M/S ROJER MATHEW & CO. v. DELHI METRO RAIL CORPORATION LIMITED and KOCHI METRO RAIL LIMITED

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN THURSDAY, THE 3[RD] DAY OF FEBRUARY 2022 / 14TH MAGHA, 1943** **AR NO. 93 OF 2021** ## **APPLICANT:** **M/S ROJER MATHEW & CO.G 203, PANAMPILLY NAGAR, COCHIN-682 036, REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER, MR.ROJER MATHEW.** **BY ADVS.SANTHA VARGHESE RAHUL VARGHESE RANJITH VARGHESE** ## **RESPONDENTS:** - **1 THE CHIEF ENGINEER/NORTH,** **DELHI METRO RAIL CORPORATION LIMITED, 2ND FLOOR, GCDA COMPLEX, EASTERN ENTRY TOWER, KARSHAKA ROAD, ERNAKULAM SOUTH RAILWAY STATION, COCHIN-682 016.** - **2 THE DEPUTY CHIEF ENGINEER, DELHI METRO RAIL CORPORATION LIMITED, 2ND FLOOR, GCDA COMPLEX, EASTERN ENTRY TOWER, KARSHAKA ROAD, ERNAKULAM SOUTH RAILWAY STATION, COCHIN-682 016.** - **3 DELHI METRO RAIL CORPORATION LIMITED, METRO BHAVAN, FIRE BRIGADE LANE, BAREKHAMBA ROAD, NEW DELHI, PIN-110 001, REPRESENTED BY ITS MANAGING DIRECTOR.** - **4 KOCHI METRO RAIL LIMITED, JLN METRO STATION, 4TH FLOOR, KALOOR, KOCHI, ERNAKULAM-682017, REPRESENTED BY ITS MANAGING DIRECTOR.** **BY ADVS. LATHA ANAND-R1 TO R3, K.JAJU BABU (SR.)-R4 SRI.P.S.SIDHARTH-R3** **SMT.M.U.VIJAYALAKSHMI, SC, KOCHI METRO RAIL LTD.-R4 SRI.BRIJESH MOHAN-R4.** **THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 03.02.2022, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** ## **AR NO. 93 OF 2021** **-2-** ## **ORDER** The applicant says that they are engaged in the field of civil engineering construction; and that considering their expertise in the field, they were offered the contract of ' _Construction of Entry/Exit structures (LHS & RHS) of Changampuzha_ _Park Metro Station of Kochi Metro Rail Project, under Work Order/LOA No. DMRC/Kochi/KC3-DR/3477 dated 10.12.2015_ ', by the 3[rd] respondent - Delhi Metro Rail Corporation Limited (DMRC). 2. The applicant says that the Letter of Acceptance - which is produced as Annexure A1, has been issued by the 1[st] respondent on 10.12.2015, subsequent to which, Annexure A2 Agreement dated 25.01.2016, was entered into between them. They allege that, in spite of the successful completion of the work under the said Agreement, legitimate payments due to them are withheld and even ## **AR NO. 93 OF 2021** **-3-** unprocessed for several years, thus giving rise to various disputes between the parties, touching upon and relating to the terms of the Agreement in question. 3. The applicant says that since, as per Clause 17.5 of Annexure A12 General Conditions of Contract (GCC) - which is admittedly part of Annexure A2 Agreement - all such disputes can be resolved and adjudicated only through the process of arbitration; and that they, therefore, addressed Annexure A8 letter to the respondents requesting them to advert to their 'grievances' and to take an apposite decision thereon, but that since no action was taken on it, they were forced to issue Annexure A9 letter dated 14.09.2020, specifically asserting that the same must be treated as a 'Final Notice' of their claims, under Clause 17 of the GCC. 4. The applicant says that, in spite of the ## **AR NO. 93 OF 2021** **-4-** afore, when the respondents refused to accede to their request, Annexure A10 letter was issued, seeking that the disputes be referred for conciliation in terms of Clause 17.6 of the GCC, but that this was also met with stoic silence, which left them no other option, but to issue Annexure A11 letter dated 24.03.2021, taking recourse to arbitration and seeking that an independent, impartial Arbitrator be appointed with the consent of both sides. 5. The applicant says that since even the afore request has not been responded to by the respondents, they have been left without any other option, but to approach this Court through this Arbitration Request, invoking jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996 (the 'Act', for short). 6. I have heard Sri.Ranjith Varghese – learned counsel for the applicant; ## **AR NO. 93 OF 2021** **-5-** Sri.P.S.Sidharth - learned counsel representing the learned Standing Counsel for the 3[rd] respondent – DMRC, and Sri.Brijesh Mohan - learned counsel representing the learned Standing Counsel for the 4[th] respondent – Kochi Metro Rail Limited (KMRL). 