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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 ..... documents cited by the petitioner in the present case, this court is of the opinion that the petitioner has failed to discharge the burden to establish consent on the part of respondent No. 2 to have any disputes arising from the transaction to arbitration. The petitioner's emphasis on certain documents and correspondence exchanged with respondent No. 2, are all post the execution of the contractual documents between the petitioner and respondent No. 1; and most importantly, even such post-hock correspondence does not establish the existence of an arbitration agreement between the petitioner and respondent No. 2. From another perspective, the petitioner's reliance upon the later documents and correspondence is also destructive of the petitioner's own averment that respondent No. 2 was involved in the negotiations between the petitioner and respondent No. 1. Thus, in the opinion of this court, the requirement of there having to be an arbitration agreement between the petitioner and respondent No. 2 is not fulfilled. The present petition cannot be allowed against respondent No. 2, much less only for the reason that respondent No. 1 is presently under moratorium - Petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into between the petitioner and respondent No. 1, which is governed by a separate set of SCCs and GCCs; 2.5. The supply-contract as well as the work-contract were amended on 27.12.2012. Subsequently, the work-contract was further amended on 01.04.2013, thereby amending the scope of work of respondent No. 1 and revising the contract price. 2.6. Additionally, there was also a Supply Purchase order dated 29.10.2012 and a Work Order dated 29.10.2012 issued by respondent No. 1 in favour of the petitioner, which notably was also signed only by these parties. For convenience the entire set of agreements and documents mentioned above are referred to as 'contractual documents' in the present judgment. 3. The arbitration agreement between the parties is contained in the following documents: 3.1. Clause 16 of letter of award dated 10.09.2012, requiring a three-member arbitral tribunal to be constituted for adjudication of disputes between the parties; 3.2. Clause 11 of the GCCs governing both the supply-contract as well as the work contract, again requiring a three-member arbitral tribunal to be constituted for adjudication of disputes between the parties; 3.3. Clause 1.0 of both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbitration against the petitioner for its claims (counter-claims); and proceeded to appoint it's nominee arbitrator. 7. Thereafter however, respondent No. 1 went under 'moratorium' as part of corporate insolvency resolution proceedings that were initiated against it under the Insolvency Bankruptcy Code, 2016. Vide order dated 20.09.2021, an interim resolution professional was appointed for respondent No. 1 by the learned National Company Law Tribunal, New Delhi. 8. During this period, the petitioner issued a notice dated 27.08.2021 to respondent No. 2, making the following demands, and thereby also purporting to invoke arbitration: Therefore in the given facts and circumstances, RattanIndia Power Limited is requested to consent to appointment of Justice Surender Kumar (Retd.), former Judge, High Court of Allahabad, the nominee arbitrator of IICL, to be the nominee arbitrator of RattanIndia Power Limited as well regarding the disputes relating to non-release of Bank Guarantees, payment of margin money for extension of Bank Guarantees, non-payment of the amount due and outstanding, including the amount of final bill loss of profit, payment on account of escalation and pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. 11.1.4. Clause 11 of the SCCs governing the supply-contract, under which respondent No. 2 had reserved the right to increase or decrease the quantity of items under that contract. 11.1.5. Annexure-V to the GCCs governing the work-contract, which provides a format for letter of credit, in which respondent No. 2's name appears as the 'applicant'. 11.2. That respondent No. 2 is an alter-ego of respondent No. 1 (or vice-versa), in support of which, the petitioner enlists several communications, including those exchanged between the petitioner and respondent No. 2, to indicate that it was in fact respondent No. 2 and not respondent No. 1 (or respondent No. 2 acting through respondent No. 1) which executed the agreements in favour of the petitioner. Some of the communications highlighted in the petition are: 11.2.1 Communication dated 16.02.2013, issued by the petitioner to respondent No. 2 seeking variation in the quantity of height gauge. 11.2.2. Communications dated 06.08.2013, 27.08.2014 and 02.07.2015, issued by the petitioner to respondent No. 2 seeking extension of time for completion of works under the contracts. 11.2.3. Communications dated 13.08.2015 and 31.08.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed fraud perpetuated by respondent No. 1 upon the petitioner, respondent No. 2 was also a party and invocation of the subject bank guarantees was stayed by a Co-ordinate Bench of this court vide order dated 10.07.2020; which order has thereafter been continued. The petitioner contends that in the said proceedings, respondent No. 2 never sought deletion from the array of party-respondents since it was a necessary party thereto. 11.7. That additionally, clause 1.0 of the Supply Purchase Order and Work-Order dated 29.10.2012 contemplates reference of disputes between 'Owner' and 'Supplier' to arbitration. The petitioner pegs its case on the interpretation of word 'Owner' as defined in clause 3.1.25 of the GCCs governing the Supply Purchase Order and the corresponding clause in the Work-Order, to submit that the said clause constitutes an arbitration agreement between the petitioner and respondent No. 2. Clause 3.1.25 of the GCCs governing the Supply Purchase Order reads as under: Clause 3.1.25: Owner or IPL shall mean Indiabulls Power Limited and shall include their legal representative, successors and assigns. It is urged on behalf of the petitioner that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .: On the point that the 'group of companies' doctrine may be interpreted by examining the impression that was conveyed to the contracting parties by the third party. 