Gujarat Gas Limited v. Vedanta Limited & Ors.

1. Appellant/Gujarat Gas Limited impugns order dated 12.05.2022 passed in OMP (I)(COMM) 125/2022, titled Gujarat Gas Limited vs.

SANJEEV SACHDEVA, J. (ORAL) 2022:DHC:3261-DB FAO(OS) (COMM) 179/2022 2 Vedanta Limited & Ors.. By order dated 12.05.2022, interim measures sought by the Appellant under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act), have been declined and the petition has been dismissed at the pre-notice stage.

2. Appellant/Gujarat Gas Limited had issued a notice dated 28.07.2022 invoking the arbitration clause contained in Master Gas Sale Contract read with Gujarat Gas Limited Gas Sale Contract, both dated 30.05.2001. Said notice was issued to Respondent Nos.[1] to 4.

3. Appellant has also issued another notice dated 05.08.2022 invoking arbitration agreement contained in the Master Gas Sale Contract dated 30.05.2001 read with Co-ordination Agreement dated 21.09.2001. Said notice dated 05.08.2022 has been issued only to Respondent No.4 i.e. Apraava Energy Private Limited (formerly CLP India Private Limited) as the Co-ordination Agreement dated 21.09.2001 is between the Appellant and said Respondent.

4. The Arbitration Clause contained in Master Gas Sale Contract dated 30.05.2001 reads as under:- “ARTICLE 11 DISPUTES (a). Any unresolved dispute, difference or claim arising out of or in relation to this Contract shall be settled by arbitration in accordance with the Indian Arbitration and Conciliation Act 1996 (the “Act”). To the extent that the Act allows the Parties discretion to choose procedures applicable to the conduct of the arbitration, the UNCITRAL Arbitration Rules then in force shall apply. (b). The Arbitral tribunal shall consist of three arbitrators. In the case of a dispute between the Sellers FAO(OS) (COMM) 179/2022 3 (or any of them) and both Buyers as to a common issue under this Contract the Sellers shall appoint one arbitrator and the Buyers shall appoint one arbitrator. In the case of a dispute between the Sellers (or any of them) and one Buyer only under this Contract the Sellers shall appoint one arbitrator and that Buyer shall appoint one arbitrator. In the case of a dispute between the Buyers only under this Contract each Buyer shall appoint one arbitrator. The two arbitrators so appointed shall by agreement appoint the third arbitrator. In default of agreement within fourteen (14) days one Party to the dispute may require the appointment of the third arbitrator, in which case the third arbitrator shall be appointed by the ICC in Paris. (c). Where the amount in dispute, or quantum of loss or damage claimed, is in excess of United States Dollars one million (US$1,000,000) the third arbitrator shall not be a national or citizen of the country in which any Party to the dispute or its ultimate parent is incorporated but shall be from a common law jurisdiction. (d). If any of the arbitrators fails or is unable to act for a continuous period of one (1) month, his successor shall be appointed by the Party or person who originally appointed such arbitrator. If such Party fails to appoint a replacement arbitrator within one (1) month, the other Party may request the ICC in Paris to appoint a replacement. (e). The decision of the Arbitral tribunal, and, in the case of difference among the arbitrators the decision of the majority, shall be final and binding upon the parties to the dispute. (f). The right to arbitrate disputes and claims under this Contract shall survive the termination of this Contract. (g). The venue of arbitration proceedings conducted under this Contract, unless the Parties otherwise agree, shall be New Delhi and proceedings shall be conducted in the English language. FAO(OS) (COMM) 179/2022 4 (h). Assessment of the costs of arbitration including incidental expenses and liability for the payment thereof shall be at the discretion of the arbitrators. (i). The Parties shall continue to perform their respective obligations under this Contract notwithstanding any dispute. (j). In the case of any dispute under the Gas Sales Contracts (but not this Contract) which contains a common dispute of fact or law under the other Gas Sale Contract, the Parties shall at the request of any of them seek to consolidate any arbitral proceedings under the Gas Sale Contracts so far as the rules of such proceedings allow.”

