The Delhi High Court recently adjudicated a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, filed by RBCL Piletech Infra. The case revolves around a Work Order dated April 4, 2022, executed between the petitioner and Bholasingh Jaiprakash Construction Limited (BJCL). The dispute arose when the petitioner claimed idling charges, damages, and other compensations, which they argued were payable by the respondents, including BJCL, National Thermal Power Corporation (NTPC), and Bharat Heavy Electricals Limited (BHEL).
Important Legal Issues Involved
The primary legal issue in this case was whether NTPC and BHEL, who were not signatories to the arbitration agreement, could be included in the arbitral proceedings. The petitioner argued for their inclusion based on specific clauses in the Work Order, while NTPC and BHEL contended that they had no privity of contract with the petitioner and should not be dragged into the arbitration.
Decision of the Court
The case was presided over by Justice C. Hari Shankar. The court’s decision hinged on the interpretation of the arbitration clauses and the applicability of the “Group of Companies” doctrine and other legal principles.
Key Observations and Rulings
1. Inclusion of BHEL:
– The court noted that Clauses 21 and 28 of the Work Order established a contractual relationship that made BHEL’s approval and payment crucial for the petitioner to receive payments from BJCL.
– Clause 21 stipulated that BJCL would release payments to the petitioner within three days of receiving payment from BHEL for the portion of work carried out by the petitioner. Clause 28 further allowed BHEL to withhold payments due to reasons attributable to the petitioner, thereby exercising a degree of supervisory control.
– Based on these clauses, the court concluded that BHEL could be included in the arbitration proceedings. However, it left the door open for BHEL to contest its inclusion before the arbitral tribunal.
2. Exclusion of NTPC:
– The court found no direct contractual responsibility of NTPC towards the petitioner, except for the provision of water supply and issuance of gate passes.
– The court ruled that the mere inclusion of NTPC in the petitioner’s allegations did not justify its inclusion in the arbitration proceedings at this stage. The petitioner could, however, move the arbitral tribunal to include NTPC if they could substantiate their claims further.
3. Appointment of Arbitrator:
– Given the lack of consensus on the arbitrator, the court appointed Mr. Anant V. Palli, Senior Advocate, as the arbitrator to arbitrate the disputes between the parties.
Quotes from the Judgment
– On BHEL’s Inclusion:
“These two clauses, seen in conjunction, leave no manner of doubt that, sans the approval by BHEL and release of payment by BHEL to BJCL, BJCL would not release the payments to the petitioner” .
– On NTPC’s Exclusion:
ย ย “Admittedly, there is no contractual responsibility of NTPC towards the petitioner. The mere fact that the petitioner has included NTPC in an omnibus fashion in the allegations contained in the Section 21 notice and also claimed the demanded amounts jointly and severally from all the respondents cannot, prima facie, justify inclusion of NTPC in the arbitral proceedings”.
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Case Details
– Case Number: ARB.P. 1108/2023
– Bench: Justice C. Hari Shankar
– Petitioner: RBCL Piletech Infra
– Respondents: Bholasingh Jaiprakash Construction Limited (BJCL), National Thermal Power Corporation (NTPC), Bharat Heavy Electricals Limited (BHEL)
– Lawyers:
– For Respondent 2 (NTPC): Mr. Animesh Sinha, Mr. Shubham Budhiraja, Ms. Ishita Pandey
– For Respondent 3 (BHEL): Mr. K.K. Tyagi
