Vedanta Limited vs. Gujarat State Petroleum Corporation LTD.

Facts

The Petitioner, Vedanta Limited, acting as the Operator of a Gas Block in Barmer, Rajasthan, issued a Request for Proposal (RFP) and Gas Sales Agreement (GSA) on December 28, 2022. The Respondent, Gujarat State Petroleum Corporation Ltd., uploaded a signed copy of the GSA and RFP on January 12, 2023, along with Forms C1 & C6. The Respondent emerged as a successful bidder, allocated a significant quantity of gas. The Petitioner sent multiple reminders for the formal signing of the GSA. On February 27, 2023, the Respondent cited adverse market changes for not being able to market the gas at the bid price. The Petitioner asserted that a contract was concluded upon bid acceptance. The Respondent, on March 21, 2023, stated there was no valid GSA or binding agreement. The Petitioner invoked arbitration on July 7, 2023, appointing its nominee arbitrator. The Respondent contested the existence of a valid arbitration agreement.

Held

The Court held that there is a prima facie existence of an arbitration agreement between the parties. The Court reasoned that the Respondent's participation in the RFP process, including uploading signed documents and making declarations in Forms C1 & C6, coupled with the Petitioner having signed the GSA and only the Respondent's formal signature being pending, establishes a prima facie case for the existence of an arbitration agreement. The Court relied on the Supreme Court's pronouncements in cases like SBI General Insurance Co. Ltd. v. Krish Spinning, emphasizing that the referral court's role under Section 11 is to determine the prima facie existence of an arbitration agreement, and any dispute regarding its validity or enforceability should be decided by the arbitral tribunal. The Court appointed Justice Ravinder P. Bhatt, former Judge of the Supreme Court of India, as the nominee Arbitrator for the Respondent, with the Petitioner's nominee being Justice L. N. Rao. The Arbitrators were directed to proceed further and appoint the Presiding Arbitrator. All rights and contentions of the parties were kept open to be decided on merits by the Arbitrators.

Key Issues

1. Whether a valid arbitration agreement exists between the Petitioner and the Respondent, as contemplated under Section 11(6) of the Arbitration and Conciliation Act, 1996, in relation to the RFP and GSA? The Petitioner argued that a binding arbitration agreement exists because the Respondent participated in the e-tendering process, uploaded signed documents including the GSA and RFP, and made declarations in Forms C1 & C6, indicating acceptance of the terms. The Petitioner contended that the subsequent refusal to formally sign the GSA does not negate the existence of an arbitration agreement, especially since the Respondent's arguments are a mere formality. The Petitioner relied on the principle that a prima facie existence of an arbitration agreement is sufficient for referring parties to arbitration. The Respondent argued that no valid arbitration agreement exists because the GSA was never formally signed by both parties, and therefore, no binding contract, including an arbitration clause, was in place. The Respondent contended that initialling pages or uploading unsigned documents does not constitute a concluded contract or a valid arbitration agreement.