Case Note & Summary
The petitioner, PMP Infratech Pvt Ltd, an AA Class Government Registered Civil Contractor, was engaged by the respondent, Bharat Petro Resources Ltd (BPRL), for waste management services in an operatorship block in Gujarat. The petitioner executed an MOU with Eco Care Infrastructure Pvt Ltd, the sole operator in Gujarat, to transport and dispose drill cutting waste. A Letter of Award dated 24/1/2020 was issued for a contract value of Rs.6.84 crores for twelve months. Due to the Covid-19 pandemic, the contract could not be completed within the stipulated period; the petitioner completed 80% of the work but the remaining 20% (transportation of waste) was pending due to technical issues regarding the operator requirement. The respondent terminated the contract and by notice dated 24/7/2021 called upon the petitioner to withdraw the termination or refer the dispute to an independent arbitrator. The petitioner filed Arbitration Petition (L) No. 16074/2021, and by consent, Shri S.C. Gupte (Retd Judge of Bombay High Court) was appointed as Sole Arbitrator on 10/5/2021. Subsequently, the respondent invoked the bank guarantee furnished by the petitioner, and HDFC Bank debited the amount despite the pending arbitration. The petitioner then filed the present petition under Section 9 of the Arbitration and Conciliation Act, 1996, along with an application under Section 11 for appointment of an arbitrator. The court, noting that an arbitrator was already appointed by consent, disposed of the Section 11 application as not pressed and granted interim relief under Section 9, protecting the petitioner from further coercive action pending the arbitration proceedings.
Headnote
A) Arbitration - Interim Relief under Section 9 - Appointment of Arbitrator under Section 11 - The petitioner sought interim protection against termination of contract and invocation of bank guarantee, and appointment of an independent arbitrator. The court held that since the arbitration was already pending before a sole arbitrator, the Section 9 petition was maintainable for interim relief, and the appointment of arbitrator was already made by consent. (Paras 1-3)
B) Contract Law - Termination of Contract - Bank Guarantee Invocation - The contract was terminated due to alleged non-completion of work, and the bank guarantee was invoked during pendency of arbitration. The court noted that the disputes were already before the arbitrator and did not delve into merits, but granted interim relief to maintain status quo. (Paras 2-3)
Issue of Consideration
Whether the petitioner is entitled to interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, and whether a sole arbitrator should be appointed under Section 11 of the Act to adjudicate disputes arising from the termination of the contract and invocation of bank guarantee.
Final Decision
The court allowed the Section 9 petition for interim relief, protecting the petitioner from further coercive action pending arbitration. The Section 11 application was disposed of as not pressed since an arbitrator was already appointed by consent.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996
- Section 11 of the Arbitration and Conciliation Act
- Interim measures
- Appointment of arbitrator
- Termination of contract
- Bank guarantee invocation
- Covid-19 pandemic as force majeure
Case Details
2023 LawText (BOM) (07) 68
Arbitration Petition (L) No. 30250 of 2022 with Arbitration Application (L) No. 32620 of 2022
Mr. Kamlesh Sukhwani with Mr. Chirag Sukhwani i/b Suvarna Joshi for the petitioner; Mr. Mustafa Doctor, Sr. Counsel with Roopadaksha Basu and Heenal Wadhwa for the respondent.
Bharat Petro Resources Ltd
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Nature of Litigation
Arbitration petition under Section 9 and application under Section 11 of the Arbitration and Conciliation Act, 1996 seeking interim relief and appointment of arbitrator in a dispute arising from termination of a waste management services contract and invocation of bank guarantee.
Remedy Sought
The petitioner sought interim protection against the termination of the contract and invocation of bank guarantee, and appointment of an independent and impartial sole arbitrator.
Filing Reason
The respondent terminated the contract and invoked the bank guarantee despite the pendency of arbitration proceedings, prompting the petitioner to seek interim relief and appointment of arbitrator.
Previous Decisions
Earlier, in Arbitration Petition (L) No. 16074/2021, by order dated 10/5/2021, Shri S.C. Gupte (Retd Judge of Bombay High Court) was appointed as Sole Arbitrator by consent of parties.
Issues
Whether the petitioner is entitled to interim relief under Section 9 of the Arbitration and Conciliation Act, 1996?
Whether a sole arbitrator should be appointed under Section 11 of the Act?
Submissions/Arguments
The petitioner argued that due to the Covid-19 pandemic, the contract could not be completed within the stipulated period, and the termination and bank guarantee invocation were unjustified.
The respondent contended that the contract was terminated due to non-completion of work and the bank guarantee was validly invoked.
Ratio Decidendi
The court held that since arbitration was already pending before a sole arbitrator appointed by consent, the Section 9 petition for interim relief was maintainable, and the court granted interim protection to maintain status quo pending arbitration.
Judgment Excerpts
The petitioner is 'AA' Class Government Registered Civil Contractor and its services were engaged by the respondent – Bharat Petro Resources Limited, (for short 'BPRL') for hiring of Waste Management Services in Operatorship Block, CB-ONN 2010/8, Cambay Basin, Gujarat India.
By the letter of Award dated 24/1/2020, he was awarded a total estimated contract value of Rs.6.84 crores (including taxes), the contract period being twelve months from the date of Letter of Authority (LOA).
The respondent invoked the bank guarantee furnished by the petitioner and the HDFC Bank debited the amount of bank guarantee from the account of the petitioner and paid the same to BPRL despite pendency of the disputes before the Sole Arbitrator.
Procedural History
The petitioner initially filed Arbitration Petition (L) No. 16074/2021, and by consent, Shri S.C. Gupte was appointed as Sole Arbitrator on 10/5/2021. Subsequently, the respondent invoked the bank guarantee, leading the petitioner to file the present petition under Section 9 and application under Section 11. The court disposed of the Section 11 application as not pressed and granted interim relief under Section 9.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 9, Section 11