7. In response to the request made by the applicant in this Arbitration Request, Sri.P.S.Sidharth submitted that the applicant has approached this Court in gross violation of the conditions in the GCC. He argued that since Clause 17.5 of the GCC mandates a two stage disputes resolution, the conduct of the applicant in having approached this Court directly, without seeking conciliation, is illegal and contrary to the terms of the Agreement. 8. As an adscititious argument, Sri.P.S.Sidharth, thereafter, submitted that if this Court is inclined for any reason to allow this Arbitration Request, then his client may be ## **AR NO. 93 OF 2021** **-6-** permitted to nominate the Arbitrator in terms of Clause 17.5 of the GCC. 9. Sri.Brijesh Mohan – learned counsel appearing for the KMRL, submitted that his client has been unnecessarily dragged into this Arbitration Request, because they were not part of Annexure A2 Agreement or Annexure A12 GCC. He submitted that this appears to be merely because of Clause 6 of Annexure A1 Letter of Acceptance, but that the terms of the same would clearly show that no liability can be brought upon the KMRL. He, therefore, prayed that this Arbitration Request be dismissed as against his client. 10. In reply, Sri.Ranjith Varghese – learned counsel for the applicant, submitted that the afore argument of Sri.P.S.Sidharth, that conciliation proceedings had not been initiated by his client, is grossly incorrect because, through Annexure A9 dated 14.09.2020, a specific request ## **AR NO. 93 OF 2021** **-7-** for such purpose was made, which was, however, disregarded by the respondents. He then argued that, as per Clause 17.5 of the GCC, it is incumbent upon the respondents to have referred the matter for conciliation within a period of 60 days after Annexure A9 had been received; and that their failure to do so, empowered his client to approach this Court through this Arbitration Request, particularly because they had addressed Annexure A10 letter under Section 21 of the 'Act' for such purpose, which also has remained unresponded to. 11. As far as the arguments of Sri.Brijesh Mohan as afore, Sri.Ranjith Varghese submitted that it is evident from Annexure A1 that the 3[rd] respondent – DMRC, has been assigned to execute the 'Kochi Metro Rail Project' on behalf of the 4[th] respondent – KMRL. He submitted that, therefore, the KMRL is also a necessary party to this ## **AR NO. 93 OF 2021** **==> picture [22 x 9] intentionally omitted <==** Arbitration Request, even though they had not specifically signed Annexure A2 Agreement, because DMRC had done so on their behalf also. 12. Sri.Ranjith Varghese added that this is more so, because the 4[th] respondent is the real beneficiary of the entire contract and that there is a valid 'Transfer Mechanism' between the DMRC and themselves for the final transfer of the infrastructure undertaking to them. He, therefore, argued that the presence of 4[th] respondent in the arbitration proceedings is imminent and necessary. 13. I have given the afore rival submissions of the learned counsel for the parties juxtaposed on the various materials available on record, a great amount of thought. 14. It is admitted by the petitioner and the 3[rd] respondent, that Annexure A2 Agreement had been validly entered into between them. It is also ## **AR NO. 93 OF 2021** **-9-** conceded that Annexure A12 GCC is part of the said Agreement; and that Clause 17 thereof provides for dispute resolution only through the process of conciliation and then Arbitration. 15. Therefore, the question really is whether the applicant has moved this Court after complying with the stipulations in Clause 17.5 of the GCC, which is to mean whether they had asked for a conciliation prior to approaching this Court. The uncontested Annexures A8 and A9 would render it apodictic that the applicant had approached the respondents for an amiable settlement of their disputes through conciliation. 16. It is pertinent that the afore letters did not evoke any response from the respondents, though Sri.P.S.Sidharth – learned counsel for the 3[rd] respondent, tried to argue that this was because of the DMRC had closed their office in Kochi and they being incapacitated to receive the ## **AR NO. 93 OF 2021** **-10-** same. In fact, in the statement filed by the 3[rd] respondent, in paragraph 12 thereof, the DMRC takes the stand that Annexures A8 and A9 ' _were addressed to Respondent's Kochi office, but after closing of Kochi/DMRC office these letters are not available in records received by Delhi Inderlok Office_ .' (sic). Pertinently, the DMRC has no case that Annexures A8 and A9 did not reach their Kochi office, but only that the same were not available in their Delhi office. 