Bombay HC Holds No Arbitration Without Specific Clause Incorporation, Rejects Plea Against Tata Projects

On 17 June, the Bombay High Court held that an arbitration clause contained in a principal contract cannot be imported into a subcontract unless the subcontract specifically incorporates the arbitration clause itself.

Justice Arun R. Pedneker dismissed a Commercial Arbitration Application filed by Apurvakriti Infrastructure under Section 11 of the Arbitration and Conciliation Act against Tata Projects Ltd, holding that no arbitration agreement existed between the parties in relation to a Rs. 58.27 crore subcontract for ballastless track work in the Navi Mumbai Metro Rail Project. He held:

“Considering the judgements as noted above in M. R. Engineers And Contractors Private Limited (supra), NBCC (India) Limited (supra) and Hirani Developers (supra) and Inox Wind Limited (supra) and also considering the tender document, this Court holds that Clause 31 of the General Conditions of Contract signed between the Respondent No.1 and CIDCO is not incorporated in the Tender-cum-Work Order dated 2 March, 2015 executed between the Respondent No.1 and the Applicant. In absence of arbitration agreement between the parties, it would not be possible for this Court to refer the disputes to arbitration.”

The dispute arose from a work order dated 2 March 2015, under which Apurvakriti Infrastructure was engaged by Tata Projects Ltd as a subcontractor for construction of ballastless track work on the Belapur–Pendhar corridor of Navi Mumbai Metro Line 1. The subcontract formed part of a larger project awarded by the City Industrial and Development Corporation (CIDCO) to the AnTaCs consortium, of which Tata Projects Ltd was a member.

Apurvakriti Infrastructure completed the work and was issued a completion certificate on 4 December 2023. It thereafter raised claims seeking payment of alleged outstanding dues and invoked arbitration in 2025, seeking appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act.

The subcontractor argued that the work order incorporated CIDCO's contractual documents, including the General Conditions of Contract (GCC), and therefore Clause 31.3 of the GCC, which contained the arbitration clause, stood incorporated by reference.

Rejecting this contention, the Court relied on Supreme Court precedents including M.R. Engineers and Contractors Private Limited, NBCC (India) Limited, Hirani Developers and Inox Wind Limited. It held that incorporation of terms from a principal contract does not automatically import the arbitration clause unless there is a specific reference to it.

Further, the Bench noted that while the work order referred to CIDCO documents, it did not specifically incorporate the arbitration clause or indicate an intention to bind the subcontractor to arbitration under the principal agreement.

Accordingly, the High Court dismissed the application, holding that no arbitration agreement existed between the parties.