Delhi High Court
Consulting Engineers Group ... vs National Highways Authority Of ... on 6 October, 2022
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P.(I) (COMM.) 244/2022 & I.A. 12741/2022
CONSULTING ENGINEERS GROUP LIMITED..... Petitioner
Through: Mr. Arvind Nayar, Sr.
Advocate with Ms. Nandadevi
Deka, Mr. Sudhir Yadav, Mr.
Savyasachi Rawat and Mr.
Akshay Joshi, Advocates
(M:8130788166)
versus
NATIONAL HIGHWAYS AUTHORITY OF
INDIA (NHAI) ..... Respondent
Through: Ms. Gunjan Sinha Jain,
Advocate
(M:9811387311;email:gunjan.si
[email protected])
CORAM:
HON'BLE MS. JUSTICE MINI PUSHKARNA
JUDGMENT
% 06.10.2022
MINI PUSHKARNA, J.
1. By way of the present petition under Section 9 of the
Arbitration and Conciliation Act, 1996 (hereinafter called "The Act"),
petitioner is seeking prayer for staying operation of debarment order
dated 02.08.2022 issued by the respondent by which petitioner has
been debarred from participating in all the tenders floated by
respondent and other executing agencies of Ministry of Road
Transport and Highways of India, for a period of three months with
levy of penalty of Rs. 20 lakhs. The petitioner further prays for
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restraining respondent from giving effect to or acting in terms of or in
furtherance of the said debarment order, and for restraining respondent
from rejecting the bills submitted by petitioner prior to the order dated
02.08.2022 as non responsive.
2. Facts in brief are that, notice inviting tender dated 15.03.2018
was issued by respondent for the project: consultancy services for
Authority‟s Engineer (hereinafter referred to as „AE‟) for supervision
of construction of 8 Lane Dwarka Expressway from Delhi-Haryana
Border to start of rail over bridge, Gurugram, Haryana. As per the
tender document, bidders could apply either as a sole firm or by
forming joint venture with other consultants.
3. In order to participate in the aforesaid tender process and to
provide consultancy services, M/s Aecom Asia Company Ltd
(hereinafter referred as "M/s Aecom") and M/s Consulting
Engineering Group Ltd. (hereinafter referred as „petitioner‟) agreed to
form a consortium wherein M/s Aecom was the lead partner and
petitioner was the associate partner. Memorandum of Understanding
(MOU) dated 14.05.2018 was entered between petitioner and M/s
Aecom for this purpose. Petitioner entered into the bidding process as
joint venture with M/s Aecom pursuant to the aforesaid MOU.
Technical and financial bids were submitted by M/s Aecom for
participation in the tender process.
4. Subsequently, Letter of Award ("LOA") dated 22.10.2018 was
issued to the consortium of petitioner and M/s Aecom. LOA was
specifically addressed to M/s Aecom being the lead partner and
authorized representative of the consultants.
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5. Consultancy Agreement dated 05.12.2018 was entered between
the consortium of petitioner and M/s Aecom as joint venture on the
one hand and respondent on the other hand. Clause 8 of the said
Consultancy Agreement under the General Conditions of Contract
provides for amicable settlement of disputes between the parties, as
follows:
'' 8. Settlement of Disputes
8.1 Amicable Settlement
The Parties shall use their best efforts to settle
amicably all disputes arising out of or in connection
with this Contract or the interpretation thereof.
8.2 Dispute Settlement
Any dispute between the Parties as to matters
arising pursuant to this Contract which cannot be
settled amicably within thirty (30) days after receipt
by one Party of the other Party's request for such
amicable settlement may be submitted by either
Party for settlement in accordance with the
provisions specified in the SC."
6. The contract for construction of 8 lane Dwarka Expressway was
awarded to Larsen and Toubro Ltd. (hereinafter referred as EPC
Contractor). The consortium of petitioner and M/s Aecom was
engaged as consultant to act on behalf of respondent herein as
Authority‟s Engineer for supervision of the said construction work.
