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Supreme Court hears UP Assembly appeal against Bombay HC order in TCS-initiated arbitration

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The Supreme Court today has heard the appeal by the Uttar Pradesh Legislative Assembly seeking clarification in an order passed by the Bombay High Court wherein the High Court has taken on record the proposed amendment in contract by the Tata Consultancy Services Ltd (TCS) which proposed the name of the Government of Uttar Pradesh through the UP Legislative Assembly Secretariat as party respondent for arbitration proceedings. 

During the hearing of the matter today before the bench of Chief Justice of India N.V. Ramana, and Justices A.S. Bopanna and Hrishikesh Roy, Solicitor General Tushar Mehta, appearing on behalf of the UP Legislative Assembly, submitted that he is seeking only the limited indulgence of the Court. He said he is not challenging the judgment but only seeking clarification in the order where the High Court added the State of Uttar Pradesh as a party respondent. 

CJI Ramana replied this was even resolved by negotiation. “You have not even raised an objection when the petitioner (Tata Consultancy Services Ltd) modified the parties.” 

SG- “Government is different and the legislature is different. Let Section 16 (Competence of arbitral tribunal to rule on its jurisdiction) in the Arbitration and Conciliation Act, 1996, be decided.” 

CJI- You want to replace the State of UP with the Govt of UP. Read Section 16, applicability. 

SG- Govt of Uttar Pradesh is not a signatory to the agreement but the Legislative Assembly is the party concerned. 

CJI- What is the prayer?

SG- To direct the tribunal not to adjudicate the claim. The learned arbitrator feels handicapped because of the High Court order. I am not challenging the order. But only seeking clarification. 

CJI- Is anybody appearing for the Vidhan Sabha? 

SG- I am appearing for Vidhan Sabha too. 

CJI- Question is who is a party to the agreement?

SG- Legislative Assembly

CJI- Now you are saying it has to be Assembly instead of State of UP. 

SG- Assembly can never be represented by the State of UP. It has to be represented by the Secretary. 

CJI- You were a party to the amendment which took place before the High Court. Whether the State is a party or not? What is the problem of Vidhan Sabha for amending the Cause Title? Let the arbitrator pass an award and later challenge that. 

CJI- At the outset, the petitioner submitted to raise those contentions before the learned arbitrator and the same shall be decided in accordance with law. 

The Court was hearing the appeal against the order of Bombay High Court which had appointed an arbitrator in a plea filed by the TCS under Section 11 of the Arbitration and Conciliation Act 1996. TCS entered into an agreement with the UP Government. The High Court had noted in its order that, “in this agreement, the signatory on behalf of the UP Government was one Pradipkumar Dube, the Principal Secretary of the UP Legislative Assembly Secretariat, Vidhan Sabha Marg, Hazratganj, Lucknow 226001.”

The Bombay High Court further noted, “The present petition is brought against the UP Legislative Assembly Secretariat itself. To a question from the Court as to whether, notwithstanding the signature on the document, such a petition would lie, my attention was invited to Article 187 of the Constitution of India. However, this only says that each House of the Legislature must have a separate secretariat. In any case, the question may not arise since on behalf of the petitioner a draft 18th November 2019 23-CARAP155-19.DOC amendment is tendered proposing to name the Government of Uttar Pradesh through the UP Legislative Assembly Secretariat as the respondent. I will accept this amendment. The draft amendment is taken on record and marked ‘X1’ for identification with today’s date. The amendment is allowed. The amendment is to be carried out within one week from today without the need of verification. The respondent waives service of the amended petition. A copy of the amendment has been given to the learned Advocate for the respondent in Court.”

Furthermore, the Court had held that the venue and seat of the arbitration will have to be in Mumbai and denied the jurisdictional objection raised by the UP Legislative Assembly based on territoriality. The respondent before the High Court “UP Legislative Assembly had cited Swastik Gases Pvt Ltd v Indian Oil Corporation and submitted that Mumbai would have no jurisdiction. Not only are exclusionary words missing from the contract but there is no jurisdiction or forum selection clause at all.

Also Read: Supreme Court grants a week’s time to Centre on plea challenging national minorities commission

But the High Court had said, “To insist that, in a matter such as this, where one party is from Uttar Pradesh and the other party is from Mumbai, that the only forum is one which neither of these two jurisdictions is clearly incorrect. The later decision of the Supreme Court in Brahmani River Pellets Ltd v Kamachi Industries Ltd3 considers the question of seat and venue and a conjoint reading of both Indus Mobile and Brahmani River Pellets Ltd leaves no manner of doubt that it is a contractual choice that will be given recognition notwithstanding the provisions of Section 20 of the Code of Civil Procedure 1908.”

The Bombay High Court had appointed Smt R.P. Sondur Baldota, former Judge of the Bombay High Court, as a sole arbitrator with the consent of the parties. 

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