17. Indubitably, therefore, the argument of Sri.P.S.Sidharth, that the applicant has violated Clause 17.5 of Annexure A12 GCC in having approached this Court through this Arbitration Request, cannot be countenanced at all. 18. That said, the subsequent prayer of Sri.P.S.Sidharth that, in the event this Arbitration Request is ordered, his client be allowed to nominate the Arbitrator can also not ## **AR NO. 93 OF 2021** **-11-** appeal to me, because as per Clause 17.9 of the GCC – which is seen to have been settled in the year 2011, the sole Arbitrator for claims below Rs.50,00,000/- is mandated to be nominated by the DMRC. 19. However, on account of the judgments of Hon'ble Supreme Court in _**TRF Ltd. v. Energo Engineering Projects Ltd.**_ [2017 (8) SCC 377] **and** _**Perkins Eastman Architects DPC & Another v. HSCC**_ _**(India) Limited**_ [AIR 2020 SC 59], which has been followed by this Court in _**Tulsi Developers India**_ _**Pvt. Ltd. v. Dr.Appu Benny Thomas**_ [2021 (5) KHC 404], no party to the Agreement can either arbitrate or nominate an Arbitrator to adjudicate and resolve the disputes between them. Since Section Clause 17.9 of the GCC came into being much before Section 12(5) of the 'Act' had been amended, I am certain that the argument of Sri.P.S.Sidharth, that his client must be given ## **AR NO. 93 OF 2021** **-12-** liberty of nominating an Arbitrator, cannot be granted imprimatur. 20. All which is thus left is the argument of Sri.Brijesh Mohan, on behalf of the KMRL, that his client is not a necessary party to this proceedings because they had not signed Annexure A2 Agreement. Though this Court is not in a position to affirmatively state on this issue, prima facie, from Annexure A1 it appears that the KMRL also has some role to play, since they admit to be the successor-in-interest of the DMRC. 21. Of course, the argument of KMRL is that, since Annexure A2 Agreement has already concluded before the undertaking was transferred to them, they cannot be made liable for any claim of the applicant. However, as I have already said above, since this Court cannot affirmatively speak on this since it will require assessment of factual and documentary factors and materials, I am ## **AR NO. 93 OF 2021** **-13-** certain that this aspect must also be considered by the learned Arbitrator, if the same is raised before him by the KMRL. 22. This is more so because, normally, a nonsignatory to an Arbitration Agreement cannot be thrust into the process of Arbitration, but an exemption has been drawn by the Hon'ble Supreme Court in _**Chloro Controls India Private Limited v.**_ ## _**Severn Trent Water Purification Inc. and Others**_ [2013 (1) SCC 641]. The said judgment refers to two theories and if any of them become applicable, then even a non-signatory can be brought into the arbitration proceedings. 23. Axiomatically, therefore, the learned Arbitrator will have to consider whether _**Chloro Controls India**_ (supra) would have any application in the case of the 4[th] respondent, particularly because this argument has been impelled by the applicant in their reply affidavit, filed to the ## **AR NO. 93 OF 2021** **-14-** objections of the 4[th] respondent, in which their stand is that since the contractual obligations between the applicant and the 3[rd] respondent had been completed as early as on 17.06.2017, the handing over of the 'Project' to them in the year 2020 could not make them liable for any claim of the applicant. 24. Needless to say, the question whether the KMRL would have any residuary liability on behalf of the DMRC will be assessed by the learned Arbitrator as a preliminary issue; and I request him to conclude upon it, before further proceedings under the Arbitration is taken forward. For this purpose, all rival contentions of the parties are left open to be impelled before the learned Arbitrator. 25. That being so said, even though some other contentions also appear to have been projected by the 3[rd] respondent, they were not argued before ## **AR NO. 93 OF 2021** **-15-** this Court, except that, Sri.Brijesh Mohan – learned counsel for the KMRL, pointed out that the seat of Arbitration as per the GCC is Delhi. However, as is manifest from Annexure A2 Agreement - of which GCC is only a part - the seat has been shown specifically to be in Kochi, which is certainly within the jurisdiction of this Court. 