Case Note & Summary
The applicant, Jaina Marketing & Associates, a partnership firm, filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator. The respondent, Department of Women & Child Development, Government of Maharashtra, had invited e-tenders for procurement of android based smart phones. The applicant participated and was declared the L1 bidder on 10th August 2017. The applicant submitted a Non-Disclosure Agreement on 17th August 2017. However, the respondent subsequently cancelled the tender process and did not award the contract. The applicant contended that a contract was concluded and that the tender documents contained an arbitration clause, thus an arbitrator should be appointed. The respondent argued that no contract was ever concluded and therefore no arbitration agreement existed. The court, relying on the principle that at the Section 11 stage, the court need not finally decide the existence of a concluded contract if there is an arbitration clause in the tender documents, held that the issue of existence of the contract is for the arbitrator to decide. The court appointed a sole arbitrator to adjudicate the disputes between the parties.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) Arbitration and Conciliation Act, 1996 - Existence of Arbitration Agreement - The applicant, a bidder in a tender process, sought appointment of an arbitrator after the respondent allegedly failed to honour the contract. The respondent contended that no contract was concluded and thus no arbitration agreement existed. The court held that at the stage of Section 11, the court need not decide the existence of a concluded contract if there is an arbitration clause in the tender documents; the issue of existence of the contract is for the arbitrator to decide. The court appointed a sole arbitrator to adjudicate the disputes. (Paras 2-10) B) Contract Law - Tender Process - L1 Bidder - Formation of Contract - The applicant was declared L1 bidder and submitted a Non-Disclosure Agreement. The respondent later unilaterally cancelled the tender. The court noted that the tender documents contained an arbitration clause, and the applicant's participation and acceptance as L1 bidder indicated a prima facie contract. The court left the final determination of the contract's existence to the arbitrator. (Paras 3-8)
Issue of Consideration
Whether an arbitrator should be appointed under Section 11(6) of the Arbitration and Conciliation Act, 1996 when the respondent disputes the existence of an arbitration agreement and the applicant claims that a contract was concluded.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties.
Law Points
- Section 11(6) of the Arbitration and Conciliation Act
- 1996
- Appointment of arbitrator
- Existence of arbitration agreement
- Tender process
- L1 bidder
- Unilateral rescission of contract
