J 2015 SCC OnLine Bom 1707 2015 7 Bom CR 62 Prachitid Gmailcom 20240101 172842 1 17

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2015 SCC OnLine Bom 1707 : (2015) 7 Bom CR 62
In the High Court of Bombay

(BEFORE R.D. DHANUKA, J.)
Oil and Natural Gas Corporation Ltd. A public sector

undertaking incorporated under the Companies
Act, 1956 having its Registered Office at Jeevan
Bharti Building Tower-II, 124 Indira Chowk, New
Delhi-100 001 and Mumbai Regional Business
Centre Office at NSE Plaza, 1st Floor, ‘A’ Wing,
Bandra Kurla Complex, Bandra (E), Mumbai -
400 051 … Petitioner;
Versus
Jindal Drilling and Industries Limited a company
incorporated under the Companies Act, 1956,
having their Registered Office at 1107, Vikram
Towers, 16m Rajendra Place, New Delhi 110 008
and having their Operations office at Keshva
Building, 3rd Floor, Bandra Kurla Complex,
Bandra (E), Mumbai - 400 051 … Respondent.
Arbitration Petition No. 587 of 2014 Along With Arbitration Petition
No. 767 of 2014 Along With Arbitration Petition No. 768 of 2014
Along With Arbitration Petition No. 1045 of 2014
Decided on April 28, 2015
Advocates who appeared in this case:
Mr. Dipen Merchant, Senior Advocate a/w Mr. Prakash Shinde a/w
Ms. Ambreen Saheed i/by M/s. MDP & Partners for the petitioners.
Mr. Rahul Narichania, Senior Advocate a/w Ms. Pratiksha Avhad a/w
Ms. Pooja Kapadia i/by M/s. Mulla & Mulla & Craigie Blunt & Caroe for
the respondents.
JUDGMENT
1. By these petitions filed under Section 34 of the Arbitration and
Conciliation Act, 1996 (for short “the said Arbitration Act), the
petitioners have impugned the arbitral award dated 9th October 2013
allowing some of the claims made by the respondents. By consent of
the parties, all the aforesaid petitions were heard together and are
being disposed of by a common judgment in view of the identical facts
and being common award rendered by the arbitral tribunal. The
petitioners herein were the original respondents in the arbitration
proceedings whereas the respondents herein were the original
claimants. Some of the relevant facts for the purpose of deciding these
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petitions are as under:

2. Some time in the month of October 2005, the petitioners floated a
tender for charter hire of a Floating Production, Storage and Off-loading
vessel (FPSO). Pursuant to the said notice inviting tender, Messrs.
Discovery Enterprises Pvt. Ltd. (hereinafter referred to as ‘the said
DEPL’) submitted its bid with the petitioners. On 22nd March 2006, the
petitioners awarded the said contract in favour of the said DEPL and
executed a contract agreement with the said DEPL.
3. It is the case of the petitioners that pursuant to the said contract
between the petitioners and the said DEPL, the said DEPL imported the
vessel FPSO ‘Crystal Sea’ for oil and gas processing in the Bombay High
in the offshore fields of the petitioners. It is the case of the petitioners
that the petitioners paid the customs duty on the said vessel on behalf
of the said DEPL as assessed at Rs. 55,78,12,857/- with clear and
express understanding that the vessel would be exported under the
duty drawback scheme and the said DEPL would complete all the
formalities required to be completed as per the Customs Act, 1962 to
avail of the benefit of duty drawback. The said DEPL, however, did not
comply with their part of the obligation and accordingly, the petitioners
terminated the said contract on 12th November 2006. The petitioners
issued a notice on 12th February 2007 to the said DEPL and demanded
various amounts towards compensation. The said dispute between the
petitioners and the said DEPL was referred to the arbitral tribunal.
4. In the said arbitration proceedings between the petitioners and
the said DEPL, the petitioners had impleaded the respondents herein
also as respondents. The respondents filed an application on 23rd
August 2008 in the arbitration proceedings under Section 16 of the
Arbitration Act, inter alia, praying for deletion of their name from the
said arbitration proceedings as respondents and raised an issue of
jurisdiction. By an order passed by the arbitral tribunal on 27th October
2010, the arbitral tribunal accepted the plea of the respondents and
directed the petitioners to strike of the name of the respondents from
the array of parties. Being aggrieved by the said order dated 27th
October 2010, the petitioners filed an appeal (Arbitration Petition No.
814 of 2011) under Section 37 of the Arbitration Act before this Court.
By an order dated 27th June 2012, the learned Single Judge (Shri S.J.
Kathawalla, J) dismissed the said appeal filed by the petitioners, inter
alia, challenging the said order dated 27th October 2010. The petitioners
have filed a Special Leave Petition against the said order dated 27th
June 2012 before the Supreme Court which is pending. In the
meanwhile, the arbitral tribunal rendered final award on 6th June 2013
in the said arbitral proceedings in favour of the petitioners and against
the said DEPL. It is not in dispute that the said DEPL did not challenge
the said final award dated 6th June 2013.
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5. In the meanwhile, the petitioners entered into an agreement with

