TaxTMI 
TaxTMI 
2022 (11) TMI 1519
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....nts executed by and between the parties, which reflect the transaction between them. The attention of this court has been drawn to the following: 2.1. Letter of Intent dated 31.08.2012 issued by respondent No. 1 to the petitioner for "supply, erection, testing and commissioning including civil works of Railway Overhead Electrification from Badnera to 5 x 270 MW Thermal Power Plant at Nandgaonpeth, Amravati, Maharashtra."; 2.2. Letter of Award dated 10.09.2012 issued by respondent No. 1 in favour of the petitioner for "design, engineering procurement, shop inspection, packing, forwarding, supply, transportation, transit insurance, erection, testing, commissioning including civil works of Railway Overhead Electrification from Badnera station to Project Site with all associated equipment for 5X270 MW Thermal Power Plant at Nandgaonpeth, Amravati, Maharashtra."; 2.3. Contract dated 05.10.2012 for "... design, engineering, procurement, shop inspection, testing, packing, forwarding, supply, transit insurance, transportation upto Site..." (hereinafter referred to as 'supply-contract') entered into between the petitioner and respondent No. 1, which is gov....
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....tion against respondent No. 2. 5. Arbitration against respondent No. 1 was invoked under clause 16 of the letter of award dated 10.09.2012 and clause 11 of the GCCs governing the supply-contract as well as the work-contract. The dispute raised in the invocation notice dated 26.10.2020 were as regards "non-payment of amount due qua work done and/or withheld amount of Rs. 4,61,94,069/- (rupees four crore sixty one lakh ninety four thousand sixty nine only), release of Performance Bank Guarantees and Advance Bank Guarantees amounting to Rs. 4,43,87,045/- (rupees four crore forty three lakh eighty seven thousand forty five only), mentioned herein above, payment of margin money qua extension of the Bank Guarantees and payment of interest from the due date of payment of the claimed amount till the date of payment and any other related issues/claims in connection with Letter of Intent dated 31.08.2012, Letter of Award dated 10.09.2012 and Supply and Service contract being Contract Res-IICL/ATPP/Railway OHE/898/1 & 2 dated 5th October 2012 as amended time to time in terms of Clause 16 of the Letter of Award and Clause 11 of the General Conditions of Contract to Arbitration in accordance....
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....though in the rejoinder, the petitioner has called respondent No. 2 the alter-ego of respondent No. 1. 10. Notice on this petition was issued on 01.10.2021; consequent to which respondent No. 2 has filed its reply dated 12.01.2022. The petitioner has also filed rejoinder dated 02.03.2022. Mr. Pramod Kumar Gupta, the Resolution Professional appointed for respondent No. 1 has also been impleaded as respondent No. 3 in the present proceedings; and has filed an affidavit confirming the moratorium imposed upon respondent No. 1. Petitioner's Submissions 11. The petitioner argues that the present petition seeking to proceed in arbitration against respondent No. 2 be allowed inter-alia for the following reasons: 11.1. That respondent No. 2, which is referred to as the 'Owner' in the GCCs had participated in the negotiations that culminated in the formation of the main contracts. This, the petitioner seeks to show inter-alia by the following: 11.1.1 Letter of intent dated 31.08.2012 and the letter of award dated 10.09.2012, to point-out that these were issued on the letterhead of Respondent No. 2, thus indicating respondent No. 2's direct involveme....
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.... bill of supply and final bill of erection; and requesting respondent No. 2 to process the bills and release the payments due. 11.2.8. The statement of reasons issued by the petitioner to respondent No. 2 vide letter dated 15.03.2019, explaining the causes for delay in completion of works. 11.2.9. E-mail dated 06.12.2012 sent by respondent No. 2 to the petitioner, confirming that respondent No. 2 would pay the excise duty for the work carried out by the petitioner. 11.2.10. Several other e-mails sent by respondent No. 2 to the petitioner about technical and financial matters and various updates concerning the project. 11.3. That respondent No. 2 is the direct beneficiary of the work executed by the petitioner since the petitioner's obligations under the contractual documents were with respect to the project being developed by respondent No. 2. 11.4. That respondents Nos. 1 and 2 are related parties and also have 'a' common director on their respective boards, indicating direct relationship between the respondents and also the influence that respondent No. 2 has over respondent No. 1. The petitioner thus seeks to invoke 'g....
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.... Trading Corp. (2021) 2 SCC 1; para 244. 11.8. The petitioner also relies upon the following precedents to support, what appears to be its contention in the alternative, that even without an arbitration agreement between them, the petitioner can yet proceed against respondent No. 2 in arbitration: 11.8.1. Chloro Controls India Pvt. Ltd. vs. Severn Trent Water Purification Inc. and Ors. (2013)1 SCC 641; para 107.; Ameet Lalchand Shah and Ors. vs. Rishabh Enterprises and Ors. (2018)15 SCC 678; paras 24 and 25; and Purple Medical Solutions Pvt. Ltd. vs. MIV Therapeutics Inc. & Anr. (2015)15 SCC 622; paras 12 and 14.: On the point that even non-signatory parties to an arbitration agreement can be referred to arbitration as a result of implied or specific consent or judicial determination. It is argued that respondent No. 1 herein is an alter-ego of respondent No. 2 (or vice-versa), and therefore, respondent No. 2 may be referred to arbitration. 11.8.2. Shapoorji Pallonji and Co. Pvt. Ltd. vs. Rattan India Power Ltd. and Ors. 2021 SCC OnLine Del 3688; paras 2, 19, 25-32, 41, 42-46, 54-62, 64-66: To highlight that in another case involving respondent No. 2 itse....
