LexM/S. LARSEN & TOUBRO LTD. versus M/S. MOHAN LAL HARBANS LAL BHAYANA
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A B [2014] 3 S.C.R. 162 MIS. LARSEN & TOUBRO LTD. v. M/S. MOHAN LAL HARBANS LAL BHAYANA (Civil Appeal No. 7586 of 2009) FEBRUARY 25, 2014 [SURINDER SINGH NIJJAR AND A.K. SIKRI, JJ.] ARBITRATION AND CONG/LIA T/ON ACT, 1996: c s. 11 (6) - Application before High Court for appointment of arbitrator - Agreement between employer SCOPE and appellant contractor - Clause 25 of agreement bearing arbitration clause - Appellant engaging respondent sub- contractor - Application by respondent for appointment of 0 arbitrator - Allowed by High Court - Held: SCOPE being Principal/Employer of appellant, the liability for honouring the claim of respondent was that of SCOPE and appellant was not supposed to make any payment from its coffers - Further, by virtue of first supplementary agreement, the modalities of E settling the dispute between parties underwent a significant change - It was unambiguously provided that in view of arbitration between appellant and SCOPE, pertaining to claims of respondent as well, even if the disputes between the appellant and the respondent were deemed to have been settled and were not referable to arbitration again between F these two parties Order of High Court is set aside - In view of subsequent developments after the decision of the High Court, when the final bill is almost at the stage of finalization, the only aspect that can be taken care of at this stage is to hasten the process of arbitration, in case after the passing of G the final bill by SCOPE, some claims of respondent still survive -- Directions issued accordingly to balance the equities. In the instant appeal, the appellant challenged the H 162 M/S. LARSEN & TOUBRO LTD. v. M/S. MOHAN LAL 163 HARBANS LAL BHAYANA order of the High Court passed on an application A preferred by the respondent u/s 11 (6) of the Arbitration and Conciliation Act, 1996 appointing an arbitrator on behalf of the appellant 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 B the agreement entered into between the parties. Since the respondent had already nominated its arbitrator, further direction was given that the two arbitrators (one nominated by the respondent and one appointed by the High Court for the appellant), would appoint an Umpire c in consonance with the said Clause 25. The stand of the appellant was that Clause 25 was modified by three , supplementary agreements and resultantly there was no question of arbitration between the appellant and the respondent in view of the modifications. The appellant 0 claimed that by agreement dated 29.2.1988 entered into between the Standing Conference of Public Enterprises (SCOPE) and the appellant, SCOPE awarded certain construction works to the appellant. This agreement also permitted the appellant to sub-contract. Accordingly, the E appellant entered into an agreement dated 3.3.1988 with the respondent. Clause 2 of this agreement dated 3.3.1988 pertained to the payments which were to be made by the appellant to the respondent and the amount under this sub contract was payable to the respondent by the appellant only on receipt of corresponding F receipts from SCOPE. Further, as per Clause 6, the respondent was to perform the work awarded to it to the . satisfaction of SCOPE. It was further the case of the appellant that the appellant and the respondent entered into a supplementary agreement dated 31.1.1990 and the G modalities of settling the disputes between the parties through arbitrator also underwent a significant change, as was clear from Clause (viii) of the first supplementary agreement. H 164 SUPREME COURT REPORTS [2014] 3 S.C.R. A Allowing the appeal, the Court HELD: 1.1 In essence, the parties understood that as the Principal/Employer was SCOPE, for whom the work was to be performed by virtue of main agreement dated 8 29.2.1988 entered into between the parties, and the sub contract between the appellant and respondent was on back to back basis, any work done by the respondent was for the benefit of SCOPE and, ultimately, liability for honoring the claims of the respondents was that of SCOPE and the appellant was not supposed to make any C payment from its coffers. The parties even acted on the basis of said understanding initially. [para 5-6] [169-F-G] 1.2 Clause (viii) of the first supplementary agreement acknowled
Excerpt shown. Read the full judgment & AI analysis in Lexace.