Bombay High Court
Bharat Sanchar Nigam Limited vs Siemens Financial Services Ltd. ... on 20 June, 2016
Bench: Anoop V. Mohta
dgm 1 appl-545-15-judgment.sxw
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION APPEAL (L) No. 545 OF 2015
IN
ARBITRATION PETITION NO. 1006 OF 2013
Bharat Sanchar Nigam Limited
through Chief General Manager,
B.S.N.L., Maharashtra Circle,
Santacruz (W), Mumbai 400 054 .... Appellant
ig (Orig. Respondent No.2.)
vs
1 Siemens Financial Services Ltd.,
A Company incorporated under the
provisions of Companies Act, 1956
having its registered office at
4th floor, Siemens Ltd., 130,
Pandurang Budhkar Marg,
Worli, Mumbai 400 018 (Orig. Petitioner)
2 Sai Infosystem (India) Limited
A Company incorporated under the
provisions of Companies Act, 1956
having its registered office at
Sai care, super Plaza, Near Sandesh
Press Road, Bodakdev, Vastrapur,
Ahmedabad-380 054 (Orig.Respondent No.1)
.... Respondents
Ms. Neeta Vinay Masurkar for the Appellant.
Mr. Shavez Mukari with Mr. Srinivas Atreya i/by India Law for
respondents
1/9
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CORAM: ANOOP V. MOHTA AND
A. A. SAYED, JJ.
CLOSED FOR JUDGMENT ON: May 03, 2016
PRONOUNCED ON : June 20, 2016
JUDGMENT (Per Anoop V. Mohta, J.)
Being aggrieved by the judgment of the learned Single
Judge of this Court, the Appellant/original Respondent No.2 (BSNL)
- a third party to the arbitration agreement, has filed this Appeal
under Section 37 of the Arbitration and Conciliation Act, 1996. The
impugned judgment and order dated 28 October 2014 is passed in
Arbitration Petition No. 1006 of 2013 whereby Respondent No.1's/
Original Petitioner (Siemens) section 9 Application has been
disposed of by passing the following order :
"i) That before or during arbitral proceedings or
at any time after the making of the Arbitral Award
but before it is enforced, Respondent No. 1 and
Respondent No.2 are jointly and severally ordered
and directed by this Court to forthwith handover
possession of the said equipment mentioned at
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Exhibit "E" to the Petition, to the Petitioner and/or
its servants, agents and/or assigns from the
premises at BSNL CACT Complex, Doorwani
Nagar, Opp ITI, KR Puram, Bangalore 560 016,
where the said equipment is known to be placed
or wheresoever the said equipment may be lying
and being."
2 Siemens - Original Petitioner (Respondent No.1 herein)
had entered into a Master Lease Agreement (The Master Agreement)
along with the Lease Schedule with Sai Infosystem (India) Ltd (SIS) -
(Original Respondent No.1)(Respondent No.2 herein). The
equipment have been given possession as recorded in the Master
Agreement on 5 January 2012. There exists an arbitration agreement
having agreed clause of Court's jurisdiction at Bombay. Siemens had
filed Section 9 Petition against Respondent No.2 and the Appellant
(BSNL) for getting the possession of the equipment. The Appellant,
specifically Maharashtra Circle, was not party to the arbitration
agreement between the Respondents. The Appellant's counsel
submitted that there was an independent agreement between SIS and
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BSNL on 7 October 2009. It is provided that ownership of the
equipment installed by SIS at BSNL's above premises would pass on
BSNL in case of default by SIS. The submission is that SIS left the
contract during the lock-in-period, therefore, the ownership has been
passed on to the Appellant-BSNL. SIS has prayed for possession of
these equipments in the Arbitration Petition as filed on 17 September
2013. The Appellant, therefore, resisted the Arbitration Petition also
on the ground of jurisdiction and on merits. The learned Judge, as
recorded, has passed the impugned order against the Appellant.
Hence, this Appeal on 10/07/2015.
3 The Appellant on 23 December 2013, itself terminated it's
contract with SIS even before filing of the Arbitration Petition. The
learned counsel appearing for the Appellant submitted that the
arbitration proceedings between the Appellant and SIS is pending.
4 After hearing the parties and after going through the
documents and the agreement, read and referred including award
dated 15.04.2015 in the arbitration between Siemens and SIS, the
learned Arbitrator has declared Siemens as the owner of the
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equipment and directed SIS to pay to Siemens an amount of
Rs.5,98,63,881.38 p with interest.
