The Single Bench of the Delhi High Court in the case of Ansal Properties Infrastructure Ltd & Anr. vs Dowager Maharanis Residential Accomodation Welfare and Amenities Trust & Anr. consisting of Justice Neena Bansal Krishna reiterated that the theory of Implied Consent could be applied to compel non-signatories to an arbitration agreement to arbitrate.
Facts
Respondent No.1 approached petitioner No.1 for commercial development of a property. A MoU was signed between petitioner No.1 and respondent No.1 as per which the respondent No.1 was responsible to obtain clearances with regard to change in land use to commercial use and a hotel. Pursuant thereto a Collaboration Agreement was entered into between petitioner No.1 and respondent No.1. The project could not move forward as respondent No.1 was unable to get the land use changed from residential to commercial. After approximately five years a Joint Venture Agreement (JVA) was entered into between respondent No.1, respondent, 2, and petitioner No.2 while petitioner No.1 was the confirming party. It was provided in the Collaboration Agreement that if the condition precedent was not satisfied or waived within nine months of JV Agreement, the parties had a right to terminate the Agreement and upon such termination, the Collaboration Agreement would bind the parties. Further, Article 15.12 of the JV Agreement provided for resolution of disputes through arbitration.
Procedural History
An application u/s 8 of the Arbitration & Conciliation Act, 1996 (“the Act”) was filed which was allowed and petitioner No.1 was allowed the initiate arbitration proceedings for settlement of the disputes arising out of the JV Agreement. A letter was received on behalf of respondent No.1 raising frivolous objections, but the Arbitration Clause was not disputed. However, it rejected the request for arbitration and refused to nominate any arbitrator. Hence, the present petition has been filed for appointment of the Sole Arbitrator.
Contentions Made
Petitioner: It was contended that respondent No.1 failed to fulfil its various obligations as envisaged in the JV Agreement.
Respondent: It was contended that the petition is malafide on account of suppression of material facts and being hopelessly barred by time. It was also contended that in the JV Agreement the petitioner No.1 is only a confirming party and has been expressly kept out of the Arbitration clause. It was also contended that the petitioners concealed the factum of modification of the Dispute Resolution Clause under the JV Agreement as petitioner No.1 had expressly sought modification by requesting respondent No.1 to opt out of arbitration.
Observations of the Court
The Bench relying on an observation in the Vidya Drolia case noted that the contention regarding point of limitation cannot be considered u/s 11 of the Act and may be agitated by the parties before the learned Sole Arbitrator. It also noted that the disputes raised do not come within the jurisdiction of NCLT and hence it cannot be said that the disputes herein are non-arbitrable.
Regarding the challenge that there was improper joinder of parties, it relied on Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc. wherein it was held that the theory of Implied Consent could be applied to compel non-signatories to an arbitration agreement to arbitrate. In this case, even if the confirming party was not bound by the terms of the Contract in the sense that there was no liability affixed for it under the Contract but the very fact that it signed the JV Agreement containing the Arbitration Clause, implied that it consented to all the disputes being decided through arbitration and the implied consent to the arbitration clause can be inferred.
Judgment
The Bench appointed Hon’ble Ms. Justice Usha Mehra as the sole arbitrator. The arbitration was to be held under the aegis of the Delhi International Arbitration Centre. The remuneration of the learned Arbitrator was to be computed in terms of Schedule IV of the Act or as agreed by the parties and the arbitrator.
Case: Ansal Properties Infrastructure Ltd & Anr. vs Dowager Maharanis Residential Accomodation Welfare and Amenities Trust & Anr.
Citation: ARB.P. 1050/2021
Bench: Justice Neena Bansal Krishna
Decided on: 10th October 2022
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