the respondents on 2nd December 2006 and took on hire the drilling
unit RIG Noble Charlie Yester from the respondents to conduct drilling
operations in the offshore waters of India. The petitioners also executed
three more contracts with the respondents dated 9th December 2004,
17th August 2006 and 23rd December 2003 for three other works. It is
not in dispute that these four contracts awarded to the respondents by
the petitioners were independent contracts and were not related to
each other or they did not have any connection of whatsoever nature
with the contract awarded by the petitioners in favour of the said DEPL.
The respondents had carried out those works awarded under the said
four contracts and submitted various bills to the petitioners.
6. The petitioners have not disputed the claim made by the
respondents. The petitioners, however, refused to pay the dues of the
respondents on the ground that since the said DEPL was liable to
compensate the petitioners as claimed in the said pending arbitration
proceedings at the relevant time between the petitioners and the said
DEPL, the petitioners had adjusted/appropriated and/or exercised lien
on the amount of Rs. 63,87,38,070.76 which was kept by the
respondents with the petitioners by treating it as a security to satisfy
the award to be passed in favour of the petitioners in the said then
pending arbitration proceedings between the petitioners and the said
DEPL.
7. Since the petitioners refused to pay the undisputed dues of the
respondents under the aforesaid four contracts, the dispute arose
between the parties arising out of those four contracts and was referred
to arbitration. The arbitral tribunal framed separate points for
determination in all four arbitral proceedings. The respondents led oral
evidence in the arbitral proceedings. The petitioners, however, relied
upon the oral evidence led by the petitioners in the arbitral proceedings
filed by the petitioners against the said DEPL as evidence in the present
proceedings.
8. On 9th October 2013, the arbitral tribunal rendered a common
award in all four matters and directed the petitioners to pay to the
respondents various amounts with interest and costs. The said common
award has been impugned by the petitioners in these four petitions
under Section 34 of the Arbitration Act.
9. Mr. Merchant, learned senior counsel for the petitioners submits
that the said DEPL was a Group Company and part of the D.P. Jindal
Group and on the representation of the respondents herein at the time
of finalisation of the bid received from the said DPEL, the petitioners
awarded the said contract dated 22nd March 2006 to the said DEPL. He
submits that the said DEPL was an extension of the activities of the
respondents who had set up the said DEPL as an agency to carry out its
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activities and the doctrine of Group Company ought to have been

applied in this case.
10. It is submitted that the respondents had all throughout acted on
behalf of the DEPL in respect of the contract which was awarded by the
petitioners in favour of the said DEPL. It is submitted that the Directors
of the said DEPL were the sons and daughters-in-law of the Managing
Director of the respondents and both the companies for some time
shared a common office and telephone numbers. It was the case of the
petitioners that the DEPL was incorporated in order to defraud the
creditors. Based on such allegations, learned senior counsel for the
petitioners submits that the arbitral tribunal was required to lift the
corporate veil in order to treat the said DEPL and the respondents
herein as one company and ought to have rejected the claims made by
the respondents. He submits that the petitioners were entitled to claim
lien on the amount of the respondents in respect of the amounts
recoverable from the said DEPL by the petitioners and to appropriate
the same. He submits that the Special Leave Petition filed by the
petitioners against the order passed by this Court under Section 37 of
the Arbitration Act dismissing the appeal filed by the petitioners
against the order of the arbitral tribunal passed under Section 16 of the
Arbitration Act in favour of the respondents herein in the case of the
arbitration proceedings which were filed by the petitioners against the
said DEPL is pending.
11. Mr. Narichania, learned senior counsel for the respondents, on
the other hand, submits that the respondents were incorporated in the
year 1983 whereas the said DEPL was incorporated some time in the
year 2003. He submits that even prior to the date of awarding contract
in favour of the said DEPL by the petitioners on 22nd March 2006, the
petitioners had awarded two out of the four contracts i.e. on 23rd
December 2003 and on 9th December 2004 to the respondents herein.
He submits that it is an admitted position that those four contracts
awarded to the respondents by the petitioners were independent
contracts and had no nexus whatsoever with the contract awarded by
the petitioners to the said DEPL. He submits that the petitioners had
not disputed their liabilities to the respondents arising out of the said
four contracts.
12. He submits that the respondents-company is a separate and
independent legal entity and thus alleged dues of the petitioners
against the said DEPL could not have been appropriated and/or no lien
could have been claimed by the petitioners against the amounts due
and payable to the respondents by the petitioners under four separate
and independent contracts.
13. Learned senior counsel submits that though the petitioners had
alleged that the respondents and the said DEPL were part of the D.P.
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Jindal Group and based on the representation made by the respondents

