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NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

ARBITRATION PETITION (CIVIL) NO.19 OF 2015

M/S. WEXFORD FINANCIAL INC. PANAMA …PETITIONER

VERSUS

BHARAT HEAVY ELECTRICALS LTD.  …RESPONDENT

O  R  D  E  R

T.S. THAKUR, CJI.

1. In this petition under Section 11(5) read with Section 11(12)

of the Arbitration and Conciliation Act, 1996, the petitioner prays

for  the  appointment  of  a  sole  arbitrator  for  adjudication  of

disputes  that  have arisen between the parties  in  relation  to  a

“Service Provider Agreement” executed between them.  The facts

in brief are as under:

2. The  petitioner-company  is  registered  under  the  Laws  of

Panama  with  its  Registered  Office  at  Microjacket-359003,  Roll

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64778, Frame 53, Panama and a representative office at C-204,

LGF,  Greater  Kailash-I,  New  Delhi-110048.   The  company,  it

appears, is engaged in providing liaison services to companies in

public as well as in private sector within and outside the country

including procurement of contracts from Government agencies for

its clients and providing facilitation of pre and post contractual

obligations  and  activities  agreed  upon  by  the  parties.  The

company claims a small percentage of the value of the contract

towards its fee for the Agency services rendered to its clients.   

3. The petitioner’s case is  that  M/s.  Mass Global  Investment

Company incorporated under the Iraqi Law and engaged in power

production  for  Kurdistan  Regional  Government  is  one  of  its

clients.   Its further case is that in January-February 2006, the

petitioner  introduced  respondent-Bharat  Heavy  Electricals

Limited, a public sector undertaking engaged in integrated power

equipment  plant  manufacturing  to  the  said  M/s  Mass  Global

Investment  company  in  connection  with  a  “Turnkey  Supply  of

Arbeel Power Plant” in the State of Kurdistan.  A contract was,

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according  to  the  petitioner,  signed  between  M/s  Mass  Global

Investment Company (“the MGIC” for short) and the respondent

on 6th May, 2006.  The petitioner claims that the respondent had

agreed to pay 1.1% of the contract value as agency fee for the

services rendered by the petitioner in connection with the said

Arbeel  project  for  the  respondent.   The  project  could  not,

however, materialize for no fault of the petitioner.  That did not

deter the petitioner from using its good offices to procure another

project  by  the  name  “Sulaymaniah  Gas  Power  Project”.   A

Memorandum of Agreement was signed between the petitioner’s

client and the respondent- Corporation on 20th January, 2007 for

execution of the said project which was followed by signing of a

Turnkey contract on 4th March, 2007.  The original contract value

of the project aforementioned was US $ 117,000,000 which was

later increased to US $ 118,181,750.  The petitioner asserts that

as in the case of Arbeel project, the respondent had agreed to

pay  1.1%  of  the  contract  value  towards  agency  fee  to  the

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petitioner  without  the  requirement  of  providing  any  further

service.  

4. The  petitioner  asserts  that  work  of  the  execution  of  the

project  aforementioned  started  and  was  undertaken  with  the

participation  of  the  petitioner,  in  the  course  of  which  the

petitioner  claims  to  have  rendered  various  services  to  the

respondent  for  facilitating  execution  of  the  project  including

logistic support at Amman/Jordon.  The petitioner submits that

the Service Provider Agreement in respect of Sulaymaniah Gas

Power Project was executed between the petitioner, on the one

hand,  and  the  respondent,  on  the  other,  on  11th May,  2010

providing for pre-contractual and post-contractual activities and

for payment of a fee equivalent to 1.1% of the total contractual

value within thirty days from the receipt of the payment of the

respondent-BHEL.  The  petitioner  alleges  that  progressive

payments were received by the respondent from the company but

no payment  towards  agency fee was realized  in  favour  of  the

petitioner.  After  several  reminders  and  persuasion,  the

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respondent-BHEL  is  said  to  have  disbursed  a  sum  of  US  $

3,60,282  only  to  the  petitioner  on  22nd June,  2010  for  the

services so rendered.  The petitioner claims the balance sum of

US  $  9,39,718  towards  agency  fee  after  adjustment  of  the

amount of US $ 3,60,282 towards the payment already received

by  it.  The  petitioner  submits  that  the  respondent  has  not

responded  to  several  e-mails  sent  by  the  petitioner  seeking

payment  of  the  balance  amount  and  that  by  a  final

communication  date  21st December, 2011  the  respondent  has

declined to make the payment of the balance on the ground that

the claim of the petitioner is baseless, unfounded and untenable.

