Briefcased.

in
Case Name: Imc Limited vs Board Of Trustees Of Deendayal
Case Year: 2018

“If a strong case is made out for impleadment, it is always open for the Courts
and Tribunals to order impleadment and to give an opportunity before deciding
the main claim.”

[Case Brief] Imc Limited vs Board Of Trustees Of Deendayal

Case name: Imc Limited vs Board Of Trustees Of Deendayal

Case number: SPECIAL CIVIL APPLICATION NO. 5694 of 2018

Court: THE SUPREME COURT OF INDIA

Bench: HONOURABLE THE CHIEF JUSTICE MR. R.SUBHASH REDDY,

Decided on: 28 September, 2018

Relevant
Act/Sections:

➢ BRIEF FACTS AND PROCEDURAL HISTORY:

1. The 1st respondent Kandla Port Trust decided to develop Berth Nos. 13 to 16 by private
participation on Build, Operate and Transfer ("BOT" basis). Acting on the Resolution, notice
inviting tenders was published inviting bids from the prospective parties for the respective
berths in two-stage process for selection.
2. The appellant - M/s. IMC Limited submitted its bid for licence of Berth No. 15. The bid of
the appellantCompany was accepted and a Letter of Intent for Award of Concession was

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Case Name: Imc Limited vs Board Of Trustees Of Deendayal
Case Year: 2018

issued to M/s. IMC Limited on 07.12.2010. Vide communication dated 27.01.2011, the
appellant-Company was conveyed by the 1st respondent - DPT that it was required to form a
Special Purpose Vehicle ("SPV").
3. The appellant - IMC constituted Special Purpose Vehicle (SPV) i.e. JRE Infra Private
Limited - the 2nd respondent herein (hereinafter referred to as "JRE" or "SPV") which has
executed the Concession Agreement with the Concessioning Authority. The Concession
Agreement has an arbitration clause, as a part of the dispute resolution mechanism. Disputes
having arisen, the 1st respondent alleging breach of agreement, invoked arbitration clause and
initiated arbitration proceedings.
4. The 2nd respondent-JRE filed Statement of Defence in the arbitration proceedings and also
preferred Counter Claim. On completion of pleadings, before recording evidence, the 1st
respondent - DPT moved an application for impleadment of appellant - IMC as a party to the
arbitration proceedings.
5. The learned Arbitral Tribunal, by considering the respective pleas of the 1st respondent and
2nd respondent and by considering the clauses in the agreement, by prima-facie accepting the
case of the 1st respondent, allowed the application for impleadment.
6. The appellant-Company, which responded to Request for Qualification ("RFQ") and Request
for Proposal ("RFP"), has filed the Special Civil Application under Articles 226 and 227 of
the Constitution of India with the prayer, inter alia, that an appropriate Writ, order or
direction may be issued for quashing and setting aside the order dated 14.03.2018 (with the
reasons as recorded on 26.03.2018) passed by the learned Arbitral Tribunal on various
grounds.

➢ ISSUE BEFORE THE COURT:

1. Whether any prejudice is caused to the party which has complained that it was ordered to be
impleaded without notice?
2. Whether the dispute raised by the respondent in the suit is incapable of settlement through
arbitration
3. Whether Appellant entitled for relief on ground that single judge had committed error in
dismissing petition filed by Appellant

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Case Name: Imc Limited vs Board Of Trustees Of Deendayal
Case Year: 2018

