TaxTMI 
TaxTMI 
2022 (4) TMI 1350
X X X X Extracts X X X X
X X X X Extracts X X X X
............ 14 C Analysis .............................................................................................................. 21 C.1. Group of Companies Doctrine..................................................................... 21 C.2. Standard for Review of the Interim Arbitral Award ...................................... 37 D Conclusion ......................................................................................................... 58 A Facts 1 The appeal arises from a judgment dated 27 June 2012 of the High Court of Judicature at Bombay by which an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 "Act of 1996" has been dismissed. Oil & Natural Gas Corporation Limited "ONGC" instituted an appeal against an interim award dated 27 October 2010 "interim award" of the Arbitral Tribunal holding that the second respondent - Jindal Drilling and Industries Limited "JDIL" or the "second respondent" was not a party to the arbitration agreement and must be deleted from the array of parties. The interim award was challenged in an appeal which was dismissed by the impugned judgment. 2 On 22 March 2006, ONGC ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g to a single group of companies, namely DP Jindal Group of companies. M/s Jindal Drilling has also acknowledged that the contractor M/s DEPL is a group company of Jindal Group in their website in an article titled "Key due diligence observations". A copy of the said article is annexed herewith and marked as Annexure 8. Since Respondent No. 1 is liable to compensate ONGC for the losses suffered by it, ONGC has adjusted the said amount from the monies payable to Jindal Drilling and Industries Limited as a security to satisfy the award to be passed in this case. 18. As stated above, Respondent No. 2 was supplying vessels and rigs to ONGC under various contracts, for last many years. It is a fact that the Respondent No.1 was formed as a group company with the charter of introducing cutting-edge technology and solutions to the oil and gas market in India. Respondent No.1 has represented itself as a part of the DP Jindal group of companies as seen from the company's website (www.discoveryepl.com). A copy of the relevant extract from the website is attached herewith and marked as Annexure A-9. The same web-based representation was made in categorical and unequivocal manner b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ine of group companies/alter ego/ultimate beneficiary. This Tribunal has to hold Respondent No. 2 also liable to compensate ONGC for the dues of respondent No.1. The issue preferred to Tribunal is within the arbitration agreement and under law and this Hon'ble Tribunal has jurisdiction to entertain and decide the dispute." 4 An application under Section 16 of the Act of 1996 was filed by JDIL seeking its deletion from the arbitral proceedings on the ground that it is not a party to the arbitration agreement. ONGC responded to the application. During the course of the proceedings, ONGC filed an application on 5 January 2009 for discovery and inspection to support its case that DEPL is an alter ego of the Jindal Group of companies. In support of the application for discovery and inspection, ONGC pleaded that: (i) DEPL and JDIL are group companies and that the former is an agent or alter ego of the latter; (ii) There exists corporate and functional unity between them; (iii) DEPL is a corporate facade which has been created to promote and extend the business of JDIL; (iv) JDIL is responsible for the acts of omission and commission of DEPL on the basis of the group of com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r (MM) of ONGC, produced documents in support of claim. The production of documents was objected to by JDIL on the ground of relevance and admissibility. During the arbitral meeting on 7 July 2009, the Tribunal recorded the following minutes: "Per Tribunal : The documents produced by the witness Anindya Bhattacharya (CW-1) along with his affidavit dated June 26th 2009 and annexures 1 to 10 are taken on record. Mr. Rahul Narichania, Ld. Advocate for Respondent No. 2 objects to these documents being taken on record on the ground that the same are not relevant and admissible as far as the Respondent No. 2 is concerned. He further stated that he will cross examine the witness on the documents without prejudice to his rights that the said documents were neither relevant nor admissible in evidence and ought not to be marked as exhibits. The rival contentions will be decided while disposing of the application made under Section 16 of the Arbitration & Conciliation Act, 1996. It is also made clear that merely because the witness has been cross examined on behalf of the Respondent No. 2 on the documents, the documents do not automatically stand exhibited. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....em one economic unit. The mere fact that the son and daughter-in-law of the managing director of JDIL are directors in DEPL also does not and cannot establish that these companies are one and the same. There is also no credible evidence to show that because of the alleged nexus between the two companies, ONGC awarded the said contract to DEPL. Even assuming this to be correct, it does not take the case of ONGC any further. JDIL is admittedly not a party to the contract and cannot be liable under the said contract which is only between ONGC and DEPL. If ONGC wanted to bind JDIL to the said contract, it should have asked JDIL to be a party to the said contract. In fact, this court inquired from learned Advocate appearing for ONGC as to why ONGC did not insist on JDIL signing the said contract when admittedly there are other contracts which are entered into between ONGC and JDIL. However, the learned advocate appearing for ONGC had no answer to the same. In response, he only submitted that ONGC has also filed suit being 2947 of 2011 in this court in which DEPL and JDIL have been arrayed as the defendants." 9 The judgment of the High Court was challenged by ONGC under Article 136 of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....elong to the same group thus entitling ONGC to make the deductions. Rejecting the contention of ONGC, the Arbitral Tribunal held: "25. There is hardly any evidence to support the plea of the Respondent that DEPL and the Claimant are one and the same company. Both DEPL and the Claimant are group companies of D.P. Jindal group of companies. Although the directors of DEPL are the son and daughter-in-law of the managing director of the Claimant, and the two companies, for some time, shared a common office and telephone numbers, that does not make the two companies one. Both are subsidiaries of the main company and both have independent legal existence. DEPL was incorporated in the year 2003. The Claimant is a public limited company listed on the stock exchange and was incorporated in the year 1983. 26. [...] The facts of the present case are totally different and do not warrant lifting of corporate veil, assuming there is one. The evidence in the present case does not justify the application of "lifting the corporate veil". In respect of the contract which was entered into by the Respondent with DEPL, the tender was floated by ONGC in 2005 and the contract was entered....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... lodged before the Bombay High Court against the judgment of the Single Judge dismissing the petitions under Section 34 for challenging the Arbitral Award in the second proceeding. The transferred cases Transferred Case (Civil) Nos. 47, 48, 49 and 50 of 2016 have come up before this Court together with the special leave petition arising out of the interim award dated 27 October 2010. B Submissions of Counsel 13 Mr K M Nataraj, Additional Solicitor General "ASG", appearing on behalf of ONGC submitted that: (i) The case of ONGC is that DEPL and JDIL constitute one single commercial entity and that ONGC is hence entitled by law to compel JDIL to participate in the arbitration proceedings so as to enforce the award against it; (ii) Though evidence was available with ONGC to buttress the above claim, it filed an application for discovery and inspection to secure material which was within the possession, control and custody of JDIL. However, with the deletion of JDIL from the array of parties, the application for discovery and inspection has been rendered otiose; (iii) The Arbitral Tribunal has not enquired into the facts at all, despite the contention of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reproduced below for convenience of reference: "ONGC CONTENTION JDIL RESPONSE INTERIM AWARD HIGH COURT ORDER JDIL has substantial business interest in DEPL. None of these assertions are based on fact and no evidence led by ONGC points to towards this. Further JDIL is a publicly listed company at BSE and its annual reports, etc. are in public domain. It can be Para 16, Page 178 of SLP Not a tickle of evidence to show that JDIL ever played any role to find itself in the contract between Para 16 Page 14 of SLP There is no evidence tendered before Arbitral Tribunal that DEPL and JDIL had common shareholders and common Board of Directors. Even if that had been the case, the Hon'ble Supreme DEPL is an alter ego of JDIL. JDIL is the ultimate beneficiary in the business with DEPL. DEPL has close corporate unity with JDIL. seen that there is no benefit being derived by JDIL from DEPL. Further, it was incorporated in 1983 and DEPL was incorporated way later in 2003. • DEPL and ONGC. The executives of JDIL participated in the negotiations, etc. on behalf of DEPL as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ies of DP Jindal Group of Companies as well including MSL, Jindal Pipes, etc. The directors of DEPL are related to the MD of JDIL (Son and daughter-in-law). There is no bar on the directorship of any person and this is not an evidence on the basis of which doctrine of group companies can be invoked. This is just an allegation unfounded in law and fact. It was a separate venture started by Mr. Manav Kumar on his own. An Arbitration agreement signed by one company in a group of companies binds other non- signatory companies, when the underlying