herein, the petitioners had awarded the said contract dated 22th March
2006 in favour of the said DEPL, the petitioners did not lead any
evidence to show that either the petitioners had awarded the said
contract dated 22nd March 2006 to the said DEPL based on any such
alleged representation and did not prove that the petitioners had
awarded these four contracts to the respondents on the ground that the
respondents were part of the D.P. Jindal Group.
14. Learned senior counsel for the respondents invited my attention
to oral evidence led by the petitioners in the arbitration proceedings
filed by the petitioners against the DEPL which was adopted in the
present proceedings and would submit that the said witness examined
by the petitioners had failed to prove that the said DEPL was awarded
the contract by the petitioners on the premise that the said DEPL was
part of the D.P. Jindal Group or the same was awarded based on any
representation of the respondents. He submits that the witness
examined by the petitioners admitted that he had accessed the website
of DEPL only in the year 2008 though the said contract was awarded as
far back as 22nd March 2006. He submits that though there was
correspondence exchanged between the petitioners and the said DEPL
during the period between 2006 and 2008 in respect of the alleged
dues under the alleged agreement dated 22nd March 2006 entered into
between the petitioners and the said DEPL, the petitioners raised
demand notice for the first time on 25th April 2008 in respect of the
said transactions upon the respondents.
15. Learned senior counsel submits that the petitioners' witness
failed to produce the Minutes of Meeting of the Executive Purchase
Committee which gave its approval for awarding the contract to the
said DEPL. He submits that the said witness examined by the
petitioners was not even present the said meeting. He submits that
since the petitioners had suppressed the best evidence which could
have been made available by the petitioners in support of their case
against the respondents, the arbitral tribunal was empowered to draw
adverse inference against the petitioners. In support of this submission,
learned senior counsel placed reliance on the judgment of the Supreme
Court in the case of Gopal Krishnaj Ketkar v. Mohamed Haji Latif,
reported in AIR 1968 SC 1413 and in particular paragraph 5 thereof.
to the order dated 27th June 2012 passed by this Court in Arbitration
Petition No. 814 of 2011 rejecting the appeal filed by the petitioners
herein inter alia impugning the order passed by the arbitral tribunal
accepting the plea of the respondents herein. He submits that the issue
raised by the petitioners in these arbitration proceedings about lifting of
corporate veil and the alleged nexus in the contracts awarded to the
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respondents herein and the said DEPL was also urged in the said
proceedings.
17. Learned senior counsel submits that the arbitral tribunal
accepted the plea of the respondents in the said matter by holding that
the respondents were separate legal entity and thus the respondents
being not parties to the agreement between the petitioners and the
said DEPL could not have been impleaded as party-respondents. He
submits that this Court has already dealt with the issues raised by the
petitioners in these proceedings, in the said Arbitration Petition No. 814
of 2011 and rejected all such submissions in the said order dated 27th
June 2012. He submits that the said judgment of this Court between
the same parties on the said issue and on the same subject matter is
final, conclusive and is binding on the parties as well as this Court.
18. Learned senior counsel for the respondents placed reliance on
the judgment of this Court delivered on 22nd December 2008 in draft
notice of motion in Admiralty Suit (L) No. 3547 of 2008 in the case of
Polestar Maritime Ltd. v. M.V. QI LIN MEN and more particularly
paragraph 14 and would submit that merely because the shareholders
are common or their holding in two different companies duly registered
under the Companies Registration Act are identical, it would not make
the two companies one and the same entity. Paragraph 14 of the said
judgment of the learned Single Judge of this Court in the case Polestar
Maritime Ltd. (supra) reads thus:—
“14. defendant no. 1 has filed on record a xerox copy of the
certificate of registration (page 7 of the compilation of documents of
the defendant. The certificate shows that the defendant no. 1 ship,
at the relevant time belonged to YFM Shipping Co. Ltd. The
certificate is dated 6th October 2008. This shows that on the date of
the filing of the suit, defendant no. 1 ship was not owned by the
defendant nos. 2 or 3. Learned counsel for the plaintiff however
submitted that YFM Shipping Co. Ltd which is shown to be the owner
of the defendant no. 1 ship and YHM Shipping Co. Ltd, (who is the
defendant no. 2) are one and the same in as much as the
shareholders of the former and the latter are the same and they hold
share capital in the same proportion. In my view, merely because
the shareholders are common or their holding in two different
companies duly registered under the Companies Registration Act, is
identical would not make the two companies one and the same
entity. It is elimentary principle of law when a company is
incorporated it becomes a separate legal entity different from the
persons constituting it. Therefore assuming for the sake of argument
that the shareholders of the two companies are common, (presently
there is no material on record that the shareholders of the two
companies are identical) that would not make the defendant no. 2
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the owner of the defendant no. 1 ship. As the defendant no. 1 vessel
is not owned by defendant nos. 2 or 3, plaintiff cannot arrest the
defendant no. 1 vessel for the alleged maritime claim against
defendant nos. 2 or 3. The maritime claim is neither against the
defendant no. 1 ship nor there is any maritime claim against the
owner of the defendant no. 1 ship.”
19. Learned senior counsel also placed reliance on the judgment of
Division Bench in Appeal (L) No. 772 of 2008 delivered on 6th January
2009 dismissing the appeal arising out of the said order dated 22nd
December 2008.
20. Learned senior counsel also placed reliance on the paragraphs 9
and 10 to 15 of the judgment of the Division Bench in the case of
Lufeng Shipping Company Ltd. v. M.V. Raiwbow ACE in Appeal (L) No.
228 of 2013 in support of the submission that the respondents were
separate and distinct legal entity from its shareholders and other
companies.
21. Learned senior counsel for the respondents also placed reliance
on the judgment of the Supreme Court in the case of Indowind Energy
Limited v. Wescare (India) Limited, reported in (2010) 5 SCC 306 and
the judgment of the Delhi High Court in the case of K.K. Modi
Investment and Financial Services Pvt. Ltd. v. Apollo International INC.,
reported in (2009) 2 Arb LR 499 (Delhi) in support of the aforesaid
submission.
22. Learned senior counsel for the respondents submits that the
petitioners have also filed a suit (294 of 2011) for the same reliefs
against the said DEPL and the respondents arising out of the same
cause of action raising the same contentions which suit is pending for
hearing and final disposal.
to the cross-examination of the witness examined by the respondents
who deposed that there were no composite transactions between the
parties. There was no joint venture agreement between the parties.
Learned senior counsel appearing for the respondents placed reliance
on the judgment of the Supreme Court in the case of Balwant Rai
Saluja v. AIR India Limited, reported in (2014) 9 SCC 407 and would
submit that at the first instance, the arbitral tribunal has no power to
lift the corporate veil of the company and in the alternative would
submit that no case was made out by the petitioners before the arbitral
tribunal by leading appropriate evidence for lifting the corporate veil of
the respondents or of the said DEPL. Paragraphs 69, 71 and 74 of the
said judgment in the case of Balwant Rai Saluja (supra) read thus:—
“69. The Vodafone case (supra), further made reference to a
decision of the US Supreme Court in United States v. Bestfoods [141
L.Ed.2d 43 : 524 US 51 (1998)]. In that case, the US Supreme Court
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explained that as a general principle of corporate law a parent

