2013 (4) TMI 440 - HC - Companies Law

Section 34 of the Arbitration and Conciliation Act, 1996 - The contention of the petitioners is that the works claimed by the respondent were never executed and the claims made by the respondent were beyond the scope of the allotment agreement - Held that - The sole Arbitrator has dealt with each and every objection raised by the petitioners in their application under Section 16 of the Act and held that the Arbitrator has got the jurisdiction to adjudicate the dispute between the partiesThough the allotment letter and allotment agreement were executed at different stage, are part and parcel of the same transaction and flat buyer agreement regulates the rights and liabilities qua the allotted flat - Both these documents form part of the sale deed - The flat buyer agreement which regulate the rights and liabilities in regard to allotment and transfer of flats, would not come to an end and arbitration clause 42 will not be wiped out on execution of sale deed. The Arbitration Clause is wide enough to cover the claims made - Clause 2(9) of the flat buyers agreement speaks of the liability of the flat buyer to compensate for the works contract tax which is one of the item. After hearing the learned counsel for the petitioners as well as reasons given by the Sole Arbitrator, I find that there is no force in the petition as the petition under Section 34 Act is not maintainable against the disposal of application under Section 16 of the Act filed by the petitioners - Whatever the grievances raised by the petitioners in the present petition or in the application filed by them before the learned Sole Arbitrator - The petitioners are at liberty to raise the same after rendering of the award by the sole Arbitrator if such a situation arises - As far as present petition is concerned, the same is not maintainable and is dismissed.

Issues:
1. Challenge to the order of the sole Arbitrator upholding the jurisdiction of the Tribunal.
2. Validity of the arbitration agreement and maintainability of the arbitration proceedings.
3. Allegations of unfair trade practice and deficiency of services by the respondent.
4. Dispute regarding the execution of works and claims made beyond the allotment agreement.
5. Interpretation of the flat buyer agreement and the scope of the arbitration clause.

Analysis:
1. The petitioners challenged the order of the sole Arbitrator under Section 34 of the Arbitration and Conciliation Act, 1996, which upheld the jurisdiction of the Tribunal based on the arbitration clause in the flat buyer agreement. The Arbitrator deemed that the agreement's arbitration clause would not be invalidated by the execution of the sale deed, allowing for the adjudication of claims made within three years of the sale deed's execution.

2. The petitioners raised objections regarding the validity of the arbitration agreement and the jurisdiction of the Arbitrator. The Arbitrator, however, found that the flat buyer agreement and the allotment agreement were integral to the same transaction, with the arbitration clause remaining in force post-sale deed execution. The Arbitrator determined that the claims fell within the purview of the arbitration clause, dismissing the petitioners' objections.

3. Allegations of unfair trade practice and deficiency of services were made by the petitioners against the respondent, leading to complaints filed before the District Redressal Forum. The respondent invoked the arbitration clause in response to the complaints, claiming monetary compensation for works allegedly carried out, which the petitioners disputed as beyond the agreement's scope.

4. The petitioners contended that the works claimed by the respondent were not executed and exceeded the allotment agreement's terms. They argued that the respondent's invocation of the arbitration clause was retaliatory to pressure the petitioners to withdraw their complaints. The Arbitrator, however, found the claims arbitrable under the agreement's terms.

5. The interpretation of the flat buyer agreement was crucial in determining the scope of the arbitration clause. The Arbitrator held that the agreement's provisions, including liability for works contract tax, remained enforceable post-sale deed execution. The petition under Section 34 of the Act challenging the Arbitrator's decision was deemed not maintainable, with the petitioners advised to raise grievances post-award if necessary.

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