contract is intended to benefit the non- signatory as in the instant case. There are no underlying contracts wherein JDIL has any interest. JDIL was never a party or had any benefits arising from the contract between DEPL and ONGC. ONGC and JDIL have four separate contracts which are a part of TC 47-50 of 2016 proceedings. JDIL and DEPL have offices in the same building/same premises. A lot of businesses have common business address (Eg. Tata Companies). Just on the basis of the same, it certainly cannot be said that they are one and the same. Especially todays' time of co- working spaces, a lot of c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... no representation that JDIL was bidding for the contract. The association of the executive of JDIL was to render assistance to DEPL and nothing more; and (vii) ONGC's witness has no knowledge of the facts since he was not: a. Involved in the shortlisting of bidders; b. A part of the decision-making process for the award of the contract; c. A party to the deliberations by the tender committee for the award of the contract; d. Present at the time when the approval was given for the award of the contract; and e. Party to the deliberations within ONGC. The witness stated that he has accessed the website of DEPL for the first time in June 2008, after the award of the contract on 22 March 2006. Hence it is not open to ONGC to claim that DEPL or JDIL represented to ONGC that DEPL was a group company of JDIL or that ONGC awarded the contract because of any representation by JDIL on its website. C Analysis C.1. Group of Companies Doctrine 16 Section 7 "7. Arbitration agreement.- (1) In this Part, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to an agreement of sale. In the agreement, the seller was described to include the first respondent and its subsidiaries. The second respondent was described as the buyer and as the promoter of Indowind. Under the agreement, the seller agreed to transfer business assets for a consideration which was partly payable in money and partly by the issuance of shares. The sale agreement also incorporated a clause to arbitrate any dispute. The Board of Directors of the first and second respondent approved of the agreement, but there was no approval by the Board of Indowind. After a dispute arose, the first respondent instituted a petition under Section 11(6) against both the second respondent and Indowind for the appointment of an arbitrator. Indowind resisted the petition on the ground that it was not a party to the agreement between the first and second respondent. The application was allowed by the Chief Justice of the Madras High Court by observing that prima facie Indowind was a party after lifting the corporate veil and noticing Indowind's intention to be bound by the sale agreement. Two issues were framed by this Court for consideration: "(i) Whether an arbitration clause fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bed Indowind as its nominee or as a company promoted by it or that the agreement was purportedly entered by Subuthi on behalf of Indowind, will not make Indowind a party in the absence of a ratification, approval, adoption or confirmation of the agreement dated 24-2-2006 by Indowind. [....] 20. Wescare referred to several acts and transactions as also the conduct of Indowind to contend that an inference should be drawn that Indowind was a party to the agreement or that it had affirmed and approved the agreement or acted in terms of the agreement. An examination of the transactions between the parties to decide whether there is a valid contract or whether a particular party owed any obligation towards another party or whether any person had committed a breach of contract, will be possible in a suit or arbitration proceeding claiming damages or performance. But the issue in a proceeding under Section 11 is not whether there was any contract between the parties or any breach thereof. A contract can be entered into even orally. A contract can be spelt out from correspondence or conduct. But an arbitration agreement is different from a contract. An arbitration agreemen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ne. In substance, the doctrine postulates that an arbitration agreement which has been entered into by a company within a group of companies, can bind its non-signatory affiliates or sister concerns if the circumstances demonstrate a mutual intention of the parties to bind both the signatory and affiliated, non-signatory parties. Elaborating on the concept, the Court held: "71. Though the scope of an arbitration agreement is limited to the parties who entered into it and those claiming under or through them, the courts under the English law have, in certain cases, also applied the "group of companies doctrine". This doctrine has developed in the international context, whereby an arbitration agreement entered into by a company, being one within a group of companies, can bind its non-signatory affiliates or sister or parent concerns, if the circumstances demonstrate that the mutual intention of all the parties was to bind both the signatories and the non-signatory affiliates. This theory has been applied in a number of arbitrations so as to justify a tribunal taking jurisdiction over a party who is not a signatory to the contract containing the arbitration agreement. [Russel....