2021 (12) TMI 1387 - HC - Indian Laws

Appointment of an Arbitrator under the provisions of Sections 11(5) and (6) of the Arbitration and Conciliation Act, 1996 - time limitation - HELD THAT - The two Judge Bench of the Hon ble Supreme Court in DLF Home Developers Limited Vs. Rajapura Homes Private Limited and Another 2021 (9) TMI 1053 - SUPREME COURT has observed that the jurisdiction of this Court under Section 11 is primarily to find out whether there exists a written agreement between the parties for resolution of disputes through arbitration and whether the aggrieved party has made out a prima facie arbitrable case. Whether the claims raised by the petitioner are time barred or not? - HELD THAT - The conjoint reading of Clauses-36 37 makes it clear that a party does have a right to seek enforcement of agreement before the Court of law but it does not bar settlement of disputes through Arbitration and Conciliation Act, 1996. Moreover, Clause-37 also suggests how arbitration proceedings shall be conducted and in the light thereof. Petitioners have already proposed name of Mr.Justice (Retd.) Kailash Gambhir and respondent in its reply has proposed name of Mr. Justice (Retd.) Manmohan Singh as the second Arbitrator. Even otherwise, once respondent has proposed the name of second Arbitrator, it cannot be permitted to take objection of delay and latches as well as application of Clause-36 to the Addendum Agreement dated 19.04.2011 to the present case. This Court finds that the disputes inter se parties are arbitrable and can be adjudicated by the arbitral tribunal. A part of petitioner s land has been transferred by the respondent to a third party i.e. M/s MGF Developments Ltd. - petition disposed off.

Summary

Issues Involved:
1. Validity and enforcement of the Collaboration Agreement and Addendum Agreement.
2. Breach of contractual obligations by the respondent.
3. Applicability of the Arbitration Clause.
4. Limitation and delay in filing the petition.
5. Appointment of Arbitrators.
6. Necessary parties to the arbitration proceedings.

Detailed Analysis:

1. Validity and Enforcement of the Collaboration Agreement and Addendum Agreement:
The petitioners, M/s Tarun Aggarwal Projects LLP and M/s Prajakta Colonilers Pvt. Ltd., entered into a Collaboration Agreement on 07.05.2009 with the respondent for the development of a residential colony. The respondent was to complete development works within 36 months. An Addendum Agreement dated 19.04.2011 was later signed, which the petitioners claim supersedes the original agreement. The Addendum Agreement included terms for irrevocable allotment of plots as non-refundable security and detailed obligations for both parties.

2. Breach of Contractual Obligations by the Respondent:
The petitioners allege that the respondent failed to obtain the necessary licenses and did not fulfill its obligations under the agreements. Despite assurances, the respondent did not execute the Buyer’s Agreement or complete the development work, leading to financial losses for the petitioners. The petitioners claim they would have earned substantial profits had the respondent complied with the agreements.

3. Applicability of the Arbitration Clause:
The petitioners sought the appointment of Arbitrators under Section 11(5) & (6) of the Arbitration and Conciliation Act, 1996, citing Clause-37 of the Addendum Agreement. The respondent contested this, arguing that the claims fall under Clause-36, which requires specific performance through the courts. However, the court found that Clause-37 allows for arbitration of disputes related to the agreement.

4. Limitation and Delay in Filing the Petition:
The respondent argued that the petition was barred by limitation, being filed after more than eight years. The court examined the timeline of events, including the rejection of the petitioners' application for an additional license in 2014 and the termination of the Addendum Agreement in 2015. The court concluded that the claims were not time-barred, as the cause of action was continuing.

5. Appointment of Arbitrators:
The court noted that both parties had proposed names for Arbitrators, with the petitioners suggesting Mr. Justice (Retd.) Kailash Gambhir and the respondent proposing Mr. Justice (Retd.) Manmohan Singh. The court appointed both as Arbitrators, who would then appoint a third Arbitrator as per Clause-37 of the Addendum Agreement.

6. Necessary Parties to the Arbitration Proceedings:
The respondent claimed that M/s MGF Developments Ltd. was a necessary party due to the transfer of development rights over part of the land. The court left this issue open for the arbitral tribunal to decide, emphasizing the limited scope of judicial review under Sections 8 & 11 of the Arbitration Act.

Conclusion:
The court found that the disputes between the parties were arbitrable and appointed Mr. Justice (Retd.) Kailash Gambhir and Mr. Justice (Retd.) Manmohan Singh as Arbitrators. The question of whether M/s MGF Developments Ltd. is a necessary party was left for the arbitral tribunal to decide. The petition was disposed of with these observations.