Case Note & Summary
The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 was filed by Maharashtra State Electricity Distribution Company Limited (MSEDCL) challenging an arbitral award dated 15 February 2019 and Minutes of Meeting dated 9 February 2019 passed by a sole arbitrator. The dispute arose from eight contracts awarded by MSEDCL to a joint venture comprising Godrej and Boyce Manufacturing Company Limited as lead partner and Electropath Services (India) Private Limited. The contracts were executed in 2009. A dispute arose on 25 July 2017, and the respondent (Godrej and Boyce) invoked arbitration. Despite the contract being with the joint venture, the respondent alone filed an application under Section 11(6) of the Arbitration Act for appointment of an arbitrator. The parties subsequently executed a Joint Memo on 21 March 2018, agreeing to refer disputes to a sole arbitrator and not challenge jurisdiction on that ground. By consent, the High Court appointed a senior advocate as sole arbitrator. The respondent thereafter filed a statement of claim on 19 May 2018 without impleading the other joint venture partner, Electropath. MSEDCL filed a statement of defence and counterclaim on 30 July 2018. After the respondent amended its claim, MSEDCL filed an additional statement of defence on 26 November 2018, raising the ground of non-joinder of Electropath. MSEDCL contended that the contract was with the joint venture, and the respondent alone had no privity of contract and could not maintain the claim. On 2 January 2019, MSEDCL filed an application under Section 31(6) of the Arbitration Act seeking rejection of the reference on this ground. The respondent opposed. The arbitrator dismissed the application on 9 February 2019, holding that he had jurisdiction to decide the dispute. MSEDCL then filed the present petition under Section 34. The arguments advanced by MSEDCL emphasized various clauses of the contract documents, including the definition of 'Contractor' in the General Conditions of Contract (GCC) which referred to the joint venture, and clause 1.14 which provided for joint and several liability. It was argued that the respondent, even as lead member, could only act on behalf of the joint venture and not in its individual capacity. The arbitration clause in the GCC referred to 'Contractor', which meant the joint venture. The court's analysis and final decision on the Section 34 petition are not included in the provided judgment text.
Issue of Consideration
Whether the claim filed by the respondent as lead partner of a joint venture, without impleading the other joint venture partner, is maintainable in arbitration, and whether the arbitrator's rejection of the interim application under Section 31(6) of the Arbitration and Conciliation Act, 1996 is valid.
Law Points
- privity of contract
- joint venture
- lead member
- non-joinder of necessary party
- arbitration agreement under Section 7
- Section 31(6) Arbitration Act
- interim award
- Section 34 challenge
- maintainability of claim
- jurisdiction of arbitrator
- joint and several liability
- definition of contractor
- GCC clauses
Case Details
2019 LawText (BOM) (11) 63
Commercial Arbitration Petition (L) No.238 of 2019
Shiraz Rustomjee, Senior Advocate a/w Anoshak Daver, Zubin Morris, Kiran Gandhi, Aakash Kothari i/by Little & Co. for the petitioner; Darius J. Khambata, Senior Advocate a/w Rohan Cama, Ankoosh Mehta, Dhvani Shah, Sanika Gokhale i/by Cyril Amarchand Mangaldas for the respondent.
Maharashtra State Electricity Distribution Company Limited (MSEDCL)
Godrej and Boyce Manufacturing Company Limited
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Nature of Litigation
Arbitration petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award and minutes of meeting that rejected an interim application for rejection of reference.
Remedy Sought
Petitioner sought setting aside of the impugned award and rejection of respondent's statement of claim.
Filing Reason
Petitioner contended that the contract was with a joint venture, and the respondent alone (lead partner) could not maintain the claim without impleading the other joint venture partner, thus the arbitrator lacked jurisdiction and the claim was not maintainable.
Previous Decisions
Arbitral award dated 15 February 2019 (reasons) and Minutes of Meeting dated 9 February 2019 dismissing petitioner's application under Section 31(6) of the Arbitration Act.
Issues
Whether the claim filed by the lead partner of a joint venture is maintainable without impleading the other joint venture partner.
Whether the arbitrator had jurisdiction to entertain the claim despite non-joinder.
Whether the interim award rejecting the application under Section 31(6) is valid.
Submissions/Arguments
Petitioner argued that contract was awarded to JV, not respondent alone; clauses of GCC and contract showed that contractor meant JV; joint venture agreement and MOUs confirmed that both partners were necessary; only JV could invoke arbitration; respondent had no privity of contract independently; claim should be rejected for non-joinder.
Respondent opposed the application (details not provided in text).
Judgment Excerpts
the petitioner has impugned the arbitral award dated 15th February 2019 and Minutes of Meeting dated 9th February 2019 thereby rejecting an interim application filed by the petitioner for an interim award under Section 31(6) of the Arbitration Act praying for rejection of reference filed by the respondent herein (original claimant).
The respondent who claimed to act as a lead member under the said provision, could act as a joint venture and not act in individual capacity.
it is provided that the respondent had submitted a joint venture proposal to the petitioner on behalf of the joint venture member as per enclosed power of attorney.
the respondent and the said Electropath Services (India) Private Limited were the vital components of JV.
the claim was admittedly filed by the lead partner i.e. M/s.Godrej & Boyce Manufacturing Co. Ltd. and thus the said claim was liable to be dismissed with costs on the sole ground for non-joinder of parties i.e. Electropath Services (India) Private Limited.
Procedural History
Petitioner invited bids in 2008; respondent as lead partner of JV with Electropath submitted offer. Dispute arose on 25 July 2017; respondent invoked arbitration, filed application under Section 11(6) (Arbitration Application No.13 of 2018) on 28 December 2017. On 21 March 2018, parties executed Joint Memo in 8 arbitration applications, agreeing to refer disputes to a sole arbitrator and not challenge jurisdiction. By consent, High Court appointed a senior advocate as sole arbitrator on 23 March 2018. Respondent filed statement of claim on 19 May 2018 without impleading Electropath. Petitioner filed statement of defence and counterclaim on 30 July 2018. Respondent amended claim on 16 October 2018, allowed. Petitioner filed additional statement of defence on 26 November 2018, raising non-joinder issue. On 27 November 2018, arbitrator recorded that issue would be considered after replication. Respondent filed replication on 22 December 2018. Petitioner filed application under Section 31(6) on 2 January 2019 for rejection of reference. Respondent opposed on 14 January 2019. Arbitrator dismissed the application on 9 February 2019 (minutes) and gave reasons on 15 February 2019. Petitioner filed present Section 34 petition.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 7, 11(6), 31(6), 34
- Companies Act, 1956:
