The court emphasized the need for appointing an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, due to unresolved disputes between contracting parties.

JUDGMENT (Oral)

(Video-Conferencing)

I.A. 7824/2020 in ARB.P. 356/2020 & I.A. 7826/2020 in ARB.P. 358/2020

Exemptions allowed, subject to all just exceptions.

The applications stand disposed of.

ARB.P. 356/2020 & ARB.P. 358/2020

1. These are petitions under Section 11 (6) of the Arbitration & Conciliation Act, 1996, for appointment of arbitrators.

2. Issue notice. Mr Aseem Chaturvedi accepts notice on behalf of the respondent.

3. With consent of parties, the matter has been heard finally.

4. The relationship between the petitioner and the respondent is governed by a Memorandum of Understanding (MoU), as well as by two sub-contracts, all of which are dated 22nd August, 2019.

5. The MoU, between the petitioner and the respondent, was a fallout of bids, submitted by the respondent, for certain projects relating to City Gas Distribution (CGD) network for various customers.

6. The petitioner and the respondent came to an understanding, formalised in the shape of the aforesaid MoU, dated 22nd August, 2019, to the effect that, in the case of projects awarded to the respondent, the petitioner would be the nominated sub-contractor for execution of part of the works related thereto.

7. Clause 1(ii)(a) of the MoU may, in this regard, be reproduced, thus:

"(ii). Projects already awarded in favour of NIPL

(a) In case of the projects which have already been awarded to NIPL as on the date of this MoU, Sterna shall be the nominated subcontractor for execution of part of works of the projects. NIPL shall subcontract the works or part of the works on the same schedule of rates as per the main contract executed by it with the respective client."

8. Sub-clauses (iv) & (v) of clause (1) of the MOU also merit reproduction, thus:

"(iv). The Parties will decide on the submission of bank guarantees for the Agreed Projects on case to case basis. In the event Sterna agrees to provide performance bank guarantees for any Agreed Project as per the terms of the respective tender/the contract, the costs incurred by Sterna in issuance, maintenance or renewal of the said performance bank guarantees will be reimbursed by NIPL if agreed mutually, on case to case basis. Further, in the event bank guarantees submitted by Sterna are invoked by the Client, NIPL shall keep Sterna fully indemnified against any loss or damage that may be caused to Sterna so long as the encashment was not directly due to a sole breach of the contract terms or non-performance on the part of Sterna.

(v). The Parties will execute with respect to each Agreed Project, a detailed separate agreement for allocation of scope of work, responsibilities, price and risk sharing as well as for establishing mechanism for execution of the Project (s), resolution of disputes etc., based on the terms of this MoU, prior to submission of proposal for each Agreed Project. Specific agreement executed between the Parties for Patiala GA Project forms part of this MoU as Annexure-2."

9. The petitioner asserts that at the request of the respondent, two bank guarantees were submitted by the petitioner in favour of the respondent's client, namely, Torrent Gas Pvt. Ltd.

10. As contemplated by clause 1(v) of the MoU, extracted hereinabove, two sub-contracts were executed, between the petitioner and the respondent, on the date of the MoU, i.e. 22nd August, 2019, relating to the work to be done for the areas of Patiala, Punjab and Karikal, Puducherry.

11. The disputes arose between the parties, consequent on the petitioner asserting that the respondent had defaulted in its obligation under the MoU and the sub-contracts and the respondent level