7. It is the case of the petitioner that as per the design of
contractual work, 219 numbers of spans of approximately 40 meters
each, were to be erected by the EPC contractor, of which 55%
physical progress of contractual work was achieved without any glitch
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by the EPC contractor and petitioner. However, while erecting P 107-
108, some cracks in the bottom of RS3 - RS4 segments and hogging
of spans were observed by the EPC contractor on the night of
24.03.2021. The same was intimated telephonically to the petitioner
on the morning of 25.03.2021 by the EPC contractors. Thus, it is
submitted on behalf of the petitioner that considering the exigency of
the situation, the petitioner instructed the EPC contractor to secure the
site between P107-109 by following the safety norms and to close the
sides with hard barricades.
8. It is the case of the petitioner that without seeking its
permission, the EPC contractor began de-stressing of the span to
release the tension at the earliest and avoid further damage to the
segments. Petitioner had instructed the EPC contractor to submit
methodology for de-stressing and lowering of segments of the spans
for its approval, however, before the methodology could be submitted,
an accident occurred on 28.03.2021.
9. It is submitted by ld. Senior Counsel for petitioner that in the
morning of 28.03.2021 at around 7:30 A.M., after night shift of
workers was over at 7:00 A.M., an accident occurred on the site
wherein span P108-109 collapsed bringing down the contiguous span
P107-108 along with it. Pursuant to the occurrence of accident,
respondent constituted an Expert Committee to carry out detailed
technical analysis and further analyze the reasons of failure leading to
accident.
10. The Expert Committee constituted by respondent and the
Ministry of Road Transport and Highways of India (MoRTH),
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submitted its report in September, 2021. The Expert Committee inter
alia concluded that there was laxity in monitoring of quality control
measures by the contractor and the Authority‟s Engineer; lack in
coordination and formal communication amongst the contractor,
Authority‟s Engineer and designer and proof check consultants
relating to deviations in construction related activities, etc.
11. Subsequently, respondent sent a show cause notice dated
16.09.2021 to petitioner and the EPC contractor citing the findings
and observations of the Expert Committee. Petitioner submitted its
representation against the said show cause notice on 06.10.2021.
Petitioner was called for personal hearing on 01.12.2021 by
respondent vide letter dated 26.11.2021.
12. Respondent issued an order against the EPC Contractor levying
penalty to the tune of Rs. 6.67 crores along with self imposed
disciplinary measure from participating in bids of NHAI/MoRTH for
three months. Afterwards, petitioner received order of debarment
dated 02.08.2022, which has been impugned by way of the present
petition.
13. It is contended on behalf of petitioner that petitioner was
responsible for reviewing only 20% of the contractual work by
conducting test and inspections. Whereas, the EPC contractor was
responsible for the entire 100% of the contractual work. It is submitted
that debarment order is manifestly illegal and arbitrary for the fact that
petitioner has been made a scapegoat in the entire incident, despite the
fact that the entire responsibility of maintaining the quality of
construction was upon the contractor. The accident occurred entirely
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due to laxity of workmanship by the contractor. It is, thus, prayed that
petitioner is entitled to reliefs as prayed in the present petition.
14. In support of his submissions, ld. Senior Counsel for petitioner
has relied upon the following judgments:
Denis Chem Lab Limited v. State of MP & Ors., ILR [2020] MP
Kulja Industries Limited v. Chief General Manager, (2014) 14
SCC 731.
Royal Infra Engineering Private Limited v. Surat Municipal
Corporation & Ors., 2022 GLH (1) 483.
Sarku Engineering Services v. Union of India, 2016 SCC
OnLine Bom 523.
Coastal Marine Construction and Engineering Limited v.
Indian Oil Corporation Limited, 2019 SCC OnLine Del 6542.
Sai Consulting Engineers Private Limited v. National Highways
Authority of India, in OMP (I) (COMM.) 330/2020.
15. On the other hand, ld. Counsel appearing for respondent
submits that the present petition is not maintainable and is liable to be
dismissed, as there is no valid and existing arbitration clause between
the petitioner in its individual capacity and respondent. The
consultancy agreement dated 05.12.2018 was executed between
respondent and Joint Venture of M/s Aecom in association with
petitioner. In the consultancy agreement, the Joint
Venture/Consortium is referred to as "the consultants". Admittedly,
the present petition has not been filed by M/s Aecom and/or with the
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specific authorization/consent of M/s Aecom. Thus, it is contended
that the terms of the MoU do not confer any express or implied
authority on petitioner to pursue the contractual matters, which
include invocation of dispute resolution clause for raising any dispute
in individual capacity, without
participation/approval/authorization/consent from the lead
member/partner, i.e., M/s Aecom.
