Delhi High Court: In a petition filed by the petitioner engaged in the business of providing cranes of various types and capacity on hire basis under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of the sole arbitrator in terms of Clause 10 of the contract between the parties, Mini Pushkarna, J., appointed Justice Jayant Nath (Retired), Former Judge of the present Court as Sole Arbitrator to adjudicate the disputes between the parties.
The Respondent is engaged in the business of constructing, developing, operating and maintaining wind power projects in India. The parties entered business negotiations leading to Respondent issuing a Purchase Order which further led to the execution of a contract.
It is the case of the petitioner that as per Clause 3.1 of the Contract, ‘the right to way’ to the project site for installation and demobilization of the cranes was to be provided by the respondent, which could not be done due to protest from local vendors of the respondent who did not allow the petitioner to get access and move its crane and equipment from the site. Despite numerous communications, the hire charges were not paid by the respondent.
Thus, a notice was sent by the petitioner invoking the arbitration clause which was refused by the respondent stating that the petitioner did not send the notice of the dispute to the respondent. Aggrieved by the same, the present petition was filed.
Counsel for the respondent submitted that the present petition is not maintainable as parties have not submitted themselves to the process of arbitration in relation to the disputes raised by the petitioner, the relationship between the parties arises out of and is governed by the purchase orders issued and executed between the parties and there exists no arbitration clause in the said purchase orders.
The Court noted that examination of the contract and the purchase orders clearly exhibits that they relate to the same purpose and are between the same parties. Therefore, the contract dated 18.01.2021 and the purchase orders are intrinsically intertwined with each other and are connected fundamentally to the transaction between the parties for hiring of crane packages by the respondent from the petitioner company.
The Court further noted that the purchase orders issued by the respondent cannot be said to be independent of the contract dated 18-01-2021. The purchase orders have been issued by the respondent based on and in pursuance of the contract dated 18-01-2021. Thus, the contract dated 18-01-2021 is the main agreement executed between the parties and the purchase orders are part of the services required under the main agreement.
The Court recorded that even if the purchase order dated 28-12-2020 was issued prior to the contract dated 18-01-2021, the intention of the parties can clearly be gauged from their conduct and the documents on record.
The Court remarked that the fact that in the contract dated 18-01-2021, it is stated that the respondent company has made an advance payment of Rs. 31,86,000/- to the contractor towards one time mobilisation charges on 31-12-2020, vide the purchase order dated 28-12-2020. Hence, the purchase orders are clearly connected and linked to the contract between the petitioner and the respondent.
The Court observed that the parties may choose to enter in two different contracts covering the same transaction at different points of time, however, the purchase orders do not in any manner supersede the contract between the parties.
Thus, the Court held that the purchase orders having been issued based on the contract between the parties, the parties would be governed by the arbitration clause as contained in the contract, even though the arbitration clause is not specifically incorporated in the purchase orders.
[Sanghvi Movers Limited v. Vivid Solaire Energy Private Limited, 2022 SCC OnLine Del 4423, decided on 15-12-2022]
Advocates who appeared in this case :
Mr. Sandeep P. Agarwal, Senior Advocate with Ms. Niyati Kohli, Mr. Pratham Vir Agarwal and Ms. Tanya, Advocates for the Petitioner;
Mr. Sandeep P. Agarwal, Senior Advocate with Ms. Niyati Kohli, Mr. Pratham Vir Agarwal and Ms. Tanya, Advocates for the Respondent.
*Arunima Bose, Editorial Assistant has reported this brief.
