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IN THE HIGH COURT OF DELHI AT NEW DELHI
Mini Pushkarna, J.
Consulting Engineers Group Limited - Appellant
Versus
National Highways Authority Of India (nhai) - Respondent
O.M.P.(I) (Comm.) 244 of 2022 & I.A. 12741 of 2022
Decided On : 06-10-2022
Arbitration and Conciliation Act - Petition under Section 9 - 9 of the Arbitration and Conciliation Act, 1996 - Summary of Acts and Sections: The court discussed the Arbitration and Conciliation Act, 1996, particularly Section 9, in the context of the petitioner's prayer for staying the debarment order. The court analyzed the authority to invoke the dispute resolution clause and concluded that the joint venture, not the petitioner in its individual capacity, had the authority to invoke the dispute resolution clause. The court dismissed the petition on this basis.
Fact of the Case:
The petitioner sought relief under Section 9 of the Arbitration and Conciliation Act, 1996, to stay the debarment order issued by the respondent. The petitioner participated in a tender process as a joint venture with M/s Aecom and was engaged as the consultant for a construction project. An accident occurred during the project, leading to the debarment order against the petitioner.
Finding of the Court:
The court found that the petitioner, in its individual capacity, did not have the authority to invoke the dispute resolution clause and approach the court. The court dismissed the petition on this basis.
Issues: The main issue was whether the petitioner, in its individual capacity, had the authority to invoke the dispute resolution clause and approach the court under Section 9 of the Arbitration and Conciliation Act, 1996.
Ratio Decidendi: The court held that the joint venture, not the petitioner in its individual capacity, had the authority to invoke the dispute resolution clause. The court relied on previous judgments and legal principles establishing that a joint venture is a legal entity and that action by only one of the constituents of the joint venture is not legally tenable.
Final Decision: The court dismissed the petition, finding that the petitioner, in its individual capacity, could not solely and independently approach the court by taking recourse to the Dispute Settlement Clause.
JUDGMENT
Mini Pushkarna, J. - By way of the present petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter called 'The Act'), petitioner is seeking prayer for staying operation of debarment order dated 02.08.2022 issued by the respondent by which petitioner has been debarred from participating in all the tenders floated by respondent and other executing agencies of Ministry of Road Transport and Highways of India, for a period of three months with levy of penalty of Rs. 20 lakhs. The petitioner further prays for restraining respondent from giving effect to or acting in terms of or in furtherance of the said debarment order, and for restraining respondent from rejecting the bills submitted by petitioner prior to the order dated 02.08.2022 as non responsive.
2. Facts in brief are that, notice inviting tender dated 15.03.2018 was issued by respondent for the project: consultancy services for Authority's Engineer (hereinafter referred to as 'AE') for supervision of construction of 8 Lane Dwarka Expressway from Delhi-Haryana Border to start of rail over bridge, Gurugram, Haryana. As per the tender document, bidders could apply either as a sole firm or by forming joint venture with other consultants.
3. In order to participate in the aforesaid tender process and to provide consultancy services, M/s Aecom Asia Company Ltd (hereinafter referred as 'M/s Aecom') and M/s Consulting Engineering Group Ltd. (hereinafter referred as 'petitioner') agreed to form a consortium wherein M/s Aecom was the lead partner and petitioner was the associate partner. Memorandum of Understanding (MOU) dated 14.05.2018 was entered between petitioner and M/s Aecom for this purpose. Petitioner entered into the bidding process as joint venture with M/s Aecom pursuant to the aforesaid MOU. Technical and financial bids were submitted by M/s Aecom for participation in the tender process.
4. Subsequently, Letter of Award ('LOA') dated 22.10.2018 was issued to the consortium of petitioner and M/s Aecom. LOA was specifically addressed to M/s Aecom being the lead partner and authorized representative of the consultants.
5. Consultancy Agreement dated 05.12.2018 was entered between the consortium of petitioner and M/s Aecom as joint venture on the one hand and respondent on the other hand. Clause 8 of the said Consultancy Agreement under the General Conditions of Contract provides for amicable settlement of disputes between the parties, as follows:
'' 8. Settlement of Disputes
8.1 Amicable Settlement The Parties shall use their best efforts to settle amicably all disputes arising out of or in connection with this Contract or the interpretation thereof.
8.2 Dispute Settlement Any dispute between the Parties as to matters arising pursuant to this Contract which cannot be settled amicably within thirty (30) days after receipt by one Party of the other Party's request for such amicable settlement may be submitted by either Party for settlement in accordance with the provisions specified in the SC."
6. The contract for construction of 8 lane Dwarka Expressway was awarded to Larsen and Toubro Ltd. (hereinafter referred as EPC Contractor). The consortium of petitioner and M/s Aecom was engaged as consultant to act on behalf of respondent herein as Authority's Engineer for supervision of the said construction work.
7. It is the case of the petitioner that as per the design of contractual work, 219 numbers of spans of approximately 40 meters each, were to be erected by the EPC contractor, of which 55% physical progress of contractual work was achieved without any glitch by the EPC contractor and petitioner. However, while erecting P 107-108, some cracks in the bottom of RS3 - RS4 segments and hogging of spans were observed by the EPC contractor on the night of 24.03.2021. The same was intimated telephonically to the petitioner on the morning of 25.03.2021 by the EPC contractors. Thus, it is submitted on behalf of the petitioner that considering the exigency
AI
The main legal point established in the judgment is that a joint venture, as a legal entity, has the authority to invoke the dispute resolution clause, and action by only one of the constituents of t....
Misrepresentation of facts at the time of bidding amounted to fraudulent practice, justifying the debarment of the joint venture consortium.
The arbitration agreement binds all parties, including non-signatories, and disputes must be referred to arbitration despite objections on limitation and jurisdiction.
The court upheld the validity of debarment and encashment of Performance Bank Guarantee due to non-performance by the petitioner under the contract, emphasizing adherence to tender conditions.
The main legal point established in the judgment is that a party can invoke arbitration in accordance with the arbitration agreement between the parties, and the voluntary nature of conciliation as a....
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