M/s. S.R. Constructions vs M/s. Jayanti Films India Pvt. Ltd.

Sanjay Kishan Kaul, C.J.—The petitioner, a sole proprietorship concern, is stated to be engaged in the business of interior and civil constructions. The petitioner claims that tenders were invited for interior and exterior works for the project of the respondent i.e. Gurgaon Dreamz through an NIT which in turn contained an Arbitration Clause 20.2.1 giving right to both the parties to appoint their respective Arbitrators and they in turn would elect the third Arbitrator. The petitioner submitted a final bid on 11.11.2008 which was accepted by the letter of award dated 13.11.2008.

The work is stated to have been carried out over a longer period of time on account of defaults and breaches on part of the respondent. There are stated to have been short payments of several RA bills and since the dispute regarding payments could not be resolved, a notice for arbitration was sent on 8.6.2012 by the petitioner. The respondent by its response dated 27.8.2012 requested the petitioner to come forward to resolve the issue but despite subsequent meetings nothing happened.

The petitioner vide their letter dated 5.1.2013, thus, proposed their nominee Arbitrator to which there is stated to be no response from the respondent which resulted in the petitioner filing a petition u/s 11 of the Arbitration & Conciliation Act, 1996 (hereinafter to be referred to as "the said Act") before the Delhi High Court being Arbitration Petition No. 150 of 2013. The respondent objected to the territorial jurisdiction of the Delhi High Court and on 1.8.2013, after some arguments, the petitioner sought leave to withdraw the petition with liberty to approach the appropriate forum in accordance with law which was granted. It is stated that even thereafter endeavours for settlement were made in August, 2013, but to no avail which has given rise to filing of the present petition.

The petition is resisted by the respondent. The narrow compass of the controversy within which the respective stands have to be appreciated is set out hereinafter.

It appears that it was not the respondent initially which floated the tender for the project in question but its sister-concern M/s. Dreamtime Projects Limited. M/s. Dreamtime Projects Limited was defined as the principal contractor to the contractee being the respondent as per the NIT. The General Conditions of Contract (GCC) contained the arbitration clause. However, ultimately, the bids were invited by the respondent itself and the final bid was submitted by the petitioner on 11.11.2008 (Annexure P/2). This document shows that along with the bid tender form duly stamped and signed along with tender documents and addendums were enclosed as also the general terms and conditions duly signed.

The respondent vide their letter dated 13.11.2008 (Annexure P/3) referred to the bid meeting and the final offer and accepted the same. Having set out the relevant terms and conditions, at the end of the letter it is stated as under:

The above special terms and conditions in conjunction with the tendered conditions of contract, specifications and bill of quantities shall from (sic) part of contract agreement.

xxx

A formal contract in this regard shall be executed by both of us in pursuance of this Letter of Award.

The notice invoking arbitration dated 8.6.2012 (Annexure P/4) was clear in its terms and in reply the matter was contested on merits, but not on the existence of the arbitration agreement over which there was silence.

In the course of hearing, on 2.5.2014, learned counsel for the respondent sought to urge that the agreement inter se the parties (Annexure P/3) was the only agreement duly signed which did not contain an arbitration clause and the arbitration clause sought to be relied upon by the petitioner is qua another tender forming accompanying NIT which contains an arbitration clause and the same was issued by a third party. In fact, this is the reference to the tender floated by M/s. Dreamtime Projects Limited. In the next hearing on 28.5.2014, the matter was heard at some length. It was explained by learned counsel for the petitioner that the letter dated 13.11.2008 itself referred to the tender conditions of contract other than the special terms and conditions, specifications and bill of quantities with all of them to form a part of the contract agreement. It is not disputed that no further formal contract was executed in pursuance to the letter of the award. The plea sought to be advanced as if there were some other general terms and conditions of contract was sought to be negated as they had not been produced. In a nutshell, plea was that the impression sought to be given was as if the terms and conditions referred to in the letter of the respondent dated 13.11.2008 were different which did not contain the arbitration clause while what was sought to be contended before the Court on that date by learned counsel for the respondent was that the absence of the formal contract meant that only the special conditions were binding and there was no binding clause.

The matter was deferred to today for learned counsel for the respondent to obtain instructions whether there were other general terms and conditions of contract. The answer to this is in the negative, as disclosed by learned counsel for the respondent. Thus, the general conditions of contract are the same which contain the arbitration clause.

The limited plea sought to be advanced now by learned counsel for the respondent is arising from the absence of execution of a "formal contract" referred to in the letter dated 13.11.2008.

I am unimpressed by the arguments of learned counsel for the respondent for the reason that the letter dated 13.11.2008 mentions that apart from special conditions contained in the letter, the same would have to be read in conjunction with the "tendered conditions of contract", specifications and bill of quantities all of which have to form a part of contract agreement. The acceptance of this letter amounts to the tendered conditions of contract being binding which has been referred to earlier and which had been duly stamped, signed and sent along with the offer letter of the petitioner dated 11.11.2008 as enclosure. This letter at the end stated so in the following terms:-

Encl.

Tender Form Duly stamped & signed along with complete tender documents with Addendum (2 NO.) As collected from you.

General Terms & Conditions

I am fortified in my view by the opinion of the Hon''ble Supreme Court, as referred to by learned counsel for the petitioner, in Unissi (India) Pvt. Ltd. Vs. Post Graduate Institute of Medical Education and Research, . It was held therein that where a tender was floated which has an arbitration clause and offer submitted in pursuance thereto and acted upon by him, the absence of existence of any formal arbitration agreement would not defeat arbitration.

I am clearly of the view that the petitioner is correct in urging that having signed the GCC terms and sent them to the respondent which was to form a part of the contract as per letter dated 13.11.2008 along with the special conditions of contract results in a valid arbitration agreement inter se the parties. Thus, the dispute inter se the parties is liable to be referred to arbitration in terms of the arbitration clause.

At this stage, learned counsel for the parties, faced with the aforesaid position, urged that in order to reduce the costs, they request this Court to appoint only a sole Arbitrator and the arbitration to be held under the aegis of the Delhi Arbitration Centre. I accede to the request and appoint Justice Anil Dev Singh, retired Chief Justice of the Rajasthan High Court (Residence: #F-10, Geetanjali Enclave, New Delhi-110017. Mobile No. 09810060203) as the sole Arbitrator with the arbitration to be held under the aegis of the Delhi Arbitration Centre. The fee and other terms and conditions of the Centre would, thus, be applicable.

The petition is accordingly allowed leaving the parties to bear their own costs.