5 SIS failed to make the payment, and cheques were
dishonoured and as there was default in the Master Agreement.
Siemens terminated the Master Agreement on 29 July 2013. The
arbitration clause was invoked on 3 September 2013. Those
equipment have been lying in the premises of the Appellant, in view
of the agreement between SIS and BSNL. The Receiver has been
appointed by the Court with a direction to take symbolic possession of
the equipment. The Court Receiver took symbolic possession and
made the inventory of the equipment on 9/10 December 2013 itself.
The learned Judge ultimately passed final order on 28 October 2014.
In the meantime, the learned Arbitrator passed the order in favour of
Siemens on 15 April 2015, pending the Appeal. The filing of Appeal
and the submissions so made, even if any, by the Appellant, in the
background, after more than 135 days delay, which we have
condoned by separate order, is, in no way, sufficient to disturb the
order passed by the learned Single Judge specifically in view of above
facts and the following reasons :
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JURISDICTION OF THIS COURT
(a) There is no substance in the submission with regard to the
jurisdiction specifically in view of the agreed clause of Court's
jurisdiction at Mumbai, between Siemens & SIS, apart from the
reason so given by the learned Judge in support of rejecting the issue
of jurisdiction against the Appellant. We are in agreement with the
said reasons. This Court has jurisdiction to entertain Section 9
Petition as filed by Siemens.
THE EQUIPMENT IN RECEIVER'S SYMBOLIC POSSESSION LYING IN
APPELLANT'S PREMISES.
(b) There is no denial to the ownership of the equipment in question
which is, as stated, and found to be in possession of Appellant though
at Bangalore premises. This Court's appointed Receiver is in
possession of the same. The learned Arbitrator, as recored, concluded
the issue in favour of Siemens against SIS. The claim of Appellant,
even if any, for and against SIS and/or Siemens, even if adjudicated in
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it's arbitral pending proceedings, still, that itself is not sufficient
reason to interfere with the order passed by the learned Judge at this
stage.
(c ) The Appellant admittedly, though they have different
office/Circle, are in possession of the equipment which are subject
matter of the Master Agreement between the Respondents, apart from
agreements of Appellant with SIS.
PROTECTIVE RELIEFS AGAINST THE THIRD PERSON
(d) The issue of passing interim order and/or direction and/or
protective reliefs against the third person, in the present case, as
stated, the Appellant being not party to the agreement of Siemens and
the SIS is also of no assistance as the equipment involved in the
present case which, are subject matter of the Master Agreement
between the Respondents. The prior agreement, even if any, of
Appellant with SIS would be considered separately in the separate
arbitration proceedings, if any. In the present case, the Appellant's
grounds so raised in the Appeal and the objection so raised in Section
9 Petition of Siemens are not sufficient to interfere with the reasoned
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order.
ARBITRATION APPEAL BY THIRD PARTY IS MAINTAINABLE
6 The Apex Court has dealt with the rights of third person and/or
objection of third person, in arbitration proceedings in Taiyo
Membrane Corporation Pty. Ltd vs. Shapoorji Pallonji and Company Ltd
[ (2016) 1 SCC 736. ], by following [Chloro Controls (I) Pvt Ltd
v.Severn Trent Water Purification Inc and anr., (2013) 1 SCC 641. ]. In
the present matter, we have to consider the submission of Appellant
accordingly. At the instance of a party, though not party to the
Arbitration Agreement in Taiyo Membrane Corporation Pty. Ltd
(supra), based on the facts and the correspondences between the
parties, the Supreme Court has maintained the invocation of the
arbitration clause by the third person to appoint Arbitrator under
Section 11(6) of the Arbitration Act. Therefore, depending upon the
facts of the case, even the third party can be added or joined as party
for appropriate reliefs and for it's effective implementation, specially
in Section 9 Petition. There is no total bar, but subject to the
interconnected and interdependent facts and the contract conditions
between the parties. In the present case also, all the transactions are
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interdependent and interlinked. Hence, we have to hold that the
present Arbitration proceedings so initiated and the order so passed is
sustainable. There is no perversity or illegality in the order. Hence,
the order :
ORDER
(a) The Appeal is dismissed.
(b) There shall be no order as to costs.
(A. A. SAYED, J.) (ANOOP V. MOHTA, J.)