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a domestic arbitration award against a non-signatory to the arbitration agreement. The Court observed that the decision by a two-judge Bench in Indowind (supra) was rendered before the evolution and application of the group of companies doctrine by a three-judge Bench in Chloro Controls (supra): "23. As the law has evolved, it has recognised that modern business transactions are often effectuated through multiple layers and agreements. There may be transactions within a group of companies. The circumstances in which they have entered into them may reflect an intention to bind both signatory and non-signatory entities within the same group. In holding a non-signatory bound by an arbitration agreement, the court approaches the matter by attributing to the transactions a meaning consistent with the business sense which was intended to be ascribed to them. Therefore, factors such as the relationship of a non-signatory to a party which is a signatory to the agreement, the commonality of subject-matter and the composite nature of the transaction weigh in the balance. The group of companies doctrine is essentially intended to facilitate the fulfilment of a mutually held intent b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r of a group of companies [ Op cit fn. 16, 2.40, p. 100.] . Though the extension of this doctrine is met with resistance on the basis of the legal imputation of corporate personality, the application of the doctrine turns on a construction of the arbitration agreement and the circumstances relating to the entry into and performance of the underlying contract. [Id, 2.41 at p. 100.]" This Court in Cheran Properties (supra) also distinguished the principle laid down in Chloro Controls (supra) from its application in the context of Section 11(6) in Duro Felguera v. Gangavaram Port Limited (2017) 9 SCC 729 ["Duro Felguera"]. In Duro Felguera (supra), a two-judge Bench of this Court refused to direct a joint arbitration in five different contracts between sister concerns of one of the parties of the original arbitration agreement, by respecting the conscious intention of the parties to subject themselves to separate arbitration agreements under their individual contracts. This Court in Cheran Properties (supra) distinguished the factual situation in Duro Felguera (supra) by discerning the mutual intention of the parties and performance of the contract: "34. [.....] The princi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Canfina. Canfina paid back a part of the amount of the FD while the rest was not paid to MTNL. As a consequence, MTNL did not service the interest of the bonds. Canfina was a wholly-owned subsidiary of Canara Bank. Canfina had transferred the bonds to Canara Bank. Subsequently, all three parties had participated in a meeting where the minutes indicated their view to take recourse to arbitration. A sole arbitrator was appointed to resolve the dispute and notice was issued in the arbitration to MTNL, Canara Bank and Canfina. A dispute was raised on whether Canfina could be joined as a party to the arbitral proceedings. In this backdrop, this Court while dealing with the joinder of Canfina in the arbitration proceedings held: "10.3. A non-signatory can be bound by an arbitration agreement on the basis of the "group of companies" doctrine, where the conduct of the parties evidences a clear intention of the parties to bind both the signatory as well as the non-signatory parties. Courts and tribunals have invoked this doctrine to join a non-signatory member of the group, if they are satisfied that the non-signatory company was by reference to the common intention of the parties,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n bound together under the arbitration agreement. This will apply in particular when the funds of one company are used to financially support or restructure other members of the group. [ ICC Case No. 4131 of 1982, ICC Case No. 5103 of 1988.]." (emphasis supplied) On the facts, the Court held that Canfina was set up as a wholly-owned subsidiary of Canara Bank. The dispute arose out of the subscription by Canfina of the bonds floated by MTNL which were subsequently transferred by Canfina to its holding company, Canara Bank. MTNL had contended that it was constrained to cancel the allotment due to the non-payment of the sale consideration by Canfina. Hence, this Court held that it would be futile to decide the dispute only between MTNL and Canara Bank in the absence of Canfina since indisputably, the original transaction emanated from the agreement between MTNL and Canfina and there was "a clear and direct nexus" between the issuance of the bonds, their subsequent transfer by Canfina to Canara Bank and the cancellation of allotment by MTNL. Canfina was held to be a proper party to the proceedings. 