Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
BADAR DURREZ AHMED And ASHUTOSH KUMAR, JJ.
M/S GEO MILLER & CO PVT LTD - Appellant
Versus
BIHAR URBAN INFRASTRUCTURE DEVELOPMENT CORPORATION PVT LTD & ANR - Respondents
FAO(OS) 382/2016
Decided On : 20-02-2017
Arbitration - Dispute Resolution - Arbitration and Conciliation Act, 1996 - Section 9 - OMP (I) No. 290/2015 - Clause 20.4 - Patna Water Supply Distribution Networks Pvt. Ltd. - BUIDCO - Patna Nagar Nigam - Geo Miller - Gammon India - Joint Bidding Agreement - Tripartite Agreement - Supplementary Agreement - Blacklisting - Debarment - Consortium - Lead Member - Invocation of Arbitration Clause
Fact of the Case:
The appellant, Geo Miller, and Gammon India formed a consortium to bid for a project. Disputes arose, leading to the appellant and Gammon India being debarred and blacklisted. The appellant sought to invoke the arbitration clause individually, but the court held that the consortium, not the appellant, could invoke the arbitration clause.
Finding of the Court:
The court found that the appellant could not invoke the arbitration clause individually as the consortium, not the appellant, was the 'party' to the arbitration agreement. The court also rejected the appellant's argument that the blacklisting and debarring were individual actions on the appellant.
Issues: The main issue was whether the appellant could invoke the arbitration clause individually and whether the blacklisting and debarring of the appellant were justified.
Ratio Decidendi: The court held that the intention reflected in the agreement indicated that the arbitration clause could only be invoked by the consortium, not by individual members. The court also referred to a previous case where the word 'party' in the arbitration clause was interpreted broadly, but found that the present arbitration clause clearly referred to a dispute between the 'parties', meaning the consortium.
Final Decision: The appeal was dismissed, and the court held that the appellant could not invoke the arbitration clause individually.
ASHUTOSH KUMAR, J.
CM 47779/2016 (Exemption)
Allowed, subject to all just exceptions.
FAO(OS) 382/2016
1. This appeal is directed against the order dated 06.12.2016 passed by a learned single Judge of this Court in the appellant’s petition under Section 9 of the Arbitration and Conciliation Act, 1996 being OMP (I) No. 290/2015 whereby it was held by the learned single Judge that such petition was not maintainable by the appellant in its individual capacity.
2. The appellant had sought setting aside of orders dated 26.10.2013 and 27.05.2015 debarring the appellant from participating in future tenders by the respondent no.1 and blacklisting the appellant for a period of 5 years respectively.
3. The respondent no.1 had invited bids for a project for design, construction, installation, commissioning, management, operation and maintenance of Intake, RWPH, 220 MLD water treatment plant and water distribution network in Patna.
4. The appellant (Geo Miller) and another company, Gammon India, intending to bid jointly, formed a consortium by way of a ‘Joint Bidding Agreement’ dated 12.01.2012. Under this agreement the parties intended to constitute a proposed SPV i.e. Patna Water Supply Distribution Networks Pvt. Ltd. for the purpose of conducting the works under the agreement. The lead member of the consortium was Gammon India having an equity participation of 74% and Geo Miller held 26% equity.
5. The bid of the consortium/JV was accepted vide Letter of Acceptance dated 27.02.2014 at a bid price of Rs. 5,48,83,14,670/-. A tripartite agreement (TPA) was entered between the JV/consortium, Respondent no.1 (BUIDCO) and Patna Nagar Nigam in terms of which bank guarantees were furnished by the appellant and Gammon India up to the value of 10% of the contract value.
6. A supplementary agreement (SA) was also entered into between aforesaid three parties, containing the dispute resolution clause, the arbitration clause and a clause regarding applicability of law and jurisdiction. In terms of Clause 20.4 of the agreement, it was agreed that arbitration would be held in accordance with the rules of arbitration of the International Centre for Alternative Dispute Resolution, New Delhi. The venue of arbitration was to be Patna. Clause 24.1 provided for "governing law and jurisdiction.” viz. that the Courts at Delhi would have jurisdiction over matters arising out of or relating to the contract.
7. Because of the disputes between the respondents and the JV/consortium as also because of delay in execution of contract, the respondents, by order dated 26.10.2013 debarred the appellant and Gammon India from participating in future tenders to be floated by BUIDCO. On 27.05.2015, the appellant as well as Gammon India were blacklisted for 5 years.
8. The learned single Judge, by noticing the Clause 20.4 of the agreement dealing with arbitration, held that arbitration clause could be invoked only in case of dispute between the parties. The "party", the learned single Judge further observed, was defined under section 2(1)(h) of the Arbitration and Conciliation Act, 1996 which means party to an arbitration agreement. Since the "party" to the arbitration agreement in the present case was the consortium and not Geo Miller in its individual capacity, it was held that such invocation of the arbitration clause by only the appellant was not maintainable.
9. For the sake of completeness, Clause 20.4 of the agreement is being reproduced below:
“20.4 Arbitration
1. Any Dispute which is not resolved amicably by conciliation of the Expert Committee, as provided in Clause 20.3 shall be finally decided by reference to arbitration by a Board of Arbitrators appointed in accordance with the Rules of Arbitration of the International Centre for Alternative Dispute Resolution. New Delhi (the "Rules") or such other rules as may be mutually agreed by the Parties. And shall be subject to the provisions of the arbitration Act. The venue of such arbitration shall be Patna Bihar (India)
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
