2019 Supreme(Ker) 923
IN THE HIGH COURT OF KERALA AT ERNAKULAM
SUNIL THOMAS, J.
M/s. Kepco KDN Co. Ltd., - Appellant
Versus
M/s.Enzen Global Solution Pvt. Ltd. – Respondent
OP(C).No.2078 of 2019
Decided on : 11-12-2019
Important Points
The nature of the transaction between the parties in this case and its consequences will have to be evaluated. A copy of the letter of award (LOA) issued by the KSEB along with agreement dated 21.11.2012, and the copy of the original parent agreement entered into between the petitioner and the second respondent and the agreement between the petitioner and first respondent were made available. By the above LOA, petitioner herein was appointed as the ITIA (IT Implementation Agency of the project). Clause (3) of the LOA indicates that, petitioner was recognized as one entity in consortium with M/s. POSDATA Co. Ltd. along with M/s. Enzen Global Solutions Private Limited. The various terms of the agreement, includes clause (27), which contemplates entering into a separate tripartite agreement between KSEB, ITIA and NSP/ISP.
Subject
Arbitration Law - Impleading Parties
Headnote
Arbitration Act-The “Group of Companies” doctrine can be invoked where arbitration agreement was entered into by one of the companies in the group and non signatory affiliate, or sister or parent concern was held bound by the arbitration agreement. The circumstances in which such a doctrine could be invoked were if there was a direct relationship between the party which was a signatory to arbitration agreement, direct commonality of the subject matter and the composite nature of transactions between parties-Clause (3) of the LOA indicates that, petitioner was recognized as one entity in consortium with M/s.POSDATA Co. Ltd. along with M/s.Enzen Global Solutions Private Limited. The various terms of the agreement, includes clause (27), which contemplates entering into a separate tripartite agreement between KSEB, ITIA and NSP/ISP.
Statement of facts:
An application was filed before the arbitrator to implead the second respondent in the arbitration proceedings. Arbitral Tribunal passed Ext.P10 order dated 02.05.2019 expressing its inability, due to lack of jurisdiction to implead the second respondent and directed the parties to approach and pursue the same before the jurisdictional court. Accordingly, original petition was filed.
Finding of the court:
Agreement between the petitioner and the first respondent clearly shows that, even the KSEB contemplated a multi layer performance of the contract-For the purpose of an effective arbitration proceedings, the presence of the second respondent in the arbitration proceeding is essential- The question whether KSEB can be bound by the terms of the award is a matter that has to be considered in the course of adjudication, which is not the subject matter of this original petition.
Result: Allowed
Advocate Appeared:
For the Appellant : SRI.SREELAL N.WARRIER, SRI.B.RAGHUNANDANAN, SRI.BIJU MATHEW, SRI.M.S.AMAL DHARSAN
For the Respondent: SRI.CYRIAC TOM, SRI.JIKKU SEBAN GEORGE, SRI.RAJU JOSEPH (SR.), SRI.C.JOSEPH ANTONY
JUDGMENT :
Petitioner herein challenges the order in I.A.No.1 of 2019 in Arbitration Case No.2 of 2018.
2. According to the original petitioner, the Government of India, Ministry of Power, had introduced a new project called Restructured Accelerated Power Development Programme (RAPDRP), aiming to reduce aggregate technical and commercial losses with respect to distribution of electricity. Power Finance Corporation was appointed as nodal agency for the planning and implementation of the project. As per RAPDRP, Kerala State Electricity Board (KSEB), who is the second respondent herein, issued a request for proposal notice on 27.03.2010 inviting proposals from PFC empanelled domain experts for the implementation of IT infrastructure under the above programme. Petitioner claiming himself to be a lead consortium member with two other consortium partners who were empanelled by PFC, after due consultation and based on their confirmation on all the technical requirements, submitted a bid to the second respondent, in response to the above request for proposal. The bid of the petitioner was accepted by the second respondent and contract was awarded to them. Letter of award dated 06.09.2010 was issued to the petitioner. The concept of consortium and empanelment of domain experts by PFC was embedded in the original scheme as discernible from the PFC documentation and Ext.P2 letter of award. Subsequently, second respondent entered into an agreement with petitioner on 21.11.2012, a copy of which is produced as Ext.P3. A subsequent agreement is stated to have been entered into between the petitioner and the first respondent on 05.03.2013, in furtherance of the principal agreement.
3. Disputes arose between the petitioner and the first respondent with respect to the performance of the contractual terms on the basis of the alleged claims of delay and default. Invoking the provisions to the contract, arbitration proceedings were initiated and each of the party appointed an arbitrator and they in turn appointed an umpire. According to the petitioner, in the defence statement, it was stated that, Ext.P2 principal agreement dated 21.11.2012 between the petitioner and the second respondent and the subsequent contract dated 05.03.2013 between the petitioner and the first respondent were so inter-connected and inter-dependent that without the second respondent on the party array, no conclusive and final decision could have been arrived at by the Arbitral Tribunal. It was further stated that, about 21 issues were framed by the arbitrators, out of which majority required the presence of the second respondent in the party array. Hence, an application was filed before the arbitrator to implead the second respondent in the arbitration proceedings. Arbitral Tribunal passed Ext.P10 order dated 02.05.2019 expressing its inability, due to lack of jurisdiction to implead the second respondent and directed the parties to approach and pursue the same before the jurisdictional court. Accordingly, original petition was filed.
4. According to the learned counsel for the petitioner, the law is settled by the Honourable Supreme Court that, though arbitration proceedings can be initiated against parties to the arbitration agreement and consequently, arbitral award could be enforced as against the parties to the proceeding, that will not preclude other persons claiming or acting through such party, who are also brought on record. Though, award if any passed against the petitioner could in principle be enforced as against KSEB as the person who has been benefited from the work, fairness of process, justice and equity required that an entity bound by a award should also be given an opportunity to defend the possibility of an award in an arbitration proceeding and accordingly, second respondent was liable to be brought on record.
5. Vehemently opposing the application, learned counsel for the KSEB contended that, it was an unnecessary party and the attempt of the petitioner wa