* IN THE HIGH COURT OF DELHI AT NEW DELHI
3
+ ARB.P. 318/2011
INTUITIVE TECH SOLUTIONS PRIVATE LTD. ..... Petitioner
Through: Mr. Harpreet Singh and Mr. Rajesh
Gupta, Advocates.
versus
DLF LIMITED ..... Respondent
Through: Mr. H.L. Tiku, Senior Advocate with
Ms. Mandeep Kaur and
Ms. Yashmeet, Advocates.
CORAM: JUSTICE S. MURALIDHAR
ORDER
% 16.01.2012
1. The Petitioner, M/s. Intuitive Tech Solutions Private Limited, in this petition under Section 11 of the Arbitration & Conciliation Act, 1996 ('Act') seeks the appointment of an Arbitrator to adjudicate the disputes with the Respondent, M/s. DLF Limited, arising out of an agreement dated 21st February 2011 between the parties.
2. Under the said Agreement, the Petitioner was allotted on licence basis a commercial space being Unit No. 002 having a specific area of 167.03 square meters and super area of 238.62 square meters on the ground floor of a commercial complex to be constructed by the Respondent at Baba Kharag Singh Marg, Connaught Place, New Delhi. According to the Petitioner, the Respondent failed to fulfill its commitment to obtain the Arb P. No. 318 of 2011 Page 1 of 9 necessary occupancy certificate and to hand over the possession of the allotted unit to the Petitioner till 30th May 2011. Consequently, the Petitioner terminated the agreement on 31st May 2011 and sought refund of Rs. 22,92,450/- deposited by it with the Respondent as 'interest free refundable security deposit'. After three subsequent notices, the Petitioner issued notice dated 14th September 2011 invoking the arbitration clause in the Agreement dated 21st February 2011.
3. The arbitration Clause 32 (b) in the Agreement dated 21st February 2011 reads as under:
"32 (b) In case of any dispute arising on terms of the EOI, the matter shall be referred to arbitration for adjudication as per the provisions contained in the Arbitration & Conciliation Act, 1996. In that event, the right to appoint the arbitrator shall be of the Intending Licensor, at its sole discretion and the Intending Licensee shall have no objection in this regard. The decision of the arbitrator shall be final and binding upon the parties. The Intending Licencsee hereby confirms that it shall have no objection to this appointment even if the person so appointed, as the Arbitrator, is an employee or Advocate for the Intending Licensor or is otherwise connected to the Intending Licensor and the Intending Licensee confirms that notwithstanding any such relationship/connection, the Intending Licensee shall have no doubts as to the independence or impartiality of the said Arbitrator. The arbitration proceedings shall be held at an appropriate location in New Delhi."
4. In its letter dated 14th September 2011 the Petitioner while invoking the arbitration clause stated as under:
"7. In view of the aforementioned facts and circumstances, Arb P. No. 318 of 2011 Page 2 of 9 since the disputes have arisen between the parties, it would be just, proper and expedient that the parties appoint an Arbitrator to adjudicate and decide all the inter se disputes. Accordingly, our client calls upon you to appoint a sole Arbitrator in consultation with our client to adjudicate upon the disputes which have arisen between the parties.
8. That if you fail to give your response to the contents of the present notice within 30 days of the receipt of the same, our client shall be advised to initiate appropriate proceedings before the competent court of law for redressal of their grievance including initiation of the appropriate proceedings for the appointment of the arbitrator to adjudicate the disputes which have arisen between the parties."
5. According to the Petitioner, the said letter dated 14th September 2011 was sent to the Respondent by speed post and registered post with acknowledgment due ('AD'). Copies of the postal receipts evidencing dispatch of letter dated 14th September 2011 by registered and speed post have been placed on record. Also placed on record is the AD card signed by the Respondent card in which the date 16th September 2011 appears. The Petitioner states that since the Respondent failed to appoint an Arbitrator in terms of Clause 32 (b) of the Agreement within 30 days from the date of receipt of the Petitioner's notice dated 14th September 2011 it has forfeited its right to do so and this Court should appoint an Arbitrator. Consequently, the present petition was filed on 20th October 2011.
6. Mr. Harpreet Singh, learned counsel appearing for the Petitioner states that in the afternoon of 21st October 2011 the Petitioner received a letter Arb P. No. 318 of 2011 Page 3 of 9 dated 17th October 2011 from the Respondent informing it of the appointment Mr. Sudhanshu Batra, a Senior Advocate, as the Sole Arbitrator in terms of Clause 32 (b) of the Agreement. On 22nd October 2011 the learned Arbitrator entered upon reference and issued notice to the parties to appear before him on 25th November 2011 for further proceedings.
7. On 24th October 2011 learned counsel replied to the letter dated 17th October 2011 of the Respondent. It was, inter alia, contended that the appointment of an Arbitrator by the Respondent was non est as it took place beyond 30 days after receipt of the Petitioner's letter invoking of the arbitration Clause 32 (b) of the Agreement.
8. On 25th November 2011 learned counsel for the Petitioner wrote to the learned Arbitrator stating that the present petition under Section 11 of the Act had been filed in this Court and in view of the stand taken in the present petition, the said appointment of the learned Arbitrator was inconsequential and non est. It was pointed out that in the present petition notice was issued on 21st October 2011.