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....up of companies' doctrine sought to be invoked by the petitioner is not applicable to the present case, since respondent No. 1 is an independent contractor and the contracts executed between the respondents do not constitute any 'partnership' or 'joint-venture' between them. Attention in this behalf is drawn to Article 8 of the Supply Contract Agreement entered into between the two respondents, which recites to that effect. 12.4. That the petitioner's contention that respondent No. 2 exercised control over respondent No. 1 company since the two respondents had a common director, is untenable, since at best, that would make respondent No. 2 a 'related party' with respondent No. 1 in terms of section 2(76) of the Companies Act, 2013, which however does not indicate control of respondent No. 2 over the affairs of respondent No. 1, and is also insufficient to invoke 'group of companies' doctrine to seek reference of respondent No. 2 to arbitration. 12.5. That notice dated 27.08.2021 issued by the petitioner to respondent No. 2 is an afterthought, is belated and not tenable. In this behalf, attention is drawn to invocation notice....
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....n International Ltd. vs. M/s. Vinay Heavy Equipments (2015) 13 SCC 680.: On the point that even if a principal-employer has made payments to a subcontractor, the same would not establish privity of contract between the principal-employer and the subcontractor. Discussions and Conclusions 13. Now, the broad contours for deciding a petition under section 11, which are well accepted, are: (i) Whether the party against whom disputes are sought to be raised is bound by an arbitration agreement with the party seeking appointment of an arbitrator; (ii) Whether arbitrable disputes have arisen with the party against whom arbitration is sought to be invoked; (iii) Whether the party that has approached the court has 'invoked arbitration'; and of course; (iv) Whether the court which is moved has territorial jurisdiction to entertain and decide such petition. 14. In the present case, admittedly, the contractual documents from which the petitioner says that disputes have arisen, were signed by and between the petitioner and respondent No. 1. However, since respondent No. 1 is presently undergoing corporate insolvency resolution process and a &....
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....aim of the applicant is that Mr. Frederik Reynders was acting for and on behalf of Respondent 2, as a result of which Respondent 2 has assented to the arbitration agreement. This basis has been completely demolished by Respondent 2 by stating, on affidavit, that Mr. Frederik Reynders was in no way associated with Respondent 2 and was only an employee of Respondent 1, who acted in that capacity during the negotiations preceding the execution of agreement. Thus, Respondent 2 was neither the signatory to the arbitration agreement nor did have any causal connection with the process of negotiations preceding the agreement or the execution thereof, whatsoever. If the main plank of the applicant, that Mr. Frederik Reynders was acting for and on behalf of Respondent 2 and had the authority of Respondent 2, collapses, then it must necessarily follow that Respondent 2 was not a party to the stated agreement nor had it given assent to the arbitration agreement and, in absence thereof, even if Respondent 2 happens to be a constituent of the group of companies of which Respondent 1 is also a constituent, that will be of no avail. For, the burden is on the applicant to establish that Respondent ....
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....h the decision of the present petition hinges. And that is, that in invocation notice dated 26.10.2020, which was addressed only to respondent No. 1, the claims raised by the petitioner also relate only to respondent No. 1. These claims are: (i) Regarding alleged non-payment for work done and amount of Rs. 4,61,94,069/- withheld by respondent No. 1; (ii) Disputes relating to bank guarantees furnished by the petitioner to respondent No. 1; (iii) Disputes as to payment of margin money for extension of the bank guarantees in question, and for payment of interest in connection therewith; (iv) Disputes relating to payment of interest on amounts claimed by the petitioner to be due from respondent No. 1. 21. It is noteworthy that the subject performance bank guarantees and advance bank guarantees, were issued at the instance of the petitioner only in favour of respondent No. 1. Clearly therefore, invocation notice dated 26.10.2020 does not even purport to raise any claim against respondent No. 2, much less does it purport to raise any arbitrable dispute against the said respondent. 22. Insofar as separate notice dated 27.08.2021 issued by the peti....
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....itical step in the arbitral process, since it puts the party against whom a claim is made in arbitration, to notice as to what the claims are; whether the party accepts some or all of those claims; and also provides to the other party an opportunity to point-out if some of the claims are time-barred; or are barred by any law; or are untenable in fact and also to raise its counter-claims, if any. On a plain reading of section 21, arbitration proceedings get 'triggered' only upon issuance of a valid invocation notice under section 21. 25. In the present case therefore, there is no valid invocation notice issued by the petitioner to respondent No. 2 under section 21, which could be the foundation of the present petition under section 11. 26. In the above view of the matter, the requirements that the petitioner should establish the existence of an arbitration agreement with respondent No. 2; that there should be arbitrable disputes between those two parties; and that a valid invocation notice should have been issued by the petitioner to respondent No. 2, are not satisfied. 27. For completeness, it may be mentioned that as far as territorial jurisdiction of this court i....