26. That being so recorded, it is without dispute - it being expressly admitted – that Clause 17 of the GCC contractually obligates the parties to have their disputes resolved only through the process of Arbitration. I am, therefore, of the firm view that this Court is now enjoined to allow this Arbitration Request, which I do so in the following manner: (a) I nominate Sri.N.S.Gopakumar, Hill Valley Estate, Flat No.A2, Ruby Block, Kakkanad, Thrikkakara P.O., ## **AR NO. 93 OF 2021** **-16-** Kochi – 682 021, as the sole Arbitrator, to adjudicate and resolve the disputes and differences between the parties to this case arising from and relating to Annexure A2 agreement. (b) The Registry is directed to communicate a copy of this order to the learned Arbitrator within a period of two weeks from today and to obtain a Statement of Disclosure from him under Section 11(8) read with Section 12(1) of the 'Act'. (c) Once the Disclosure Statement is obtained from the learned Arbitrator the Registry shall release the certified copy of this order, with a copy of the said statement appended to it, retaining the original of the ## **AR NO. 93 OF 2021** **-17-** same on the files of this case. (d) The fees of the Arbitrator shall be governed by the Fourth Schedule of the 'Act'. (e) In order to enable the Arbitrator to commence the proceedings without delay, I direct the parties to mark appearance before him at 11 A.M. on 02.03.2022. ## **Sd/DEVAN RAMACHANDRAN JUDGE** akv **-18-** ## **AR NO. 93 OF 2021** ## **APPENDIX OF AR 93/2021** ## **PETITIONER ANNEXURES** **ANNEXURE A1 TRUE COPY OF THE LETTER OF ACCEPTANCE DATED 10.12.2015 ISSUED BY THE 1ST RESPONDENT TO THE APPLICANT ANNEXURE A2 TRUE COPY OF THE AGREEMENT DATED 25.01.2016 EXECUTED BETWEEN THE APPLICANT AND THE 1ST RESPONDENT ON BEHALF OF THE 3RD RESPONDENT, WITHOUT ACCOMPANIMENTS ANNEXURE A3 TRUE COPY OF THE LETTER DATED 07.07.2016 ISSUED BY THE 1ST RESPONDENT TO THE APPLICANT ANNEXURE A4 TRUE COPY OF THE NOTE DATED 05.12.2016 ISSUED BY THE 1ST RESPONDENT ANNEXURE A5 TRUE COPY OF THE FINAL BILL CHEKLIST DATED 04.10.2017 PREPARED BY THE ASSISTANT ENGINEER AND CHECKED BY THE 2ND RESPONDENT ANNEXURE A6 TRUE COPY OF THE LETTER DATED 20.12.2017 ISSUED BY THE ASSISTANT ENGINEER OF THE 3RD RESPONDENT TO THE APPLICANT ANNEXURE A7 TRUE COPY OF THE LETTER DATED 18.12.2017 ISSUED BY THE APPLICANT TO THE 1ST RESPONDENT ANNEXURE A8 TRUE COPY OF THE LETTER DATED 13.08.2019 ISSUED BY THE APPLICANT TO THE PRINCIPLE ADVISOR OF THE 3RD RESPONDENT ANNEXURE A9 TRUE COPY OF THE LETTER DATED 14.09.2020 ISSUED BY THE APPLICANT TO** ## **AR NO. 93 OF 2021** ## **-19-** ## **THE 1ST RESPONDENT** **ANNEXURE A10 TRUE COPY OF THE LETTER DATED 02.02.2021 ISSUED BY THE APPLICANT TO THE 1ST RESPONDENT ALONG WITH THE PROOF OF DELIVERY** - **ANNEXURE A11 TRUE COPY OF THE LETTER DATED 24.03.2021 ISSUED BY THE APPLICANT TO THE 1ST RESPONDENT** - **ANNEXURE A12 TRUE COPY OF CLAUSE 17 OF GCC-DISPUTE RESOLUTION AND ARBITRATION CLAUSE IN THE AGREEMENT** - **ANNEXURE A13 TRUE COPY OF CLAUSE 1.5 OF GCC-PRIORITY OF DOCUMENTS.** - **ANNEXURE A14 TRUE COPY OF LETTER DATED 06.06.2016 ISSUED BY THE APPLICANT TO THE 3RD RESPONDENT.** ## **RESPONDENT'S EXHIBITS :** - **ANNEXURE R3(a) TRUE COPY OF THE NOTICE DATED 2.5.2016 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER.** - **ANNEXURE R3(b) TRUE COPY OF THE NOTICE DATED 28.10.2016 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER.** - **ANNEXURE R3(c) TRUE COPY OF THE LETTER DATED 3.5.2016 ISSUED BY THE PETITIONER TO THE 3RD RESPONDENT.** - **ANNEXURE R3(d) TRUE COPY OF THE CHECKLIST DATED 4.10.2017.** - **ANNEXURE R4(a) TRUE COPY OF THE LETTER VIDE NO.DMRC/KOCHI/12/1384/KC3-DR-989 DATED 10.12.2016, FORWARDED BY THE 3RD RESPONDENT.** **AR NO. 93 OF 2021** **-20-** **ANNEXURE R4(b)** **TRUE COPY OF THE NOTICE OF TERMINATION VIDE NO.DMRC/KOCHI/12/1384/KC3-DR/745 DATED 02.05.2016 OBTAINED FROM THE 3RD RESPONDENT.** **ANNEXURE R4(c) TRUE COPY OF THE LETTER DATED 03.05.2016, FORWARDED BY THE PETITIONER TO THE DMRC.** **ANNEXURE R4(d)** **TRUE COPY OF THE LETTER DATED 14.11.2016 FORWARDED BY THE PETITIONER TO THE DMRC.** **//TRUE COPY// P.A. TO JUDGE**