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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
Talaipalli Coal Mining Pvt. Ltd. - Petitioner
Versus
NTPC Limited – Respondent
ARB.P. 1098 of 2021
Decided On : 25-02-2022
Arbitration and Conciliation Act, 1996 - Section 11(6) - Arbitration and Conciliation (Amendment) Act, 2015 - Project Agreement – Bidders – Arbitration Clause – Appointment of Arbitrator - TCMPL had nominated its Arbitrator and it further prays that two Arbitrators (one nominated by TCMPL and the other as may be appointed by this Court on behalf of NTPC), be directed to appoint Presiding Arbitrator - NTPC had issued a Notice Inviting Tender (‘NIT’) for “Development and Operation of Talaipalli Coal Block, State of Chhattisgarh, India” and for appointment of a Mine Development Operator for said Coal Block - M/s NCC Limited and M/s BGR Mining and Infra Limited (‘Consortium Members’) participated in tendering process as NCC-BGR Consortium.
Finding of the court :
Admittedly, NTPC and TCMPL have not signed any agreement However, TCMPL claims that the parties are bound by the Project Agreement. It claims that in terms of Clause 6.4.4 of the ITB, the Project Agreement was deemed to have been executed between the parties on the issuance of LoA by NTPC - Arbitration Agreement in terms of Clause 23.3 of Project Agreement exists between the parties even though, neither TCMPL nor NTPC has formally signed the Project Agreement - Court must necessarily clarify that the views expressed by this Court are prima facie and does not preclude the parties from contesting the issue regarding existence of the Arbitration Agreement before the Arbitral Tribunal - Judge of the Supreme Court, is appointed as an Arbitrator on behalf of NTPC. The nominated Arbitrators shall jointly appoint the Presiding Arbitrator.
Result : Petition allowed
JUDGMENT :
VIBHU BAKHRU, J.
1. The petitioner (hereafter ‘TCMPL’) has filed the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereafter the ‘A&C Act’) praying that an Arbitrator be appointed on behalf of the respondent (hereafter ‘NTPC’), in accordance with Clause 23 of the Project Agreement. TCMPL had nominated its Arbitrator and it further prays that the two Arbitrators (one nominated by TCMPL and the other as may be appointed by this Court on behalf of NTPC), be directed to appoint the Presiding Arbitrator.
Factual Context
2. On 31.12.2015, NTPC had issued a Notice Inviting Tender (hereafter ‘NIT’) for the “Development and Operation of the Talaipalli Coal Block, State of Chhattisgarh, India” and for the appointment of a Mine Development Operator for the said Coal Block.
2.1 M/s NCC Limited and M/s BGR Mining and Infra Limited (hereafter referred to as the ‘Consortium Members’) participated in the tendering process as NCC-BGR Consortium.
2.2 The bid submitted by NCC-BGR Consortium was accepted and they were declared as the ‘Selected Bidder’. Thereafter, on 13.11.2017, NTPC issued a Letter of Acceptance (hereafter ‘LoA’) to the NCC-BGR Consortium.
2.3 In terms of the Instructions to Bidders (hereafter ‘ITB’), the Consortium Members constituted and incorporated TCMPL as a Joint Venture Company on 11.12.2017. It is stated in the petition that NTPC was informed on 12.12.2017 that TCMPL was incorporated by the Consortium Members as a representative of the Mine Operator.
2.4 Thereafter, on 13.12.2017, the Consortium Members informed NTPC regarding certain intimations issued by TCMPL on behalf of the NCC-BGR Consortium. This was followed by certain other communications issued by TCMPL seeking issuance of a No Objection Certificate from NTPC for approval of construction of the Diesel Bunk in Raikera Village.
2.5 On 14.12.2017, TCMPL requested NTPC to issue a Form-III certificate as it was proposing to apply for a labour license for the Talaipalli Coal Mining Project operations.
2.6 NTPC states that after issuance of the LoA, the Central Bureau of Investigation (CBI) registered an FIR (being FIR No. RC AC1 2017 A0007 dated 07.12.2017) against one of the directors of M/s BGR Mining and Infra Limited under various provisions of the Indian Penal Code, 1860 and the Prevention of Corruption Act, 1988. NTPC states that in view of the registration of the FIR, it did not recognise the incorporation of TCMPL and declined to sign the Project Agreement with TCMPL.
2.7 However, TCMPL contends to the contrary. It relies upon a letter dated 19.12.2017 addressed by NTPC to TCMPL conveying it’s ‘No Objection’ for construction of a Diesel Bunk in Raikera Village. It also claims that NTPC had issued a Form-III certificate to TCMPL for obtaining a labour license under the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 and its relevant rules. However, NTPC had thereafter, on 26.12.2017, called upon TCMPL to return the original copy of the Form-III certificate and to desist from seeking any license on the strength of the Form-III certificate issued by NTPC under the provisions of the Contract Labour (Regulation and Abolition) Act,1970 and the Contract Labour (Regulation and Abolition) Central Rules, 1971.
2.8 On 20.12.2017, NTPC issued a notice for suspension of the mining services in terms of Clause 24.1 of the Project Agreement. This was followed by a Show Cause Notice issued on 29.12.2017, by NTPC to the Consortium Members for terminating the services under Clause 24.4(a) of the Project Agreement.
2.9 The Consortium Members issued a letter dated 08.01.2018 and sought discussions in good faith for resolution of the disputes under Clause 24.4(c) of the Project Agreement. Thereafter, by a letter dated 17.01.2018, the Consortium Members invoked the Disputes Resolution Clause in terms of Clause 23.1 of the Project Agreement.
2.10 NTPC issued a Termination Notice dated 04.07.2019 to the consortium members unde
Point of Law : In terms of Section 11(6A) of the A&C Act, the scope of examination under Section 11 of the A&C Act is limited to the existence of the arbitration agreement
The arbitration agreement allows individual consortium members to invoke arbitration under certain conditions; the referral court's role is limited to determining the existence of the arbitration agr....
Arbitration clauses establishing party-designated arbitrators can become unworkable; disputes may still be arbitrable through court appointment of an arbitrator under statutory provisions.
The arbitration agreement binds all parties, including non-signatories, and disputes must be referred to arbitration despite objections on limitation and jurisdiction.
The court clarified the scope of Section 17 of the A&C Act, emphasizing that interim measures should be in aid of the final relief and related to the disputes pending before the Arbitral Tribunal.
The scope of interim relief under Section 17 of the Arbitration and Conciliation Act is strictly limited to matters directly aiding the final relief sought in arbitration.
Point of law: The Court by default would refer the matter when contentions relating to non-arbitrability are plainly arguable.
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