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TMI Blog2018 (12) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... perations. This agreement contains an arbitration clause, which is set out hereunder:- "Claims, Disputes and Arbitration 20.1 Contractor's Claim If the Contractor considers himself to be entitled to any extension of the Time for Completion and/or any additional payment, under any Clause of these Conditions for otherwise in connection with the Contract, the Contractor shall give notice to the Employer/Employer's Representative, describing the event or circumstance giving rise to the claim. The notice shall be given as soon as practicable, and not later than 30 days after the Contractor became aware, or should have become aware, of the event or circumstance. If the Contractor fails to give notice of a claim within such period of 30 days, the Time for Completion shall not be extended, the Contractor shall not be entitled to additional payment, and the Employer/Employer's Representative shall be discharged from all liability in connection with the claim. Otherwise, the following provisions of this Sub-Clause shall apply. The Contractor shall also submit any other notices which are required by the Contract, and supporting particulars for the claim, all as releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstantiate the whole of the claim, the Contractor shall only be entitled to payment for such part of the claim as he has been able to substantiate. The Employer/Employer's Representative shall proceed in accordance with Sub-Clause 3.5 (Determination) to agree or determine (i) the extension (if any) of the Time for completion (before or after its expiry) in accordance with Sub-Clause 8.4 [Extension of Time for Completion], and/or (ii) the additional payment (if any) to which the Contractor is entitled under the Contract. The requirements of this Sub-Clause are in addition to those of any other Sub-Clause, which may apply to a claim. If the Contractor fails to comply with this or another Sub-Clause in relation to any claim, any extension of time and/or additional payment shall take account of the extent (if any) to which the failure has prevented or prejudiced proper investigation of the claim, unless the claim is excluded under the second paragraph of this Sub-Clause. 20.2 Dispute to be referred to and settled by Employer's Representative at Site Should any dispute or difference of any kind whatsoever arise between the Employer and the Contractor, in connection w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to arbitration as herein provided 20.4 Disputes Due for Arbitration and Settlement of Disputes Disputes or differences shall be due for arbitration only if the conditions in Sub-Clause 20.2 and 20.3 above fulfilled. Except where otherwise provided in the Contract, all disputes or differences, whatsoever arising between the parties, arising out of or relating to construction, measuring operation or effect of the Contract or the breach thereof, shall be settled by arbitration as detailed in Sub Clause 20.5. 20.5 Nomination of Arbitrators/Sole Arbitrator Matters to be arbitrated upon shall be referred to a Sole Arbitrator where the individual claim does not exceed Rs. 5 million or the total value of claims does not exceed Rs. 15 millions. Beyond the above limit(s), there shall be three arbitrators. For this purpose the employer will make out a panel of Arbitrators with the requisite qualifications and professional experience relevant to the field to which the Contract relates and will be residents of India only. In case of a single arbitrator, the Panel will be of three Arbitrators, out of which the Contractor will choose one. In case three arbitrators are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pute in all cases. (f) Where the arbitral award is for payment of money, no interest shall be payable on the whole or any part of the money for any period till the date on which the award is made. (g) The cost of arbitration shall be borne by the respective parties. The cost inter alia includes the fees of the Arbitrator(s) as per the rate fixed by the Employer from time to time. 20.7 Rules Governing the Arbitration Proceedings The arbitration proceedings shall be governed by India Arbitration and Conciliation Act, 1996, as amended, from time to time including provisions in force at the time the reference is made. 20.8 No Supervision of Work The reference to arbitration shall proceed notwithstanding that Works/System shall not then be or be alleged to be complete, provided always that the obligations of the Employer/Employer's Representative and the Contractor shall not be altered by reasons of arbitration being conducted during the progress of Works. Neither party shall be entitled to suspend the work to which the dispute relates on account of arbitration and payments to the Contractor shall continue to be made in terms of the Contract. 20.9 Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 2(1)(f)(iii) as being an association or a body of individuals, provided the central management and control is exercised in any country other than India. He has also gone on to rely heavily upon the fact that in the Consortium, the lead partner is the Indian company, and the Consortium's office is at Wadala in Mumbai making it clear, therefore, that sub-Clause (iii) of Section 2(1)(f) of the Act would not apply as it is clear that the central management and control, that is envisaged by the said sub- Clause, would not be exercised in a country outside India but in India itself. He has also strongly relied upon an order passed by the High Court of Bombay, dated 20.10.2016 between the same parties, in which an interim Award dated 18.08.2016 was challenged, which was between the same parties arising out of the self-same agreement. This Order upheld the interim Award of the Learned Arbitrators in stating that the particular claim that was made in that case could be made only as a Consortium and not as two entities separately. He has also pointed out that this Order has become final as it has not been challenged by the petitioner before this Court. In answering Mr. Gopal Jain's sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Supervisory Board will consist of four members, two appointed by each Member. One of the Members nominated by the Consortium Leader and agreed to by all members shall then act as the Chairman of the Supervisory Board, which is, by Clause 11.5, to decide on various matters relating to the execution of the contract. Clause 21.1(g) provides that the Consortium leader shall lead all arbitration proceedings. 6) As correctly pointed out by Shri Jain, separate claims were made by the Indian company and the Malaysian company which were rejected by the respondent. Nonetheless, by a letter dated 22.04.2016, the respondent referred to these various rejection letters, and stated that documents in support of the list of "delayed events" had not yet been given, and therefore, necessary information and clarification, in response to certain observations, together with all documents in support of the claim, was requested to be furnished. By a letter dated 01.07.2016, the Consortium, instead of responding to this letter, invoked arbitration, stating that interim claims had already been rejected, and all the necessary information had already been furnished, as a result of which, the stage of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts of this case and not Section 2(1)(f)(ii) as the Malaysian body cannot be referred to as an independent entity following the judgment of the High Court of Bombay. 11) Section 2(1)(f)(iii) of the Act refers to two different sets of persons: an "association" as distinct and separate from a "body of individuals". For example, under Section 2(31) of the Income Tax Act, 1961, "person" is defined as including, under subclause (v), an association of persons, or body of individuals, whether incorporated or not. It is in this sense, that an association is referred to in Section 2(1)(f)(iii) which would therefore include a consortium consisting of two or more bodies corporate, at least one of whom is a body corporate incorporated in a country other than India. 12) Further, the expression "a company or" which was originally at the beginning of Section 2(1)(f)(iii) was omitted by Act 3 of 2016. This was for the reason that the judgment of this Court, in TDM Infrastructure Private Ltd. v. UE Development India Private Ltd., (2008) 14 SCC 271, held that the expression "a company or" in Section 2(1)(f)(iii) of the Act cannot possibly be said to refer to a company registered and incorporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate and distinct category by itself, as is understood from the definition of "person" as defined in the Income Tax Act referred to above. 13) This being the case, coupled with the fact, as correctly argued by Shri Diwan, that the Indian company is the lead partner, and that the Supervisory Board constituted under the Consortium Agreement makes it clear that the lead partner really has the determining voice in that it appoints the Chairman of the said Board (undoubtedly, with the consent of other members); and the fact that the Consortium's office is in Wadala, Mumbai as also that the lead member shall lead the arbitration proceedings, would all point to the fact that the central management and control of this Consortium appears to be exercised in India and not in any foreign nation. 14) This being the case, we dismiss the petition filed under Section 11 of the Act, as there is no "international commercial arbitration" as defined under Section 2(1)(f) of the Act for the petitioner to come to this Court. We also do not deem it necessary to go into whether the appropriate stage for invoking Arbitration has yet been reached. 15) The Arbitration Petition is dismissed in the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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