16. In support of its submissions, respondent has relied upon the
following judgments:
Geo Miller & Co. Pvt. Ltd. Vs. Bihar Urban Infrastructure
Development Corporation Limited and Anr., 2016 SCC OnLine
Del 6248
Maharashtra State Electricity Distribution Company Limited
(MSEDCL) Vs. Godrej and Boyce Manufacturing Company
Limited, 2019 SCC Online Bom 3920
17. On merits, it is contended on behalf of respondent that the
petitioner along with its consortium partner was engaged as
Authority‟s Engineer, whose role was extremely vital as the
Authority‟s Engineer is to act as eyes and ears of the respondent.
Petitioner along with its consortium partner had to thoroughly
scrutinize every activity undertaken during the construction at project
site to avoid any lapses on the part of the contractor, particularly
safety aspects. Thus, AE was required to supervise and monitor
execution of the EPC contract agreement with the contractor.
Respondent also relied upon report of the Expert Committee to bring
out the gross dereliction of duties/responsibilities by the AE, which
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contributed to the accident.
18. I have considered the submissions made on behalf of both the
parties and have perused the documents.
19. In terms of the NIT/Request for proposal (RFP) issued by
respondent, bidders had the option to apply either as a sole firm or by
forming joint venture. Relevant clause of the RFP is as follows:
"9. Consultants may apply either as a sole firm or
forming joint Venture with other consultants. In case of
Joint Venture, the maximum number of Joint Venture
partners is limited to 2 (i.e. one lead + 1 JV partners).
Formulation of more than one JV/association with different
partners for the same work is not allowed and all such
proposal involving the firms shall be treated as non-
responsive. If the consultant submits bids as sole applicant
and also in JV/Association with another consultant, both
bids shall be summarily rejected. No consultant shall submit
more than one bid.
10. (A) The Applicant whether a sole applicant or lead
member with joint venture may include any number of
Associate to provide technology in assignment (refer para
10 (iii) of data sheet). The associate firm can provide
equipment based road inspection services for any of the 4
equipment viz., (i) Network Survey Vehicle including all
modules required as per technical specifications, (ii)
Falling Weight Deflectometer, (iii) Mobile Bridge
Inspection Unit and (iv) Retro Reflectometer. However, the
associate(s) cannot be common for 2 or more bidders. If any
associate is common with 2 or more bidders, all those bids
shall be declared non-responsive. Hence, the bidder may
ensure on his own that the associate proposed by him is not
proposed by any other bidder participating in the same
assignment and the bidder is solely responsible in this
regard.
(B) In addition, the applicant whether a sole
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applicant or lead member with joint venture may also
include an Associate for providing key personnel. In such
case, the applicant should submit an MOU with associate
regarding role and responsibility of Associate Company.
However the maximum no. of key personnel from Associate
firm during RPF proposal and implementation of contract
should be limited to two (2).
11. Consulting firms meeting the following criteria are
only eligible for applying for this assignment. Firms not
meeting these criteria, need not apply.
The construction period to be indicated in the RFP by
concerned Technical Division inviting the RFP.
A). Eligibility criteria for sole applicant firm.
S. Experience of the firm in last 7 years Annual
No. Preparation of DPR Project Turnover***
(NH/SH/Equivalent Supervision/IC
) (NH/SH/Equivalent)
1(a) The firm should The firm should have Annual turnover
have minimum minimum experience (updated average
experience of of Project of last 3 years) of
preparation of Supervision/Independ the firm from
detailed Project ent consultancy
Report/ Feasibility Engineer/Authority‟s business should
Study cum Engineer of project be equal to or
Preliminary Design which has 4** lane or more than 2% of
Report which has more Estimated Project
4** lane or more Bridge/Underpass/ Cost.
Bridge/Underpass/ Flyover of aggregate
Flyover of aggregate length equal to 30
length equal to 20 Km or more.
Km or more.