5. Article 17.[4] contained in the Gujarat Gas Limited GSC dated 30.05.2001 reads as under:- “17.[4] Composition of Arbitral Tribunal and Appointment of Arbitrators (a) The Arbitral tribunal shall consist of three arbitrators. Each Party to the dispute shall appoint one arbitrator. Where two or more Sellers are co-parties to an arbitration they shall collectively be entitled to appoint one arbitrator only. The two arbitrators appointed by the Parties shall by agreement appoint the third arbitrator. In default of agreement within fourteen (14) days one Party to the dispute may require the appointment of the third arbitrator, in which case the third arbitrator shall be appointed by the ICC in Paris. (b) Where the amount in dispute, or quantum of loss or damage claimed, is in excess of US$1,000,000 (United States Dollars one million) the third arbitrator shall not be a national or citizen of the country in which any Party or its ultimate parent is incorporated but shall be from a common law jurisdiction.” FAO(OS) (COMM) 179/2022 5

6. Clause 16.[2] (c) of the Co-ordination Agreement dated 21.09.2001 entered into between Gujarat Gas Company Ltd. and Gujarat Powergen Energy Corporation Limited reads as under:- “16.[2] Dispute Resolution x x x

(c) The arbitral tribunal shall consist of three arbitrators. Each Party shall appoint one arbitrator. The two arbitrators appointed by the Parties shall, by agreement, appoint the third arbitrator. In default of agreement within fourteen (14) days, either Party to the dispute may require the appointment of the third arbitrator, in which case the third arbitrator shall be appointed by the ICC in Paris. Where the amount in dispute, or quantum of loss or damage claimed is in excess ofUS$1,000,000, the third arbitrator shall not be a national or citizen of the country in which any Party or its ultimate parent is incorporated but shall be from a common law jurisdiction.”

7. Learned counsels for the parties, under instructions, submit that disputes as well as interim measures sought by the Appellant be referred to an Arbitral Tribunal to be constituted with the consent of parties.

8. Appellants have nominated Mr. Justice R.V. Raveendran, former Judge of the Supreme Court as their nominee Arbitrator in respect of the two notices invoking arbitrations referred to hereinabove.

9. Learned counsel appearing for Respondent Nos.[1] to 3 and Respondent No.4 submit that though some of their issues may be FAO(OS) (COMM) 179/2022 6 different, however, they have no objection to nominating a common Arbitrator on their behalf. Accordingly, they have nominated Mr. Justice A.K. Sikri, former Judge of the Supreme Court as their nominee Arbitrator.

10. Since there are two separate notices invoking arbitration in respect of the two separate set of contracts, one, between the Appellant and Respondent Nos.[1] to 4 and the other, between the Appellant and Respondent No.4, it is agreed between the parties that both the arbitral proceedings be adjudicated by the same Arbitral Tribunal and the proceedings be consolidated as common issues of fact and law may arise in both the proceedings.

11. In view of the above, the appeal is disposed of constituting an Arbitral Tribunal in terms of the arbitration clause between the parties. Tribunal shall comprise of Mr. Justice R.V. Raveendran and Mr. Justice A.K. Sikri, both former Judges of the Supreme Court. The third Arbitrator shall be appointed by the two arbitrators in terms of the arbitration clause contained in Article 11 of the Master Gas Sale Contract dated 30.05.2001.

12. It is clarified that Appellant shall be at liberty to move an application under Section 17 of the Act before the Arbitral Tribunal so constituted and the Arbitral Tribunal shall decide the application in accordance with law without being influenced by anything stated in the impugned order passed by the learned Single Judge.

13. It is clarified that all rights and contentions of the parties are reserved and all issues inter se the parties would be left open to be FAO(OS) (COMM) 179/2022 7 decided by the Arbitral Tribunal while considering the proceedings, inter alia, under Section 17 of the Act as well.