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TMI Blog2022 (11) TMI 1519X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 governed by certain Special Conditions of Contract (SCCs) and General Conditions of Contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 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 with the provisions of the Indian Arbitration Act, 1996 as amended upto date." The petitioner also nominated its arbitrator in compliance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 involvement in the transactions. 11.1.2. Clauses 3.1.25 of the GCCs governing the supply-contract and the corresponding clause in the GCCs relating to the work-contract, to say that re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 'group of companies' doctrine in relation to the respondents to seek reference of respondent No. 2 to arbitration. 11.5. That in separate proceedings bearing ARB.P. No. 209/2021, involving the same respondents, though not the same petitioner, respondent No. 2 consented to be referred to arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 itself, in similar circumstances, despite not being a signatory to the arbitration agreement, Rattan India was referred to arbitration on the ground that Rattan India was directly involved with the contract. 11.8.3. Ashav Advisory LLP vs. Patanjali Ayurveda Ltd. & Ors. 2022 SCC OnLine Del 328; paras 53-54.: On the point that the 'group of companies' d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents, 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 dated 26.10.2020, which was issued by the petitioner only to respondent No. 1. It is stated that the invocation notice does not contain any allegation connecting respondent No. 2 with the disputes raised therein, and no claims have been made against respondent No. 2 in that notice. Further, it is stated that even notice dated 27.08.2021 does not disclose any 'arbitrable dispute' with respondent No. 2. 12.6. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 'moratorium' is in force against respondent No. 1, the petitioner's legal remedy against respondent No. 1 is restricted for the time being and the petitioner can only file a claim before the Resolution Professional and/or avail remedies before the learned NCLT per Alchemist Asset Reconstruction Co. Ltd. vs. Hotel Gaudavan (P) Ltd. (2018) 16 SCC 94; para 4.. 15. It is in this backdrop that the petitioner seeks to invoke arbitration against respondent No. 2, premised on the allegation that resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 2 had an intention to consent to the arbitration agreement and be party thereto, maybe for the limited purpose of enforcing the indemnity Clause 9 in the agreement, which refers to Respondent 1 and the supplier group against any claim of loss, damages and expenses, howsoever incurred or suffered by the applicant and arising out of or in connection with matters specified therein. That burden has not been discharged by the applicant at all. On this finding, it must necessarily follow that Respondent 2 cannot be subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 petitioner to respondent No. 2 is concerned, in the said notice, the petitioner does not call upon respondent No. 2 to refer any disputes to arbitration; but only seeks the consent of respondent No. 2 to agree upon the person nominated by respondent No. 1 as its arbitrator, meaning thereby that it only calls upon respondent No. 2 to accept respondent No. 1's nominee arbitrator as its own nominee. In notice dated 27.08.2021 the petitioner claims that despite not being a signatory to the contractual documents containing arbitration agreement with respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 is concerned, both parties are ad-idem that this court is entitled to entertain and decide the present petition since, parties to the contractual documents had agreed that arbitration proceedings are to be conducted at New Delhi. 28. Although the petitioner also lays some emphasis on the earlier proceedings in O.M.P.(I) (COMM.) 172/2020, which petition was filed by the petitioner seeking relief in relation to the performance bank guarantees, the orders made in the said matter relate only to respondent No. 1; and though the petitioner had impleaded respondent No. 2 also as a party-respon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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