1(b) Firm should also
have experience of
Project
Supervision/Independ
ent Engineer/
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Authority‟ Engineer
of at least one project
of similar category of
4** or more lane
bridge / Underpass/
Flyover project of
length equal to 4 Km
or more. For this
purpose the metro
projects (Viaducts)
shall be considered.
** Similar project means 4 lane or more as applicable for
the project for which RFP is invited. Experience of 4/6 lane
shall be considered in terchangeably for 4/6 laning projects.
B) Eligibility Criteria for partners in case of JV (not
more than 1 JV partners shall be allowed) shall be as
under:
The lead partner must fulfill atleast 50% of requirements at
1(a) of table in para (A) above and other JV partner should
fulfill atleast 30% of eligibility criteria s indicated at 1(a) of
table in para (A) above. Also the lead partner and JV
partner jointly should meet the eligibility criteria as
mentioned at 1 (a) of table in para (A) above. Lead partner
should meet the criteria 1(b) of table in para (A) above.
Note: The weightage given for experience of a firm would
depend on the role of the firm in the respective assignments.
The firm‟s experience would get full credit if it was the sole
firm in the respective assignment. If the applicant firm has
completed projects as JV with some other firms, weightage
shall be given as per the JV share***. However if the
applicant firm has executed the project as associate with
some other firms, 25% weightage shall be given to the
applicant firm for the projects completed under such
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association.
*** For weightage of experience in any past
Consultancy assignment, experience certificate from the
client shall be submitted. In absence of clear demarcation of
JV share in client certificate, the weightage will be treated
as 60% for lead partner and 40% for minor partner. Annual
turnover duly certified by Chartered Accountant shall be
accepted. In case of non-availability of such documents no
weightage of turnover/experience will be considered."
20. For participating in the present tender process in order to
provide consultancy services to respondent, petitioner entered into
MoU dated 14.05.2018 with M/s Aecom. As per the said MoU,
petitioner formed a consortium with M/s Aecom in order to provide
services to the respondent as Authority‟s Engineer. As per the MoU,
M/s Aecom is the lead partner while the petitioner herein is the
associate partner. The relevant terms of the MoU are reproduced as
under:
"(i) M/s AECOM Asia Company Limited will be the lead
partner and M/s Consulting Engineers Group Ltd.
(Associate Partner) will be the Associate Partner.
(ii) M/s AECOM Asia Company Limited (Lead Partner)
shall be the Incharge of overall administration of
contract and shall be authorized representative of all the
Consortium partners for conducting all business for and
on behalf of the Consortium during the bidding process
and subsequently, represent the Consortium for and on
behalf of the Consortium for all contractual matters for
dealing with the Employer/ EPC Contractor if
Consultancy work is awarded to Consortium.
(iii) The Consortium Partner do hereby undertake to be
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jointly and severely responsible for all the obligation and
liabilities relating to the consultancy work and in
accordance with the Terms of Reference of the Request
for Proposal for the Consultancy Services.
(iv) Subsequently, if the Consortium is selected to
provide the desired consultancy services, a detailed MOU
indicating the specific project inputs and role of each
partner/s along with percentage sharing of cost of services
shall be submitted to the Employer (Consultant may submit
the detailed MOU along with percentage sharing of cost at
the time of bidding also)"
21. Thus, the petitioner participated in the tender process as joint
venture, after entering into MoU with M/s Aecom, by which a
consortium was formed between petitioner and M/s Aecom.
22. Subsequently a consultancy agreement dated 05.12.2018 was
executed between the respondent and the joint venture of M/s Aecom
and petitioner. In the consultancy agreement, the joint
venture/consortium is referred to as the consultants. Consultant is
defined in Clause 1.1(h) - General Conditions of Contract (GCC) to
mean the Authority Engineer, which in the present case is not the
petitioner in individual capacity, but the consortium of petitioner and
M/s Aecom, who participated in the tender process as Joint Venture.
23. Perusal of the GCC shows that petitioner was not a member-in-
charge/ lead member or authorized representative of the consortium in
terms of clauses 1.6, 1.8 & 1.9 of the GCC, read with Clauses of
Special Conditions of Contract (SCC).