23 Commentators have noted that a signed written agreement to submit a pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....an arbitration agreement from the lens of the doctrine of estoppel. He situated the rationale behind the application of the principle of direct estoppel against competing considerations of party autonomy and consent in interpreting arbitration agreements. Fellas observed that non-signatory parties can be bound by the principle of direct estoppel to prohibit such a party from deriving the benefits of a contract while disavowing the obligations to arbitrate under the same : "There are at least two distinct types of estoppel doctrine that apply in the non-signatory context: "the direct benefits" estoppel theory and the "intertwined" estoppel theory. The direct benefits theory bears the hallmark of any estoppel doctrine- prohibiting a party from taking inconsistent positions or seeking to "have it both ways" by "rely[ing] on the contract when it works to its advantage and ignor[ing] it when it works to its disadvantage." Tepper Realty Co. v. Mosaic Tile Co., 259 F.Supp. 688,692 (SDNY 1966). The direct benefits doctrine reflects that core principle by preventing a party from claiming rights under a contract but, at the same time, disavowing the obligation to arbitrate in the sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....DIL; (ii) DEPL is a corporate facade created by JDIL for their extended business; (iii) The executives of JDIL were actively associated in the bidding process; and (iv) The office of DEPL or JDIL were situated in the same building. The Arbitral Tribunal rejected the above submissions by holding that there was not a "tickle" of evidence on record to show that JDIL, which is a distinct corporate legal entity, "ever played any role to find itself in the contract between JDIL and ONGC". The participation of JDIL in the execution of the contract was held to be on behalf of DEPL and that the fact that the directors of DEPL are the son and daughter-in-law of the MD of JDIL was held not to be of relevance. 28 The fundamental basis of the interim award is that in view of the provisions of Section 7 and the definition of the expression "party" in Section 2(1)(h), the provisions of the Act of 1996 could not be invoked or applied to a non-signatory to an arbitration agreement. The Tribunal held that it has no jurisdiction to investigate, enquire into or record any findings on the basis of ONGC's claim against JDIL. 29 The Tribunal had, by its order dated 7 July 2009, specific....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not considered whether the group of companies doctrine would stand attracted. The Arbitral Tribunal precluded itself from deciding as to whether the application for discovery and inspection should be allowed. The Arbitral Tribunal effectively shut out material evidence which ONGC sought to bring on the record. 32 In this backdrop, the failure of the Arbitral Tribunal to allow for discovery and inspection goes to the root of the process in as much as it disabled ONGC from pursuing its fundamental claim based on the application of the group of companies doctrine. 33 During the course of his submissions, Mr Shyam Divan, senior counsel urged that: (i) JDIL's application under Section 16 was decided by the Arbitral Tribunal after evidence was adduced; (ii) The witness for ONGC deposed and the Tribunal has evaluated the evidence and documentary material on record; (iii) The Tribunal has entered a finding of fact that there is nothing to indicate the existence of a single economic unit comprising JDIL and DEPL; (iv) No directions could have been issued by the Tribunal on ONGC's application for discovery and inspection unless the Tribunal were to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fine the standard of review under Section 34. These decisions indicate that a challenge to an arbitral award must be adjudicated within the confines of Section 34. Clause (b)(ii) of sub-section (2) of Section 34 stipulates that an arbitral award may be set aside only if the court finds that it conflicts with the public policy of India. Prior to its substitution by Act 3 of 2016, the explanation stipulated that without prejudice to the generality of sub-clause (ii), an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81. As a result of the substitution of the explanation by Act 3 of 2016, Parliament has stipulated that an award conflicts with the public policy of India only if one of three conditions is fulfilled, namely: (i) The making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; (ii) The award is in contravention with the fundamental policy of Indian law; or (iii) The award conflicts with the most basic notions of morality or justice. 36 In Ssangyong Engineering (supra), this Court hel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse." (emphasis supplied) 37 In this backdrop, it has been held that: (i) A mere contravention of substantive law is not a ground to set aside an award; (ii) The court while exercising the power of judicial review should not reappreciate evidence; (iii) The construction of a contract is essentially a matter for the arbitral tribunal to decide; (iv) An award can be construed to be perverse only if it is based on no evidence or has ignored vital evidence; (v) The illegality of an award must be of such a nature or character so as to go to the root of the award; and (vi) Judicial intervention under Section 34 would not be warranted only because an alternative view on facts or the construction of the award is available. 