* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB. P. NO.113/2008
Date of Decision : 29.1.2010
M/S MAPLETREE PROPERTY PVT. LTD. ...... Applicant
Through: Mr. H.Devarajan &
Mr.Ashok Rajagopalan,
Advocates.
Versus
M/S TODAY HOMES PROPERTY & INFRASTRUCTURE
...... Respondent
Through: Mr.Vivek Sibal and
Mr.Rahul Sharma,
Advocates for respondent
Nos.1 to 4.
Mr.Kirti Kumar proxy
counsel for respondent
no.5.
CORAM :
HON'BLE MR. JUSTICE V.K. SHALI
1. Whether Reporters of local papers may be
allowed to see the judgment? YES
2. To be referred to the Reporter or not ? NO
3. Whether the judgment should be reported
in the Digest ? NO
V.K. SHALI, J. (oral)
1. This is a petition filed by the petitioner under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator.
2. The case of the applicant is that it is a company incorporated under the Companies Act, 1956 having its office at 140, Sunama House, August Kranti Marg, Mumbai-400 036. The petition was filed through one of the authorized representative of the company. It was alleged Arb. P. No.113/2008 Page 1 of 8 that the respondent no.1 is also a company and misleading the members of the Consortium along with the respondent Nos.2 to 4. The respondent Nos.1 to 4 are the members of Consortium which bid for development of City Centre Project for Ludhiana. It is alleged that respondent no.5 is also a statutory authority and is called the Ludhiana Improvement Trust vested with the responsibility of development of City of Ludhiana. It is alleged that respondent no.5 had invited tenders from eligible entities for implementing the construction of the City Centre Project at Ludhiana.
3. Pursuant to the said invitation, the respondent Nos.1 to 4 were one of the successful bidders for the said construction and had signed the Memorandum of Understanding with the respondent no.5 on 04.5.2005. It is alleged that the respondent no.5 had put respondent no.1 a member of the Consortium in physical possession of the plot according to the agreement executed on 24.5.2005, along with the power of attorney dated 29.8.2005 executed by respondent no.5 in favour of respondent no.1.
4. It is alleged that by an agreement dated 10.1.2006, the applicant purchased a property measuring 1,50,000 sq. ft. area on the lower ground floor of the building proposed to be constructed by the respondent Nos.1 to 4 at the said City Centre for Rs.51.84 crores @ Rs.3456/- per sq. ft. along with the undivided proportionate share in the land. Arb. P. No.113/2008 Page 2 of 8 The said agreement was that the respondent no.1 for and on behalf of respondent Nos.1 to 4 as well as respondent no.5 in the capacity of an attorney had signed an agreement of sale of certain built up area proposed to be constructed in Ludhiana.
5. The agreement recorded total sale consideration of
Rs.51,84,00,000/- out of which a sum of
Rs.15,55,20,000/- was paid by the applicant by way of two demand drafts bearing Nos.177466 dated 19.12.2005 and 177282 dated 07.1.2006 in favour of the respondent Nos.1 to 4. It is alleged that clause 50 of the said agreement contained an arbitration clause that in the event of any dispute relating to the said agreement arising between the parties, the same would be referred to a sole arbitrator in accordance with the Arbitration and Conciliation Act, 1996 with the Seat of Arbitration at Delhi.
6. It is alleged that the respondent Nos.1 to 4 could not develop the said City Centre on account of the dispute having arisen between the respondent no.5 on the one hand and respondent Nos.1 to 4 on the other as there was a change of Government in the State of Punjab. The applicant had accordingly prayed for appointment of an arbitrator to the respondent Nos.1 to 4 and since the respondents had failed to appoint an arbitrator, consequently, the present petition has been filed. Arb. P. No.113/2008 Page 3 of 8
7. The respondent nos.1 to 4 filed their response to the petition and contested the claim of the applicant on various grounds initially. The respondent no.5 also filed the response to the application/petition for appointment of an arbitrator.
8. I have heard the learned counsel for the parties and perused the record.
9. So far as the objections of the respondent Nos.1 to 4 are concerned, they are in fact not considered on merit, on account of the fact that during the course of arguments, the respondent Nos.1 to 4 have very fairly conceded that they have no objection for appointment of an arbitrator for adjudication of the dispute purported to be raised by the applicant with the respondents. Both the learned counsel for the applicant and respondent Nos.1 to 4 had agreed to the name of Hon'ble Ms.Justice Usha Mehra, retired Judge of this Court to act as the sole arbitrator for the purpose of adjudication of the dispute arisen between the parties.
