Nelson.P.S vs. Union Of INDIA

Facts

The petitioner, P.S. Nelson, filed a writ petition seeking to quash an order dated 10.03.2021 passed by Hindustan Petroleum Corporation (HPCL), the second respondent. The petitioner also sought a direction for HPCL to disburse Rs. 63,71,328/-, including GST, for work done prior to December 21, 2019, and between January 2020 and March 20, 2020. The petitioner's claim was against the third respondent, Rail India Technical and Economic Service (RITES), which had a contract with HPCL. HPCL stated that the contract with RITES was terminated on July 22, 2020, and RITES had been paid approximately Rs. 4 crores prior to termination. RITES was claiming Rs. 15.30 lakhs from HPCL. The petitioner contended that RITES was evasive in settling dues and intended to implead himself in any arbitration proceedings between HPCL and RITES.

Held

The Court held that the petitioner is a third party with respect to the contract between HPCL (second respondent) and RITES (third respondent). The Court found that the petitioner does not have any privity of contract with HPCL. Therefore, HPCL is not obligated to disburse the amount claimed by the petitioner directly. The Court declined to make any observations regarding the petitioner's intention to implead himself in potential arbitration proceedings between HPCL and RITES, noting that no arbitration proceedings had been initiated as of the date of the judgment. The Court granted liberty to the petitioner to independently make his claim against RITES and work out his remedy in accordance with law. The writ petition was disposed of without passing any further orders, except recording the stands of the parties.

Key Issues

1. Whether the second respondent (HPCL) is obligated to disburse the amount claimed by the petitioner, considering the absence of privity of contract between them, in relation to the work done by the petitioner for the third respondent (RITES)? Petitioner's argument: The petitioner argued that RITES was evasive in settling the amounts due and payable. Therefore, even if arbitration proceedings were initiated between HPCL and RITES, the petitioner intended to implead himself to seek settlement of his dues. Revenue/State's argument (HPCL and RITES): The respondents argued that the contract between HPCL and RITES was terminated. HPCL submitted that it had no privity of contract with the petitioner and that the inter se dispute between the petitioner and RITES could not be resolved by HPCL. HPCL also stated that RITES was claiming a sum from HPCL, and any dispute would likely result in arbitration proceedings based on the contract between HPCL and RITES.