24. Relevant clauses of GCC are reproduced as below:-
"1.6 Notices
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1.6.1 Any notice, request or consent required or
permitted to be given or made pursuant to this
Contract shall be in writing. Any such notice,
request or consent shall be deemed to have been
given or made when delivered in person to an
authorized representative of the Party to whom the
communication is addressed, or when sent by
registered mail, telegram or facsimile to such
Party at the address specified in the SC.
1.6.2 Notice will be deemed to be effective as specified in
the SC.
1.6.3 A Party may change its address for notice
hereunder by giving the other Party notice of such
change pursuant to the provisions listed in the SC
with respect to Clause GC 1.6.2.
................
1.8 Authority of Member in Charge
In case the Consultants consist of· a joint venture of
more than one entity, the Members hereby authorize
the entity specified in the SC to act on their behalf in
exercising all the Consultants' rights and
obligations towards the Client under this Contract,
including without limitation the receiving of
instructions and payments from the Client.
1.9 Authorized Representatives
Any action required or permitted to be taken, and
any document required or permitted to be executed,
under this Contract by the Client or the Consultants
may be taken or executed by the officials specified in
the SC."
25. Perusal of the clauses of Special Conditions of Contract
("SCC") clearly reflect that the member-in-charge was M/s Aecom
Asia Company Limited. The address of Joint Venture is shown as
situated in DLF Cyber City, which is that of M/s Aecom. Similarly,
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Authorized Representative of consultants is shown as Mr. Manmohan
Singh Rawat, who is again Vice-President with M/s Aecom.
26. Relevant clauses of SCC are reproduced as below:-
"1.6.1 The addresses are:
Shri Dinesh Yadav
General Manager (Tech)- Delhi Division
National Highways Authority of India
G5&6 Sector 10 Dwarka
New Delhi-110075
(Tel: 011-25074100/4200 Ext: 1232)
(Email: [email protected])
Shri Manmohan Singh Rawat
Vice President-Transportation
th
19 Floor Tower C Building 5 Cyber Terraces
DLF Cyber City, phase-II, Gurgaon-122002, Haryana India
(Tel: +911244871400 Ext:645)
(Email: [email protected])
................
1.8 The Member in Charge is: M/s AECOM Asia
Company Ltd.
1.9 The Authorised
Representatives are:
Client: Shri Dinesh Yadav
General Manager (Tech)-Delhi Division.
National Highways Authority of India
G-5&G-6, Sector-10, Dwarka
New Delhi 110075
(Tel:-011-25074100/4200 Ext 1232)
([email protected])
Consultants: Shri Manmohan Singh Rawat
Vice President-Transportation
th
19 Floor Tower C Building 5 Cyber Terraces
DLF Cyber City, phase-II, Gurgaon-122002, Haryana India
(Tel: +911244871400 Ext:645
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(Email: [email protected])"
27. The consultancy agreement was signed by the lead partner, i.e.,
M/s Aecom and not by petitioner. Show cause notice dated
16.09.2021 was issued by respondent to the consortium through
authorized representatives of M/s Aecom. Reply dated 06.10.2021 to
the show cause notice was issued by the lead member, i.e., M/s
Aecom. Further, representation dated 04.08.2022 after passing of the
impugned order was submitted by the lead member, M/s Aecom.
28. Similarly after perusal of the terms of the MoU between
petitioner and M/s Aecom, it transpires that the terms of MoU do not
confer any express and/or implied authority on the petitioner to pursue
the contractual matters, which include invocation of dispute resolution
clause, in individual capacity without the participation or approval or
authorization or consent from the lead member, M/s Aecom.
29. It is pertinent to note here that pursuant to the MoU, technical
and financial bid in the present tender process was submitted by M/s
Aecom, and not the petitioner herein. The Letter of Award dated
22.10.2018 was issued to the consortium and specifically addressed to
M/s Aecom being the lead partner and authorized representative of the
consultant.
30. Reference to the terms of the Consultancy Agreement,
NIT/Request for Proposal and MoU, discloses that petitioner is not
party to the Consultancy Agreement in its individual capacity. Clause
8 of the GCC relating to settlement of disputes refers to parties, which
includes the consultants i.e. Consortium of petitioner and M/s Aecom
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and the respondent, and not the petitioner alone. Clause 8.2 of the
GCC further provides that any disputes between the parties which
cannot be amicably settled, would be referred to a settlement in
accordance with the terms of the special conditions of contract, which
envisages resolution by process of arbitration by sole arbitrator
31. Thus, in view of the aforesaid it is seen that only the
consultants, i.e., M/s Aecom in association with the petitioner can
invoke the disputes resolution clause. It is the consultants and not the
petitioner in his individual capacity who are referred to as "parties" in
the arbitration agreement as contained in the Consultancy Agreement.