corporation is not liable for the acts of its subsidiary. The US
Supreme Court went on to explain that corporate veil can be pierced
and the parent company can be held liable for the conduct of its
subsidiary, only if it is shown that the corporal form is misused to
accomplish certain wrongful purposes, and further that the parent
company is directly a participant in the wrong complained of. Mere
ownership, parental control, management, etc. of a subsidiary was
held not to be sufficient to pierce the status of their relationship and,
to hold parent company liable.
71. In recent times, the law has been crystallized around the six
principles formulated by Munby J. in Ben Hashem v. Ali Shayif, 2008
EWHC 2380 (Fam). The six principles, as found at paragraphs 159-
164 of the case are as follows- (i) ownership and control of a
company were not enough to justify piercing the corporate veil; (ii)
the Court cannot pierce the corporate veil, even in the absence of
third party interests in the company, merely because it is thought to
be necessary in the interests of justice; (iii) the corporate veil can be
pierced only if there is some impropriety; (iv) the impropriety in
question must be linked to the use of the company structure to avoid
or conceal liability; (v) to justify piercing the corporate veil, there
must be both control of the company by the wrongdoer(s) and
impropriety, that is use or misuse of the company by them as a
device or facade to conceal their wrongdoing; and (vi) the company
may be a ‘facade’ even though it was not originally incorporated with
any deceptive intent, provided that it is being used for the purpose
of deception at the time of the relevant transactions. The Court
would, however, pierce the corporate veil only so far as it was
necessary in order to provide a remedy for the particular wrong
which those controlling the company had done.
74. Thus, on relying upon the aforesaid decisions, the doctrine of
piercing the veil allows the Court to disregard the separate legal
personality of a company and impose liability upon the persons
exercising real control over the said company. However, this
principle has been and should be applied in a restrictive manner,
that is, only in scenarios wherein it is evident that the company was
a mere camouflage or sham deliberately created by the persons
exercising control over the said company for the purpose of avoiding
liability. The intent of piercing the veil must be such that would seek
to remedy a wrong done by the persons controlling the company.
The application would thus depend upon the peculiar facts and
circumstances of each case.”
24. Learned senior counsel for the respondents placed reliance on
the judgment of the Supreme Court in the case of Associate Builders v.
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Delhi Development Authority, reported in (2015) 3 SCC 49 and more

