IMPORTANT POINT
IMPORTANT POINT
The court affirmed that disputes arising from a Memorandum of Understanding containing an arbitration clause are subject to arbitration under the Arbitration and Conciliation Act, 1996.

ORDER :

1. Mr. Lomesh Kiran N. learned counsel representing Mr. Emil Joseph, learned counsel for the applicant. Mr. P.U. Bhaskara Rao, learned counsel for the respondent.

2. This application under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) has been filed to seek appointment of an arbitrator to adjudicate the claims and disputes between the parties as envisaged under Clause 32 of Memorandum of Understanding (hereinafter referred to as “MoU”) dated 25.01.2019.

3. Facts leading to filing of this application briefly stated are that the applicant is a company incorporated on 18.09.2017 in Ahmedabad. The respondent is also a company situated in Hyderabad. The applicant and respondent entered into an MoU on 25.01.2019 whereunder the respondent agreed to render complete support to the applicant to participate in the tenders as mentioned in the MoU dated 25.01.2019. Sometime in the month of January, 2019, the respondent participated in Tender Ref: HCC/LPG-32/Pt-171/ 2018-19 (hereinafter referred to as ‘the Tender”) for a bid titled “Construction of Plant Buildings, Non-Plant Buildings, ground improvement and allied works at grass root LPG bottling facility at Motihari, Bihar” (hereinafter referred to as ‘the Project”) raised by the Indian Oil Corporation Limited (IOCL). The respondent was awarded the contract on 28.03.2019 and a letter of acceptance was issued to it.

4. Thereafter on 29.04.2019, a Work Order was issued in favour of the applicant to execute the work under the Project. The respondent by a communication dated 02.01.2020 made an additional demand to the applicant for a bank guarantee for the escrow account. The additional bank guarantee was not a part of the MoU dated 25.01.2019. However, the applicant submitted a bank guarantee worth Rs.35,00,000.00, which was encashed by the respondent sometime in the month of April, 2020.

5. On 01.04.2020, the respondent issued an e-mail in which the status of the applicant was acknowledged as “MoU holder” and the respondent requested the applicant to share all information regarding value of work conducted on the Project site and dues receivable from IOCL in order to furnish the information to IOCL so that further payments may be disbursed to the applicant.

6. The applicant issued a notice on 29.09.2021 to the respondent, in which the various breaches committed by the respondent under the MoU dated 25.01.2019 were highlighted. The respondent sent a reply on 19.10.2021, in which the claims made by the applicant were denied. Thereafter, the applicant issued an e-mail on 14.07.2023 invoking arbitration under Clause 32 of the MoU dated 25.01.2019. The aforesaid e-mail was responded to by the respondent on 24.07.2023. Thereafter, this petition has been filed seeking appointment of an Arbitrator.

7. Learned counsel for the applicant submitted that neither the execution of the MoU dated 25.01.2019 nor the existence of the arbitration clause has been denied on behalf of the respondent. Attention of this Court has also been invited to by Clause 16.1 and Clause 27 of the Memorandum of Understanding dated 25.01.2019 and it has been submitted that the respondent is at liberty to urge all such contentions before the Arbitrator. In support of his submission, reliance has been placed on decision of Supreme Court In Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899, 2023 SCC Online SC 1666.

8. On the other hand, learned counsel for the respondent submits that the MoU dated 25.01.2019 is only a pre-tender MoU and thereafter no back to back agreement has been executed between the parties. It is further submitted that the MoU is not in existence. It is also contended that there is neither an agreement nor an arbitration clause under which the dispute raised by the applicant can be referred for adjudication. It is further submitted that the applicant has been debarred by IOCL from part