M/S Dps Contractors PVT. LTD. vs. Hindustan Urvarak And Rasayan LTD.

Facts

M/s DPS Contractors Pvt. Ltd. (Petitioner) filed a petition seeking the appointment of an arbitrator against Hindustan Urvarak and Rasayan Ltd. (Respondent) due to disputes arising from a contract. The Petitioner had invoked arbitration on September 24, 2021, citing several claims, including the release of a withheld amount, GST amount, escalation claims, loss of resources, loss of profit, release of Performance Bank Guarantees, finance charges, and interest, totaling approximately Rs. 26.46 crores. The Respondent argued that no arbitrable disputes existed, relying on a letter of indemnity dated May 11, 2022, which they contended settled the GST dispute. The Respondent also raised an objection regarding M/s PDIL not being a party to the petition, as PDIL was involved in the contract. The Court noted that the letter of indemnity appeared to settle only the GST dispute, leaving other claims pending.

Held

The Court held that there is a prima facie arbitration agreement between the parties. Regarding the first issue, the Court found that the letter of indemnity dated May 11, 2022, appears to have settled only the dispute concerning the GST amount, leaving other claims pending. Therefore, the argument that no arbitrable disputes exist is not accepted at this prima facie stage. The Court also addressed the objection regarding M/s PDIL, holding that M/s PDIL acted only for and on behalf of the Respondent. The arbitration clause permits disputes between the contractor (Petitioner) and the owner (Respondent) or consultant (M/s PDIL) to be referred to arbitration. Since the dispute is with the Respondent, not M/s PDIL, the petition is maintainable. The Court emphasized that these findings are prima facie, and the issue of arbitrability and other preliminary objections can be raised before the Arbitral Tribunal. Consequently, the Court appointed Justice R.S. Endlaw (Retd.) as the Sole Arbitrator to adjudicate the disputes, with all rights and contentions of the parties left open for the arbitrator's adjudication.

Key Issues

1. Whether there are subsisting arbitrable disputes between the parties, given the letter of indemnity dated May 11, 2022, and the judgment in NTPC LTD. vs. SPML INFRA LTD. (2023) 9 SCC 385? (Question of law) 2. Whether the petition is maintainable in the absence of M/s PDIL as a party, considering their role in the contract? Petitioner's arguments: - The letter of indemnity only settled the dispute concerning the GST amount, and other disputes remain pending and are arbitrable. - M/s PDIL was acting solely on behalf of the Respondent, and the dispute is with the Respondent, making the petition maintainable against them. Respondent's arguments: - No arbitrable disputes exist due to the settlement evidenced by the letter of indemnity, as per the principle laid down in NTPC LTD. vs. SPML INFRA LTD. - The petition is not maintainable as M/s PDIL, who was involved in the contract, is not a party to the arbitration proceedings.