AI Drafter 
TaxTMI 
TaxTMI 
2019 (11) TMI 717
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....nt in the leading appeal, Water and Power Consultancy Services (India) Limited (for short, "WAPCOSL"), a Public Sector Undertaking, entered into an agreement, dated 29.11.2004, for the implementation of the work on "the Reconstruction, Rehabilitation and completion of Salma Dam Project (3x14 MW), Afghanistan, Package III: Main Civil and Hydro Mechanical Works" (for short, "project"). The appellant (WAPCOSL), was given the responsibility to provide financial, administrative and contractual management services for the MEA. Even though MEA was to provide the finances, the same was to be channeled through WAPCOSL to the successful awardee of the tender. 3. The respondent No.1 in both the appeals, Salma Dam Joint Venture (for short, "SDJV") was formed by the M/s SSJV Projects Private Limited (for short, "SSPPL") and M/s Angelique International Ltd. (for short, "AIL") under a Joint Venture Agreement (for short, "JVA") dated 09.09.2005 to submit its bid for the said project. In accordance with the terms and clauses of the JVA, SSPPL was nominated to be the 'Lead Partner' of SDJV with ninetyfive percent (95%) share as compared to five percent (5%) share of AIL. SSPPL was also authorized....
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....ssued by AIL addressed to WAPCOSL, informing that SDJV has started the process of dismantling the machinery and the work force from the project site with full awareness of WAPCOSL. 8. Subsequent to the execution of AoA, dispute arose between the JV partners which resulted in AIL filing a petition (bearing number O.M.P. (I) (COMM.) 70/2016) under Section 9 of the Arbitration Act, wherein the High Court of Delhi, vide order dated 05.09.2016, directed WAPCOSL to deposit the amount payable to SDJV with the Registrar of the High Court in order to secure the interests of both the JV entities. The High Court in a separate petition (bearing number Arb. P. 442/2016), filed by AIL against SSPPL, also appointed a sole arbitrator for their (AIL and SSPPL) inter se disputes. 9. On 21.09.2016, the Board of Directors of AIL resolved to revoke the PoA executed in favour of SSPPL and in furtherance of the same, AIL, vide letters dated 19.10.2016 and 11.11.2016, wrote to the respective Banks and also to WAPCOSL informing them about the revocation of the authority of SSPPL. Thus, it was duly notified through these letters that in future, only those letters or communications which are signed or ....
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....s before the High Court for reconsideration of all aspects, as would be raised by the parties including regarding the locus and competence of SSPPL to unilaterally appoint an arbitrator or file arbitration petition under Section 11 of the Act. 14. The High Court of Delhi, vide judgment dated 25.01.2019 (for short, "impugned judgment"), once again allowed the said arbitration petition and appointed a sole arbitrator, instead of three arbitrators envisaged in CoPA. 15. The High Court opined that the arbitration agreement between SDJV and WAPCOSL was still in force on the date of filing of the arbitration petition and the same would operate between the parties. That finding has been reached despite the AoA having been executed between the parties on 09.06.2015. The High Court also opined that SSPPL had authority under the JVA as well as the Contract Agreement to represent SDJV, as a leading partner thereof. It held that SSPPL derived authority from clause 20.6 of CoPA read with the other enabling terms in the JVA and FIDIC Conditions of Contract for Construction (for short, 'FIDIC'). The High Court was also impressed by the fact that SSPPL had 95 per cent shareholding in SDJV as....
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....Agreement? 19. Reverting to the first question, we must immediately advert to the Arbitration Agreement incorporated in the Contract Agreement. That can be discerned from clause 4, which reads thus: " 4. Settlement of Disputes 4.1 It is specifically agreed by and between the parties that all the differences or disputes arising out of the Agreement shall be decided by process of settlement of disputes and arbitration as specified in Clause 20 of the Conditions of the Contract. 4.2 It is also agreed that the Salma Dam Joint Venture agreement dated 9th September 2005 shall be treated as part of this agreement and both the parties to the said joint venture namely M/s SSJV Projects Private Limited and M/s Angelique International Limited shall also be jointly and severally liable in the process of settlement of disputes in arbitration between WAPCOS and Salma Dam Joint Venture." This clause must be read alongwith the terms specified in CoPA in particular clause 20 and clauses 1.14, 4.3 and 20.6 of FIDIC. Going by the Contract Agreement read with relevant clauses of CoPA and FIDIC, it is obvious that the parties had agreed for resolution of all their diffe....
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.... 1.2 This Amendment of Agreement will form part of the Original Agreement no. WAPCOS/SDP/AFG/Pkg.III05 dated 9th March 2006. 1.3 This Amendment of Agreement includes revised Bill of Quantity (BoQ) (containing executed & balance quantum of works, New Items of work, etc) with the modified approved rates for eight major item of Civil works and modified cost of HydroMechanical works along with additional terms and Conditions of Contract. 1.4 Any Clauses/items other than the Amendment of Agreement will be governed by Original Agreement and in case of any dispute the decision of CMD, WAPCOS will be final and binding to the Contractor. 1.5 In case of any inconsistency between Original Agreement and Amendment of Agreement, the content of Amendment of Agreement will succeed. 1.6 In case of any dispute on Technical Specification and interpretation of any contract clauses the decision of CMD, WAPCOS will be final and binding to the Contractor. ......... ." 22. It may be useful to now advert to clauses 1.2 and 1.3 of Section 01 of the AoA, which read thus: "REVISED COST AND RELATED TERMS AND CONDITIONS Clause 1.0 .... .......
