2021 (9) TMI 1053 - SC - Indian Laws

Seeking appointment of sole arbitrator to adjudicate the differences between the parties - Section 11(6) read with Section 11(12) of the Arbitration and Conciliation Act, 1996 - whether the nature of dispute sought to be referred for arbitration in these petitions fall under the Arbitration Clause(s) of RCMA and SCMA, governed by the Arbitration and Conciliation Act, 1996, with the seat and venue for arbitration at New Delhi or such disputes can be arbitrated only in terms of the dispute resolution mechanism specified in Clause 9 of the Rajapura SPA/Southern Homes SPA i.e. under the rules of the Singapore International Arbitration Centre and the seat and venue of the arbitration at Singapore? HELD THAT - The Share Purchase Agreements as well as the Construction Management Agreements are subsisting and have not been repudiated by the Parties. Both sets of agreements contain arbitration clauses that are not similar to one another - in order to determine the nature of arbitral proceedings, the two groups of agreements will have to be read in harmony and reconciled so as to avoid any head on collision, and thereafter a conclusion as to which of the clauses would be applicable in the present case, needs to be drawn. Upon perusing the Share Purchase Agreements, it is clear that the primary purpose of these agreements is to effectuate the change of ownership of Respondent No.1 and the Begur Company from DHDL to Resimmo PCC. No doubt, the Rajapura SPA and the Southern Homes SPA as per their Clause 6.1 and 6.2, do provide for the completion of the respective residential projects as a postclosing obligation, however, these construction obligations had to be fulfilled in accordance with the terms of the Construction Agreements - A prima facie reading of Share Purchase Agreements and Construction Management Agreements , does suggest that notwithstanding certain overlaps between these agreements, their object and field of operation is different and distinct in nature. It is therefore difficult for us to accept it outrightly that the respective Share Purchase Agreements are the principal agreements governing the transaction between the parties or that the present disputes can be resolved solely under the arbitration clause contained therein. The dispute sought to be referred to arbitration by the Petitioner DHDL pertains to non-deposit of agreed amount by Respondent No.2 and resultant payment thereof as Fee which the Petitioner claims in terms of clause 4 of RCMA/SCMA. Whether or not the Petitioner has complied with the condition precedent under Rajapura SPA and thus has become entitled to fee as per clause referred to above, is purely a question of fact to be determined by the Arbitral Tribunal. The fact remains that the RCMA and SCMA, though interlinked and connected, are still two separate agreements - since the Fee Agreement provides that the Fee can only be calculated after taking into consideration various financial components of both the Rajapura Homes Projects and the Southern Homes Project, it would be necessary for the sake of avoiding wastage of time and resources, and to avoid any conflicting awards, that the disputes under Arbitration Petition No.17 and Arbitration Petition No.16 are referred to a sole Arbitrator. This Court appoints Mr. Justice (Retd.) R.V. Raveendran, Former Judge, Supreme Court of India as the sole arbitrator to resolve all disputes/differences between the parties. The arbitrator will be paid fees in accordance with the Fourth Schedule of the Arbitration and Conciliation Act, 1996 as amended from time to time - Petition allowed.

Summary

Issues Involved:
1. Appointment of a sole arbitrator under Section 11(6) read with Section 11(12) of the Arbitration and Conciliation Act, 1996.
2. Determination of whether disputes fall under the arbitration clauses of RCMA/SCMA or Rajapura SPA/Southern Homes SPA.
3. Consolidation of arbitration proceedings under RCMA and SCMA.

Issue-wise Detailed Analysis:

1. Appointment of Sole Arbitrator:
The petitioner, DLF Home Developers Limited (DHDL), filed Arbitration Petitions under Section 11(6) read with Section 11(12) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a sole arbitrator to adjudicate disputes arising from two Construction Management Agreements (RCMA and SCMA). The petitioner argued that the respondents unreasonably rejected the notices of project completion and failed to fulfill their financial obligations. The respondents contended that the disputes should be resolved under the Share Purchase Agreements (Rajapura SPA and Southern Homes SPA), which stipulate arbitration under the rules of the Singapore International Arbitration Centre (SIAC) with the seat and venue in Singapore.

2. Determination of Applicable Arbitration Clause:
The court analyzed whether the disputes fall under the arbitration clauses of RCMA/SCMA or Rajapura SPA/Southern Homes SPA. The primary purpose of the Share Purchase Agreements was to effectuate the change of ownership, with post-closing construction obligations to be fulfilled under the Construction Management Agreements. The RCMA and SCMA detailed the scope of services and financial obligations of the parties, including the payment of fees to DHDL. The court found that the disputes regarding the non-deposit of the agreed amount by Respondent No.2 and the resultant payment of fees to DHDL fall under the RCMA and SCMA, not the Share Purchase Agreements. The court emphasized that the arbitration clauses in RCMA/SCMA should govern the disputes related to construction obligations and financial transactions.

3. Consolidation of Arbitration Proceedings:
The petitioner argued for a consolidated arbitration proceeding due to the interconnected nature of RCMA and SCMA, which involve overlapping financial components. The respondents opposed consolidation, citing breaches under both agreements and distinct factual bases for the disputes. The court acknowledged the interlinked nature of the agreements but noted that they are still separate contracts. The court decided that a single arbitrator should be appointed to avoid conflicting awards and wastage of resources. The sole arbitrator would have the discretion to consolidate the proceedings and decide on a composite award or separate awards.

Conclusion:
The court allowed the Arbitration Petitions and appointed Mr. Justice (Retd.) R.V. Raveendran, Former Judge, Supreme Court of India, as the sole arbitrator to resolve all disputes between the parties. The arbitrator's fees would be in accordance with the Fourth Schedule of the Arbitration and Conciliation Act, 1996. The arbitrator would have the authority to determine whether the disputes should be consolidated and the manner of conducting the arbitral proceedings.