➢ RATIO OF THE COURT

1. On the issue that whether any prejudice is caused to the party which has complained that it
was ordered to be impleaded without notice, the court opined that no prejudice is caused to
the appellant. Whether notice is required to be issued to a party before ordering impleadment,
or not, is a matter which depends on facts and circumstances of each case. If a strong case is
made out for impleadment, it is always open for the Courts and Tribunals to order
impleadment and to give an opportunity before deciding the main claim. The order of the
learned Arbitral Tribunal cannot be said to be not in conformity with law merely on the
ground that appellant was not issued notice before passing the order of its impleadment. Even
the learned Single Judge has also rightly rejected the plea of the appellant for quashing the
order of the learned Arbitral Tribunal on the aforesaid ground.
2. The court pointed out that the appellant, as an applicant, responded to the RFQ and as it was
found to be qualified, RFP was furnished to it and in response to the same, bid documents
were submitted by the appellant. Various clauses in the RFP make it clear that the appellant,
as an applicant, has incorporated the Concessionaire, i.e. 2nd respondent as a Special Purpose
Vehicle to implement the project and 'applicant' is defined even in the Concession
Agreement, namely, "M/s. IMC Limited", i.e. the appellant herein.
3. It later observed that the very terms of the Concession Agreement itself clears that the
obligations are created on the appellant - applicant by the 2nd respondent Concessionaire of
which management and control is fully that of the appellant. In addition to the same, the
appellant - Company has also addressed a letter dated 28.04.2011 accepting the terms and
conditions of the Concession Agreement entered into between the first respondent - DPT and
the 2nd respondent - Special Purpose Vehicle.
4. The court observed that while interpreting a document, the document as a whole is to be
considered, but by not referring to one single clause in such document and, further intention
of the parties has to be culled out by looking at all the terms and conditions of the document.
Hence, from a composite reading of all the terms and conditions of the Concession
Agreement, the appellant cannot be termed as a third party and as such, cannot be impleaded
in arbitral proceedings.
5. It was stated by the court that there is nothing in law which prohibits an Arbitral Tribunal
from lifting the corporate veil on the basis of doctrine of alter ego. The Arbitral Tribunal has
a right to take up all disputes which a Court can undertake, except certain disputes generally

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Case Name: Imc Limited vs Board Of Trustees Of Deendayal
Case Year: 2018

treated as non-arbitrable, viz. (i) patent, trade marks and copyright, (ii) anti-trust/competition
laws, (iii) insolvency/winding up, (iv) bribery/corruption, (v) fraud, (vi) criminal matters.
6. It was later added that The Arbitration and Conciliation Act, 1996, does not make any
provision excluding any category of disputes treating them as non-arbitratble but the Courts
have held that certain kinds of disputes may not be capable of adjudication through means of
arbitration. In the instant case, there is no dispute about the arbitration agreement inasmuch as
there is a specific arbitration clause in the partnership deed.
7. The court disagreed with the submission made by Shri S.N.Soparkar, learned Senior Counsel
for the appellant, that the learned Arbitral Tribunal has no jurisdiction to examine the issue by
lifting the corporate veil and opined that on facts, no case is also made out to examine the
claim of alter ego by lifting the corporate veil. Whether a case is made out for impleading a
third party by applying the doctrine of lifting of corporate veil, is a matter which is to be
examined having regard to facts of each case and keeping in mind the concept of group
Companies.
8. The court observed that various clauses in the Concession Agreement also create rights and
obligations not only against parties to the agreement but also against the appellant-Company,
which is a holding Company of the 2nd respondent – SPV and it cannot be said that the
appellant-Company is a third party, has nothing to do with the disputes which have arisen
between the 1st and 2nd respondents and has no obligations to the contract
9. In view of the clauses in the Concession Agreement and further, having regard to plea of the
1st respondent - DPT that appellant is an alter ego of the 2nd respondent, the plea of the
appellant that prelude to a contract cannot be confused with the contract itself, also would not
render any support to accept the case of the appellant.
10. The court disapproved of the stand adopted by some of the High Courts that any order passed
by the arbitral tribunal is capable of being corrected by the High Court under Article 226 or
227 of the Constitution of India.
11. The court referred to Lalitkumar V. Sanghavi And Another v. Dharamdas V. Sanghavi And
Others and opined that the object of minimizing judicial intervention while the matter is in
the process of being arbitrated upon, will certainly be defeated if the High Court could be
approached under Article 227 of the Constitution of India or under Article 226 of the
Constitution of India against every order made by the arbitral tribunal. it is necessary to
indicate that once the arbitration has commenced in the arbitral tribunal, parties have to wait
until the award is pronounced unless, of course, a right of appeal is available to them under
Section 37 of the Act even at an earlier stage.
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Case Name: Imc Limited vs Board Of Trustees Of Deendayal
Case Year: 2018

➢ DECISION HELD BY COURT:

1. The Court held that the learned Single Judge has not committed any error in dismissing the
petition filed by the appellant herein..
2. Appeal accordingly dismissed, with no order as to cost.

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