R. F. Nariman, J. - (1.) The present petition, under Section 11 of the Arbitration & Conciliation Act, 1996, (in short 'the Act'), that has been filed before this Court, arises out of a contract entered into on 09.01.2009 for the work of planning, design, development, construction, manufacture, supply, testing and commissioning of a Monorail system in two particular earmarked sections in Wadala, Mumbai including operation and maintenance for a period of three years from the date of start of commercial operations. This agreement contains an arbitration clause, which is set out hereunder:- "Claims, Disputes and Arbitration JUDGEMENT_32_LAWS(SC)10_2018_1.html JUDGEMENT_32_LAWS(SC)10_2018_2.html If the Contractor considers himself to be entitled to any extension of the Time for Completion and/or any additional payment, under any Clause of these Conditions for otherwise in connection with the Contract, the Contractor shall give notice to the Employer/Employer's Representative, describing the event or circumstance giving rise to the claim. The notice shall be given as soon as practicable, and not later than 30 days after the Contractor became aware, or should have become aware, of the event or circumstance. If the Contractor fails to give notice of a claim within such period of 30 days, the Time for Completion shall not be extended, the Contractor shall not be entitled to additional payment, and the Employer/Employer's Representative shall be discharged from all liability in connection with the claim. Otherwise, the following provisions of this Sub-Clause shall apply. The Contractor shall also submit any other notices which are required by the Contract, and supporting particulars for the claim, all as relevant to such event or circumstance. The Contractor shall keep such contemporary records as may be necessary to substantiate any claim, either on the Site or at another location acceptable to the Employer/Employer's Representative. Without admitting liability, the Employer/Employer's Representative may, after receiving any notice under this Sub-Clause, monitor the record-keeping and/or instruct the Contractor to keep further contemporary records. The Contractor shall permit the Employer/Employer's Representative to inspect all these records, and shall (if instructed) submit copies to the Employer/Employer's Representative. Within 45 days after the Contractor became aware (or should have become aware) of the event or circumstances giving rise to the claim, or within such other period as may be proposed by the Contractor and approved by the Employer/Employer's Representative, the contractor shall send to the Employer/Employer's Representative a fully detailed claim which includes full supporting particulars of the basis of the claim and of the extension of time and/or additional payment claimed. If the event or circumstance giving rise to the claim has a continuing effect: (a) this fully detailed claim shall be considered as interim; (b) the Contractor shall send further interim claims at monthly intervals, giving the accumulated delay and/or amount claimed, and such further particulars as the Employer may reasonably require; and (c) the Contractor shall send a final claim within 30 days after the end of the effects resulting from the event or circumstance, or within such other period as may be proposed by the Contractor and approved by the Employer/Employer's Representative. Within 45 days after receiving a claim or any further particulars supporting a previous claim, or within such other period as may be proposed by the Employer/Employer's Representative and approved by the Contractor, the employer shall respond with approval, or with disapproval and detailed comments. He may also request any necessary further particulars, but shall nevertheless give his response on the principles of the claim within such time. Each interim payment shall include such amounts for any claim as have been reasonable substantiated as due under the relevant provision of the Contract, unless and until the particulars supplied are sufficient to substantiate the whole of the claim, the Contractor shall only be entitled to payment for such part of the claim as he has been able to substantiate. The Employer/Employer's Representative shall proceed in accordance with Sub-Clause 3.5 (Determination) to agree or determine (i) the extension (if any) of the Time for completion (before or after its expiry) in accordance with Sub-Clause 8.4 [Extension of Time for Completion], and/or (ii) the additional payment (if any) to which the Contractor is entitled under the Contract. The requirements of this Sub-Clause are in addition to those of any other Sub-Clause, which may apply to a claim. If the Contractor fails to comply with this or another Sub-Clause in relation to any claim, any extension of time and/or additional payment shall take account of the extent (if any) to which the failure has prevented or prejudiced proper investigation of the claim, unless the claim is excluded under the second paragraph of this Sub-Clause 20.2 Dispute to be referred to and settled by Employer's Representative at Site 20.3 Referring of Disputes for Arbitration 20.4 Disputes Due for Arbitration and Settlement of Disputes Disputes or differences shall be due for arbitration only if the conditions in Sub-Clause 20.2 and 20.3 above fulfilled. Except where otherwise provided in the Contract, all disputes or differences, whatsoever arising between the parties, arising out of or relating to construction, measuring operation or effect of the Contract or the breach thereof, shall be settled by arbitration as detailed in Sub Clause 20.5. 