The petitioner, in the above backdrop, asserts that disputes have

arisen  between  the  parties  in  relation  to  the  Service  Provider

Agreement executed between them, Clause 7, whereof provides

for  adjudication  of  the same by way of  Arbitration.   Clause 7

reads as under :

“Article 7 – Arbitration

7.1 Any  and  all  disputes  arising  between  the PARTIES in connection with the performance and/or

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interpretation of this Agreement shall be settled in an amicable manner.  In case the parties fail to arrive at a  settlement  within  Sixty  (60)  days  of  the  matter being referred by the aggrieved PARTY to the other, such disputes shall  be finally  settled in  accordance with  the  provisions  of  Indian  Arbitration  and Conciliation Act, 1996 and rules framed there under  

7.2 The Arbitrator (s) appointed shall have its seat in New Delhi and the arbitration proceedings shall be in English.  The Arbitrator (s) shall record reasons for the award.  Courts at New Delhi shall have exclusive jurisdiction  relating  to  adjudication  of  any  dispute which may arise between the PARTIES hereto.”

5. The petitioner has, in the light of the above, approached this

Court for appointment of an arbitrator and for reference of the

disputes for adjudication to him.   

6. The respondent-company has in its reply opposed the grant

of any relief to the petitioner  inter alia on the ground that the

notice for arbitration served upon the respondent is not a proper

one  and  that  the  claim  made  by  the  petitioner  is  barred  by

limitation.  The respondent’s further case is that the main service

which  the petitioner  was obliged  to  provide  under  the Service

Provider Agreement was to ensure that there was an amicable

settlement of the disputes between the respondent and the client

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and that the bank guarantee provided by the respondent for US $

15.7 million to MGIC was returned to it.  The petitioner having

failed  to  fulfill  that  obligation  under  the  agreement  was  not

entitled to claim any amount from the respondent.   

7. We  have  heard  learned  counsel  for  the  parties  at  some

length.  The material  facts  are not  in  dispute.   That  a  Service

Provider  Agreement  was  executed  between  the  parties  is

admitted.   That  Article  7  of  the  said  agreement  provides  for

settlement of the dispute in relation to the agreement by way of

arbitration is  also  not  in  dispute.   That  disputes  have actually

arisen between the parties in relation to the agreement is also

evident  from the  averments  made  in  the  pleadings.  The  only

method  for  determination  of  such  disputes  is  by  way  of

arbitration.   Whether  or  not  the  petitioner  has  provided  the

services envisaged under the agreement and, if so, whether the

said services were adequate and satisfactory are matters that can

be examined only by the Arbitrator.  So also the question whether

the  claim  made  by  the  petitioner  is  time  barred  cannot  be

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examined in the present proceedings and shall  have to be left

open to be raised before the Arbitrator.  There is, in that view, no

gainsaying  that  the present  petition  under  Sections  11(5)  and

11(12)  shall  have  to  be  allowed  with  appropriate  directions,

particularly  when  this  Court  is  concerned  primarily  with  the

question  whether  an arbitration  agreement  exists  between  the

parties and if so whether the disputes falling within the scope of

the  agreement  have arisen  for  determination.   Our  answer  to

both these questions being in the affirmative, the petitioner has

made  out  a  case  for  appointment  of  an  Arbitrator  and  for

reference of the disputes for adjudication to him/her.  

8. In the result, we allow this petition, and appoint Ms. Justice

Rekha Sharma, former Judge of the High Court of Delhi as a Sole

Arbitrator  for  adjudication  of  the  disputes  that  have  arisen

between the parties in relation to the Service Provider Agreement

executed  between  them.  We leave it  open  for  the parties  to

make their claims and counter claims in relation to the agreement

afore-mentioned before the Arbitrator.  All contentions otherwise

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open to the parties on facts and in law shall be open to be urged

before the Arbitrator. The petition, is accordingly, allowed with the

above directions leaving the parties to bear their own costs.   

9. Parties are directed to appear before the Arbitrator on 22nd

August, 2016.

.…………….……………….CJI.        [T.S. Thakur]

..…………………….………….J.        [R. Banumathi]

...………………..…….……….J.        [Uday Umesh Lalit]

New Delhi;  July 13, 2016

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