11.8.6. Oriental Insurance Co. Ltd. vs. Sanju Bai Ors. 2015 SCC OnLine MP 7565; para 5.; and Gujarat Narmada Valley Fertilizers Co. Ltd. vs. Commissioner of Central Excise Customs; para 3.: On the point that if a decision of the Supreme Court has been referred to a larger Bench, it would still hold the ground until set aside or varied. Respondent No. 2's Submissions 12. Responding to the petitioner's case, respondent No. 2 has made the following submissions: 12.1. That there is no arbitration agreement between the petitioner and respondent No. 2. It is argued that since the disputes raised by the petitioner arise from letter of intent dated 31.08.2012, letter of award dated 10.09.2021 and contracts dated 05.10.2012, to which respondent No. 2 was admittedly not signatory, the said respondent cannot be made to participate in the arbitration proceedings sought to be initiated by the petitioner in respect of those disputes. It is further stated that the petitioner has produced no documents that would demon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent No. 2 must be sent to arbitration in the present case as well, is baseless, since the case referred to was a consent order, on a different fact situation and has no precedential value. 12.8. Supporting its case, respondent No. 2 has relied upon the following decisions: 12.8.1 Reckitt Benckiser (India) (P) Ltd. vs. Reynders Label Printing (India) (P) Ltd. (2019) 7 SCC 62; paras 12 13., STCI Finance Ltd. vs. Sukhmani Technologies Pvt. Ltd. 2016 SCC OnLine Del 6650; paras 29-32., Prize Petroleum Company Ltd. vs. ABG Energy Ltd. Anr. 2017 SCC OnLine Del 10627; para 11., and S. Sivagurunathan vs. R. Mennan 2022 SCC OnLine Mad 5501; paras 19-30.: On the point that the correspondence exchanged between the petitioner and respondent No. 2 after the execution of the contractual documents would not bind respondent No. 2 to any arbitration agreement; and that the intention to agree for arbitration is necessary, to be referred to arbitration. 12.8.2. Indo Wind Energy Ltd. vs. Wescare (I) Ltd. Anr. (2010) 5 SCC 306; paras 11, 14, 15, 20., S.N. Prasad vs. Monnet Finance Ltd. (2011) 1 SCC 320; paras 7-11.: On the point that in the absence of an agreement to arbitrate, a non-signatory cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt inter-alia in Chloro Controls (supra), which enunciates the law on when, and in what circumstances, a non-signatory party can be held bound by an arbitration agreement. 16. As held by a Co-ordinate Bench of this court in STCI Finance Ltd. (supra), a situation where (i) a non-signatory party to an arbitration agreement invokes arbitration against a signatory party is different from a situation where a (ii) signatory party invokes arbitration against a non-signatory party. In situation (i) where arbitration is invoked by a non-signatory party against a signatory party (even though signatory with a third party), on the basis that the non-signatory party is claiming through or under such third party, the consent of the signatory party to refer the disputes to arbitration is a given. In situation (ii) however, when a signatory party invokes arbitration against a non-signatory party, since the non-signatory party has never consented to the remedy of arbitration itself, there is a heavy burden on the signatory party to establish that the non-signatory party had agreed to arbitration. In this regard, the Supreme Court has held in Reckitt Benckiser (supra) that the burden to establish t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner in the present case, this court is of the opinion that the petitioner has failed to discharge the burden to establish consent on the part of respondent No. 2 to have any disputes arising from the transaction to arbitration. The petitioner's emphasis on certain documents and correspondence exchanged with respondent No. 2, are all post the execution of the contractual documents between the petitioner and respondent No. 1; and most importantly, even such post-hock correspondence does not establish the existence of an arbitration agreement between the petitioner and respondent No. 2. From another perspective, the petitioner's reliance upon the later documents and correspondence is also destructive of the petitioner's own averment that respondent No. 2 was involved in the negotiations between the petitioner and respondent No. 1. 18. Accordingly, in the opinion of this court, the requirement of there having to be an arbitration agreement between the petitioner and respondent No. 2 is not fulfilled. 19. To add to this, in the present case, evidently invocation notice dated 26.10.2020 was issued by the petitioner only to respondent No. 1, without even a copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents and communications on record, it is an established case that IICL is an alter-ego(sic) RattanIndia Power Ltd. (formerly known as IndiabullsPower Ltd.) 23. In the opinion of this court, notwithstanding the above allegations, notice dated 27.08.2021 issued by the petitioner to respondent No. 2 does not raise any independent disputes with respondent No. 2; and does not call upon respondent No. 2 to refer any disputes to arbitration. The disputes sought to be raised by the petitioners and the claims made by it relate only to respondent No. 1; and there is nothing to show that respondent No. 2 was liable to pay the petitioner's dues if respondent No. 1 defaulted in doing so. The subject bank guarantees, in relation to which relief is sought by the petitioner, were admittedly issued by the petitioner only in favour of respondent No. 1; and the petitioner cannot therefore seek release of the subject bank guarantees from respondent No. 2. 24. It is settled law that a petition under section 11 of the A C Act is founded upon a party validly invoking arbitration as a remedy in relation to arbitrable disputes with another. It has also been held by a Co-ordinate Bench of this court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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