particularly paragraphs 28, 30, 32, 33, 34 and 52 to 62 and would
submit that the petitioners have not made out any ground under
Section 34 of the Arbitration Act. The arbitral tribunal has rendered
findings of facts which are not perverse and thus cannot be interfered
with under Section 34 of the Arbitration Act by this Court. He submits
that this Court cannot re-appreciate the evidence considered by the
arbitral tribunal in the impugned award.
REASONS AND CONCLUSIONS:
25. It is not in dispute that the respondents were incorporated in the
year 1983 whereas the said DEPL was incorporated in the year 2003.
The respondents were already awarded the two contracts out of the said
four contracts i.e. on 23rd December 2003 and 9th December 2004 i.e.
much prior to the said contract dated 22nd March 2006 awarded by the
petitioners to the said DEPL. It is not in dispute that both the
companies were incorporated under the provisions of Companies Act,
1956. There was no reference to the participation, if any, of the
respondents in the contract entered into between the petitioners and
the said DEPL. There was no involvement of any nature whatsoever of
the respondents in the award of the said contract by the petitioners in
favour of the said DEPL on 22nd March 2006.
26. It is not in dispute that in respect of the said contract awarded
to the said DEPL by the petitioners, the dispute had arisen between the
parties. The said dispute was separately referred to the arbitration in
the said proceedings filed by the petitioners against the said DEPL. The
respondents herein were impleaded as party-respondents along with
the said DEPL. The respondents herein had filed an application under
Section 16 of the Arbitration Act before the said arbitral tribunal
hearing the arbitral proceedings filed by the petitioners against the said
DEPL and the respondents herein raising the plea of the jurisdiction.
The arbitral tribunal in the said matter accepted the plea raised by the
respondents and directed the petitioners to delete the name of the
respondents from the array of the parties. The said order passed by the
arbitral tribunal was impugned by the petitioners herein by filing the
arbitration petition (814 of 2011).
27. A perusal of the said order dated 27th June 2012 passed by this
Court in the said arbitration petition clearly indicates that the plea
raised by the respondents herein in the said arbitration proceedings
before the arbitral tribunal that the respondents were not parties to the
arbitration agreement entered into the said contract and consequently,
could not be dragged to the arbitration. The said plea of the
respondents was accepted by the arbitral tribunal. It is clear that the
plea of the petitioners in the said proceedings was that the said DEPL
was the altered ego of the respondents herein and because of the
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alleged nexus between the two companies, the petitioners had awarded
the said contract to the said DEPL.
28. It was also contended by the petitioners in the said proceedings
that Mr. Manav Kumar and Mrs. Shilpa Agarwal were son and daughter-
in-law of Mr. Naresh Kumar who was the Managing Directors of the
respondents were the directors of the said DEPL at the relevant time. It
was also contended that the said DEPL and the respondents herein were
operating out the said premises situated at 3rd Floor, Keshav Building,
Bandra Kurla Complex, Bandra (East), Mumbai - 400 051 having
telephone numbers. It was contended by the petitioners that the said
contract awarded to the said DEPL was because of the relation with the
petitioners enjoyed by the respondents and, therefore, the respondents
could not avoid the liabilities in respect of the dues of the said DEPL
and could be made liable and bound to meet and answer the petitioners
dues recoverable from said DEPL.
29. A perusal of the said judgment indicates that this Court has held
that the respondents herein were admittedly not parties to the contract
dated 22nd March 2006 which was entered into between the petitioners
and the said DEPL and also to the said arbitration agreement. This
Court also accepted and approved the findings rendered by the arbitral
tribunal in that matter between the petitioners and the said DEPL. On
the issue of commonality of interests between the said DEPL and the
respondents herein and plea of common economic unit, the arbitral
tribunal held that there was not a ‘tickle of evidence’ on record to show
that the respondents, a distinct incorporated legal entity ever played
any role to bind itself in the contract between the petitioners and the
said DEPL. It is held that the Executives of the respondents assuming
they assisted the said DEPL in the bid process and finalisation, their
contribution was on behalf of DEPL as the signatures reflected ‘on
behalf of M/s. DEPL’ in the Minutes of Meeting and not on behalf of the
respondents.
30. It is held that merely because son and daughter-in-law of the
Managing Director of the respondents were the Directors of the DEPL,
the same could not take the claim of the petitioners any further to pin
down the respondents in respect of the contractual obligations between
the petitioners and the said DEPL. In the said judgment, this Court held
that there was no evidence tendered before the arbitral tribunal that
the said DEPL and the respondents herein had common shareholders
and common Board of Directors. This Court after adverting to the
judgment of the Supreme Court in the case of Indowind Energy Limited
v. Wescare (India) Limited (supra) and the judgment of the Delhi High
Court in the case of K.K. Modi Investment and Financial Services Pvt.
Ltd. v. Apollo International INC. (supra) held that merely because the
two companies may, at one point of time, had a common address and
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telephone number, it did not make them one economic unit. The mere
fact that son and daughter-in-law of the Managing Director of the
respondents herein were the Directors in the said DEPL also did not and
could not establish that those companies were one and the same.
31. It is held by this Court that there was also no credible evidence
to show that because of the alleged nexus between the two companies,
the petitioners had awarded the said contract to the said DEPL. It is
held that even assuming that to be correct, it did not take the case of
the petitioners any further. The respondents herein were admittedly not
parties to the contract and could not be liable under the said contract
which was only between the petitioners and the said DEPL. It is held
that if the petitioners wanted to bind the respondents to the said
contract, it should have asked the respondents to be a party to the said
contract.
32. Learned advocate appearing for the petitioners in that matter
had no answer to the query raised by this Court as why the petitioners
did not insist on the respondents signing the said contract when
admittedly there were other contracts which were entered into between
the petitioners and the respondents. This Court after rendering the
aforesaid findings and upholding the findings rendered by the arbitral
tribunal in favour of the respondents herein and against the petitioners
in the said arbitration proceedings dismissed the said arbitration
petition filed by the petitioners under Section 37 of the Arbitration Act.
It is not in dispute that the said judgment of this Court between the
same parties on the same issue has not been stayed by the Supreme
Court till the date of conclusions of the hearing of this matter. In my
view, the parties as well as this Court is bound by the said order passed
by this Court on 27th June 2012 in Arbitration Petition No. 814 of 2011
which was filed by the petitioners against the said DEPL and the
respondents herein.
33. It is not in dispute that in the said arbitral proceedings in which
the application of the respondents herein under Section 16 was allowed
by the arbitral tribunal and the appeal arisen therefore has been
rejected by this Court, the arbitral tribunal has already rendered final
award against the said DEPL and in favour of the petitioners. It is also
not in dispute that the petitioners herein have already filed a civil suit
against the said DEPL and the respondents herein, inter alia, praying for
the same reliefs under the contract in question and the said suit is
pending. The said DEPL has not challenged the said final award and the
same has achieved finality.
34. It is submitted by Mr. Narichania, learned senior counsel for the
respondents that the petitioners had relied upon the oral evidence led
by the petitioners in the said arbitral proceedings filed by the
petitioners against the said DEPL in which the respondents were
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impleaded as one of the respondents, in the present proceedings also