Petitioner not being a party to the arbitration agreement in its
individual capacity, cannot take recourse to the arbitration clause in its
individual capacity, or approach this Court in individual capacity.
32. This court in the case of Geo Miller and Company Limited
(Supra)*1 has held as follows:
"25. Clearly, therefore, the arbitration clause refers to
and envisages dispute only "between parties." Under
Section 2(1)(h) of the Act, party is defined as "party to an
arbitration agreement." The parties to the arbitration
agreement in the present case are clearly the consortium
and BUIDCO.
26. It was then contended that the agreement has been
signed not only by Gammon India but also by Geo Miller
and therefore Geo Miller could its own capacity seek to
invoke the arbitration clause. The Court is unable to
agree with the above submission. The wording of the
*1 2016 SCC OnLine Del 6248
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agreement is clear that the consortium would be
represented through M/s. Gammon India Limited, lead
member of the consortium through its authorised
signatory. The parties never intended that one of the
members of the consortium separately invoked the
arbitration agreement. Unlike the decision Automation
Technologies (I) Pvt. Ltd. (supra) where there was no
contrary intention expressed in the agreement in the
present case the agreement in question clearly envisages
the consortium acting through the lead member Gammon
India.
27. It was then contended that Geo Miller is aggrieved by
the SCN issued to it and the subsequent order black
listing it and that since this arose out of the contract in
question Geo Miller has a remedy of seeking arbitration
for adjudication of the said disputes.
28. The Court is unable to agree with the above
submission either. While it is true that SCN issued by
BUIDCO, which led to its black listing, the remedy of
Geo Miller for such action is not under the TPA between
BUIDCO, Consortium and PNN, but other remedies that
may be available to it in accordance with law."
33. In the aforesaid case, this Court has categorically held that
when the agreement is with a consortium, it is never the intention that
one of the members of the consortium separately invokes the
arbitration agreement. In the present case also the consultancy
agreement of the respondent is with the consortium between the
petitioner and M/s Aecom. There is no contrary intention which has
been expressed in the agreement that only one of the members of the
consortium could separately invoke the arbitration agreement.
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34. This Court in the case of Municipal Corporation of Delhi Vs
M/s Asian-Techs-Progressive Constructions Joint Venture and Ors.,
2017 SCC OnLine Del 6455, held as follows:-
"15. In this regard reference may be made to the decision
in Gammon India Limited v. Commissioner of Customs,
Mumbai (2011) 12 SCC 499 whereby the Supreme Court
held that a joint venture itself was a legal entity and,
therefore, action by only one of the parties to the JV could
not be construed as action on part of the JV. Reference in
the said decision was also made to the earlier decision of
the Supreme Court in New Horizons Limited v. Union of
India (1995) 1 SCC 478."
35. Hon‟ble Supreme Court in the case of Gammon India Ltd. Vs
Commissioner of Customs, Mumbai, (2011) 12 SCC 499 recognized
that Joint Venture is a legal entity. Thus, action by only one of the
constituents of the joint Venture was not held acceptable and legally
tenable. Hon‟ble Supreme Court held as follows:-
"25. In New Horizons [(1995) 1 SCC 478] , a joint venture
company, consisting of a few Indian companies (with 60%
share capital) and a Singapore-based company (with 40%
share capital), had participated in tender proceedings
floated by the Department of Telecommunications for
printing and binding of the telephone directories of Delhi
and Bombay. The tender submitted by New Horizons Ltd.
(for short "NHL") was not accepted by the Tender
Evaluation Committee, apparently, on the basis of the fact
that the successful party had more technical experience
than any one of the constituent companies of NHL.
Aggrieved by the said decision, NHL filed a writ petition in
the Delhi High Court against the decision of the
Department of Telecommunications. The said writ petition
was dismissed rejecting the plea of NHL that the technical
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experience of the constituents of the joint venture was
liable to be treated as that of the joint venture. NHL
brought the matter to this Court.
