IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

NOTICE OF MOTION NO. 4606 OF 2007

IN

SUMMARY SUIT NO. 1960 OF 2007

Newton Engineering & Chemicals Ltd... .. Plaintiff

Vs.

Engineering Projdects (India) Ltd. .. .. Defendant

Ms. Shilpa Kapil for the plaintiff Mr. Girish Desai with Mili Thakkar i/b Ms. S. V. Thakkar & R.V. Thakkar for defendant

CORAM: S.C.DHARMADHIKARI, J.

DATED : 8/11/2011

P.C.

This is a defendant's notice of motion invoking Section 8 of the Arbitration and Conciliation Act, 1996 and praying that the subject matter of the suit be referred to the arbitration.

2. It is contended on behalf of the defendant by Mr. Desai, learned

counsel that the claim in the suit arises out of a contract between the parties and the suit has been filed on the basis that the agreement was to be governed on back to back arrangement between the defendant and the Oil and Natural Gas Corporation ("ONGC" for short). It is stated that the arbitration clause contained in clause 5 of the agreement dated 28/10/1999 is clear. The disputes under this agreement have to be resolved by arbitration. All ingredients of Section 8 of the Act are thus satisfied.

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3. My attention is invited to para 4 of the affidavit-in-support of this motion and it is contended that the terms and conditions of the parent agreement would also be binding on the plaintiff and the defendant and it is not as if the annexure to the affidavit-in-support is an isolated transaction or that is distinct from the suit agreement. Both have to be seen together and so seen and considered, there is a clear arbitration agreement between the parties and the disputes between them can be resolved by that mechanism alone. For all these reasons the motion be allowed.

4. On the other hand Ms. Kapil appearing on behalf of the plaintiff submits that the plaintiff seeks a decree against the defendant not on the basis of the agreement annexed to the affidavit-in-support but pursuant to an arrangement that has been recorded and reduced into writing. According to

her it is clear that what is now relied upon is a M.O.U. at the stage of tendering or bidding process. What the suit claims is that pursuant to a contract being awarded by ONGC to the defendant, the defendant had pretender tie-up with the plaintiff and accordingly complete job was awarded to the plaintiff by defendant on back to back basis except residual engineering. It was stated that pursuant to a letter of intent of the ONGC, the defendant was awarded a contract and the plaintiff carried out the work as subcontractor for and on behalf of the defendant.

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5. Ms. Kapil submits that the claim in the suit refers to the work at Mehsana in the State of Gujarat. In relation to this work certain disputes and differences arose between the defendant and ONGC which were referred to the arbitration. After mutual discussions what the parties agreed was that the benefits of the award under the said arbitration would be shared in the proportions recorded in the agreement dated 26/3/2002 which confirms the minutes dated 7/3/2002. Thereafter there was an award made by the arbitrator but despite the defendant receiving substantial sums under the award the share was not given in the proportion agreed by parties. Only part amount or benefit under the award was forwarded to the plaintiff and the balance was withheld. It is in such circumstances that the claim in the suit arises and that cannot be said to be covered by the arbitration agreement which is contained in the agreement, copy of which is annexed to the affidavit-in-support of this present notice of motion. She, therefore, submits that the motion be dismissed.

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6. With the assistance of the learned counsel appearing for parties I have perused the motion and the affidavits placed on record. I have also perused the plaint and the annexures thereto. In my view, there is much substance in the contention of Ms. Kapil. The plaint itself proceeds on the basis that the pre-tender arrangement or the sub-contracting work which has been referred to in the distinct agreements between the parties is not the subject matter of the suit. What is subject matter of the suit is the rights and obligations flowing from the arrangement reduced into the writing on 7/3/2002 and confirmed by the agreement dated 26/3/2002. The benefit which is to be shared in the proportion determined by the agreement dated 26/3/2002 is the foundation of the plaintiff's claim in the suit. It is alleging breach of contractual obligations and not parting with the entire sum which is due and payable under the aforementioned arrangement and the Agreement, that the plaintiff has filed a summary suit. Whether the said agreement can be seen in isolation or whether it must be seen in continuation of the earlier arrangement is not something which is subject matter of the present motion nor can it be decided in this motion. Once it is clear that neither the minutes of the meeting dated 7/3/2002 and agreement dated 26/3/2002 contain any arbitration clause nor was there any agreement between the parties to resolve the disputes under this arrangement by recourse to arbitration, then, the defendant cannot succeed. Admittedly these two documents did not contain any arbitration clause, therefore, the ingredients which are essential to be satisfied for invoking the powers of this court under Section 8 of the Arbitration and Conciliation Act, 1996 are not satisfied in this case. Once this conclusion is recorded then no relief can be granted on this notice of motion.

7. As a result of the discussion, the notice of motion fails and it is accordingly dismissed but without any costs.

(S. C. DHARMADHIKARI, J.)