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....09.2011 and 17.09.2012, it is amply clear that the parties were ad idem that substantial part of the works (around 97 per cent) of the "Dam and Spillway" was completed by 31.12.2014. This fact has been plainly restated in the preamble of the AoA. The AoA also records that if due to site conditions, the balance quantities increase, the contractor will carry out the construction and complete the work. Further, the AoA would form part of the Contract Agreement dated 09.03.2006 and it includes revised Bill of Quantities (BoQ) (containing executed and balance quantum of works, new items of works, etc.) with the modified approved rates for eight major items of civil works and modified cost of HydroMechanical works along with additional terms and conditions of Contract. Clause 1.4 of the AoA makes it amply clear that any other clauses/items other than the AoA will be governed by Original Agreement (Contract Agreement) and in case of any dispute, the decision of CMD, WAPCOSL will be final and binding on the contractor. Clause 1.5 of the AoA makes it further clear that in case of any inconsistency between the Contract Agreement and AoA, the terms specified in AoA will prevail. Clause 1.6 of....
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....cally deals with the amendments in general conditions of CoPA but it makes no reference to amendment of clause 20 of CoPA. That may be so, however, in our view, it will be of no avail. We will deal with this aspect a little later. Suffice it to observe that the terms and conditions of AoA make it amply clear that the arbitration agreement stands overridden in view of the express declaration in AoA in that regard referred to earlier. 28. As noticed earlier, AoA was executed on 09.06.2015 by which date, substantial part of the works (around 97 per cent) of the "Dam and Spillway" had been completed. The water filling in dam commenced on 26.07.2015 by closing diversion tunnel gate. That presupposes that the "Dam and Spillway" work was fully completed before that date. It is also not disputed that the project was inaugurated by the Prime Minister of India and the President of Afghanistan on 04.06.2016. The terms agreed upon between the parties and as recorded in AoA dated 09.06.2015 was the outcome of steep revision of rates. These circumstances are germane whilst answering the question under consideration. We have no manner of doubt that the purport of the terms and conditions incor....
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....AOA. 10.8 Therefore, the ground taken on behalf of WAPCOS that no claim could be lodged post execution of the AOA is untenable and hence cannot be accepted. There is, to my mind, much merit in the submission advanced on behalf of the J.V. entity that the AOA cannot impede adjudication of all future claims whether or not they have their genesis in the AOA. If that was the intent, as correctly argued on behalf of the J.V. entity, the AOA should have done away with Clause 20.6 of COPA, which contains the arbitration agreement." 30. As regards the first reason weighed with the High Court that the Technical Committee entertained the five appeals filed on behalf of the SDJV, that in our view cannot undo the effect of terms and conditions of AoA which had annulled the arbitration clause in the Contract Agreement. There are at least two other tangible reasons to overturn the stated opinion of the High Court. First, the Technical Committee was, as a matter of fact, constituted under clause 2.1 of Section - 02 of AoA by the CMD of WAPCOSL, as is evident from the communication dated 21.10.2015 sent by WAPCOSL to SDJV. That fact has been restated in the subsequent correspondence. T....
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....cified therein may have to be followed whilst taking recourse to that process. However, as the substantive provision regarding remedy of arbitration itself has been done away with in terms of clauses 1.2 and 1.3 of Section01 of AoA, there was no need to modify clause 20 in CoPA dealing with machinery provision. Thus, the remedy of arbitration cannot be resurrected merely because clause 20 of CoPA has not been expressly modified in the AoA. Hence, even this reason does not commend us. 33. As these are the only reasons which had weighed with the High Court to reject the argument of the appellant(s) regarding nonexistence of arbitration agreement and the same being untenable in law, it must necessarily follow that the Arbitration Petition filed for and on behalf of SDJV through SSPPL was not maintainable. In other words, the Arbitration Petition should have been rejected for lack of subsisting or existing arbitration agreement between the parties on the date of filing of Arbitration Petition. 34. It is not unknown in commercial world that the parties amend original contract and even give up their claims under the subsisting agreement. The case on hand is one such case where the ....
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.... (ii) A claimant makes several claims. The admitted or undisputed claims are paid. Thereafter negotiations are held for settlement of the disputed claims resulting in an agreement in writing settling all the pending claims and disputes. On such settlement, the amount agreed is paid and the contractor also issues a discharge voucher/noclaim certificate/full and final receipt. After the contract is discharged by such accord and satisfaction, neither the contract nor any dispute survives for consideration. There cannot be any reference of any dispute to arbitration thereafter. (iii) .... .... .... (iv) .... .... .... (v) A claimant makes a claim for a huge sum, by way of damages. The respondent disputes the claim. The claimant who is keen to have a settlement and avoid litigation, voluntarily reduces the claim and requests for settlement. The respondent agrees and settles the claim and obtains a full and final discharge voucher. Here even if the claimant might have agreed for settlement due to financial compulsions and commercial pressure or economic duress, the decision was his free choice. There was no threat, coercion or compulsion by the respondent....