26. Explaining the concept of joint venture in detail, it was
held in New Horizons case [(1995) 1 SCC 478] that a joint
venture is a legal entity in the nature of a partnership
engaged in the joint undertaking of a particular
transaction for mutual profit or an association of persons
or companies jointly undertaking some commercial
enterprise wherein all contribute assets and share risks. It
was observed that a joint venture could take the form of a
corporation wherein two or more persons or companies
might join together. Accordingly, the appeal of NHL was
allowed and it was held that it was a joint venture
company in the nature of a partnership between the Indian
group of companies and Singapore-based company which
had jointly undertaken the commercial venture by
contributing assets and sharing risks.
27. Applying the principle of "lifting the corporate veil", it
was held in New Horizons case [(1995) 1 SCC 478] that
the joint venture companies' technical experience could
only be the experience of the partnering companies and the
technical experience of all constituents of NHL was liable
to be cumulatively reckoned in the tender proceedings and
any one of the constituents was competent to act on behalf
of the joint venture company. Highlighting the concept of
joint venture, the Court observed thus: (New Horizons
case [(1995) 1 SCC 478] , SCC pp. 493-94, para 24)
"24. The expression „joint venture‟ is more
frequently used in the United States. It connotes a
legal entity in the nature of a partnership engaged
in the joint undertaking of a particular transaction
for mutual profit or an association of persons or
companies jointly undertaking some commercial
enterprise wherein all contribute assets and share
risks. It requires a community of interest in the
performance of the subject-matter, a right to direct
and govern the policy in connection therewith, and
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duty, which may be altered by agreement, to share
both in profit and losses. (Black's Law Dictionary,
6th Edn., p. 839.) According to Words and Phrases,
Permanent Edn., a joint venture is an association of
two or more persons to carry out a single business
enterprise for profit (p. 117, Vol. 23). A joint
venture can take the form of a corporation wherein
two or more persons or companies may join
together. A „joint venture corporation‟ has been
defined as a corporation which has joined with
other individuals or corporations within the
corporate framework in some specific undertaking
commonly found in oil, chemicals, electronic,
atomic fields. (Black's Law Dictionary, 6th Edn., p.
342.)"
28. In short, New Horizons [(1995) 1 SCC 478] recognises
a joint venture to be a legal entity in the nature of a
partnership of the constituent companies. Thus, the
necessary corollary flowing from the decision in New
Horizons [(1995)1 SCC 478], wherein the partnership
concept in relation to a joint venture has been accepted,
would be that M/s Gammon-Atlanta JV, the joint venture
could be treated as a "legal entity", with the character of
a partnership in which Gammon was one of the
constituents. In that view of the matter, the next question
for consideration is: whether being a legal entity i.e. a
juridical person, the joint venture is also a "person" for
the purpose of Condition 38 of the exemption notification,
stipulating that the goods should be imported by "a
person" who had been awarded a contract for
construction of goods in India by NHAI?
29. In support of his submission that the joint venture is a
"person" as contemplated in the exemption notification,
the learned counsel for Gammon had relied on the
definition of the word "person" as given in Para 3.37 of
the Export and Import Policy for the year 1997-2002. It
reads thus:
"3.37. „Person‟ includes an individual, firm, society,
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company, corporation or any other legal person."
30. The argument was that since a joint venture has been
declared to be a legal entity in New Horizons [(1995)1
SCC 478] , it squarely falls within the ambit of the said
definition of the word "person". We are of the opinion that
even if the stated stand on behalf of the appellant is
accepted, mercifully, on stark facts at hand, it does not
carry their case any further. Neither was it the case of the
appellant either before the adjudicating authority or
before the appellate authority or before us, nor is it
suggested by the documents viz. the supply order or the bill
of entry, that the import of the machine was by or on
behalf of the joint venture. On the contrary, the Tribunal
has recorded in its order that when questioned, the learned
counsel for the appellant clarified that the correspondence
with the supplier of goods and placement of order had
been done by Gammon and not by the joint venture or on
their behalf. He also admitted that payment for the
machine had not been made from the joint venture
account, which had been provided for the contract but
from the funds of Gammon.
