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2023 Supreme(Del) 1155

IN THE HIGH COURT OF DELHI AT NEW DELHI
V. Kameswar Rao, J.
Newton Engineering And Chemicals Limited – Appellant
Versus
Uem India Private Limited – Respondent
Arb.P. 95 of 2022
Decided On : 06-03-2023

Advocates appeared:
Mr. Akash Nagar, Advocate with Ms. Ruchi Bhargarh Nagar, Mr. Samarpit Chauhan & Ms. Akanksha Chauhan, Advocates, for the Petitioner.
Mr. Kirti Uppal, Senior Advocate with Mr. Debopriyo Maulik & Ms. Riya Gulati, Advocates, for the Respondent.

The Court's limited jurisdiction under Section 11 of the Act does not allow for a detailed consideration of the disputes, which is to be determined by the arbitrator.

Headnote:

Arbitration - Appointment of Arbitrator - Section 11 of the Arbitration and Conciliation Act, 1996 - MoU - Clauses 3, 6, 7, 10 - Contract with ONGC - LOI - Invocation Notice - Dispute Resolution - Appointment of Arbitrator

Fact of the Case:

The petitioner filed a petition seeking appointment of an Arbitrator for disputes arising from a Memorandum of Understanding (MoU) with the respondent for a project awarded by ONGC. The respondent challenged the maintainability of the petition, contending that the disputes did not pertain to the MoU but to subsequent Letters of Intent (LOIs) without arbitration clauses.

Finding of the Court:

The Court found that the disputes between the parties, whether related to the MoU or the subsequent LOIs, are to be decided through arbitration. The Court appointed an arbitrator to adjudicate the disputes, leaving all contentions of the parties open for consideration by the arbitrator.

Issues: The primary issue was whether the disputes between the parties related to the MoU or subsequent LOIs, and whether they were subject to arbitration.

Ratio Decidendi: The Court held that the arbitrator can decide his own jurisdiction and that if the disputes relate to the MoU or subsequent LOIs, they are to be decided through arbitration. The Court's limited jurisdiction under Section 11 of the Act does not allow for a detailed consideration of the disputes, which is to be determined by the arbitrator.

Final Decision: The Court appointed an arbitrator to adjudicate the disputes between the parties, leaving all contentions of the parties open for consideration by the arbitrator.

JUDGMENT

V. Kameswar Rao, J.

1. The present petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 ('Act of 1996'), seeking indulgence of this Court to appoint an Arbitrator for adjudication of disputes which have arisen between the parties herein. Specifically, the instant petition has been filed with the following prayers:-

    "In light of the facts and circumstances of the case, it is most humbly prayed that this Hon'ble Court may be pleased to:

    a. Allow the present Petition.

    b. Appoint an Arbitral Tribunal in the form of Sole Arbitrator, in accordance with Section 11 (4) and 11 (8) of the Arbitration and Conciliation Act, 1996 for reference and adjudication of the claims of the Petitioner as against the Respondent; and

    c. Pass any other orders this Hon'ble Court may deem fit."

2. It is stated in the petition that the petitioner is a private limited company registered under the provisions of the Companies Act, 1956 and possesses extensive experience in the field of Project Management, Detailed Engineering, Manufacture and Erection of Equipment, Process Vessel, Tankages, Piping, Electrical and Instrumentation and other similar areas of work. It has its registered office at 864/B-4, G.I.D.C., Makarpura, Baroda-390010, Gujarat.

3. Whereas the respondent is also a private limited company which specializes in Turnkey services in the water and effluent collection, treatment and disposal and has requisite Manpower, construction equipments and capability in construction Management, Procurement and Detailed Engineering. It is also known as 'Toshiba Water Solutions Private Limited'.

4. It is stated that the petitioner had entered a Memorandum of Understanding ('MoU') dated June 19, 2014 with the respondent for the execution of the work under Tender No. UA5KC13001 ('Tender') granted by the Oil and Natural Gas Corporation ('ONGC') to the petitioner specifically for Modernization of ETP Plant at ONGC Uran Plant.

5. It is stated that as per Clause 3 of the MoU, both the parties had to cooperate in the execution of the Project in a manner that the respondent had to act like a technical collaborator and provide Design and Engineering Services, Supply Supervisory and Management Services, Supply of Critical Equipment for the Project and also to make available to the petitioner its expertise and technical know-how in the field of execution of Water and Effluent Treatment projects. It is further stated that the bid of the petitioner was accepted by the ONGC and as a result, the afore-said MoU had come into force.

6. It is further stated that under Clauses 6 and 7 of the MoU, the respondent had the obligation to render the afore-mentioned services @2% of the contract value, excluding the operation and maintenance costs. The agreed payment had to be disbursed by the petitioner to the respondent in the following manner:

a) 0.50% had to be paid immediately upon receipt of advance payment from the ONGC;

b) Balance 1.50% had to paid by way of three equal quarterly installments, whereas first quarter period had to start from the date of signing the contract.

7. It is stated that the said MoU also contains an Arbitration Clause stipulated as Clause 10, which renders any dispute arising out the said MoU arbitrable by a panel of three arbitrators. Clause 10 of the MoU has been reproduced in the following manner:

    "10. Dispute Resolution

    In case of dispute between the Parties, The Parties shall make all effort to resolve the dispute amicably. However, in case the Parties could not resolved the dispute amicably, the same can be referred for arbitration to an Arbitration Panel of 3 arbitrators as per provisions of the Arbitration and Conciliation Act, 1986. The seat of the Arbitration shall be located at Delhi. The language of the arbitration will be English."

8. It is further stated that as a result of the MoU coming into force, the petitioner and the ONGC entered into a Contract, dated May 11, 2015, bearing no. MR/URAN/MM/LSTK/






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