38 Mr K M Nataraj, ASG, urged that when an appeal arises under Section 37(2)(a) against an order of the arbitral tribunal acc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....his appellate power, the court must be mindful of the fact that the statute has entrusted the arbitral tribunal with the power to rule on its own jurisdiction with the purpose of facilitating the efficacy of arbitration as an institutional mechanism for the resolution of disputes. 40 Now it is in this backdrop that the Court must approach the task at hand. In the present batch of cases, there are two parallel proceedings arising out of the constitution of two sets of arbitral tribunals. In the first proceeding, the Arbitral Tribunal consisted of Mr Justice S P Kurdukar, Mr Justice M S Rane and Mr S Venkateswaran. Both DEPL and JDIL were made parties by ONGC, which is the claimant. The application filed by JDIL under Section 16 was allowed by the Arbitral Tribunal by its interim award dated 27 October 2010. The appeal filed by ONGC was dismissed by the Bombay High Court on 27 June 2012. In pursuance of the arbitration proceedings, the Arbitral Tribunal made a final award on 6 June 2013 in favour of ONGC against DEPL. 41 The second set of proceedings involved four agreements between ONGC and JDIL which are tabulated below: - S. No. Date of the Agreement Particulars ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xamined by the petitioners was not present in the meeting held by the Executive Purchase Committee and did not produce Minutes of Meeting held by the said Committee for short listing of the bidders; vi) the respondents herein had not issued any guarantee or letter of comfort from the respondents to the petitioners in respect of the liabilities, if any, of DEPL under its contract with the petitioners and vii) the petitioners had failed to provide any particulars of the alleged fraud or that the said DEPL was incorporated in order to defraud the creditors. In my view, all the aforesaid findings rendered by the arbitral tribunal are based on the pleadings, documents and the evidence led by the parties and are not perverse and thus no interference with such findings of facts is permissible under Section 34 of the Arbitration Act." 42 The Single Judge noted that ONGC had not denied the claims which were made by JDIL (the original claimant). The only defence of ONGC was that it was entitled to adjust the amount which was claimed by JDIL under the four contracts against ONGC's claim qua DEPL. In the course of the Arbitral Award in the second proceeding, the Arbitral Tribunal has also o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f that contract have not been produced. The only witness produced by ONGC was not present at the meetings held by the executive purchase committees when deliberations on the award of the contract to the recommended bidder took place [Of Answer to Question 39 in the cross-examination of the same witness in the first arbitration between ONGC and DEPL relied upon in this arbitration]. There is no evidence to show that in order to secure the said contract, DEPL represented that it was a part of the Claimant group. The Respondent contends that an employee of the Claimant namely Mr Mohan Ramanathan attended the pre-bid meeting and customs hearing in connection with their contract with DEPL. The Claimant in the evidence of its witness CW-2 Ms. Dalvi has stated that Mr Ramanathan had attended the pre-bid meeting and customs hearing at the request of DEPL and as a representative of DEPL on account of his expertise in these areas. She has also stated that she was asked by Mr. Ramanathan to attend the customs duty hearing on behalf of DEPL. The Claimant has also pointed out that Mr. G.D. Sharma, an employee of the Claimant attended certain meetings and signed letters etc. only on behalf of DE....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l as US dollars 1756197.50 with interest at 9% per annum as set out therein and have been granted other reliefs as set out therein. After the Claimant took out the present arbitration proceedings, ONGC has filed a suit in the High Court being Suit Number 2947/2011 against the Claimant and DEPL. The findings of the earlier Arbitral Tribunal and the High Court in its order of 27 June 2012 support our present conclusions, and we respectfully agree with the same." (emphasis supplied) 46 It is important to note that in the Arbitral Award in the second proceeding, no issue of jurisdiction arose since only JDIL and ONGC were parties and the claim of JDIL arose under four distinct contracts of JDIL with ONGC. DEPL was not a party to that proceeding. The examination-in-chief of ONGC's witness in the first arbitration proceeding was treated as an affidavit in the subsequent arbitration involving the claim by JDIL