9. Mr. Harpreet Singh submitted that in light of the law explained by the Supreme Court in Datar Switchgears Limited v. Tata Finance Limited Arb P. No. 318 of 2011 Page 4 of 9 2000 (8) SCC 151 and Punj Lloyd Limited v. Petronet MHB Limited 2006 (2) SCC 638, the Respondent had forfeited its right to appoint an Arbitrator in terms of Clause 32 (b) of the Agreement on the expiry of 30 days from the date of receipt of notice dated 14th September 2011 issued by the Petitioner invoking the arbitration clause. Inasmuch as the said notice was received by the Respondent on 16th September 2011 and the appointment was made purportedly by a letter dated 17th October 2011 which was dispatched on 20th October 2011, the said appointment was made after the filing of the present petition by the Petitioner on 19th October 2011. Consequently, the appointment would be non est in terms of the law explained in the above decisions. Reliance is also placed on the recent decision dated 9th January 2012 of the learned Judge designate of the Chief Justice of India in Arbitration Petition No. 11 of 2011 [Denel (Proprietary Limited) v. Government of India, Ministry of Defence]. It is accordingly prayed that this Court should appoint an independent Arbitrator.
10. The above submissions were resisted by Mr. H.L. Tiku, learned Senior counsel for the Respondent. He pointed out that even assuming that the Respondent had received a letter dated 14th September 2011 of the Petitioner invoking arbitration Clause 32 (b) of the Agreement on 16th September 2011, the appointment of the learned Arbitrator was made by Arb P. No. 318 of 2011 Page 5 of 9 the Respondent a few days prior to 17th October 2011 and this was in any event before filing of the present petition by the Petitioner under Section 11 of the Act. In terms of the law explained in Datar Switchgears Limited v. Tata Finance Limited, as long as the appointment of the Arbitrator was prior to the filing of the petition under Section 11 it was valid. It is submitted that if the Petitioner has any grievance regarding the impartiality of the Arbitrator appointed there were other remedies under the Act for that purpose.
11. The question whether the Respondent has forfeited its right to appoint an Arbitrator can be answered on an analysis of the facts of the present case. The documents placed on record show that the Petitioner's legal notice dated 14th September 2011 invoking the arbitration clause was received by the Respondent on 16th September 2011. However, the said notice was not in conformity with the arbitration clause since the Petitioner proposed that the appointment of an Arbitrator be done by the Respondent 'in consultation' with the Petitioner. This was contrary to the express wording of Clause 32 (b) of the Agreement. Even assuming that the notice invoking the arbitration clause was received by the Respondent on 16th September 2011, the date of appointment of the Arbitrator by the Respondent is significant. Although the letter of counsel for the Respondent informing the Petitioner of the Arbitrator is dated 17th October Arb P. No. 318 of 2011 Page 6 of 9 2011, and dispatched on 20th October 2011, the actual decision to appoint the Arbitrator must have been taken some time prior to the said letter dated 17th October 2011.
12. In Datar Switchgears Limited v. Tata Finance Limited in para 19 it was observed as under:
"19. So far as cases falling under Section 11(6) are conceded such as the one before us no time limit has been prescribed under the Act, whereas a period of 30 days has been prescribed Under Section 11(4) and Section11(5) of the Act. In our view, therefore, so far as Section 11(6) is concerned, if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand, but before the first party has moved the Court under Section 11, that would be sufficient. In other words, in cases arising under Section 11(6), if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 seeking appointment of an arbitrator. Only then the right of the opposite party ceases. We do not, therefore, agree with the observation in the above judgments that if the appointment is not made within 30 days of demand, the right to appoint an arbitrator under Section 11(6) is forfeited." (emphasis supplied)
13. The above decision was reiterated in Punj Lloyd Limited v. Petronet MHB Limited and in a recent decision dated 9th January 2012 of the Supreme Court in Arbitration Petition No. 11 of 2011 [Denel (Proprietary Limited) v. Government of India, Ministry of Defence]. Consequently, for Arb P. No. 318 of 2011 Page 7 of 9 the purposes of Section 11, it requires to be seen is whether the appointment of the Arbitrator by the Respondent has taken place prior to the filing of the present petition on 19th October 2011.
14. It was contended by learned counsel for the Petitioner that since the notice dated 17th October 2011 was dispatched only on 20th October 2011 the appointment of the Arbitrator took place after the filing of the present petition on 19th October 2011. The above submission fails to appreciate that the actual date of appointment of the Arbitrator by the Respondent had to be prior to the notice dated 17th October 2011. The date of dispatch of the letter intimating the appointment cannot `postpone' the date of appointment. It is not possible, on the basis of the documents placed on record, to hold that the appointment of the Arbitrator by the Respondent took place after the filing of the present petition. In accordance with the law explained by the Supreme Court in Datar Switchgears Limited v. Tata Finance Limited, it is held that the Respondent did not forfeit its right to appoint an Arbitrator in terms of Clause 32 (b) of the Agreement.
15. Any grievance that the Petitioner may have as regards the impartiality of the Arbitrator can be agitated before the learned Arbitrator, who has been appointed, in accordance with law.
Arb P. No. 318 of 2011 Page 8 of 9
16. For all the aforesaid reasons, this Court is not able to grant any relief as prayed for in this petition and it is dismissed as such, with no order as to costs.
S. MURALIDHAR, J.
JANUARY 16, 2012 rk Arb P. No. 318 of 2011 Page 9 of 9