2019 Supreme(Bom) 1494

IN THE HIGH COURT OF BOMBAY
R.D. DHANUKA, J.
Maharashtra State Electricity Distribution Company Limited (MSEDCL) — Appellant
Versus
Godrej And Boyce Manufacturing Company Limited — Respondent
Commercial Arbitration Petition (L) No. 238 of 2019
Decided on : 06-11-2019

Headnote:

The Court held that the respondent could not legally represent the said Electropath Services (India) Private Limited even as lead member of the said joint venture in absence of any express authority on behalf of the said Electropath Services (India) Private Limited. In view of the on going dispute between the respondent and the said Electropath Services (India) Private Limited, it is not possible to obtain any such specific no objection in writing to authorize the respondent to pursue the arbitral proceedings or that the said Electropath Services (India) Private Limited could not make any separate claim against the petitioner arising out of the same contract.

Fact of the Case:

The petitioner had invited bids for various tenders on zone wise/circle wise basis for various works. Pursuant to the said invitation of the bid, the respondent as a lead partner in Joint Venture (JV) with Electropath Services (India) Private Limited submitted its offer along with the requisite supporting documentation on 20th October 2008. On 11th October 2008 and 4th July 2009, the respondent and the said Electropath Services (India) Private Limited entered into a Joint Venture Agreement on the terms and conditions recorded therein. On 13th October 2008 and 19th July 2009, the respondent and the said Electropath Services (India) Private Limited executed Memorandum of Understandings (MOUs). The petitioner issued a Letter of Award in favour of the said JV in respect of various works. On 8th June 2009, the petitioner executed a Contract with the JV of the respondent and Electropath Services (India) Private Limited. The dispute arose between the parties on 25th July 2017. The respondent invoked arbitration agreement. The respondent thereafter filed an arbitration application bearing No.13 of 2018 in this Court under Section 11(6) of the Arbitration Act inter alia praying for the appointment of an arbitrator. The said Electropath Services (India) Private Limited was not a party to the said arbitration application filed by the respondent on 28th December 2017. On 21st March 2018, the petitioner and the respondent executed a Joint Memo in 8 arbitration applications which were filed by the respondent for appointment of arbitrator. In the said Joint Memo, there was a reference to the notice invoking arbitration dated 21st September 2017 under those 8 tenders by the respondent. It was recorded that the said agreement shall be treated as an arbitration agreement under Section 7 of the Arbitration Act. The parties jointly agreed and consented to refer those disputes under 8 agreements to the arbitrator to be appointed. It is agreed that neither of the parties shall challenge the jurisdiction of the learned Tribunal on that ground at any future stage. The said Joint Memo dated 21st March 2018 was tendered before this Court on 23rd March 2018 in the said Arbitration Application No.13 of 2018 and 7 other arbitration applications. This Court, by consent of the parties, appointed a Senior Advocate of this Court as a sole arbitrator to decide the dispute between the parties arising out of the contract dated 8th June 2009. This Court made it clear that all the contentions of the parties were kept open. Pursuant to the appointment of the learned arbitrator by this Court, the respondent filed a Statement of Claim on 19th May 2018. The said statement of claim was filed only by the respondent without impleading the said Electropath Services (India) Private Limited. On 30th July 2018, the petitioner filed its Statement of Defence and counter claim before the learned arbitrator. On 16th October 2018, the respondent filed an application for amendment to the statement of claim. The said amendment was permitted by the learned arbitrator. On 26th November 2018, the petitioner filed an Additional Statement of Defence to the amended statement of claim. In paragraph 5 of the said Additional Statement of Defence, the petitioner raised an issue that except the contract no.T09 projects, rest of the contract agreements were issued to the JV of the respondent with the Electropath Services (India) Private Limited as a joint partner. The Letter of Award was allotted to the JV partners and the contract was also executed with the JV of the respondent and as a lead partner with Electropath Services (India) Private Limited. The petitioner issued a notice invoking arbitration dated 21st September, 2017 under those 8 tenders by the respondent. It was recorded that the said agreement shall be treated as an arbitration agreement under Section 7 of the Arbitration Act. The parties jointly agreed and consented to refer those disputes under 8 agreements to the arbitrator to be appointed. It is agreed that neither of the parties shall challenge the jurisdiction of the learned Tribunal on that ground at any future stage. The said Joint Memo dated 21st March 2018 was tendered before this Court on 23rd March 2018 in the said Arbitration Application No.13 of 2018 and 7 other arbitration applications. This Court, by consent of the parties, appointed a Senior Advocate of this Court as a sole arbitrator to decide the dispute between the parties arising out of the contract dated 8th June 2009. This Court made it clear that all the contentions of the parties were kept open. Pursuant to the appointment of the learned arbitrator by this Court, the respondent filed a Statement of Claim on 19th May 2018. The said statement of claim was filed only by the respondent without impleading the said Electropath Services (India) Private Limited. On 30th July 2018, the petitioner filed its Statement of Defence and counter claim before the learned arbitrator. On 16th October 2018, the respondent filed an application for amendment to the statement of claim. The said amendment was permitted by the learned arbitrator. On 26th November 2018, the petitioner filed an Additional Statement of Defence to the amended statement of claim. In paragraph 5 of the said Additional Statement of Defence, the petitioner raised an issue that except the contract no.T09 projects, rest of the contract agreements were issued to the JV of the respondent with the Electropath Services (India) Private Limited as a joint partner. The Letter of Award was allotted to the JV partners and the contract was also executed with the JV of the respondent and as a lead partner with Electropath Services (India) Private Limited.

Finding of the Court:

The Court held that the respondent could not legally represent the said Electropath Services (India) Private Limited even as lead member of the said joint venture in absence of any express authority on behalf of the said Electropath Services (India) Private Limited. In view of the on going dispute between the respondent and the said Electropath Services (India) Private Limited, it is not possible to obtain any such specific no objection in writing to authorize the respondent to pursue the arbitral proceedings or that the said Electropath Services (India) Private Limited could not make any separate claim against the petitioner arising out of the same contract.

Issues: Whether the respondent could legally represent the said Electropath Services (India) Private Limited even as lead member of the said joint venture in absence of any express authority on behalf of the said Electropath Services (India) Private Limited.

Ratio Decidendi: The Court held that the respondent could not legally represent the said Electropath Services (India) Private Limited even as lead member of the said joint venture in absence of any express authority on behalf of the said Electropath Services (India) Private Limited. In view of the on going dispute between the respondent and the said Electropath Services (India) Private Limited, it is not possible to obtain any such specific no objection in writing to authorize the respondent to pursue the arbitral proceedings or that the said Electropath Services (India) Private Limited could not make any separate claim against the petitioner arising out of the same contract.

Final Decision: The Court set aside the arbitral award dated 15th February, 2019 and the minutes of meeting dated 9th February, 2019. The Court allowed the application dated 2nd January, 2019 filed by the petitioner under section 31(6) of the Arbitration Act. The Court allowed Commercial Arbitration Petition (Lodging) No.238 of 2019 on aforesaid terms. The Court held that there shall be no order as to costs.