M/S. Indtel Technical Services Pvt.Ltd vs W.S. Atkins Plc

1. By a Memorandum of Understanding, hereinafter referred to as "the Memorandum", entered into between the appellant and the respondent on 11th June, 2002, the parties agreed to collaborate on an exclusive basis for jointly preparing and submitting their tender for work associated with the designing, manufacturing, supply, 2 installation, test and commissioning contract for the Indian Railways Crashworthiness Project. Pursuant thereto the parties jointly prepared and submitted a tender signed by both the parties on 30.9.2002 in response to a bid invitation by RITES Limited, a Public Sector Undertaking of the Ministry of Railways, on 30.9.2002.

2. After submission of such bid the parties were invited to call upon the respondent on 29.10.2002 for contract negotiation in India, but without any valid or justifiable reason the respondent terminated the Memorandum on 12.11.2002 and on 15.11.2002 unilaterally withdrew the joint bid submitted to RITES without any reference to the applicant. According to the applicant, some of the other terms of the Memorandum dated 11.6.2002 were also breached by the respondent which impelled the applicant to address a letter to the respondent on 23.6.2003 calling upon it to 3 explain the various defaults committed by it. A request was also made to the respondent to enter into a dialogue to work out the fair level of compensation for the losses suffered by the applicant on account of such breach. The allegations contained in the letter were denied by the respondent by its reply dated 20.8.2003. Several letters were thereafter exchanged between the parties culminating in a legal notice being sent on behalf of the applicant to the respondent to compensate the applicant for the losses incurred by it on account of the unlawful acts of the respondent. The response of the respondent to the legal notice was one of denial and assertion that the respondent had acted fairly and properly in the matter.

9. The order of the learned Third Additional District Judge was challenged before the M.P. High Court, Indore Bench, by Bhatia International by way of a writ petition, which was also dismissed by the High Court. The Judgment and Orders, both of the learned 10 Additional District Judge, Indore, and the Madhya Pradesh High Court, Indore Bench, were challenged before this Court by Bhatia International and it was submitted on its behalf that Part-I of the Arbitration and Conciliation Act, 1996, applies only to arbitrations where the place of arbitration is in India, as has been clearly indicated in Sub-section (2) of Section 2 of the said Act. In the said case, it was also urged on behalf of Bhatia International that Section 2(i)(f) of the Arbitration and Conciliation Act, 1996, defines "International Commercial Arbitration" and that such arbitration could take place either in India or outside India. The submissions made on behalf of Bhatia International were accepted by this Court upon a finding that, although, Section 2 (2) of the Arbitration and Conciliation Act, 1996, provides that Part-I of the Act would apply where the place of arbitration is in India, it did not provide that Part-I would not apply where the place of arbitration is not in 11 India. It was also held that it was nowhere provided that Part-I of the aforesaid Act would not apply to arbitrations taking place outside India. Accordingly, this Court concluded as follows :-

26. Furthermore, from the wording of clause 13.2 and clause 13.3 I am convinced, for the purpose of this application, that the parties to the Memorandum intended to have their disputes resolved by arbitration and in the facts of this case the petition has to be allowed.

27. Accordingly, Justice B.N. Srikrishna, is appointed as sole arbitrator to arbitrate upon 27 the disputes which have arisen betweens the parties hereto as set out in sub-paragraphs (a) to (h) of paragraph 19 of the present application. The sole Arbitrator will be entitled to decide upon the procedure to be adopted in the arbitral proceedings, the sittings of the arbitral proceedings and to also settle his fees in respect thereof. The sole Arbitrator shall make positive efforts to complete the arbitration proceedings and pass his award with expedition.

....................................J. (ALTAMAS KABIR) New Delhi Dated: 25.08.2008