against ONGC. This Court has been informed that the cross-examination of the witness in the first arbitral proceeding leading up to the interim award dated 27 October 2010 was also treated as a cross-examination in the subsequent arbitration. JDIL also led evidence, inter alia, o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the DP Jindal Group of Companies. According to ONGC, besides the letterheads of DEPL which indicate that it belongs to the DP Jindal Group of Companies, JDIL has also acknowledged this position on its website. ONGC also indicated that since DEPL is liable to compensate ONGC for the loss suffered by it, ONGC has adjusted the monies payable to JDIL as security to satisfy the award. ONGC led the evidence of its Chief Manager (MM), Anindya Bhattacharya. The witness for ONGC deposed that: (i) At the pre-bid conference which was held on 7 October 2005, DEPL was represented by Mohan Ramanathan together with two other persons and he is an employee of JDIL; (ii) In response to the second expression of interest dated 17 October 2005, DEPL submitted its offer which was signed by G D Sharma on behalf of DEPL; (iii) G D Sharma holds the position of Manager (Commercial and Development) with JDIL; (iv) In response to ONGC's invitation for sealed bids from shortlisted parties on 31 October 2005, DEPL submitted its bid under a cover letter dated 4 November 2005. The annexure to the letter contained a resume of DEPL declaring that it is a part of the DP Jindal Gro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ucial to ONGC's claim that there existed functional, financial and economic unity between DEPL and JDIL remained to be decided before the application under Section 16 was taken up. There is merit in the submission which was been urged on behalf of the ONGC that the application for discovery and inspection had to be decided before the plea of jurisdiction was adjudicated upon. The application for discovery and inspection was intended to facilitate ONGC in its plea that there existed functional, financial and economic unity between the two companies. The failure of the first Arbitral Tribunal to hear the application for discovery and inspection goes to the root of its interim award dated 27 October 2010 holding an absence of jurisdiction qua JDIL. The interim award of the Arbitral Tribunal in the first proceeding, dated 27 July 2010 refers to the documents which were produced by ONGC and to the submission that neither DEPL nor JDIL had led any evidence to controvert the documentary and oral evidence adduced by ONGC. The first Arbitral Tribunal upheld the plea of jurisdiction that JDIL is neither a party to the contract nor had it submitted a bid to ONGC which resulted in the formatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ral tribunal to decide upon the application for discovery and inspection filed by ONGC; (ii) The failure of the arbitral tribunal to determine the legal foundation for the application of the group of companies doctrine; and (iii) The decision of the arbitral tribunal that it would decide upon the applications filed by ONGC only after the plea of jurisdiction was disposed of. D Conclusion 51 For all the above reasons we have come to the conclusion that there was a fundamental failure of the first Arbitral Tribunal to address the plea raised by ONGC for attracting the group of companies doctrine. Moreover, by leaving the application filed by ONGC for discovery and inspection unresolved, the first Arbitral Tribunal failed to allow evidence which may have had a bearing on the issue of whether JDIL could be considered to have an economic unity with DEPL and could hence be made a party to the arbitral proceedings. 52 For the above reasons, we are of the view that: (i) The interim award of the Arbitral Tribunal dated 27 July 2010 on the plea raised by JDIL under Section 16 has to be set aside; (ii) The judgment of the Single Judge of the Bombay High Court ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....set aside; (ii) The appeal filed by ONGC under Section 37 of the Act of 1996 against the interim award of the Arbitral Tribunal dated 27 October 2010 is allowed and the interim award of the Tribunal dated 27 October 2010 shall stand set aside; (iii) A fresh Arbitral Tribunal shall be constituted by ONGC and JDIL each nominating their arbitrators within a period of two weeks from the date of this judgment and the two arbitrators thereafter will jointly appoint the third arbitrator; (iv) The present judgment will not have any bearing on the arbitral award dated 6 June 2013 passed in favour of ONGC against DEPL; (v) The transferred cases shall stand remitted back to the Bomaby High Court. The hearing of the transferred cases is adjourned sine die so as to await the outcome of the arbitral proceedings between ONGC and JDIL in terms of (iii) above; (vi) In pursuance of the interim orders of this Court, ONGC was directed to deposit the amount due to JDIL under the Arbitral Award in the second proceeding dated 9 October 2013 which was permitted to be withdrawn by JDIL subject to furnishing a bank guarantee. The bank guarantee furnished by JDIL ....