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Bombay HC – Suppression of Insolvency in the tender process amounts to fraud invalidating the contract and consequently the arbitral award.

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On 31.5.2021, a JV Agreement between Om Construction (proprietary) and Nice Projects (company) was executed.  Another JV for the share of Om Construction at 75% and Nice Projects at 25% was executed on 2.7.2021.

On 15.7.2021, the respondent JV was awarded the contract for Rs.111,40,31,358/-.   On 30.5.2022, the date for completion of the work expired.

On 7.6.2022, the petitioner extended time till 14.7.2022, thereafter issued show cause notice and terminated the contract on 26.8.2022.

The respondent filed section 11 application for appointment of Arbitrator and disclosed that Nice Projects was undergoing CIRP under IBC.

On 12.12.2022, the High Court appointed the Sole Arbitrator.

The claim of the Respondent for Rs.19,82,79,601/- with 12% interest was allowed vide Arbitral Award dated 18.6.2024.

The Award is challenged and one of the grounds is that the purchase order, contract, arbitration agreement and the Award are vitiated by fraud committed by the respondent in not disclosing CRIP initiated against Nice Projects.

By the order dated 12.2.2021, the CIRP was initiated against JV Nice Projects and the JV Agreement dated 31.5.2021 was signed by the Director who had no authority.  CIRP was suppressed inspite of the fact that tender required such declaration about pendency of insolvency proceedings.  On 11.6.2021, Nice Projects falsely submitted declaration that it was not undergoing CIRP.

Judgment dated 19.1.2026 of the High Court of Bombay in Commercial arbitration Petition (L) No.28685 of 2024 of Hindustan Petroleum Corporation Ltd   Vs.   Om Construction – Nice Projects Ltd. 

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