VIJAYAWADA: The Andhra Pradesh High Court has recently set aside a request for arbitration by TBS India Telematic & Biomedical Services Private Limited against the State government, stating that the issue of arbitration does not arise when there was no agreement between the two parties.
Dealing with the application, Chief Justice Prashant Kumar Mishra delivered the judgment in favour of the State government with regard to clearing of Rs 100 crore ‘dues’. The Andhra Pradesh Medical Services Infrastructure Development Corporation issued a tender on July 25, 2015, for the service and maintenance of biomedical assets and equipment within the State. A Request for Proposal (RFP) was also issued. TBS bagged the contract, an agreement was signed and they provided the services till 2018.
Following allegations of irregularities, government ordered an enquiry by the Anti-Corruption Bureau. Its preliminary probe found substance in the charges against the company, and payments due to the company were stopped. Subsequently, the agreement between the two parties was terminated. The firm approached the court with an application for arbitration, claiming that in the Manual for Procurement of Goods issued by the Centre in 2017, there is an arbitration clause.
In his judgement, Chief Justice Prashan Kumar Mishra said there was no agreement between the parties so as to construe that an arbitration agreement exists between the parties. The Chief Justice further said the arbitration clause contained in a government manual as generic guidelines cannot be invoked by the parties.
Further, agreeing with the argument of Additional Advocate General Ponnavolu Sudhakar Reddy, the court observed that there cannot be an arbitration clause in a sub-contractor in a separate document when there is no binding agreement between the parties in the first place. Sudhakar Reddy further pointed out that the RFP, which has been made part of the agreement as claimed by the applicant, clearly states that the said documents are not an agreement.
Why was the RFP terminated?
A Request for a Proposal between the State govt and TBS to provide its services for maintenance of equipment was terminated after irregularities cropped up. The firm provided services for 3 years