Scope Of Examination U/S 11 Of Arbitration Act Confined To Existence Of Arbitration Agreement: Delhi High Court

The Delhi High Court bench of Justice Sachin Datta affirmed that when a non-signatory person or entity is arrayed as a party at Section 8 or Section 11 stage of the Arbitration Act, the referral court should prima facie determine the validity or existence of the arbitration agreement, as the case may be, and complex issue like whether the non-signatory is bound by the arbitration agreement must be left for the Arbitral Tribunal to decide. Brief Facts This is a petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereafter 'A&C Act') seeking appointment of a sole arbitrator to adjudicate the disputes between the parties. This petition is concerned with the Third Collaboration Agreement dated 14.10.2010 (hereafter 'Third Collaboration Agreement'). The said Third Collaboration Agreement has been executed between petitioner no.1 and respondent no.1 in respect of land.The purport of the said agreement was that the respondent no.1 would develop the said land and construct a Residential/Group Housing/Commercial Colony thereon. Plot Buyer Agreements dated 23.12.2010 came to be executed between the petitioner no.1, respondent no. l and a group company of respondent no. l i.e. M/s Ansal Townships & Infrastructure Ltd., (the respondent no.2 herein), as a Confirming Party, whereby specific Plots were allotted to the petitioner no.1. However, neither the possession of the Plots was handed over to the petitioner no.1 nor the sale deeds were executed. Certain disputes have also arisen between the parties in relation to the land admeasuring 9 Kanal & 1 Marla (1.1312 acres) situated in the revenue estate of village Badshahpur, Tehsil & Distt. Gurgaon in Sector 67, Gurgaon, purportedly forming part of the Fourth Collaboration Agreement. Pursuant thereto, vide letter dated 29.11.2018, the respondent no.1 froze/suspended the handing over of possession of the aforesaid plots to the petitioners. Disputes having arisen between the parties, the petitioners sent notice invoking arbitration dated 14.04.2022 to the respondent no.1 and 2, invoking the arbitration clause contained in the Third Collaboration Agreement dated 14.10.2010. However, no reply thereto is stated to have been sent by the said respondents. The petitioners have also sent notice invoking arbitration to respondent no. 3 to 5 on 11.10.2023. However, no reply thereto was sent by the said respondents. Contentions The petitioners submitted that the respondent nos. 1 and 2 have already consented for constituting an arbitral tribunal to resolve the disputes between the parties. So far as respondent nos. 3 to 5 are concerned and that the said respondents ultimately claim their purported title to the plots through respondent nos. 1 and 2 and therefore the assignees and/or have acquired the benefits which have accrued to the respondent nos. 1 and 2 under the Collaboration Agreement. That the Third Collaboration Agreement, which contains the arbitration clause, defines the term “developer” to include its assignees and the said respondents have impliedly consented to remain bound by the arbitration clause. In support of these submissions reliance has been placed on Rajesh Gupta v. Mohit Lata Sunda, and Shapoorji Pallonji and Co. Pvt. Ltd. v. Rattan India Power Ltd. That The Plots are the petitioner's share of developed land under the Third Collaboration agreement and the same could not have been dealt/sold by the respondent nos.1 and 2. It is alleged that the respondent nos. 3 to 5 are not bona fide purchasers. Per contra, the respondents submitted that respondent nos.1 and 2 have no objection to the constitution of an arbitral tribunal to comprehensively adjudicate the disputes between the parties. The respondent no. 3 submitted that the respondent no. 3 is a bonafide purchaser of the said Plot Nos. C-1018 and C1019 and that the respondent no. 3 had been allotted / purchased the Plots as a part of a settlement with the respondent no.1 and another group company of respondent no.1 and that respondent no. 1 being the absolute owner of the Plots transferred the same to respondent no. 3 in accordance with law. That respondent no. 3 is not a party to the Third Collaboration Agreement; being a third-party and a non-signatory to the Third Collaboration Agreement, it cannot be made a party to the arbitration. It is contended that in these circumstances, the respondent no. 3 cannot be referred to arbitration under the said agreement. In this regard, reliance has been placed on Gujarat Composite Ltd. v. A Infrastructure Ltd.,(2023) and Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., 2013. That there is no assignment of rights/obligations under the Third Collaboration Agreement from respondent no. 1 to respondent no. 3. Reliance has also been placed on Kapilaben v. Ashok Kumar Jayantilal Sheth, 2020. The respondent no.4 submitted that the...

Scope Of Examination U/S 11 Of Arbitration Act Confined To Existence Of Arbitration Agreement: Delhi High Court

Mohd Malik Chauhan

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