Delhi High Court: A petition was filed by petitioner under Section of the (‘the Act’), seeking appointment of an arbitrator with respect to the disputes arising between parties. Prathiba M. Singh, J., opined that the following factors would be in favour of appointment of a Sole Arbitrator for adjudication of all disputes, i.e., (a) to avoid multiplicity of disputes; (b) all contracts relate to the same project and form part of the same series of works; and (c) the correspondence between parties showed that they were treated as part of the same series of contracts. The Court thus appointed Justice A.K. Sikri (Retd.) as a Sole Arbitrator.
Background
Petitioner, KGPS Mechanical Pvt. Ltd. is a contractor for structural and mechanical jobs, registered under the (‘MSME’). Respondent-Cinda Engineering and Construction (P) Ltd. is a technical consultant company which was awarded the Engineering, Procurement, Construction, Management contract for its Carbon Black Project (‘Project’) at Dahej, Bharuch to respondent. Respondent invited bids for multiple packages and petitioner was awarded two contracts dated 27-2-2020, regarding design, engineering, manufacture, construction, erection for values of more than Rs 28 crore and Rs 31 crore. Thereafter, petitioner was awarded seven more contracts which were not completed by previous vendors.
Petitioner submitted that respondent had payment dues with regards to the work completed by petitioner and there were a total of nine agreements which were executed between the parties in which a claim of more than Rs 10 crore was raised by petitioner. Though, there were three-member arbitral tribunals contemplated under the contracts, but when petitioner invoked the arbitration vide notice dated 13-12-2023, respondent replied vide email dated 4-1-2024, stating that it was willing for a Sole Arbitrator to be appointed by this Court. Petitioner then suggested the names of three arbitrators, however, since there was no response from respondent, petitioner filed the present petition. On 14-3-2024, respondent submitted that out of nine agreements, only five agreements had an arbitration clause and in the remaining four agreements, there was no arbitration clause.
Analysis, Law, and Decision
The issue for consideration was “whether only the disputes under five agreements could be referred to arbitration or whether the disputes in respect all nine contracts, i.e., the five contracts and the four contracts which did not have the arbitration clause could be together referred to one Arbitrator?”.
The Court observed that all nine contracts were related to the same project in Dahej, Gujarat and if respondent’s submission was accepted that there was an Arbitration Clause only in five of the contracts and not to the remaining four, thus, insofar as the remaining four contracts were concerned, parties would have to be relegated to civil proceedings, which would lead to multiplicity of disputes, delay in adjudication and also a possibility of conflicting rulings.
The Court noted that the minutes of the meeting and correspondence showed that while petitioner repeatedly referred to seven contracts, respondent referred to nine contracts as part of the same set. The Court opined that this would be sufficient to refer the disputes even under the four contracts to Arbitration. However, the Court noted that in reply to the invocation of arbitration, insofar as petitioner was concerned, it invoked arbitration in respect of seven contracts on 13-12-2023 though the Clause was contained only in five contracts and in reply thereto on 4-1-2024, respondent suggested a Sole Arbitrator to be appointed in respect of all nine contracts.
The Court relied on Ameet Lalchand Shah v. Rishabh Enterprises, , wherein there was an arbitration clause in three out of the four agreements entered between the parties, however, the Supreme Court observed that since it was a part of a single commercial project, the disputes could be resolved to, by referring all the agreements to arbitration. The Court also relied on S. Ghosh & Associates v. DDA, , wherein the correspondence shared between parties reflected that even though there was no arbitration clause, arbitration could be invoked.
Further, the Court relied on MTNL v. Canara Bank, , wherein the Court interpreted Sections and of and observed that the arbitration agreement might not be in a particular form but what was to be looked into was the intention of the parties to settle their disputes and the same could also be implied from the documents/correspondence exchanged between them.
The Court opined that in the present case also the intention of the parties could be construed from the correspondence exchanged between them. The Court noted that respondent itself suggested, (a) pursuing arbitration with respect to all the nine contracts, in reply to the first notice dated 10-11-2023, which showed that respondent had considered arbitration with respect to all nine agreements; and (b) appointment of a one-member tribunal instead of three-member tribunal as contemplated in some of the agreements. The Court also noted that these proposals were agreed to by petitioner and thus, for the five agreements parties were ad idem on a single member tribunal and for the four agreements which did not contain an arbitration clause, an arbitration agreement with a single member tribunal was agreed upon.
Thus, the Court opined that the following factors would tilt in favour of appointment of a Sole Arbitrator for adjudication of all disputes, i.e., (a) to avoid multiplicity; (b) all contracts relate to the same project and form part of the same series of works; (c) the correspondence between parties showed that they were treated as part of the same series of contracts; (d) the clear proposal in the reply dated 4-1-2024; and (e) the unequivocal consent given by petitioner on 9-1-2024.
The Court thus appointed Justice A.K. Sikri (Retd.) as a Sole Arbitrator to adjudicate the disputes and the Arbitration proceedings shall take place under the aegis of the Delhi International Arbitration Centre.
[KGPS Mechanical (P) Ltd. v. Cinda Engineering and Construction (P) Ltd., Arb.P. 143 of 2024, decided on 22-4-2024]
*Judgment authored by: Justice Prathiba M. Singh
Advocates who appeared in this case :
For the Petitioner: Kaveesh Nair, Rachael Tuli, Mahima Mukherjee, Advocates
For the Respondent: Gauhar Mirza, Hiral Gupta, Ritik Kumar Rath, Advocates
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