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IN THE HIGH COURT FOR THE STATE OF TELANGANA
M.S. RAMACHANDRA RAO, J.
Tecpro Systems Limited – Appellant
Versus
Telangana State Power Generation Company Limited – Respondent
Arbitration Application No. 106 of 2018
Decided On : 25-09-2019
Arbitration and Conciliation Act, 1996 - Sections 11(6) and 7 - Indian Penal Code,1860 - Sections 7, 13(2) , 14 , 11(6) and 28 - Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 - Section 30(6) of the Code r/w Regulation 39(4) - General Conditions of Contract - Storage insurance, storage, construction, erection, testing - Application is filed by applicant, M/s Tecpro Systems Limited, under Section 11(6) of Arbitration and Conciliation Act, 1996 to appoint an Arbitrator for respondent as per clause-22.2 of General Conditions of Contract signed by parties contained in Invitation to Bid and General Conditions of Contract issued by State Power Generation Corporation - Scope of work as per bid document included design, engineering, manufacture, procurement, supply, delivery, transportation to site, transit and site storage insurance, storage, construction, erection, testing, commissioning and handing over of the specified works for balance plant including civil works, training of operation and maintenance personnel of a Complete Coal Steam -
Finding of the Court:
Whether or not other parties to the Consortium Agreement have any dispute with respondent or initiate proceedings against it for the benefit of the applicant, applicant cannot be prevented by the respondent from invoking arbitration clause contained in GCC because its scope of work under Consortium agreement was different from that of other parties to Consortium agreement - So it ought to be allowed to do so without reference to other parties to the Consortium agreement - Respondent did not appoint any arbitrator on its behalf in spite of receipt of letter dated 02.05.2018 issued by the applicant to it invoking arbitration clause and nominate its arbitrator, its lapse/failure would confer jurisdiction under Section 11(6) of the Act to appoint an arbitrator on behalf of the respondent -
Result: Application is allowed
JUDGMENT :
M.S. RAMACHANDRA RAO, J.
1. This application is filed by the applicant, M/s Tecpro Systems Limited, under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) to appoint an Arbitrator for the respondent as per clause-22.2 of the General Conditions of Contract signed by the parties contained in the Invitation to Bid and General Conditions of Contract issued by the Telangana State Power Generation Corporation (the respondent) (vide tender Notice No. Apgenco/PCT/K&R/03/2009 and tender specification No. TCT-B-02/2009 for the Kakatiya Thermal Power Project Stage-II, Unit-II).
2. Two agreements fall for consideration in this case:
(ii) Letter of Intent dated 30.10.2010 issued by the respondent Telangana State Power Generation Corporation to the applicant, M/s Tecpro Systems Limited (as leader of the above Consortium) together with the Bid Document and General Conditions of Contract, on behalf of the Consortium.
The Bid document:
3. The respondent issued Tender Notice No. APGENCO/PCT/K&R/3/2009 comprising of the Bid document and the General Conditions of Contract.
4. The Scope of the work as per the bid document included design, engineering, manufacture, procurement, supply, delivery, transportation to the site, transit and site storage insurance, storage, construction, erection, testing, commissioning and handing over of the specified works for the balance plant including civil works, training of operation and maintenance personnel of a Complete Coal Steam Power Plant, the Kakatiya Thermal Power Project Stage-II, Unit-2 at Chelpur Village, Ghanpur Mandal, Warangal in the erstwhile State of Andhra Pradesh. The terms of this document and the General Conditions of Contract will be discussed more in detail later.
5. The last date for submission of sealed tenders for short-listing of pre-qualified bidders was 20-08-2009.
The Letter of intent dated 30-10-2010:
6. As leader of the Consortium, the applicant submitted its bid on behalf of the consortium, for the project and this was accepted by the respondent by its Letter of Intent dated 30-10-2010.
7. The value of the project mentioned therein was Rs. 723.00 crores and the completion period was 30 months from the date of Letter of Intent and it was stated that the applicant will work in close coordination with the EPC main contractor i.e. M/s. Bharat Heavy Electrical Limited.
The Purchase Orders dated 25-11-2010:
8. Thereafter the respondent issued three Purchase Orders to the applicant, representing the consortium, for supply, erection and civil works on 25-11-2010 pursuant to the Letter of Intent, and in the said Purchase Orders, the schedule of prices, payment terms and other terms were agreed between the parties.
The Consortium Agreement dated 17-8-2010:
9. Before the Bid was submitted by the applicant, the three entities, namely (1) the Applicant, (2) M/s. Gammon India Limited and (3) M/s. V.A. Tech Wabag Limited, had entered into a Consortium agreement on 17-08-2010 for this project.
10. Admittedly, the Consortium Agreement contemplated in Appendix I, different scope of work for each of the Consortium partners:
(b) For M/s. V.A. Tech Wabag Ltd. Water Systems for the BOP.
(c) For the applicant Coal Handling System, Ash Handling System, Auxiliary Systems and balance portion of work.
11. The salient terms of the Consortium agreement were that:
(b) the applicant shall be the leader of the Consortium. The division of work between the parties, proposed management structure and the contribution of each member to the Consortium operation was set out in Appendix-I to the said agreement [clause-2(a)].
(c) the bid will be based on the premise that in the event the bid is accepted
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