Multiple Agreements Forming Part Of Same Commercial Project Can Be Referred To Single Arbitration: Gujarat High Court

The Bench of Chief Justice Sunita Agarwal, while hearing a petition u/s 11 of the A&C Act, moved by Adani Enterprise Ltd. (“Petitioner”) held that the General Condition of Contracts (“GCC”) and the General Terms and Conditions (“GTC”) are an integral part of the five coal sale and purchase agreements, and five service agreements respectively. The ten contracts entered into between the parties are governed by these two contracts dated 0404.2022.

The Court relied upon Ameet Lalchand Shah and others v. Rishabh Enterprises and another, (2018), where the Supreme Court appointed a single arbitrator referring all the agreements to Arbitration after observing that these multiple agreements form a single commercial project, and the dispute can be adjudicated by referring all the arbitration agreements to Arbitration.

The Court also relied upon Mahanagar Telephone Nigam Ltd v. Canara Bank and others (2020), where the Supreme Court had observed that the intention of the parties to settle their dispute via Arbitration is only required to be ascertained, and the Arbitration is not required to be in a particular format. The interpretation of a commercial contract should be done by adopting a common-sense approach, and a pedantic and legalistic interpretation should not render the contract redundant.

The dispute between Adani Enterprise Ltd. (“Petitioner”) and SMS Carbon and Minerals Pvt Ltd. ("Respondent”) arose as the Respondent agreed to purchase 45000 MT of imported steam coal from the Petitioner on a stockyard basis from Gangavaram Port. Under Clause 9 of the Contract, the buyer was required to lift the coal within 45 days from the date of completion of vessel discharge (“free period”). If the buyer does not lift the coal within the free period, the seller will not be responsible for any loss.

The SMS Carbon And Minerals Pvt Ltd. (“Respondent”) failed to lift the coal during the free period and sought an extension from Adani Enterprise Ltd. (“Petitioner”). Subsequently, a two-month extension was granted. However, the Respondent failed to lift the coal from the Gangavaram Port. Thereafter, Adani Enterprise Ltd. (“Petitioner”) issued a notice dated 10.02.2023 invoking the arbitration clause 17 under the GCC proposing the name of the sole arbitrator. SMS Carbon And Minerals Pvt Ltd. ("Respondent”) replied vide letter dated 11.03.2023, disagreeing on the proposed name of the Arbitration. As no consensus could be achieved between the parties, the Petitioner filed the present section 11 petition under the A&C Act, 1996.

The bench, after perusing the GCC and GTC dated 04.04.2022, observed that these agreements pertained only to 20,000 MT of the contracted coal, and other corresponding agreements were executed for different quantities between 05.04.2022 and 06.04.2022.

The bench, to avoid multiplicity of proceedings, and noting that these agreements form part of the same commercial project, allowed the Section 11 petition and appointed a sole arbitrator to adjudicate the dispute between the parties.

Case Name: Adani Enterprise Ltd. v. M/s SMS Carbon And Minerals Pvt Ltd.

Case Number: C/ARBI.P/76/2023

Counsels For The Petitioner: Dr Abhisht K Thaker, Adv.

Counsels For The Respondents: Mr Salil M Thakore, Adv.

Click Here To Read/Download The Order 

Citation : 2025 LiveLaw (Guj) 185