31. Thus, the inevitable conclusion is that import of
"concrete batching plant 56 cum/hr" by Gammon cannot
be considered as an import by M/s Gammon-Atlanta JV,
"a person" who had been awarded contract for
construction of the roads in India and therefore, neither
Gammon-Atlanta JV nor Gammon fulfil the requisite
requirement stipulated in Condition 38 of Exemption
Notification No. 17/2001/Cus dated 1-3-2001."
36. Similarly, Bombay High Court in the case of Maharashtra
State Electricity Distribution Company Limited (Supra)*2 held as
follows:
"63. It is thus clear that the bids invited by the petitioner
could be either by individuals or by joint venture. There
*2 2019 SCC Online Bom 3920
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was a separate criteria prescribed under the bid
document for individuals and the joint venture. A
separate joint venture was required to be entered into
between the partners of the joint venture which was to be
accompanied to the agreement to be entered into between
the petitioner and the joint venture in the prescribed
format. The contractor defined under the contract in
reference to the joint venture reference was whose tender
has been accepted by the employer. It is also clear that if
the contract was joint venture of two persons, all such
persons shall be jointly and severally liable to the
petitioner for fulfillment of the terms of the contract.
64. The petitioner and the said joint venture of the
respondent with the Electropath Services (India) Private
Limited had entered into the contract agreement on
8th June, 2009. A perusal of the said Form of Contract
Agreement clearly indicates that the respondent as well
as Electropath Services (India) Private Limited jointly
were described as the contractor in the said agreement
entered into between the petitioner and the joint venture.
No separate agreements between the petitioner on one
hand with the respondent herein and the petitioner on the
other hand with the said Electropath Services (India)
Private Limited were entered into. Clause 9.1 of the said
contract provided the terms of the payment required to be
made on the basis of the progress of the work specifically
set out in the said provision. Clause 9.2 provided that the
rates payable by the contractor shall be calculated on the
basis of post data given in bid document and quoted
percentage 13.47 for estimated tender cost.
65. Clause 14 of the said contract provided for any
dispute or claim arising of the said agreement shall be
dealt with as per clause 20 of Volume - of the bidding
document. Clause 17 of the said contract provided that
all the disputes and differences between the parties under
or in connection with the said contract or any breach
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thereof shall be sought to be referred to the Chief
Engineer (Infrastructure Plan). If any such differences
and disputes as between the parties cannot be settled
through the Chief Engineer (Infrastructure Plan) within
180 days from such disputes, they shall be settled by
arbitration which shall be conducted in accordance with
the provisions of the Arbitration & Conciliation Act, 1996
and any statutory modification thereof from time to time.
It is thus clear beyond reasonable doubt that the parties
who could refer the dispute under such contract were the
petitioner herein as the employer of one part and the
respondent herein and Electropath Services (India)
Private Limited jointly as the contractor of the other part.
Letter of award issued by the petitioner indicates that the
same was addressed to the respondent (lead partner) of
JV with Electropath Services (India) Private Limited as
joint partner.
...........
68. It is thus clear that in the said joint venture agreement
also a member and the member in-charge i.e. the said
Electropath Services (India) Private Limited and the
member in-charge i.e. the respondent herein were fully
responsible for the quality of all the
equipments/components/manufactured/supplied and
erected etc. to the petitioner. The said joint venture
agreement does not provide that the respondent alone
was entitled to invoke arbitration agreement on behalf of
the joint venture or to make any other claim on behalf of
the joint venture upon the petitioner in any Court of law."
37. Considering the aforesaid law laid down in a catena of
judgments, it is clear that the present petition filed on behalf of
petitioner is not maintainable and the same is liable to be dismissed.
The Consultancy Agreement dated 05.12.2018 was executed between
respondent and joint venture of M/s Aecom and petitioner herein.
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Thus, in the present case the joint venture consisting of M/s Aecom
and petitioner herein alone has the authority to invoke the dispute
resolution clause. Petitioner in his individual capacity cannot solely
and independently approach this Court by taking recourse to the
Dispute Settlement Clause.
38. In view thereof, the present petition is dismissed.
(MINI PUSHKARNA)
JUDGE
October 6, 2022
Au/c
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