10. So far as the respondent no.5 is concerned, it did not appear at the time when the matter was conceded by the learned counsel for respondent Nos.1 to 4. Therefore, the Court did not have the advantage of hearing arguments on the basis of objections which are purported to be raised by respondent no.5 to the application of the applicant for appointment of an arbitrator. However, their response can be construed from the reply which is filed by them to the Arb. P. No.113/2008 Page 4 of 8 application under Section 11 of the Arbitration and Conciliation Act.
11. A perusal of the said reply by respondent no.5 shows that the main objection which has been raised by the respondent no.5 to the appointment of an arbitrator is that the agreement dated 24.5.2005 which is purported to have been executed between the respondent Nos.1 to 4 for and on behalf of the respondent no.5 in the capacity of an attorney could not be a ground for entitling the applicant to appoint an arbitrator in terms of the said agreement. It is alleged that the entire agreement dated 24.5.2005 was based on fraud, forgery and cheating as a consequence of which after vigilance inquiry against the officials of Ludhiana Improvement Trust by the IGP (Vigilance), a case bearing FIR No.5/2007 was registered on 23.3.2007 under Sections 409, 420, 467, 468, 471 & 120-B IPC and Sections 7. 13 (1) (c) (d) read with Section 13(2), 14 of the Prevention of Corruption Act, 1988 in Police Station Vigilance Bureau, Ludhiana. It is alleged that a charge sheet has since been filed and therefore, as the agreement itself between the respondent no.5 and respondent Nos.1 to 4 is based on fraud and forgery, therefore, it should not be made as a basis of appointment of an arbitrator for adjudication of the so called dispute between the applicant /petitioner and the respondent Nos.1 to 4. It was also alleged that on the basis of the same reasoning, the Arb. P. No.113/2008 Page 5 of 8 respondent nos.1 to 4 could not be treated to be as attorneys of the respondent no.5.
12. Next, it has been urged that before filing the present petition under Section 11 of the Arbitration and Conciliation Act, 1996, two attempts were already made by the applicant before Punjab and Haryana High Court by filing applications under Section 11 of the Arbitration and Conciliation Act. The first case was registered as an arbitration case bearing No.263/2006 titled Today Homes and Infrastructure Pvt. Ltd. Vs. Ludhiana Improvement Trust and Anr., which was dismissed on 27.8.2007. Another petition came to be registered as Arbitration case No.76/2007 in which the Punjab and Haryana High Court was pleased to appoint Sh. R.C.Lahoti, former Chief Justice of India as the sole arbitrator vide order dated 04.4.2008. The appointment of Hon'ble Mr.Justice Lahoti, former Chief Justice as the sole arbitrator was ultimately set aside by the Apex Court and the matter was remanded back to the High Court. It has been thus averred that after the receipt of the said order, the respondent Nos.1 to 4 have now chosen to get the dispute adjudicated between the respondent Nos.1 to 4 and the respondent no.5 with the help of the applicant/petitioner by filing the present application as a surrogate petition.
13. I have carefully considered the plea of the respondent no.5 as given in their reply.
Arb. P. No.113/2008 Page 6 of 8
14. The sum and substance of the challenge of the respondent no.5 is essentially challenging the jurisdiction of the arbitrator to adjudicate the dispute as well as the very factum of appointment of an arbitrator in terms of the arbitration clause between the parties on the ground of the agreement being vitiated by fraud, forgery, etc.
15. It is now settled legal position that by virtue of Section 16 of the Arbitration and Conciliation Act, 1996, the question as to whether the arbitrator has the jurisdiction to adjudicate the dispute arising between the parties or not is essentially to be decided by the arbitrator himself and the same cannot be adjudicated by the Courts anymore. If that be so then all the pleas which are sought to be raised by the respondent no.5 in the present reply can be raised by them before the learned Arbitrator. Therefore, I do not find that there is any merit in the contentions which are averred in the reply of the respondent no.5 which will in any manner prevent this Court from appointing an arbitrator for adjudication of the dispute.
16. For the reasons mentioned above, the objections which have been filed by the respondent no.5 are dismissed. The matter is referred to the sole arbitration of Hon'ble Ms.Justice Usha Mehra, a former Judge of this Court for adjudication between the parties. The learned Arbitrator shall fix her own fees.
Arb. P. No.113/2008 Page 7 of 8
17. Copy of this order be sent to the learned Arbitrator and be given dasti to the learned counsel for the parties.
18. Petition is accordingly allowed.
V.K. SHALI, J.
JANUARY 29, 2010 RN Arb. P. No.113/2008 Page 8 of 8