and did not lead any other evidence. The petitioners have not disputed
this position.
35. Be that as it may, a perusal of the affidavit of evidence filed by
Anindya Bhattacharya who was examined as a witness by the
petitioners in the said arbitral proceedings between the petitioners and
the said DEPL and the respondents indicates that in the examination-in
-chief, it was deposed by the said witness that in response to the
expression of interests invited by the petitioners, the respondent no. 1
i.e. DEPL had responded expression of interests along with several other
bidders. In the pre-bid conference, the said DEPL was represented by
Mr. Mohan Ramnathan along with two others. It was deposed in the
examination-in-chief that Mr. Ramnathan, who was senior most of the
three persons who attended the said meeting, was an employee of the
respondent no. 2 i.e. respondents herein. The expression of interests
was signed by Mr. G.D. Sharma on behalf of the said DEPL. The
letterhead of the respondent no. 1 represented that the respondent no.
1 was a part of Jindal Group.
36. In the cross-examination of the said the witness examined by
the petitioners, he deposed that he had accessed the website of DEPL
for the first time in June 2008 whereas the contract was awarded to the
said DEPL admittedly in the month of March 2006. The witness deposed
that the petitioners had addressed a letter or communication to the
respondents herein for the first time in relation to the dispute between
the petitioners and the said DEPL on 25th April 2008. The said witness
admitted that he was not present when the Executive Purchase
Committee gave its approval for awarding the said contract to the said
DEPL. The said witness could not produce any Minutes of Meeting of the
Tender Committee and the Executive Purchase Committee in relation to
the deliberations and the award of contract though the same were
available according to the said witness with the petitioners.
37. A perusal of the impugned award on this issue indicates that the
arbitral tribunal has rendered findings of facts that there was hardly
any evidence to support the plea of the petitioners that the said DEPL
and the respondents were one and the same company. It is held that
although the Directors of the said DEPL were the son and daughter-in-
law of the Managing Director of the respondents herein and the two
companies for some time had shared a common office and telephone
numbers that did not make two companies as one entity. Both were
subsidiaries of the main company and both had independent legal
existence. The said DEPL was incorporated in the year 2003 whereas
the respondents herein were public limited company listed on the stock
exchange and were incorporated in the year 1983.
38. The arbitral tribunal has also rendered finding that there was no
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material to show that the petitioners had awarded the said contract to
the said DEPL because it was in fact the respondents herein and/or was
supported by the respondents. The petitioners did not produce Minutes
of Meeting held by the petitioners for short listing of the bidders in
respect of that contract awarded to the DEPL. The witness who was the
only witness produced by the petitioners was not present at the
meeting held by the Executive Purchase Committee when deliberations
on the award of the said contract to the recommended bidders took
place. The arbitral tribunal has held that there was no evidence to show
that in order to secure the said contract, the said DEPL represented that
it was a part of the group of the respondents.
39. The arbitral tribunal also considered the oral evidence led by the
respondents and more particularly Ms. Dalvi (CW-2) who had deposed
that Mr. Ramnathan had attended the pre-bid meeting and customs
hearing at the request of the DEPL and as a representative of the DEPL
on account of her expertise in those areas. She also deposed that she
was asked by Mr. Ramnathan to attend the customs duty hearing on
behalf of the DEPL. It was also pointed out that Mr. G.D. Sharma, an
employee of the respondents attended certain meetings and signed
letters etc. expressly on behalf of the DEPL. The arbitral tribunal has
rendered finding that there was no guarantee or letter of comfort from
the respondents to the petitioners in respect of the liabilities, if any, of
DEPL under its contract with the petitioners. The arbitral tribunal also
rejected the allegations of the petitioners that the said DEPL was
incorporated in order to defraud the creditors on the ground that there
was no basis for that allegations, no particulars of the alleged fraud had
been set out anywhere nor any evidence was produced in support of
such allegations.
40. In my view, the arbitral tribunal has considered the evidence led
by the parties in the impugned award independently and have rendered
findings of facts that i) the petitioners had failed to prove that the said
DEPL and the respondents herein were one and the same company; ii)
both the companies had independent legal existence; iii) the
petitioners had failed to produce any evidence to prove that the
petitioners had awarded the said contract to DEPL because it was in fact
the respondents herein and/or was supported by the respondents; iv)
there was no evidence to show that in order to secure the said contract,
DEPL had represented that it was a part of the respondents group; v)
the witness examined by the petitioners was not present in the meeting
held by the Executive Purchase Committee and did not produce Minutes
of Meeting held by the said Committee for short listing of the bidders;
vi) the respondents herein had not issued any guarantee or letter of
comfort from the respondents to the petitioners in respect of the
liabilities, if any, of DEPL under its contract with the petitioners and vii)
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the petitioners had failed to provide any particulars of the alleged fraud
or that the said DEPL was incorporated in order to defraud the creditors.
In my view, all the aforesaid findings rendered by the arbitral tribunal
are based on the pleadings, documents and the evidence led by the
parties and are not perverse and thus no interference with such
findings of facts is permissible under Section 34 of the Arbitration Act.
41. Supreme Court in the case of Gopal Krishnaj Ketkar (supra) has
held that the Court ought to draw an adverse inference against the
parties in case of suppression of the best evidence which would throw
light upon the issues in controversy and to rely upon the abstract
doctrine of onus of proof. In my view, though the petitioners had
deposed that the Minutes of Meeting in which the bids of various
bidders were scrutinised and approved were though available was not
produced by the petitioners which would have thrown light upon the
issues in controversy whether the said DEPL had represented on behalf
of the petitioners and that it was forming part of the Jindal Group or
not. The petitioners have thus suppressed and withheld the best
evidence before the arbitral tribunal. The arbitral tribunal, in my view,
has thus rightly rendered findings that the petitioners could not prove
the said allegations against the respondents.
42. Supreme Court in the case of Indowind Energy Limited (supra)
has held that each company is a separate and distinct legal entity and
the mere fact that two companies have common shareholders or
common Board of Directors, will not make the two companies a single
entity nor will existence of common shareholders or Directors lead to an
inference that one company will be bound by the acts of the other.
Paragraph 17 of the said judgment of Indowind Energy Limited (supra)
reads thus:—
“17. It is not in dispute that Subuthi and Indowind are two
independent companies incorporated under the Companies Act,
1956. Each company is a separate and distinct legal entity and the
mere fact that two companies have common shareholders or
common Board of Directors, will not make the two companies a
single entity. Nor will existence of common shareholders or Directors
lead to an inference that one company will be bound by the acts of
the other. If the Director who signed on behalf of Subuthi was also a
Director of Indowind and if the intention of the parties was that
Indowind should be bound by the agreement, nothing prevented
Wescare insisting that Indowind should be made a party to the
agreement and requesting the Director who signed for Subuthi also
to sign on behalf of Indowind.”
43. In my view, the petitioners have in this case failed to prove that
there were any common shareholders. It is not in dispute that the
respondents herein were not parties to the said contract awarded by
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the petitioners to the said DEPL. No letter of comfort or guarantee has

