Arbitration: Arbitration clause – Whether an arbitration clause would spring into being at the stage of Letter of Award (LOA) acceptance or whether it would be necessary to sign the ultimate agreement which would then bring in the arbitration clause contained therein – In the instant case, Request for Proposal (RFP) was sent out by the appellant for road construction – In the LOA, the Government of India made reference to the bid document and a request to return signed copy of duplicate LOA as its acknowledgment and to execute contract agreement within 15 days from date of issue of LOA – Respondent accepted the bid proposal and enclosed copy of LOA received by fax duly signed with an acknowledgment – After 2 years, appellant decided to withdraw the LOA due to non-availability of NOC from District council which was sine qua non for the land for the project – High Court held that the arbitration clause is contained in the standard form of the draft agreement and that general reference to it was sufficient to appoint arbitrator – On appeal, held: A perusal of the clauses contained in the RFP would only show that a bidder is liable for disqualification and forfeiture of bidding security at all stages of the agreement, notwithstanding that there may not be execution of the agreement between the parties – The schedule of bidding process begins with the last date for receiving queries and ends with the signing of concession agreement, LOA being Item No. 7 and part and parcel of this bidding process – The moment this is so, then under clause 6.1, dispute resolution can only take place by the Courts of Delhi – It is not possible to say that a standard form arbitration clause contained in a draft agreement would then oust clause 6.1 and disturb the entire scheme of the schedule of bidding M/s. NHID CORPORATION LTD. v. M/s. BSCPL
INFRASTRUCTURE LTD.
process – This being the case, even at the stage of acceptance of LOA, if disputes arose between the parties, they could only be resolved by the Courts of Delhi and not by arbitration – Jurisdiction.
Allowing the appeal, the Court
HELD : 1. A perusal of the clauses contained in the RFP would only show that a bidder is liable for disqualification and forfeiture of bidding security at all stages of the agreement, notwithstanding that there may not be execution of the agreement between the parties. The expression “shall be liable to be terminated...” in clause 2.1.14 is only in this context, thereby making it clear that even after the LOA may have been accepted, such disqualification and forfeiture of bid security, if the other conditions exist, can be done by the appellant. The same interpretation goes for clauses 2.6.3 and clause 2.20.7. [Paras 14 and 15] [645-D-F]
2. The schedule of bidding process begins with the last date for receiving queries and ends with the signing of concession agreement, LOA being Item No. 7 and part and parcel of this bidding process. The moment this is so, under clause 6.1, dispute resolution can only take place by the Courts of Delhi. It is not possible to say that a standard form arbitration clause contained in a draft agreement would then oust clause 6.1 and disturb the entire scheme of the schedule of bidding process. This being the case, it is clear that even at the stage of acceptance of LOA, if disputes arise between the parties, they can only be resolved by the Courts of Delhi and not by arbitration. [Paras 17 and 18] [645-G-H; 646-A]
PSA Mumbai Investments PTE. Limited v. Board of Trustees of the Jawaharlal Nehru Port Trust and Another (2018) 10 SCC 525 – relied on.
Inox Wind Ltd. v. Thermocables Ltd. (2018) 2 SCC
519 : [2018] 1 SCR 86 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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