High Court Dismisses Rajasthan State Co-op Oil Seed Growers Federation Ltd.'s Appeals in Arbitration Dispute Over Silo Construction Contracts - Upholds Arbitral Awards Favoring B.G. Shirke Construction Technology Pvt. Ltd. Despite Lack of Direct Privity


Summary of Judgement

The High Court of Judicature at Bombay dismissed three arbitration appeals filed by Rajasthan State Co-op Oil Seed Growers Federation Ltd. (Tilam Sangh) challenging orders of the District Court Pune that upheld arbitral awards in favor of B.G. Shirke Construction Technology Pvt. Ltd. The dispute arose from construction contracts for silo facilities where Tilam Sangh engaged National Heavy Engineering Co-operative Ltd. (NHEC) as Project Management Consultant, who subsequently engaged Shirke as contractor. The core issue was whether Tilam Sangh could be held liable under arbitral awards despite lack of direct privity of contract with Shirke. The court held that the arbitral tribunal had jurisdiction to bind Tilam Sangh as principal, and the District Court's modification of the award to absolve NHEC while maintaining Tilam Sangh's liability was permissible under Section 34 of the Arbitration and Conciliation Act, 1996. All three appeals were dismissed with costs.


Headnote

Arbitration and Conciliation Act, 1996 (the Act) -- Section 37 -- Section 34 -- Section 8 -- Privity of Contract -- Arbitral Tribunal Jurisdiction -- Project Management Consultant -- Principal-Agent Relationship -- Modification of Arbitral Award -- Held: The High Court found no jurisdictional error in the arbitral tribunal's decision to hold the principal liable despite lack of direct privity -- The court upheld the District Court's modification of the arbitral award to absolve the agent while maintaining liability against the principal -- The appeals were dismissed with costs -- Para 1, Para 5, Para 7, Para 9, Para 10, Para 11, Para 12, Para 13, Para 14, Para 15, Para 16, Para 17, Para 18, Para 19, Para 20, Para 21, Para 22, Para 23, Para 24, Para 25, Para 26, Para 27, Para 28, Para 29, Para 30, Para 31, Para 32

Case Title: High Court Dismisses Arbitration Appeals Upholding Arbitral Award Against Principal in Project Management Contract Dispute - No Jurisdictional Error Found in Tribunal's Decision

Citation: 2025 LawText (BOM) (11) 23

Case Number: Arbitration Appeal No. 47 of 2013 with Arbitration Appeal No. 48 of 2013 with Arbitration Appeal No. 49 of 2013

Advocate(s): Rajiv Narula, Tarang Jagtiani, Thangiani, Narula & Associates, Sukand Kulkarni, Archita Gharat, Prabhakar M. Jadhav

Date of Decision: 2025-11-03


Final Decision

The High Court dismissed all three arbitration appeals with costs, upholding the District Court's orders that maintained the arbitral award against Tilam Sangh while absolving NHEC from liability