20.5 Nomination of Arbitrators/Sole Arbitrator Matters to be arbitrated upon shall be referred to a Sole Arbitrator where the individual claim does not exceed Rs. 5 million or the total value of claims does not exceed Rs. 15 millions. Beyond the above limit(s), there shall be three arbitrators. For this purpose the employer will make out a panel of Arbitrators with the requisite qualifications and professional experience relevant to the field to which the Contract relates and will be residents of India only. In case of a single arbitrator, the Panel will be of three Arbitrators, out of which the Contractor will choose one. In case three arbitrators are to be appointed, the Employer will make out a panel of five. The Contractor and the Employer will choose one arbitrator each from the above and the two so chosen will choose the third arbitrator from the above panel only who will act as the "Presiding Arbitration " of the arbitration panel. If in a dispute, the contractor fails to choose the Arbitrator within thirty (30) days after the Employer has nominated the Panel, the Employer may nominate an Arbitrator from the same panel of Arbitrators given by the Employer for the matter in dispute. If, in a dispute, the two chosen Arbitrators fail to appoint third Arbitrator- Presiding Arbitrator (Arbitration Panel's case) within thirty (30) days after they have been appointed, the Employer may apply to the Indian Council of Arbitration, New Delhi, to nominate the third Arbitrator from the same panel of Arbitrators given by the Employer for the matter in dispute. Neither party shall be limited in the proceedings before such arbitrator/s to the evidence or arguments put before the Employer's Representative at Site for the purpose of obtaining his decision. No decision given by the Employer's Representative in accordance with the foregoing provisions shall disqualify him from being called as a witness and giving evidence before the arbitrator/s on any matter, whatsoever, relevant to dispute or difference referred to arbitrator/s. Substitute Arbitrators- If for any reason on arbitrator is unable to perform his function, a substitute shall be appointed in the same manner as the original arbitrator. 20.6 Arbitration Venue, Language and Award In any Arbitration proceedings hereunder: (a) Proceedings shall be held in Mumbai, India only. (b) English language shall be the official language for all purposes. (Note: English language may be changed to any other language, with the agreement of both the parties) (c) The Arbitration Award shall be final and binding on all parties and shall be enforceable in any Court of competent jurisdiction, and the parties hereby waive any objection to or claims of immunity in respect of such enforcements. (d) In Arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made by a majority of all its members. (e) The Arbitrator(s) shall always give item-wise and reasoned awards irrespective of the value of claim(s) in the dispute in all cases. (f) Where the arbitral award is for payment of money, no interest shall be payable on the whole or any part of the money for any period till the date on which the award is made. (g) The cost of arbitration shall be borne by the respective parties. The cost inter-alia includes the fees of the Arbitrator(s) as per the rate fixed by the Employer from time to time. 20.7 Rules Governing the Arbitration Proceedings 20.8 No Supervision of Work 20.9 Limitation of Time Since disputes arose between the parties to the agreement, various interim claims had been made by the Consortium of M/s Larsen and Toubro, an Indian company, together with Scomi Engineering Bhd, a Company incorporated in Malaysia, for which the Consortium has filed this petition under Section 11 of the Act to this Court, since according to them, one of the parties to the Arbitration agreement, being a body corporate, incorporated in Malaysia, would be a body corporate, which is incorporated in a country other than India, which would attract Section 2(1)(f)(ii) of the Act.
(2.) Shri Gopal Jain, learned senior counsel appearing on behalf of the Consortium, has taken us through the agreement, in which he strongly relies upon the fact that the two entities, that is, the Indian company and the Malaysian company, though stated to be a Consortium, are jointly and severally liable, to the employer. Learned senior counsel has also relied upon the fact that throughout the working of the contract, separate claims have been made, which have been rejected by the Mumbai Metropolitan Region Development Authority (hereinafter referred to as 'MMRDA'). He has also further relied upon the fact that by at least three letters, during the working of the agreement, the claims have in fact been rejected altogether and that, therefore, there is no impediment in invoking the Arbitration clause under Section 20.4 of the General Conditions of Contract (hereinafter referred to as 'GCC'), as the procedure outlined by Clauses 20.1 to 20.03 had already been exhausted.
(3.) On the other hand, Mr. Shyam Diwan, learned senior counsel appearing on behalf of MMRDA, the respondent, has relied upon both the contract dated 09.01.2009 as well as the actual Consortium Agreement dated 04.06.2008 between the Indian company and the Malaysian company, which, when read together, would show that they are really an un-incorporated association and would, therefore, fall within Section 2(1)(f)(iii) as being an association or a body of individuals, provided the central management and control is exercised in any country other than India. He has also gone on to rely heavily upon the fact that in the Consortium, the lead partner is the Indian company, and the Consortium's office is at Wadala in Mumbai making it clear, therefore, that sub-Clause (iii) of Section 2(1)(f) of the Act would not apply as it is clear that the central management and control, that is envisaged by the said subClause, would not be exercised in a country outside India but in India itself. He has also strongly relied upon an order passed by the High Court of Bombay, dated 20.10.2016 between the same parties, in which an interim Award dated 18.08.2016 was challenged, which was between the same parties arising out of the self-same agreement. This Order upheld the interim Award of the Learned Arbitrators in stating that the particular claim that was made in that case could be made only as a Consortium and not as two entities separately. He has also pointed out that this Order has become final as it has not been challenged by the petitioner before this Court. In answering Mr. Gopal Jain's submission as to Clause 20.4 of the GCC being invoked after the procedure under Clauses 20.1 to 20.3 has been exhausted, he referred to and relied upon a letter dated 22.04.2016 written by the respondent in which, after referring to the various refusals, referred to by Mr. Jain, further information and material was requested from Mr. Jain's client. Instead of furnishing such material straightaway, a notice invoking Arbitration dated 01.07.2016 was sent by Mr. Jain's client. The respondent, by a reply dated 20.08.2016 reiterated its position that Clauses 20.1 to 20.3 had not yet been exhausted, and therefore, on 08.09.2016, rejected the request for arbitration.;