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Bharat Sanchar Nigam Limited through Chief General Manager, B.S.N.L., Maharashtra Circle, Santacruz (W) v/s Siemens Financial Services Ltd. & Another

    Arbitration Appeal (L) No. 545 of 2015 In Arbitration Petition No. 1006 of 2013

    Decided On, 20 June 2016

    At, High Court of Judicature at Bombay


    For the Appellant: Neeta Vinay Masurkar, Advocate. For the Respondents: Shavez Mukari, Srinivas Atreya i/by India Law, Advocates.

Judgment Text

Anoop V. Mohta, J.

1. Being aggrieved by the judgment of the learned Single Judge of this Court, the Appellant/original Respondent No.2 (BSNL) – a third party to the arbitration agreement, has filed this Appeal under Section 37 of the Arbitration and Conciliation Act, 1996. The impugned judgment and order dated 28 October 2014 is passed in Arbitration Petition No. 1006 of 2013 whereby Respondent No.1's/Original Petitioner (Siemens) section 9 Application has been disposed of by passing the following order:

'i) That before or during arbitral proceedings or at any time after the making of the Arbitral Award but before it is enforced, Respondent No. 1 and Respondent No.2 are jointly and severally ordered and directed by this Court to forthwith handover possession of the said equipment mentioned at Exhibit 'E' to the Petition, to the Petitioner and/or its servants, agents and/or assigns from the premises at BSNL CACT Complex, Doorwani Nagar, Opp ITI, KR Puram, Bangalore 560 016, where the said equipment is known to be placed or wheresoever the said equipment may be lying and being.'

2. Siemens Original Petitioner (Respondent No.1 herein) had entered into a Master Lease Agreement (The Master Agreement) along with the Lease Schedule with Sai Infosystem (India) Ltd (SIS) (Original Respondent No.1)(Respondent No.2 herein). The equipment have been given possession as recorded in the Master Agreement on 5 January 2012. There exists an arbitration agreement having agreed clause of Court's jurisdiction at Bombay. Siemens had filed Section 9 Petition against Respondent No.2 and the Appellant (BSNL) for getting the possession of the equipment. The Appellant, specifically Maharashtra Circle, was not party to the arbitration agreement between the Respondents. The Appellant's counsel submitted that there was an independent agreement between SIS and BSNL on 7 October 2009. It is provided that ownership of the equipment installed by SIS at BSNL's above premises would pass on BSNL in case of default by SIS. The submission is that SIS left the contract during the lock-in-period, therefore, the ownership has been passed on to the Appellant-BSNL. SIS has prayed for possession of these equipments in the Arbitration Petition as filed on 17 September 2013. The Appellant, therefore, resisted the Arbitration Petition also on the ground of jurisdiction and on merits. The learned Judge, as recorded, has passed the impugned order against the Appellant. Hence, this Appeal on 10/07/2015.

3. The Appellant on 23 December 2013, itself terminated it's contract with SIS even before filing of the Arbitration Petition. The learned counsel appearing for the Appellant submitted that the arbitration proceedings between the Appellant and SIS is pending.

4. After hearing the parties and after going through the documents and the agreement, read and referred including award dated 15.04.2015 in the arbitration between Siemens and SIS, the learned Arbitrator has declared Siemens as the owner of the equipment and directed SIS to pay to Siemens an amount of Rs.5,98,63,881.38 p with interest.

5. SIS failed to make the payment, and cheques were dishonoured and as there was default in the Master Agreement. Siemens terminated the Master Agreement on 29 July 2013. The arbitration clause was invoked on 3 September 2013. Those equipment have been lying in the premises of the Appellant, in view of the agreement between SIS and BSNL. The Receiver has been appointed by the Court with a direction to take symbolic possession of the equipment. The Court Receiver took symbolic possession and made the inventory of the equipment on 9/10 December 2013 itself. The learned Judge ultimately passed final order on 28 October 2014. In the meantime, the learned Arbitrator passed the order in favour of Siemens on 15 April 2015, pending the Appeal. The filing of Appeal and the submissions so made, even if any, by the Appellant, in the background, after more than 135 days delay, which we have condoned by separate order, is, in no way, sufficient to disturb the order passed by the learned Single Judge specifically in view of above facts and the following reasons:


(a) There is no substance in the submission with regard to the jurisdiction specifically in view of the agreed clause of Court's jurisdiction at Mumbai, between Siemens & SIS, apart from the reason so given by the learned Judge in support of rejecting the issue of jurisdiction against the Appellant. We are in agreement with the said reasons. This Court has jurisdiction to entertain Section 9 Petition as filed by Siemens.


(b) There is no denial to the ownership of the equipment in question which is, as stated, and found to be in possession of Appellant though at Bangalore premises. This Court's appointed Receiver is in possession of the same. The learned Arbitrator, as recored, concluded the issue in favour of Siemens against SIS. The claim of Appellant, even if any, for and against SIS and/or Siemens, even if adjudicated in it's arbitral pending proceedings, still, that itself is not sufficient reason to interfere with the order passed by the learned Judge at this stage.

(c) The Appellant admittedly, though they have different office/Circle, are in possession of the equipment which are subject matter of the Master Agreement between the Respondents, apart from agreements of Appellant with SIS.


(d) The issue of passing interim order and/or direction and/or protective reliefs against the third person, in the present case, as stated, the Appellant being not party to the agreement of Siemens and the SIS is also of no assistance as the equipment involved in the present case which, are subject matter of the Master Agreement between the Respondents. The prior agreement, even if any, of Appellant with SIS would be considered separately in the separate arbitration proceedings, if any. In the present case, the Appellant's grounds so raised in the Appeal and the objection so raised in Section 9 Petition of Siemens are not sufficient to interfere with the reasoned order.


6. The Apex Court has dealt with the rights of third person and/or objection of third person, in arbitration proceedings in Taiyo Membrane Corporation Pty. Ltd vs. Shapoorji Pallonji and Company Ltd [ (2016) 1 SCC 736. ], by following [Chloro Controls (I) Pvt Ltd v. Severn Trent Water Purification Inc and anr., (2013) 1 SCC 641). In the present matter, we have to consider the submission of Appellant accordingly. At the instance of a party, though not party to the Arbitration Agreement in Taiyo Membrane Corporation Pty. Ltd (supra), based on the facts and the correspondences between the parties, the Supreme Court has maintained the invocation of the arbitration clause by the

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third person to appoint Arbitrator under Section 11(6) of the Arbitration Act. Therefore, depending upon the facts of the case, even the third party can be added or joined as party for appropriate reliefs and for it's effective implementation, specially in Section 9 Petition. There is no total bar, but subject to the interconnected and interdependent facts and the contract conditions between the parties. In the present case also, all the transactions are interdependent and interlinked. Hence, we have to hold that the present Arbitration proceedings so initiated and the order so passed is sustainable. There is no perversity or illegality in the order. Hence, the order: ORDER (a) The Appeal is dismissed. (b) There shall be no order as to costs.