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2022 Supreme(Guj) 1084

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
ARAVIND KUMAR, J.
Ms Vijay Tanks And Vessels Pvt Ltd – Appellant
Versus
Ms Indian Oil Corporation Limited – Respondent
R/Petn. Under Arbitration Act No. 166 of 2021 With Civil Application (Fixing Date Of Early Hearing) No. 1 of 2022, In R/Petn. Under Arbitration Act No. 166 of 2021
Decided on : 21-10-2022

Advocates:
Advocate Appeared:
For the Appellant :MR. S.N. SOPARKAR, SENIOR ADVOCATE WITH MR NIKUNT K RAVAL
For the Respondent:M R BHATT, MR. MANISH BHATT, SENIOR ADVOCATE WITH MUNJAAL M BHATT, ADVOCATE

The main legal point established in the judgment is the existence of an arbitration agreement between the parties for resolution of disputes as per clause 13.5 of the tender document, and the determination that the dispute regarding the applicability of a specific clause was an arbitrable dispute requiring adjudication through arbitration.

Headnote:

ARBITRATION - Dispute arising from tender contract - Clause 13.5 of the tender document provided for resolution of disputes by arbitration. The court found that there was an arbitration agreement between the parties for resolution of disputes as per clause 13.5. The dispute that had arisen between the parties regarding the applicability of a specific clause in the tender document was held to be an arbitrable dispute requiring adjudication through arbitration.

Fact of the Case:

The petitioner participated in a tender process and was declared as the successful bidder. A dispute arose between the parties regarding the applicability of a specific clause in the tender document.

Finding of the Court:

The court found that there was an arbitration agreement between the parties for resolution of disputes as per clause 13.5 of the tender document. The dispute regarding the applicability of the specific clause was held to be an arbitrable dispute requiring adjudication through arbitration.

Issues: The issues involved whether there was an arbitration clause in the contract and whether there was an arbitrable dispute emerging from the contract.

Ratio Decidendi: The court held that there was an arbitration agreement between the parties for resolution of disputes as per clause 13.5 of the tender document. The dispute regarding the applicability of the specific clause was held to be an arbitrable dispute requiring adjudication through arbitration.

Final Decision: The petition was allowed, and a former Chief Justice was nominated as the sole arbitrator to resolve the dispute between the parties in accordance with the Arbitration Centre (Domestic and International), High Court of Gujarat Rules, 2021.

ORDER :

1. Though the matter is listed for admission, by consent of learned advocates appearing for the parties, it is taken up for final disposal.

2. I have heard arguments of learned Senior Counsel Mr. S.N. Soparkar for petitioner and Mr. Manish Bhatt, learned Senior Advocate appearing for respondent. Perused the records.

3. A tender came to be floated by the respondent inviting bids from prospective contractors for the purpose of Capacity Augmentation of Indian Oil Corporation Ltd. LPG Import Terminal from 0.6 Metric Tonne Per Annum (MTPA) to 2.5 (MTPA). Petitioner which is a company incorporated under the Companies Act, 1963 had participated in the said tender process floated by respondent and offered its bid resulting in petitioner being declared as L1 bidder both in tender price opening and in reverse auction held on 16.09.2019. During price negotiations, further price discounts aggregating to 2.75% offered by the petitioner was duly accepted by the respondent namely after negotiations held on 16.09.2019, 26.09.2019 and 27.09.2019. Further discussion was held with regard to a paragraph of the tender document, which was said to have been deleted in the tender document under clause 1.4(iv) titled as “Scope for civil and structural works”. Thereafter petitioner afforded further discount of 1.70% amounting to Rs. 6.60 crores having regard to the nature of the project which was of public importance. Letter of acceptance came to be issued on 23.03.2020, pursuant to which the agreement dated 26.05.2020 came to be executed between the parties. On account of stand taken by the respondent with regard to the deleted clause of the tender document, there were discussion, exchange of communication, culminating in issuance of a notice dated 06.01.2021 by the petitioner to the respondent, whereunder petitioner highlighted the fact with regard to deleted paragraph under Clause 1.4(iv). As noticed hereinabove, there were exchange of communication in this regard between the parties which culminated in certain discounts being extended by the petitioner to the respondent. Even thereafter, according to petitioner, the respondent had taken a diametrically opposite stand and as such the petitioner under the said notice dated 06.01.2021, notified the respondent about the unilateral stand taken by the respondent. In other words, the stand taken by the respondent on certain works being carried out by the petitioner by referring to the deleted clause was found fault with by the petitioner. It has been specifically pleaded by the petitioner that stand of the respondent to revise the design even after technical and contractual requirement having been satisfied by the petitioner, would only create ambiguity and thereby it would amount to reinstating the deleted paragraph which has been explicitly excluded and as such it was specifically pleaded that it was in breach of terms of the contract. Hence, contending that there is dispute that has arisen between the parties, out of the said contract, sought for resolution of said dispute by invoking clause 13.5 of the SCC. In other words, petitioner contended that on account of the insistence of the respondent to the requirement being met by the petitioner in obedience to clause 1.4(iv) which according to petitioner has been specifically excluded from the contract and subsequently being imposed on the petitioner was an afterthought, dispute came to be raised by the petitioner on the ground of unreasonably enforcing a term of contract which is not agreed upon between the parties, as a result of which it would result in six fold increase from the minimum contractual requirement. Therefore, it was contended there exists a dispute between the parties and it requires to be adjudicated on account of this commercial expediency, petitioner sought for appointment of an arbitrator. The said notice was replied to by the respondent and denied by its reply notice dated 21.01.2021. The respondent has categorically contended b

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