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TMI Blog2019 (9) TMI 1352X X X X Extracts X X X X X X X X Extracts X X X X ..... (respondent No.2) and Wintech Engineering Pvt. Ltd. in respect of the work order issued in favour of the petitioner under 'Guwahati Water Supply Project'. It is submitted that respondent No.2 and Wintech Engineering Pvt. Ltd. being joint venture were separate entities. The joint venture did not perform its work as per the agreement and therefore, the petitioner was constrained to issue several notices to overcome defaults /breaches /defects in the work done. As the work was not carried out as per the agreement and to the satisfaction, by notice dated 08.01.2018, contract was terminated. Under the terms of the agreement, more particularly providing for arbitration clause, the joint venture, vide letter dated 08.02.2018 proposed name of Hon'ble Retired Supreme Court Judge as sole Arbitrator to adjudicate the disputes. In response, the petitioner took a stand by letter dated 14.02.2018 that under the relevant clause of the agreement, only the petitioner had right to appoint Arbitrator and such right was not available to the joint venture and accordingly, Hon'ble Retired Supreme Court Judge was appointed as sole Arbitrator. 2.1 It is submitted that the Hon'ble Reti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tech JV is joint venture between Respondent No. 2 and M/s. Wintech Engineering Private Ltd. (Refer clause 1 on page 207 & also page 210 at clause 2). b. AquafilWintech JV is defined as 'Subcontractor' in the said contract (page 22) and it includes its legal successors and permitted assigns. c. AquafilWintech JV is duly incorporated entity and validly existing under the laws of India (Page 29, Clause 3.1.1) and having its registered office at 202-203, Shyamak Complex, Near Kamdhenu Complex, Polytechnic, Ahmedabad 380015 (Page 163 clause 2). d. The address of AquafilWintech JV for the purpose of communication as per the contract is (page 47, clause 16) is Plot No.682, UdyogVihar Phase-V. Gurgaon, Haryana-486001 whereas that of Respondent No.2 is 202-203, Shyamak Complex, Near Kamdhenu Complex, Polytechnic, Ahmedabad 380015. 2.7 It is submitted that there is no privity of contract between Petitioner and Respondent No.2 much less relationship of buyer [Section 2(d)] and supplier [Section 2(n)] as prescribed under the MSME Act. The relationship of buyer and supplier within the meaning of the Act is sine qua non for referring parties to the arbitration by Respondent No.1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to thwart the proper remedy invoked under the contract. Put it differently, Respondent No.2 is using proceeding before Respondent No.1 as tool to keep at bay arbitration invoked under the contract by Petitioner. 3. As against this, learned Advocate for respondent No.2 submitted that the petitioner has suppressed material facts to his knowledge as insofar as arbitration referred to by the petitioner to the Hon'ble Retired Supreme Court Judge, the same is ordered not to be proceeded, which is communicated by the sole Arbitrator vide communication dated 26.03.2018. Therefore, it cannot be said that reference is entered into by the sole Arbitrator. 3.1 It is submitted that the order of respondent No.1 is as per the provisions of the MSME Act, more particularly Section 18(3). It is submitted that once the order is passed under Section 18(3) of the Act then the provision of Arbitration and Conciliation Act, 1996 will apply to the dispute as if the arbitration was in pursuance of an arbitration agreement referred to in subsection 1 of Section 7 of that Act. It is submitted that if the impugned order is perused, the Council has already held that the matter is referred to the GCCI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 899 dated 3.11.2014 of Rs. 99,33,750/- from M/s. Aquafil Polymers Co. Pvt. Ltd. - Resp. No.2 herein and another performance Bank Guarantee bearing No.0007BG00147915 dated 24.10.2014 of Rs. 99,33,750/- was taken from M/s. Wintech Engineering Pvt. Ltd., receiving these Bank Guarantees and later on invoking the same by the petitioner itself shows that there was a privity of contract between the petitioner and the respondent No.2 and, therefore, also on this ground, the contention raised by petitioner in petition is devoid of any merits. It is submitted that by accepting the individual bank guarantee of Resp. 2 and thereby invoking the said bank guarantee, petitioner itself have recognized that there is a privity of contract between the petitioner and respondent no.2 and therefore at this stage it is not open for the petitioner to sate that there is no contract with Resp. no.2 and therefore the ground raised by the petitioner is devoid of any merits. 3.4 It is further submitted that if the scheme of the Act, 2006 is seen, then it can be clearly seen that any order passed under section 18(3) is a consequence of the order under section 18(2), meaning thereby section 18(3) is dependent u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween the principal employer and JWIL-Ranhill JV. Clause-20.1 provides for 'Amicable Settlement'. Clause-20.2 provides for 'Assistance of Export' for the purpose and Clause- 20.3 provides for 'Arbitration'. From the facts, it appears that in terms of the agreement, both the constituents of JV, viz. Aquafil Polymers Co. Pvt. Ltd. and Wintech Engineering Pvt. Ltd. have given their individual performance guarantees which, accepted by the petitioner. It is the case of respondent No.1 and not controverted by the petitioner that such performance bank guarantees were invoked by the petitioner. Therefore, apparently, the petitioner has also recognized individual existence of separate entities, i.e. Aquafil Polymers Co. Pvt. Ltd. and Wintech Engineering Pvt. Ltd. and by entering into the contract with JV, has accepted both the constituents as a JV. On account of disputes, the JV had issued notice to the petitioner. However, there was no reconciliation as provided under the agreement and therefore, JV invoked arbitration clause of the contract proposing a sole Arbitrator, to which the petitioner refuted the allegations and under Clause-20.3 concluded that the authori ..... 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