been obtained from the respondents making them liable in case of any
liability of the said DEPL under the said contract awarded by the
petitioners to the said DEPL. The respondents being separate legal
entity, in my view, thus could not be made liable for the liabilities, if
any, of the said DEPL against the petitioners unless the same was
under any agreement independently between the petitioners and the
respondents herein. The judgment of the Supreme Court in the case of
Indowind Energy Limited (supra) squarely applies to the facts of this
case. I am respectfully bound by the said judgment.
44. The Delhi High Court in the case of K.K. Modi Investment and
Financial Services Pvt. Ltd. (supra) has also taken a similar view which
has been taken in the case of Indowind Energy Limited (supra). I am in
agreement with the views expressed by the Delhi High Court in the
case of K.K. Modi Investment and Financial Services Pvt. Ltd. (supra).
This Court in the case of Polestar Maritime Ltd. (supra) has held that
merely because the shareholders are common or their holding in two
different companies registered under the Companies Registration Act, is
identical would not make the two companies one and the same entity.
It is held that elementary principle of law is that when a company is
incorporated, it becomes a separate legal entity different from the
persons constituting it. The said judgment of the learned Single Judge
of this Court in the case of Polestar Maritime Ltd. (supra) has been
upheld by the Division Bench in its order dated 6th January 2009. The
Division Bench of this Court in the case of Lufeng Shipping Company
Ltd. (supra) after adverting to the judgment of the Supreme Court in
the case of Indowind Energy Limited (supra) has taken a similar view
and has refused to lift the corporate veil in the admiralty suit.
45. Mr. Narichania, learned senior counsel appearing for the
respondents invited my attention to the contentions raised by the
petitioners in the arbitration petition based on the judgment of the
Supreme Court in the case of Chloro Controls India Private Limited v.
Severn Trent Water Purification Inc., reported in (2013) 1 SCC 641 and
in particular paragraphs 70, 73, 105 to 108, 133, 140, 148 and 165.2
and would submit that the agreement entered into between the
petitioners and the respondents herein were not inter dependent on
each other. He submits that the petitioners themselves have admitted
that the agreement between the petitioners and the respondents had
nothing to do with the contract between the petitioners and the said
DEPL.
46. Learned senior counsel submits that the petitioners have not
made any averments that there was any mutual intention of all the
parties to bind both the signatories and the non-signatory affiliates. The
respondents had never agreed to bind itself with the liabilities and
-----------------------------------------------------------------------------------------------------------------------------------------------------------
obligations of the said DEPL under the said agreement dated 22nd March
2006 awarded in favour of the DEPL by the petitioners. In my view, the
said judgment of the Supreme Court in the case of Chloro Controls
India Private Limited (supra) referred to by the petitioners in the
arbitration petition and before the arbitral tribunal is not at all relevant
for the purpose of deciding this matter and reliance placed thereon by
the petitioners is thus misplaced.
47. The petitioners had canvassed before the arbitral tribunal that
the arbitral tribunal shall lift the corporate veil to find out that the said
DEPL and the respondents herein were forming part of the said Jindal
Group and were one and the same entity and thus the respondents
were liable for the liabilities of the said DEPL. In my view, the arbitral
tribunal has no power to lift the corporate veil. Only a Court can lift the
corporate veil of a company if the strongest case is made out. In my
view, the prayer of the petitioners for lifting the corporate veil of the
said DEPL was itself not maintainable in the arbitration proceedings.
The said DEPL was not a party to these proceedings. Be that as it may,
a perusal of the arbitral award clearly indicates that the arbitral tribunal
has refused to lift the corporate veil after considering the evidence
produced by both the parties and has rendered finding of fact that no
such case was made out by the petitioners for lifting the corporate veil
which are not perverse and thus cannot be interfered with by this Court
under Section 34 of the Arbitration Act.
48. Supreme Court in the case of Balwant Rai Saluja (supra) has
dealt with the issue of lifting the corporate veil by Court in detail. In my
view, even if the arbitral tribunal had no power to lift the corporate veil
of a company, the petitioners did not satisfy the criteria laid down by
the Supreme Court in the its judgment in the case of Balwant Rai
Saluja (supra) for lifting the corporate veil. It is not the case of the
petitioners that there was any impropriety which was linked to the use
of the company structure to avoid or conceal liability. It is held by the
Supreme Court that to justify piercing the corporate veil, there must be
both control of the company by the wrongdoers and impropriety, that is
use or misuse of the company by them as a device or facade to conceal
their wrongdoing; and the company may be a ‘facade’ even though it
was not originally incorporated with any deceptive intent. The Supreme
Court has held that the Court cannot pierce the corporate veil, even in
the absence of third party interests in the company, merely because it
is thought to be necessary in the interests of justice. In my view, the
petitioners had failed to prove that either the said DEPL or the
respondents-company was a mere camouflage or sham or were
deliberately created by the persons exercising control over the said
company for the purpose of avoiding liability. The petitioners have not
made out any case for lifting the corporate veil. I am respectfully bound
-----------------------------------------------------------------------------------------------------------------------------------------------------------
by the judgment of the Supreme Court in the case of Balwant Rai

