Isabella Mariam

The High Court of Gujarat, Single Bench of Chief Justice Sunita Agarwal held that multiple agreements forming part of the same commercial project can be referred to a single arbitration, and one arbitrator may adjudicate all related disputes. Hearing a petition under Section 11 of the Arbitration and Conciliation Act filed by Adani Enterprise Ltd., the Court observed that the General Conditions of Contract (GCC) and General Terms and Conditions (GTC) constituted integral components of five coal sale and purchase agreements and five corresponding service agreements between the parties. Noting that all ten contracts were governed by the two principal agreements executed on April 4, 2022, the Court appointed a sole arbitrator to resolve the disputes collectively, rejecting the respondent’s objection to multiple arbitrations.

The petitioner, a seller company, filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator to adjudicate disputes arising from coal sale and purchase agreements executed with the respondent, a buyer company. The agreements included a primary contract dated 4 April 2022 and related service agreements executed between 4 April and 6 April 2022 for the supply of 45,000 metric tonnes of imported steam coal on an EXW basis from Gangavaram Port. Each agreement incorporated the General Conditions of Contract (GCC) dated 4 April 2022, which contained an arbitration clause.

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According to the petitioner, the respondent was required to lift the contracted coal within 45 days of vessel discharge completion on 15 June 2022, but failed to do so despite reminders. The petitioner granted a two-month extension up to 30 September 2022 subject to conditions. When the respondent still did not fulfill its obligations, the petitioner invoked Clause 11 of the GCC relating to “Buyer’s Event of Default” and notified the respondent of the breach, seeking recovery and forfeiture of the earnest money deposit (EMD). The respondent denied the allegations. A notice invoking arbitration was issued on 10 February 2023 proposing a sole arbitrator, which the respondent declined, suggesting another name. After further communication failed to result in consensus, the petitioner approached the Court for appointment of an arbitrator.

The respondent contested the maintainability of a single petition covering ten separate contracts, arguing that each contract had its own arbitration clause and required separate proceedings. The petitioner contended that all agreements were interlinked and part of a single commercial transaction governed by the same GCC and General Terms and Conditions (GTC).

The Court recorded that “the dispute arose between the parties as stated in the petition is that as per the conditions under the agreements, the respondent had agreed to purchase the aforesaid quantity of coal from the petitioner on stockyard/port basis from Gangavaram Port.” The Court noted that “inspite of various reminders sent by the petitioner and follow up for lifting the contracted quantity and even making payment towards the price of contracted quantity along with the plot rent and interest arising out of the agreement, the respondent sought an extension of six months for lifting the cargo.”

The Bench stated that “the respondent vehemently argued on the maintainability of one writ petition pertaining to ten contracts… They contain five distinct arbitration clauses, five references and five arbitral tribunals are, thus, to be appointed in separate petitions.” However, it noted the petitioner’s rebuttal that “all sale and purchase contracts were made with reference to one parent (GCC) General Conditions to Coal Sale and Purchase contract dated 04.04.2022 and the same is an integral part of the sale and purchase agreements executed between the parties.”

The Court observed that “a careful reading of GCC dated 04.04.2022 and coal sale and purchase agreement entered into between 04.04.2022 and 06.04.2022 as also GTC dated 04.04.2022 along with service agreements… clearly indicate that all agreements are part of a single commercial project.” It recorded that “single notice was served invoking arbitration clause for 10 contracts… and no dispute was raised about invoking arbitration and appointment of sole Arbitrator to decide the dispute arising out of 10 contracts.”

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The Bench stated that “there is a consent to arbitrate and that one Arbitrator be appointed to decide all disputes arising out of 10 contracts which are governed by two mother contracts dated 04.04.2022.” Referring to Ameet Lalchand Shah v. Rishabh Enterprises and Mahanagar Telephone Nigam Ltd. v. Canara Bank, it noted that “multiple agreements entered into between the parties are part of a single commercial project” and “the intention of the parties must be inferred from the terms of the contract, conduct of the parties and correspondences exchanged.”

The Court directed that “Petition is ALLOWED. “Mr. K.A. Puj, Former Judge, High Court of Gujarat is appointed as sole Arbitrator to resolve the disputes between the parties in accordance with the Arbitration Centre (Domestic and International), High Court of Gujarat Rules, 2021. Both parties would be governed by said Rules.”

“Registry is directed to communicate this order to the sole arbitrator forthwith by speed post. No order as to costs. Consequently, all pending connected application/s, if any, stands disposed of.”

Advocates Representing the Parties

For the Petitioner: Dr. Abhisst K. Thaker, Advocate.
For the Respondent: Mr. Salil M. Thakore, Advocate.

Case Tittle: Adani Enterprise Ltd. v. M/s SMS Carbon and Minerals Pvt. Ltd.
Case No.: R/Petn. Under Arbitration Act No. 76 of 2023
Bench: Chief Justice Sunita Agarwal