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2023 Supreme(All) 1422
IN THE HIGH COURT OF ALLAHABAD
JASPREET SINGH, J.
Raster Images Pvt. Ltd. Tamilnadu Through Auth. Signatory – Appellant
Versus
State Of U.P. Through D.G. Medical And Health Service And Anr. – Respondents
Civil Misc. Arbitration Application No.10 of 2020
Decided on : 24-08-2023
Advocate Appeared:
For the Appellant : Ritesh Kalia, Abhishek Khare, Debasish Moitra, Pravin Kumar Verma, Vabhu Shankar
For the Respondent: Vivek Kumar Rai, Ajai Kumar, C S C
A single member of a Consortium cannot file a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, without impleading the other members of the Consortium as parties to the petition.
Headnote:
Arbitration - Appointment of Arbitrator - Consortium - Disputes between Consortium members - Maintainability of petition - Whether a single member of the Consortium can file a petition without impleading the other members and raise disputes which prima facie are inter-se the Consortium members and roping in the Authority with whom the agreement has been entered into - Held, petition is not maintainable at the behest of the petitioner alone for the nature of disputes so raised.
Fact of the Case:
The petitioner, a member of a Consortium comprising of Pawanshree Foods International Pvt. Ltd. and Nanotrics Innovations Pvt. Ltd., had entered into a Tele-Medicine Services Agreement with the Department of Medical Health and Family Welfare, Government of Uttar Pradesh. The petitioner alleged that the lead member of the Consortium, Pawanshree Foods International Pvt. Ltd., had breached the terms of the agreement and had unilaterally made decisions without the consent of the other Consortium members. The petitioner invoked the arbitration clause contained in the agreement and nominated its arbitrator. However, the respondent Authority did not appoint its arbitrator. The petitioner then filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator.
Finding of the Court:
The Court held that the petition was not maintainable at the behest of the petitioner alone for the nature of disputes so raised. The Court observed that the disputes raised by the petitioner were prima facie inter-se the Consortium members and not between the Consortium and the Authority. The Court further held that the petitioner could not invoke the arbitration clause without impleading the other Consortium members as parties to the petition.
Issues: 1. Whether a single member of a Consortium can file a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, without impleading the other members of the Consortium as parties to the petition? 2. Whether the disputes raised by the petitioner were arbitrable under the arbitration clause contained in the agreement?
Ratio Decidendi: 1. A single member of a Consortium cannot file a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, without impleading the other members of the Consortium as parties to the petition. 2. The disputes raised by the petitioner were not arbitrable under the arbitration clause contained in the agreement, as they were prima facie inter-se the Consortium members and not between the Consortium and the Authority.
Final Decision: The petition was dismissed.
JUDGMENT :
A. Background Facts:-
1. The instant petition has been preferred under Section 11 (6) of the Arbitration and Conciliation Act, 1996 by the petitioner-company who is a member of a Consortium comprising of Pawanshree Foods International Pvt. Ltd. and Nanotrics Innovations Pvt. Ltd. The aforesaid two companies along with the present petitioner company had jointly made a bid for a contract floated by the Department of Medical Health and Family Welfare, Government of Uttar Pradesh, for implementation of Tele Medicine Services in the State of Uttar Pradesh.
2. Proposals were invited and a request for qualification (RFQ) cum (Request for proposal) (RFP) along with instructions to bidder (tender document) inviting bids from bidders for the implementation of telemedicine services in the State of Uttar Pradesh. The said tender document in Clause 2.1.1 permitted the bidder to submit only one technical proposal for video consultation services and/or Tele-Consultation Services and submit separate financial proposals for each cluster for video consultation services and tele-consultation services on E-tender portal. It permitted the bidder to bid as an individual or as a member of Consortium but they were not entitled to submit another bid for the same cluster either individually or as a member of any other Consortium, as the case may be.
3. Clause 2.1.10 instructed that the bidder should submit a power of attorney as per the format set forth in Annexure-C of Appendix-1 authorizing the Signatory to commit the bid. In case if the bidder is a Consortium, the members thereof should furnish a power of attorney in favour of the lead member as per the format set forth in Annexure-D of Appendix-1 duly supported with a chartered document or Board Resolution in favour of the executant.
4. Clause 2.1.14 states that a bidder shall not have a conflict of interest that affects the bidding process and thereafter certain stipulations are mentioned which would affect the bidding process and would be treated to be a conflict of interest. This particular clause also had an explanation which clearly stated that in case a bidder is a Consortium then the term ‘bidder’ as used in this Clause 2.1.14 shall include each member of such Consortium.
5. Clause 2.2 related to eligibility of bidders and in Clause 2.2.1 (a), it stated that a bidder may be a single entity or a group of entities (the Consortium) coming together to implement the project, however, no bidder applying individually or as a member of a Consortium, as the case may be, can be a member of another bidder. The term ‘bidder’ used herein would apply to both a single entity and a Consortium.
6. Clause (b) of Clause 2.2.1 also stated that a Consortium for being eligible for consideration would be subject to the conditions set out in Clause 2.2.3. which in the instant case, for clarity is being reproduced hereinafter :-
“2.2.3 The Bidder (single entity or consortium of entities), may form an SPV. Alternatively, the Bidder (Lead Member in case of Consortium) may itself execute the Service Agreement and implement the Project. In case the Bidder is a Consortium, it should comply with the following additional requirements:
(a) Bid should contain the information required for each Member of the Consortium provided number of members of Consortium should not exceed 3(three).
(b) Members of the Consortium shall nominate 1 (one) member as the lead member ("Lead Member), who shall have capital investment share of at least 26 % (twenty six per cent) of the Project:
(c) The nomination of the Lead Member shall be supported by a Power of Attorney, as per the format set forth in Annexure D of Appendix-l, signed by all the other members of the Consortium,
(d) The parties to a Consortium may form an appropriate SPV or itself execute the Project through Lead Member shall sign the agreement with Authority, for and behalf of consortium and other members shall join in signing the agreement as confirming party. In this regard, its
