Reference To Two Contracts in Single Letter Does Not Constitute Composite Contract: Calcutta High Court

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Facts

The present petition was concerned with the two contracts signed between the Petitioner and the Respondent regarding the construction of the Fish Marketing Complex and post-harvest operation and cold chain at Nalban Fisheries Project. The dispute which arose in the following case is whether the two different contracts can constitute a single composite contract or not. 

Petitioner’s argument

Counsel representing the Petitioner claimed that the Respondent was unable to provide a worksite for four months to the Petitioner despite issuing a work order for the same and provide the payment of running account bills. Due to breaches of the Respondent, the Petitioner requested an extension of time to complete the agreement. 

The Petitioner alleged that the Respondent had given a notice terminating both the contracts and forfeiting the Petitioner’s protection funds. Therefore, the Petitioner invoked the arbitration clause and issued the petition regarding the reply to notice for termination of contracts. The Petitioner submitted that both the Contracts are similar and can be included in a single arbitration stating the Arbitration and Conciliation Act, 1996. Petitioner also mentioned that the Respondent has termed both the contracts as a composite contract in his notice.

Respondent’s argument

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Counsel representing the Respondent submitted that contracts are determinable in nature, so the Contracts should not be specifically enforceable. The Counsel mentioned that show- cause notice and correspondence was exchanged between the parties during the completion of work. And nothing was achieved. Which led to no option but termination of the contract by the Respondent. The Counsel also submitted that the parties entered into two different Contracts with individual arbitrations and thus it cannot be referred in a single arbitration.

Court’s judgement

The Court decided that parties entered into two separate contracts and not a single composite Contract. The reasoning provided for the same is that both the Contracts have a different name, scope, and ambit of work. Simply because of referring to 2 contracts in a single letter does not make them a composite Contract. The arbitration clause is the same in both Contracts. But then too the arbitration needs to be separate.

Court decided that the petition under the Act of 1996, is not maintainable and ruled in favour of Respondents.

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Click here to read M/s Ganapati Technology Services P Ltd. v. The State Fisheries Development Corporation Ltd.


 

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