Simplified Explanation of the Judgment
In a commercial dispute involving a government contract, the Patna High Court dismissed a request for appointment of an arbitrator filed under Section 11(6) of the Arbitration and Conciliation Act, 1996. The request was made by one company, REW Contracts Pvt. Ltd., a constituent of a joint venture (JV), without proper representation or authorization by the JV itself.
The petitioner, REW Contracts Pvt. Ltd., filed this case seeking court intervention to appoint an arbitrator after a dispute arose over contracts awarded by Bihar State Power Transmission Company Ltd. (BSPTCL). These contracts, signed in 2019, involved the supply, installation, and maintenance of power transformers.
According to the petitioner, out of seven contracts awarded, four were completed. The remaining were delayed due to the COVID-19 pandemic and price escalation. The agreement included an arbitration clause outlining a specific procedure: the Managing Director of BSPTCL would provide a panel of five arbitrators, from which each party would select one, and those two would select a third arbitrator.
However, the petitioner bypassed this process. It unilaterally appointed a retired Chief Engineer from CPWD as sole arbitrator, citing that the other party had failed to respond within the stipulated 60-day period.
The respondent, BSPTCL, objected on multiple grounds:
- The arbitration request was not filed by the joint venture itself but by one of its constituents.
- As per the agreement and Indian arbitration law, only a party to the arbitration agreement can initiate such proceedings.
- The procedure for appointment of an arbitrator was not followed.
The Court thoroughly examined the arbitration clause and agreed with BSPTCL. It held that:
- The contract was executed with the joint venture (JV) comprising REW Contracts Pvt. Ltd. and A.K. Das Associates Ltd.
- A JV is a distinct legal entity separate from its constituents.
- Only the JV could initiate arbitration—not one of its partners individually.
- Although REW Contracts argued that it held a power of attorney from the lead partner (A.K. Das Associates), the Court noted that the authorization was issued to an individual (Mr. Kunal Jindal, Director), not to REW Contracts Pvt. Ltd. as a legal entity.
- Moreover, the power of attorney was issued by one partner, not by the JV itself.
The Court concluded that REW Contracts Pvt. Ltd. lacked the legal standing to file the arbitration request. It stressed that procedural compliance in arbitration is mandatory under the 1996 Act.
However, the Court left the door open for the JV itself to file a valid arbitration request in accordance with the agreement and applicable law.
Significance or Implication of the Judgment
This judgment is a cautionary reminder for businesses and contractors involved in joint ventures: any legal action—including arbitration—must be initiated by the JV itself, not by an individual constituent company. It emphasizes the importance of respecting legal procedures and the separate legal identity of joint ventures.
The ruling safeguards contractual discipline and clarifies that technical errors in party representation can invalidate an entire arbitration proceeding. For public sector entities, it reinforces the need to respond promptly and properly to arbitration notices but also highlights their protection from improperly initiated claims.
Legal Issue(s) Decided and the Court’s Decision with reasoning
- Can a constituent company of a joint venture independently file an arbitration request under Section 11(6)?
❌ No. Only the JV, as a separate legal entity, has the locus standi to initiate arbitration under the contract. - Is the unilateral appointment of an arbitrator by one party valid if the other party does not respond in 60 days?
❌ No, not when the appointing party itself lacks legal standing to invoke arbitration under the agreement. - Was there proper authorization via power of attorney?
❌ No. The authorization was from one partner to an individual—not from the JV itself, nor did it authorize REW Contracts as an entity. - Does the decision bar the JV from initiating arbitration in future?
✔️ No. The judgment specifically states that the JV may still seek arbitration subject to compliance.
Judgments Relied Upon or Cited by Court (with citations)
- New Horizons Ltd. v. Union of India, (1995) 1 SCC 478
Case Title
M/s REW Contracts Pvt. Ltd. (in JV with A.K. Das Associates Ltd.) vs. Bihar State Power Transmission Co. Ltd. & Ors.
Case Number
Request Case No. 44 of 2022
Coram and Names of Judges
Hon’ble the Chief Justice K. Vinod Chandran
Names of Advocates and who they appeared for
For the Petitioner:
- Mr. Ankit Katriar, Advocate
For the Respondents:
- Mr. Anand Kumar Ojha, Advocate
Link to Judgment
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