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Informist, Tuesday, Dec. 9, 2025

 

NEW DELHI – The Supreme Court Tuesday set aside a Bombay High Court order appointing an arbitrator for a dispute between Hindustan Petroleum Corp. Ltd. and BCL Secure Premises Pvt. Ltd. The court allowed the oil-marketing company's appeal, noting that there was no arbitration agreement between the parties.

 

The court said BCL Secure Premises had not established its case to show even prima facie existence of an arbitration agreement with HPCL. "On the facts of this case, it is clear that the appellant (HPCL) and the respondent (BCL Secure) have been operating on separate orbits," it said. "It has not been established even prima facie that there was any intention to bind BCL to the contract between HPCL and AGC (AGC Networks Ltd.)."

 

The case has its genesis from HPCL floating a tender for the design, supply, installation, integration, testing, commissioning, and post-commissioning warranty support services of a tank truck locking system. The tender conditions had a specific clause stating that the contractor would not be entitled to sublet, transfer, or assign the work under the contract without the prior written consent of the owner.

 

In 2013, HPCL issued a purchase order in favour of AGC Networks Ltd., now known as Black Box Ltd. BCL Secure was working as a subvendor for Black Box and was entitled to receive major parts of the payment due, according to the respondent.

 

In 2018, HPCL told AGC Networks that since the latter could not complete the project successfully, no payment was due to it. Thereafter, HPCL told BCL Secure that it had not entered into any contract with the latter and so no payments were due to BCL Secure, too. 

 

BCL Secure issued a notice to HPCL invoking arbitration. The subvendor argued that AGC Networks had entered into an agreement with it in 2014 on a back-to-back basis, wherein the entire performance of the supply of tanker locking systems was to be undertaken by the respondent. As per the contractual arrangement, BCL Secure was obligated to perform the services and AGC Networks was merely an intermediary since 96% of the total amount payable by HPCL was to accrue to the respondent, BCL Secure said.

 

BCL Secure said that after the resolution of disputes between it and AGC Networks, a settlement-cum-assignment agreement was signed between the parties, assigning the receivables of AGC Networks from HPCL to the respondent. BCL Secure said that it had entered into the position of AGC Networks and could agitate all pending claims with HPCL. Accordingly, it filed a petition in the high court seeking appointment of an arbitrator, which was allowed in April.

 

Challenging the high court's order, HPCL moved the apex court. The oil-marketing company argued that there was no legal relationship between it and BCL Secure as there was no "privity of contract" between them. It contended that at no stage was BCL Secure ever involved in the preliminary negotiation or at the execution stage of the contract. It argued that there is no document disclosing that the appellant had knowledge of BCL Secure participating in the performance of the underlying contract.

 

Tuesday, shares of HPCL ended 0.6% higher at INR 448.75 on the National Stock Exchange.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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