M/S PSA MUMBAI INVESTMENTS PTE. LIMITED versus THE BOARD OF TRUSTEES OF THE JAWAHARLAL NEHRU PORT TRUST AND ANR.

Citation: [2018] 13 S.C.R. 352 · Decided: 11-09-2018 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Leave Granted & Allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2018] 13 S.C.R.
M/S PSA MUMBAI INVESTMENTS PTE. LIMITED
v.
THE BOARD OF TRUSTEES OF THE JAWAHARLAL
NEHRU PORT TRUST AND ANR.
(Civil Appeal No.9352 of 2018)
SEPTEMBER 11, 2018
[R. F. NARIMAN AND INDU MALHOTRA, JJ.]
Arbitration and Conciliation Act, 1996 – Arbitration clause
– Activation of –Respondent No.1 issued Global invitation of
Request for Qualification (RFQ) for development of a container
terminal project – The bid was divided into two stages- first, the
stage of eligibility and second, the Request for Proposal (RFP) –
Appellant and Respondent No.2, as a consortium qualified the first
stage – Letter of Award given by the Respondent No.1 to the
Consortium – Respondent No.2 opted out of the bid process – Show-
cause notice issued by the respondent no.1 to consortium to perform
the bid – Since same was not done, the Letter of Award accorded
and acknowledged by the appellant was withdrawn by Respondent
No.1 – Consequent to this, arbitration notice was sent by the
respondent no.1 – Appellant contended that no arbitration clause
was entered into by way of agreement between the parties and the
arbitration clause relied upon by respondent no.1 would not fit the
bill as the disputes that were to be adjudicated under that clause
related only to a Concession Agreement which was not entered into
– High Court held that there was a concluded contract between the
parties as the Letter of Award had been accepted by the appellant
and that since the arbitration clause forms a part of the bid document
between the parties, the arbitration clause would govern the parties
– On appeal, held: On perusal of the RFP clauses, a disclaimer at
the forefront of the RFP makes it clear that there was only a bid
process that was going on between the parties and there was no
concluded contract between them – Such a bid process would
subsume a Letter of Award to be issued by the Respondent No.1
with two further steps under the schedule to be gone into before the
draft Concession agreement finally becomes an agreement between
Respondent No.1 and the Special Purpose Vehicle that was
[2018] 13 S.C.R. 352
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constituted by the Consortium – In instant case, there was no absolute
and unqualified acceptance by Letter of Award – Some very
important steps had to be undergone before there could be an
agreement enforceable in law as a contract – Furthermore, even
assuming that there was an arbitration clause which governs the
parties, the said clause would wholly be inapt as it would only cover
the disputes between a Special Purpose Vehicle and the Respondent
No.1 arising from the Concession agreement not yet entered into,
and not between the Respondent No.1 and the appellant and
Respondent No.2 – Thus, impugned judgment of the High Court set
aside – Contract Act, 1872 – s.7.
Allowing the appeal, the Court
HELD: 1. On a conjoint reading of the Request For Proposal
(RFP) clauses, a few things become clear - (i) first and foremost
a Disclaimer at the forefront of the RFP makes it clear that there
is only a bid process that is going on between the parties and that
there is no concluded contract between the same (ii) it is equally
clear that such bid process would subsume a Letter of Award to
be issued by the Respondent No.1 with two further steps under
the schedule to be gone into before the draft Concession
Agreement finally becomes an agreement between Respondent
No.1 and the Special Purpose Vehicle that is constituted by the
Consortium for this purpose (iii) that through out the stage of
the bid process, the forum for dispute resolution is exclusively
with the Courts at Mumbai and (iv) that right uptil the stage of
the entering into the Concession Agreement, the bid process
may be annulled without giving any reason whatsoever by the
Respondent No.1.  [Para 13] [372-G-H; 373-A-B]
2. Under Section 7 of the Indian Contract Act, 1872 in order
to convert a proposal into a promise, the acceptance must be
absolute and unqualified.  It is clear on the facts of this case that
there is no absolute and unqualified acceptance by the Letter of
Award – two or three very important steps have to be undergone
before there could be said to be an agreement which would be
enforceable in law as a contract between the parties.
[Para 15] [373-G-H]
M/S PSA MUMBAI INVESTMENTS PTE. LTD v.  BOARD OF TRUSTEES
OF THE JAWAHARLAL NEHRU PORT TRUST
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SUPREME COURT REPORTS
[2018] 13 S.C.R.
3.  Appellant corre

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