- (1.) On an application preferred by the respondent herein under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act), the High Court has appointed/nominated an Arbitrator on behalf of the appellant herein on the ground that in spite of notice by the respondent in this behalf, the appellant had failed to nominate its Arbitrator in terms of Clause 25 of the Agreement entered into between the parties. Since the respondent had already nominated its Arbitrator, further direction is given that the two Arbitrators (one nominated by respondent and one appointed by the Court for the appellant), shall appoint an Umpire in consonance with the said Clause 25. This order is impugned by the appellant primarily on the ground that Clause 25 was modified by three supplementary agreements whereby the entire edifice of the said arbitration clause stood adhered and on a conjoint reading of original Clause 25 with modification effected by the supplementary agreements, there was no question of arbitration between the appellant and the respondent at this stage. To appreciate this contention, one will have to traverse through the relevant clauses of the main contract as well as supplementary agreements. Thus, we would like to state along with the events, as they occurred, in chorology. In fact, as we proceed to unfurl the events with our comments thereon, there and then we shall be getting answer as well to the issue involved.
(2.) An agreement dated 29.2.1988 was entered into between the Standing Conference of Public Enterprises (SCOPE) and the appellant namely Larsen & Toubro (L&T Ltd.). This agreement was for construction of Twin Tower Office Complex at Laxmi Nagar District Centre, Delhi which was awarded by the SCOPE to the appellant. Original contract value for this work was stipulated at Rs.27.48 Crores. Works comprised of the Civil Works and also subsidiary works, that could be ordered from time to time by SCOPE/Architect. This agreement also permitted the appellant to sub-contract. Accordingly, the appellant entered into an agreement dated 3.3.1988 with the respondent. While retaining the civil works with itself, the appellant awarded finishing works including brickworks, wood works, flooring, furnishing, aluminum works and other miscellaneous works including waterproofing etc. to the respondent. It was a pass through contract on a back to back basis. The value of sub contract was stated as Rs.12.08 crores. Clause 2 of this agreement dated 3.3.1988 pertains to the payments which were to be made by the appellant to the respondent. As can be seen from the reading of this Clause, as reproduced below, amount under this sub contract was payable to the respondent by the appellant only on receipt of corresponding receipts from SCOPE: "Clause 2 L&T shall pay "MHB" the said contract amount or such other sum as shall become payable only as and when the said payments are received by "L&T" from SCOPE at the time and in the manner hereinafter specified in the terms and conditions of this Contract."
(3.) Another important stipulation in this sub contract was Clause 6, as per which the respondent was to perform the work awarded to it to the satisfaction of SCOPE, namely the Principal. It reads as under: "Clause 6 All obligations in respect of ancillary works undertaken by MHB shall be performed by MHB itself and will not jeopardize the interest and contract of L&T with SCOPE. Satisfaction of SCOPE, their representatives and Architects shall form the basis of this agreement." ;