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Contract as envisaged u/s 7 of the contract act, 1872, must be necessarily presently to make the arbitration clause operational

To invoke the arbitration clause and make it operational, there must be a concluded contract between the parties as envisaged under Section 7 of the Contract Act, 1872, this remarkable stand was forwarded by Odisha HC in the writ appeal case of Forum Projects Private Limited, Kolkata v. Berhampur Development Authority [ARBA No.38 OF 2019], chaired by Justice K.R. Mohapatra, who dismissed the arbitration appeal, thereby disposing off the case and consequently the.

The brief summary of the relevant facts necessary for proper adjudication of this appeal are that pursuant to a ‘Request for Proposal’ (RFP) by the Respondent for development of Integrated Commercial – cum – Residential Complex in Berhampur, the Appellant had participated in the bid and became the highest bidder having quoted an amount of Rs.9.40 crore.

The project was decided to be undertaken on a Public Private Partnership (PPP) basis. Upon compliance of initial formalities and deposit of 25% of the bid amount, i.e., Rs.2.35 crore, the Respondent-BDA issued Letter of Intent (LOI) on 16.06.2008 in favour of the Appellant-Company requesting the Appellant to deposit the balance contractual bid amount within a period of 180 days and to execute the agreement.

But, the Appellant could not deposit the balance contractual bid amount of Rs.7.05 crore within a stipulated period of 180 days. Hence, the LOI issued in favour of the Appellant was cancelled vide Order No.250/BeDA Berhampur dated 03.03.2015. Assailing the same, the Appellant filed W.P.(C) No.8653 of 2015 before this Court. This Court by order dated 11.05.2015, while issuing notice in the matter, passed the following interim order. However, the Appellant could not deposit the said amount. Subsequently, the Appellant moved learned District Judge, Berhampur in Arbitration Case No.04 of 2018 under Section 9 of the Arbitration Act.

This appeal under Section 37 of the Arbitration Conciliation Act, 1996 (for short, the Arbitration Act’) has been filed against the order dated 18.10.2019 passed by learned District Judge, Ganjam, Berhampur in Arbitration Petition No.4 of 2018, whereby he dismissed a petition filed by the present Appellant-Company under Section 9 of the Arbitration Act, holding it to be not maintainable.

After examining all the submissions, arguments and evidences forwarded by the councils, the Hon’ble HC opined that:
…As has been discussed earlier there is no concluded contract between the parties. Thus, the Appellant could not have invoked the jurisdiction of learned District Judge under Section 9 of the Arbitration Act, more particularly when an interim protection in respect of the lis has already been granted by this Court in W.P.(C) No.8653 of 2015.

In lieu of the above made considerations and observations, Justice Mohapatra in this present case dismissed the arbitration appeal stating that:
learned District Judge has committed no error in holding the petition under Section 9 of the Arbitration Act not maintainable. Accordingly, this appeal being devoid of any 13 merit stands dismissed, but in the circumstances there shall be no order as to costs.

Written By: Prime Legal Law Firm
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