Saluja (supra) which squarely applies to the facts of this case.
49. Mr. Narichania, learned senior counsel for the respondents
rightly placed reliance on the Supreme Court in the case of Associate
Builders v. Delhi Development Authority (supra) and submits that if
findings of facts rendered by the arbitral tribunal are not perverse and
is based on the appreciation of the evidence, this Court cannot interfere
with such findings of facts and cannot re-appreciate the evidence under
Section 34 of the Arbitration Act. In my view, in this case, the arbitral
tribunal has considered the evidence led by both the parties and also
pleadings, documents and has rendered findings of facts which are not
perverse and thus no interference is permissible with such findings of
facts under Section 34 of the Arbitration Act.
50. It is a common ground that the claims made by the respondents
herein (original claimants) were not denied by the petitioners. Learned
senior counsel for the petitioners could not dispute this position and
accordingly did not make any submission on merits of the claim
awarded by the arbitral tribunal. In my view, the petition is devoid of
merits.
51. I, therefore, pass the following order:—
a) Arbitration Petition Nos. 584 of 2014, 767 of 2014, 768 of 2014
and 1045 of 2014 are dismissed.
b) There shall be no order as to costs.
———
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Page 1 Monday, January 01, 2024

2015 SCC OnLine Bom 1707 : (2015) 7 Bom CR 62

In the High Court of Bombay

Oil and Natural Gas Corporation Ltd. A public sector

petitions are as under:

5. In the meanwhile, the petitioners entered into an agreement with

activities and the doctrine of Group Company ought to have been

Jindal Group and based on the representation made by the respondents

explained that as a general principle of corporate law a parent

Delhi Development Authority, reported in (2015) 3 SCC 49 and more

impleaded as one of the respondents, in the present proceedings also

the petitioners to the said DEPL. No letter of comfort or guarantee has

by the judgment of the Supreme Court in the case of Balwant Rai

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