An arbitration agreement must be expressly incorporated by reference in subsequent contracts; a general reference is insufficient to bind new parties.

PRATEEK JALAN, J. (ORAL)

1. The petitioner, by way of this petition under Section 11 of the Arbitration and Conciliation Act, 1996 [“the Act”], seeks appointment of an arbitral tribunal in terms of Clause 67.3 of an agreement dated 05.10.2013.

2. The petitioner has arrayed three parties as respondents in these proceedings, namely – M/s KMC Construction Ltd. [“KMC”], Pink City ExpresswayLtd. [“Pink City”] and ETA Star Infrastructure Ltd. [“ETA”].

3. At the very outset, Mr. Susshil Daga, learned counsel for the petitioner, states that he does not wish to press the petition, as far as Pink City is concerned, as Pink City is under liquidation. This is without prejudice to any rights available to the petitioner in law, to assert claims against Pink City in the Corporate Insolvency Resolution Process proceedings.

4. Mr. Sidhant Dwibedi, learned counsel, has entered appearance on behalf of KMC, and submits that there is no arbitration agreement between the petitioner and KMC. Although ETA has not entered appearance, learned counsel for the petitioner submits that KMC and ETA would both be necessary parties in the proposed proceedings. I have, therefore, heard Mr. Daga and Mr. Dwibedi on the question of whether KMC is bound by the arbitration clause.

5. Mr. Daga submits that the arbitration clause is to be discerned from an agreement dated 05.10.2013, read with a further agreement dated 31.10.2013 which, read together, would render KMC also amenable to arbitration.

6. The first of these contracts, dated 05.10.2013, was admittedly between the petitioner and ETA alone. The contract concerns the balance work of six laning of Gurgaon-Kotputli-Jaipur section of National Highway-8. It recorded that Pink City had been appointed as the concessionaire by National Highways Authority of India [“NHAI”] for this work under a concession agreement dated 06.06.2008. Pink City, in turn, had appointed ETA as the Engineering, Procurement, Construction contractor. ETA awarded part of the work to a third party but, by the agreement dated 05.10.2013, decided to award the balance portion of the work to the petitioner herein.

7. For the present purposes, Clause 3 of the agreement dated 05.10.2013 is relevant, which reads as follows:

“3. The following document shall be deemed to be part and parcel of thisAgreement:

a) The Letter of Intent;

b) The Tender/Bid and Appendix to Bid;

c) The Conditions of Particular Application(Part II);

d) The General Conditions of Contract(Part I);

e) The Technical Specifications including Supplementary Technical Specifications;

f) The Drawings; and

g) The Priced Bill of Quantities”

8. The arbitration agreement is contained in Part – II of the “Conditions of Particular Applications” [“COPA”], referred to in Clause 3 (c) of the agreement between the petitioner and ETA. The COPA, incorporated by way of this agreement, contained the conditions which were applicable to the parent contract between NHAI and Pink City. Clause 67.1 thereof provides as follows:

“Sub-Clause 67.1 Review Board: Disputes Substitute Clause 67.1 with the following Disputes Resolution mechanism:

If any dispute occurs between both the parties, the same shall in the first place be referred to the Engineer for his recommendation, who will give the decision within 28 days of receipt of such reference by him. However, if any of the party is not satisfied with the decision of the Engineer, then any dispute arising between the Employer and the Contractor in connection with, or arising out of the Contract or the execution of the Works, whether during the execution of the Works or after their completion and whether before or after the repudiation of other termination of Contract, including any disagreement by either party with any action, inaction, opinion, inst