M/S. NATIONAL HIGHWAYS AND INFRASTRUCTURE DEVELOPMENT CORPORATION LTD. versus M/S. BSCPL INFRASTRUCTURE LTD.

Citation: [2019] 10 S.C.R. 636 · Decided: 07-08-2019 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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636
SUPREME COURT REPORTS
[2019] 10 S.C.R.
M/s. NATIONAL HIGHWAYS AND INFRASTRUCTURE
DEVELOPMENT CORPORATION LTD.
v.
M/s. BSCPL INFRASTRUCTURE LTD.
(Civil Appeal No. 6168 of 2019 )
AUGUST 7, 2019
[R. F. NARIMAN AND SURYA KANT, JJ.]
Arbitration: Arbitration clause – Whether an arbitration
clause would spring into being at the stage of Letter of Award (LOA)
acceptance or whether it would be necessary to sign the ultimate
agreement which would then bring in the arbitration clause
contained therein – In the instant case, Request for Proposal (RFP)
was sent out by the appellant for road construction – In the LOA,
the Government of India made reference to the bid document and a
request to return signed copy of duplicate LOA as its
acknowledgment  and to execute contract agreement within 15 days
from date of issue of LOA – Respondent accepted the bid proposal
and enclosed copy of LOA received by fax duly signed with an
acknowledgment – After 2 years, appellant decided to withdraw
the LOA due to non-availability of NOC from District council which
was sine qua non for the land for the project – High Court held
that the arbitration clause is contained in the standard form of the
draft agreement and that general reference to it was sufficient to
appoint arbitrator – On appeal, held: A perusal of the clauses
contained in the RFP would only show that a bidder is liable for
disqualification and forfeiture of bidding security at all stages of
the agreement, notwithstanding that there may not be execution of
the agreement between the parties – The schedule of bidding process
begins with the last date for receiving queries and ends with the
signing of concession agreement, LOA being Item No. 7 and part
and parcel of this bidding process – The moment this is so, then
under clause 6.1, dispute resolution can only take place by the
Courts of Delhi – It is not possible to say that a standard form
arbitration clause contained in a draft agreement would then oust
clause 6.1 and disturb the entire scheme of the schedule of bidding
   [2019] 10 S.C.R. 636
636
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process –  This being the case, even at the stage of acceptance of
LOA, if disputes arose between the parties, they could only be
resolved by the Courts of Delhi and not by arbitration – Jurisdiction.
Allowing the appeal, the Court
HELD : 1. A perusal of the clauses contained in the RFP
would only show that a bidder is liable for disqualification and
forfeiture of bidding security at all stages of the agreement,
notwithstanding that there may not be execution of the agreement
between the parties. The expression “shall be liable to be
terminated...” in clause 2.1.14 is only in this context, thereby
making it clear that even after the LOA may have been accepted,
such disqualification and forfeiture of bid security, if the other
conditions exist, can be done by the appellant. The same
interpretation goes for clauses 2.6.3 and clause 2.20.7.
[Paras 14 and 15] [645-D-F]
2. The schedule of bidding process begins with the last date
for receiving queries and ends with the signing of concession
agreement, LOA being Item No. 7 and part and parcel of this
bidding process.  The moment this is so,  under clause 6.1, dispute
resolution can only take place by the Courts of Delhi. It is not
possible to say that a standard form arbitration clause contained
in a draft agreement would then oust clause 6.1 and disturb the
entire scheme of the schedule of bidding process. This being the
case, it is clear that even at the stage of acceptance of LOA, if
disputes arise between the parties, they can only be resolved
by the Courts of Delhi and not by arbitration. [Paras 17 and 18]
[645-G-H; 646-A]
PSA Mumbai Investments PTE. Limited v. Board of
Trustees of the Jawaharlal Nehru Port Trust and
Another (2018) 10 SCC 525  – relied on.
Inox Wind Ltd. v. Thermocables Ltd. (2018) 2 SCC
519 : [2018] 1 SCR 86  – referred to.
Case Law Reference
[2018] 1 SCR 86
referred to
Para 5
(2018) 10 SCC 525
relied on
Para 6
M/s. NHID CORPORATION LTD. v. M/s. BSCPL
INFRASTRUCTURE LTD.
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638
SUPREME COURT REPORTS
[2019] 10 S.C.R.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6168
of 2019.
From the Judgment and Order dated  26.10.2018 of the High
Court of Delhi at New Delhi in Arbitration Petition No. 278 of 2018.
Debal Banerjee, Sr. Adv., Prasenjit Keswani, Abhishek Singh,
Upmanyu Tewari, Kabir Shankar Bose, Advs. for the Appellant.
Ms. Kiran Suri, Sr. Adv., Abhay N. Das, S. J. Amith
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