M/S. Ongc Petro Addition Limited vs State Of Gujarat
2021 Latest Caselaw 973 Guj

        C/LPA/618/2020                                ORDER




        IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

            R/LETTERS PATENT APPEAL NO. 618 of 2020

         In R/SPECIAL CIVIL APPLICATION NO. 7558 of 2020

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                 M/S. ONGC PETRO ADDITION LIMITED
                               Versus
                         STATE OF GUJARAT
==========================================================
Appearance:
MR SUDHIR NANAVATI, SENIOR COUNSEL for MOSON LE
EXPARTS(11071) for the Appellant(s) No. 1
NOTICE SERVED(4) for the Respondent(s) No. 1,2,4
MR RASHESH S SANJANWALA, SENIOR COUNSEL with MR RUSHABH H
SHAH(7594) for the Respondent(s) No. 3
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 CORAM: HONOURABLE THE CHIEF JUSTICE MR. JUSTICE VIKRAM
        NATH
        and
        HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI

                          Date : 21/01/2021

                       ORAL ORDER

(PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE VIKRAM NATH)

1. We have heard Shri Sudhir Nanavati, learned Senior

Counsel assisted by Shri Akshat Khare, learned

counsel appearing for the appellant and Shri Rashesh

S. Sanjanwala, learned Senior Counsel assisted by

Shri Rushabh H. Shah, learned counsel appearing for

the respondent No.3.

2. By means of this intra-Court appeal under Clause-15

C/LPA/618/2020 ORDER

of the Letters Patent, the appellant-M/s. ONGC Petro

Addition Limited has assailed the correctness of the

judgment and order dated 1.9.2020 passed by the

learned Single Judge in Special Civil Application No.

7858of 2020, whereby the said petition was dismissed.

3. The brief facts relevant for the adjudication are that,

the present appellant ONGC Petro Addition Limited

(hereafter referred to as "OPAL" ) entered into a written

agreement with M/s. Fernas Construction India Pvt

Ltd (hereafter referred to as "FCIPL") for carrying out

certain works. The FCIPL, in turn, entered into further

contract with Ms. Rachana Infrastructure (hereafter

referred to as "RIL") to carry out the works for OPAL.

The works had been continuing since quite sometime,

however, at some stage, some issues arose with regard

to the work being not delivered in time by FCIPL, as

such, it appears that some Board meetings were held,

firstly between FCIPL and RIL, and again between

FCIPL, RIL and OPAL. We are not going into the details

of those meetings or the resolutions passed therein as

C/LPA/618/2020 ORDER

the same are on record and duly admitted between the

parties that these board meetings had been held and

resolutions had been passed. The relevant resolution

passed in these board meetings is to the effect that

OPAL agreed to make direct payment to RIL and RIL

was requested to complete the works for OPAL within

the time limit prescribed and as agreed, and also to

ensure that same is done as per the standards already

fixed. RIL since continued to carry out the works,

however, as certain payments were not being released

by OPAL, RIL which was registered with the Micro,

Small and Medium Enterprises Development Act, 2006

under a memorandum, applied for a reference. After

due notice, Micro & Small Enterprise Facilitation

Council (hereinafter referred to as "the MSEFC") called

upon the OPAL and thereafter tried to make an

endeavor for conducting conciliation. Apparently, the

conciliation failed, whereupon the MSEFC passed an

order under Section 18 Sub-section (3) of the Micro,

Small and Medium Enterprises Development Act, 2006

(hereafter referred to as "the 2006 Act") and appointed

C/LPA/618/2020 ORDER

itself as the Arbitrator. The said order is dated 19th

February, 2020. Aggrieved by the same, the OPAL

preferred Special Civil Application No.7858 of 2020.

The petition was filed apparently on several grounds,

the main ground being that there was no written

agreement between OPAL and RIL and as such, the

MSEFC would not have any jurisdiction to entertain

the reference. The OPAL would not be a buyer nor the

RIL could be termed as supplier under the definition

given in Clause 2(d) and 2(n) respectively. Further

Section 7 of the Arbitration and Conciliation Act, 1996

was also put into service to the effect that there being

no arbitration agreement nor there being any definite

legal relationship between OPAL and RIL, the matter

could not have been referred under Section 18(3) of the

2006 Act. The other issues were also raised with

regard to there being no dues of OPAL against the RIL

as according to OPAL, all the amounts had been duly

paid for the works carried out.

4. The learned Single Judge, after considering the

material on record and the arguments advanced before

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it recorded the finding against OPAL and dismissed the

petition. The learned Single Judge held that it was

always open to OPAL to raise all such objections

including the objection to the jurisdiction of the

Arbitrator or the maintainability of the reference,

before the Arbitrator in view of Section 16 of the 1996

Act. Aggrieved by the dismissal of the said writ

petition, the present Letters Patent Appeal has been

preferred by the OPAL.

5. Shri Sudhir Nanavati, learned Senior Counsel

appearing for the appellant has primarily raised some

issues before us supported by various judgments, the

main backbone being Essar Oil Ltd. Vs Hindustan

Shipyard Ltd. and Ors, reported in (2015) 10 SCC

642. Mr. Nanavati submitted that because the OPAL

had made direct payment to the RIL, it cannot be

concluded that firstly there was an agreement between

them or there was any privity of contract between

OPAL and RIL. Shri Nanavati further submitted that in

the absence of any written document between OPAL

and RIL, the claim for reference of RIL was not

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maintainable and ought not to have been entertained.

We have also been taken through the various

definitions as also relevant provisions both under the

2006 Act and the 1996 Act.

6. On the other hand, Shri Rashesh S. Sanjanwala,

leaned Senior Counsel appearing for RIL submitted

that the judgment in the case of Essar Oil Ltd (supra)

would be distinguishable on facts as there were neither

any board meeting resolutions nor a comfort letter

being issued by the buyer in favour of the supplier and

in that case, there was only stray payment made when

it was held that on the basis of such stray payment, no

privity of contract could be read into.

7. Shri Sanjanwala has placed reliance upon a Division

Bench judgment of this Court in the case of JITF

Water Infrastructure Limited Vs. MSME

Commissionerate, reported in 2020 JX (Guj) 419 and

also upon a recent judgment of the Supreme Court

dated 6th January, 2021 passed in Civil Appeal No.

14665 of 2014 (Bhaven Construction Through

Authorized Signatory Premjibhai K. Shah Vs.

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Executive Engineer, Sardar Sarovar Narmada Nigam

Ltd.& Anr.) He has also referred to the judgment in

the case of the Food Corporation of India Vs. Indian

Council of Arbitration, reported in (2003) 6 SCC

564. Based upon the aforesaid submissions and the

case laws, Shri Sanjanwala submitted that the learned

Single Judge committed no error warranting

interference in this appeal, which being devoid of

merit, deserves to be dismissed.

8. Having considered the submissions of the rival parties,

we are of the view that the grounds taken before us or

before the learned Single Judge in the Special Civil

Application No.7858 of 2020, could always be raised

before the Arbitrator. The law is already settled on the

point that the Arbitrator has jurisdiction to decide all

the objections including objection as to his own

jurisdiction to entertain the reference. We are not going

into any further discussion by recording a finding with

regard to the question of there being privity of contract

between OPAL or RIL. All these aspects would remain

open and the learned Arbitrator would proceed to

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decide the same if such objections are raised before it.

9. On law and facts, we do not find any infirmity in the

judgment passed by the learned Single Judge

warranting interference in the appeal. The appeal lacks

merit and is accordingly dismissed.

(VIKRAM NATH, CJ)

(ASHUTOSH J. SHASTRI, J) A.M. PIRZADA