. It has been further pleaded that defendant No.3 therein namely National Highways Authority of India (NHAI) had granted exclusive right, license and authority to operate and maintain Jhansi-Orai Section (Km 90.300 to Km 225.713) a stretch of National Highway-25 (Total Length 135.413 Km) in the State of Uttar Pradesh on Operation Management and Transfer (OMT) under Public Private Partnership (PPP) basis to the plaintiff for a period of nine years vide the Concession Agreement dated 5-2-2013. It was also pleaded that on 1-9-2012, as per clause 2.1.7 read with clause 2.1.8 of the Request for Proposal, the plaintiff obtained and submitted a Bank Guarantee for Bid Security to the extent of Rs.5.10 crores from defendant No.1 Bank of India, Bhilai Mid Corporate Branch to defendant No.3. The Bank Guarantee was valid till 30-4-3013 and was subsequently extended up to 30-10-2013. It was further pleaded that on 9-11-2012, defendant No.3 NHAI sought consent of the plaintiff Company to confirm the acceptance of deletion of clause 14.7 from the Request for Proposal which relates to rectification of latent defects and ultimately, the plaintiff finding no option but to concede to the request of defendant No.3 to delete clause 14.7, by letter dated 16-11- 2012 accepted the deletion of clause 14.7 from the RFP documents. It was finally pleaded that the act of deletion of said clause has rendered the entire contract as immoral and against the judicial conscience of the Court of law as it affects the basic structure of bidding and tendering process and therefore the contract on the basis thereof i.e. the Concession Contract dated 5-2-2013 is void and based upon fraud played upon the plaintiff. Finally, the plaintiff sought relief that the Concession Agreement dated 5-2-2013 entered into between the plaintiff and defendant No.3 is against law, void ab initio, against public policy and immoral and consequently, it be quashed and the plaintiff be released from the obligation of the Bank Guarantee dated 1-9-2012 issued by defendant No.1 in favour of defendant No.3, and further to hold and declare that defendant No.3 has no right to encash the Bid Security and appropriate proceeds thereof. A decree be also passed for declaration in favour of the plaintiff and against defendant No.3 that defendant No.3 has played fraud on the plaintiff to grab Bid Security in the form of Bank Guarantee, and other reliefs were also sought.
4. Upon notice being served, defendant No.3 National Highways Authority of India (NHAI) filed an application under Section 8(1)
