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TMI Blog2013 (5) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... on agreement, notwithstanding the main agreement itself being declared void, was considered by the 7-Judge Bench in SBP & Co. (supra) and it was held that an arbitration agreement could stand independent of the main agreement and did not necessarily become otiose, even if the main agreement, of which it is a part, is declared void. Also in the case of Reva Electric Car Company Private Limited Vs. Green Mobil [2012 (10) TMI 270 - Supreme Court] wherein held that by virtue of Section 16(1)(b) of the 1996 Act, the arbitration clause continues to be enforceable, notwithstanding a declaration that the contract was null and void. Thus the designated Judge misunderstood the scope of the order passed in the earlier proceedings and the provisions of Section 16 of the 1996 Act in going into a detailed examination regarding the merits of the case and the existence of an arbitration agreement and in holding that once the main agreement between the parties was declared void, the entire contents thereof, including any arbitration clause that may have been incorporated in the main agreement, were rendered invalid - no hesitation in setting aside the impugned judgment and the order of the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Intent was issued in its favour on 18.05.2005, for development of the City Centre, Ludhiana. 3. The records indicate that after the Letter of Intent was issued in its favour, M/s. Today Homes and Infrastructure Pvt. Ltd. deposited Rs. 3.72 crores with the Trust as Performance Security. According to the agreement arrived at between the parties, the successful bidder would ultimately be required to pay to the Trust Rs.371.12 crores. The records further reveal that possession of an area measuring 25.59 acres was handed over to the successful bidder by the Trust on 24.05.2005 by way of Concession Agreement. A Tripartite Agreement was signed on 25.04.2005, between M/s. Today Homes and Infrastructure Pvt. Ltd., the Trust and the HDFC Bank. In terms of the said agreement, the entire proceeds from booking of the saleable areas were required to be deposited in the Joint Escrow Account of the Company and the Trust with the HDFC Bank, of which 30% was to be credited directly to the account of the Trust and 70% was to be deposited to the account of the Company. Disputes arose regarding the deposits made in the Escrow Account and on 12.09.2006, the Trust issued a letter to the Company see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any wrote to the Trust on 30.06.2007, indicating that it had appointed its arbitrator. The Trust responded to the said letter by raising an objection that since the matter was sub judice before the Chief Justice of the High Court, no arbitrator could have been appointed by the Company. 6. On 22.08.2007, Arbitration Application No.263 of 2006, was taken up by the Chief Justice of the Punjab and Haryana High Court, but the same was dismissed as withdrawn with liberty to file a fresh petition. On the same day, a fresh petition was filed under Section 11(6) of the 1996 Act, being Arbitration Case No. 76 of 2007. On 04.04.2008, the Chief Justice of the aforesaid High Court appointed retired Chief Justice of India, Shri R.C. Lahoti, as Arbitrator to adjudicate upon the disputes between the parties. Arbitration proceedings were, thereafter, held on 22.04.2008, when the Company filed its Statement of Claims. The next date for arguments, after completion of pleadings, was fixed on 02.06.2008. 7. In the meantime, however, SLP(C) No. 10550 of 2008, filed by the Trust challenging the appointment of the arbitrator, in Arbitration Case No.76 of 2007, came up for consideration before this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lalit submitted that the essence of the issue before the Arbitrator, was lost sight of by the designated Judge. 12. An attempt was made by Mr. Salil Sagar, learned Senior Advocate, appearing for the Trust, to counter the submissions made by Mr. Lalit and Mr. H. Devarajan, learned Advocate, appearing for the appellants in the appeals arising out of SLP (C) Nos. 11778 of 2010 and 10795 of 2010. The learned counsel supported the decision of the learned designate Judge to distinguish the decision rendered by this Court in SBP Co. (supra) and the facts of the present case. Mr. Sagar insisted that once the main agreement had been found to be void, the contents thereof, including any arbitration agreement, was also rendered void. The learned counsel submitted that the arbitration clause contained in the arbitration agreement dated 24.05.2005, stood automatically dissolved upon the agreement itself being held to be void. Mr. Sagar, therefore, urged that the appointment of an arbitrator by the designated Judge in Arbitration Case No.76 of 2007 was void and was liable to be set aside. 13. We have carefully considered the submissions made on behalf of the respective parties and we are o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oid. 15. In our view, the learned designated Judge misunderstood the scope of the order dated 14.10.2008, passed in the earlier proceedings and the provisions of Section 16 of the 1996 Act in going into a detailed examination regarding the merits of the case and the existence of an arbitration agreement and in holding that once the main agreement between the parties was declared void, the entire contents thereof, including any arbitration clause that may have been incorporated in the main agreement, were rendered invalid. 16. It may be profitable to remind ourselves of the observations made by the 7-Judge Bench in SBP Co. (supra), regarding what the Chief Justice is really required to decide on an application being made to him under Section 11(6) of the 1996 Act. In paragraph 39 of the judgment, it has been stated that obviously the Chief Justice has to first decide his own jurisdiction and whether the party concerned has approached the right High Court. He also has to decide whether there is an arbitration agreement and as to whether the person who has made the request before him, is a party to such agreement. Their Lordships further indicated that it was necessary to mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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