Veritable Party to the Arbitration Agreement & Privity of Contract
Judgment dated 3.11.2025 of the High Court of Bombay in Arbitration Appeal Nos.47, 48 and 49 of 2013 of Rajasthan State Coop Oil Seed Growers Federation Ltd (Tilam Sangh) Vs. B.G. Shirke Construction Technology Pvt. Ltd and another
No Room for Re-Litigation : Bombay HC Message to Veritable Party
Sangh had engaged National Engineering Cooperative Ltd as PMC for setting up silos for storage and process of mustard seeds at three locations vide agreement dated 6.11.1987. PMC had engaged the respondent to carry out the works vide agreement dated 28.9.1989.
Shirke completed the works on 20.1.1990, completion certificate was issued on 31.10.1993. Shirke filed claims for payment and ultimately, filed suits. On section 8 AA application of PMC, the disputes were referred to arbitration.
The Arbitral Tribunal passed the award on 2.6.2003 with interest.
On 18.7.2013, the District Court, Pune, upheld the award and also ruled that the PMC merely an agent. Section 34 petition of PMC was allowed and tht of Tilam Sangh was rejected.
HELD that the agreement is not only dependent on NHEC role as a PMC as contracted by Sangh under the PMC Contract but also akes it explicitly clear that if Sangh or Sirke have any disagreement with NHEC, the disagreement would be amenable to arbitration under clause 23.1.4 of the agreement. Thus, the agreement expands and extrapolates the reach of arbitration jurisdiction in the agreement to Sangh too.
Veritable Party to the Arbitration Agreement & Privity of Contract
PMC Contract and the Agreement have a common subject matter. PMC is but a consultant of Sangh which had authorized PMC to appoint Shirke. The Agreement was authorized by Sangh. The Agreement being on a principal-to-principal basis can only mean that Shirke is not an agent of NHEC. PMC Contract is purely to enable NHEC to carry out the specific tasks assigned to NHEC by Sangh. The risk and reward from the project flow to Sangh. The only reward for NHEC is the fees and the incentive for timely completion. Therefore,
Therefore, the obligation to pay, which is a determination on merits, cannot be visited upon NHEC, which werely a PMC.
It cannot be contended that it is customary for a project management consultant to undertake the liability owed by the principal employer owed to the sub-contractors.
PMC Not Liable for Principal Employer’s Liability to Sub-contractor – Bombay HC Defines Boundaries in Arbitration
Bombay HC – A Judicial Analysis of Consultant’s Role, Liability – of Sub-Contractor, Veritable & Contractual Parties
Decoding PMC Liability to Sub-Contractor & Arbitration Scope : Bombay HC Ruling
Consultant, Principal Employer, Sub-Contractor – Accountability & Arbitration – Bombay HC Decision in B.G. Shirke case
Expanding Arbitration & Jurisdiction: Bombay HC on Privity and PMC Liability in B.G. Shirke case
