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2024 Supreme(Guj) 988

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
NIRAL R. MEHTA, J.
Hitachi India Private Ltd – Petitioner
Versus
Aquafil Wintech Jv – Respondent
R/Special Civil Application No. 10683 of 2023
Decided On : 11-03-2024

Advocates Appeared:
For the Petitioner: Mr. Aditya A. Gupta, Mr. Mohit A. Gupta.
For the Respondent: Mr. Mitul Shelat, Adv. with Mr. Rutul P. Desai.

Headnote:

Impleadment - Arbitration Proceedings - Arbitration and Conciliation Act, 1996 - [MAIN LEGAL POINT]

Fact of the Case:

The petitioner, a claimant in an arbitration proceeding, sought impleadment of Aquafil Polymers Company Limited and Wintech Engineers Private Limited as necessary parties. The Arbitral Tribunal rejected the impleadment application, leading to the petitioner's petition under Articles 226 and 227 of the Constitution of India.

Finding of the Court:

The court held that the petitioner failed to establish exceptional circumstances warranting intervention under Article 227. It also noted that the petitioner approached the court with material concealment and dismissed the petition.

Issues: The main issue was whether the impugned order refusing to implead the proposed parties was legal and justified.

Ratio Decidendi: The court emphasized that intervention in arbitration proceedings under Article 227 should be exceptional and rare, and that the petitioner failed to establish any exceptional circumstances warranting such intervention. The court also noted material concealment by the petitioner and the importance of the unbreakability principle in arbitration proceedings.

Final Decision: The court dismissed the petition, stating that the petitioner failed to establish exceptional circumstances warranting intervention under Article 227 and approached the court with material concealment.

JUDGMENT :

1. By way of this petition under Articles 226 and 227 of the Constitution of India, the petitioner – original claimant has approached this Court against the order dated 1st March 2023 passed by the learned Arbitrator, whereby an application preferred by the petitioner for impleadment of Aquafil Polymers Company Limited as respondent No.2 and Wintech Engineers Private Limited as respondent No.3 being proper and necessary parties in the arbitral proceedings between the claimant and the respondent, came to be dismissed.

2. The facts, as per the petitioner, can be stated as under:

2.1 That Guwahati Metropolitan Development Authority (“GMDA”) and JWIL-Ranhill JV (“JWIL”) entered into an agreement for Guwahati Water Supply Project C-01 on Turnkey basis for procurement of Design, Supply, Installation and Commissioning of Intake Facilities, Transmission Mains, Water Treatment Plant and Reservoir for North Zone ( Contract Package No.C-01) including 5 years of operation and maintenance (hereinafter referred to “The Guwahati Water Supply Project”).

2.2 That thereafter JWIL (JITF Water Infrastructure Limited) one of the parties to the JWIl-Ranhill JV issued Request for proposal vide a Notice of Invitation to Tender from interested parties for the Guwahati Water Supply Project.

2.3 That Aquafil and Wintech entered into a Consortium Agreement dated 2nd August 2014 for forming an entity in the nature of an Association of Persons called “Aquafil Wintech JV” for the purpose of the bidding for the Guwahati Water Supply Project. The respondent submitted its proposal with JWIL in terms of Request for proposal issued by JWIL.

2.4 That thereafter JWIL vide work order No.JWIL/ Gu-1/CS/14054/PH dated 8th August 2014 awarded a contract to the respondent for Guwahati Water Supply Project.

2.5 Thereafter, the respondent which was set up inter alia for the purpose of executing the Guwahati Water Supply Project entered into a sub-contract with the petitioner vide Letter of Award dated 9th July 2015 read along with Order Acknowledgement dated 31st July 2015 and awarded a portion of the work under the Guwahati Water Supply Project (Main contract) to the petitioner for “Electromechanical, instrumentation and automation works for WTP (Water Treatment Plant) and Intake of Guwahati Water Supply Project Package No.C-01 of Guwahati Metropolitan Development Authority”.

2.6 One of the conditions of the Letter of Award dated 9th July 2015 and Order Acknowledgement dated 31st July 2015 are as under:

    “Clause 24 : Special Condition

The Seller after execution of LOA, shall make remittances of any agreed amount as advance payments to the downstream sub-contractors (also called “Nominated sub-contractors). In case this contract is termination pre-maturely then the Buyer will reimburse any such advance payments made by the Seller after adjusting for the billed amount.”

"Clause 5: Additional Nominated Subcontractors

It has been agreed between the Purchaser and Hitachi that M/s Wintech Engineers Private Limited having its registered office at 40, 2nd and 3rd Floor, Community Centre, Phase-1, Naraina, New Delhi - 110028 shall be a nominated subcontractor for the items mentioned in Annexure 2 and also, M/s Aquafil Polymers Company Private Limited having its registered office at 202-203, Shyamak Complex, B/h subcontractor for the items mentioned in Annexure 3.

2.7 In terms of Clause 24 of the above Letter of Award dated 9th July 2015 and Clause 5 of Order Acknowledgement dated 31st July 2015, the petitioner paid a sum of Rs.1,60,00,000 (Rupees One Crore Sixty Lakh Only) to Aquafil as advance and further executed a Letter of Award dated 29th July 2015 in favor of Aquafil as a nominated sub-contractor for basic and detailed engineering, design approval, supply, erection, installation, testing and commissioning of mechanical equipment and pipe for WTP and reservoir for Guwahati Water Supply Project under Contract Package No. C-01.

2.8 In terms of Clause 24 of the Letter

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