The Calcutta High court recently comprising of a bench of Arijit Banerjee observed that a notice seeking for arbitration of a dispute between the concerned parties should not be shrouded with technicality. (Universal Consortium of Engineers v Sri Kanak Mitra)
Facts of the case
This application was filed under Section 11 of the Arbitration and Conciliation Act, 1996 (in short ‘the Act of 1996’), for the appointment of an arbitrator for adjudication of disputes and differences that have arisen between the parties in relation to a Development Agreement (in short, ‘the said Agreement’) entered into by and between the parties
Contention of the Parties
The respondents opposed the application primarily on two grounds.
Firstly, it was argued that no notice under Section 21 of the Act of 1996 was given by the petitioner to the respondents. In the absence of such a notice, the present application is premature and not maintainable.
Secondly, the respondents have filed a complaint against the petitioner before the National Consumer Forum, New Delhi, in relation to disputes arising out of the said Agreement.
It was submitted that initiation of an arbitration proceeding by appointment of an arbitrator would mean that there will be parallel proceedings that ought not to be permitted. Although a third ground has been indicated in the written notes of argument filed by the respondents, i.e., the said Agreement is not registered as required under Section 17 of the Registration Act, this point was not argued when the matter was heard. In any event, this point can be rejected at the threshold since the said Agreement being of the year 2006, there was at that time no requirement for registering the said Agreement.
Courts Observation & Judgment
The bench noted that as regards the main contention of the respondents that the application could not be allowed since the petitioner has not served any notice under Section 21 of the Act of 1996 on the respondents, the same also is unacceptable. Section 21 merely laid down as to when the arbitral proceedings in respect of a particular dispute will be deemed to have commenced, which is when a request for the dispute to be referred to arbitration is received by the respondent.
The bench further reasoned that, the letter dated 01.02.2019 written by the petitioner, when read in a commercial perspective, clearly constitutes a notice under Section 21 of the Act of 1996. It was opined that over the top technicality should not be resorted to in interpreting such a notice. If the intention of the party issuing the notice is clear that he desires arbitration, it should suffice. An overly legalistic approach is not to be adopted. In a commercial dispute, a notice asking for arbitration ought not to be construed too strictly.
The bench with reference to the second contention of the respondents regarding pending proceedings between the parties hereto before the National Commission said that the same was wholly meritless. The petitioner was a developer and contended that it had mistakenly handed over more constructed areas to the respondents than they were entitled to under the Development Agreement. The petitioner, by no stretch of imagination could be considered to be a ‘Consumer’ within the meaning of the Consumer Protection Act. Hence, the pendency of the proceedings before the National Commission cannot be a ground for disallowing the present application.
The bench allowing the application remarked, “The decision in Alupro Building Systems Pvt. Ltd. (Supra) has been distinguished by a Learned Judge of the Delhi High Court in the case of Badri Singh Vinimay Pvt. Ltd. (supra). In that case, Prateek Jalan, J. held that the communication issued by the party wanting arbitration was clear enough and amounted to a notice under Section 21 of the Act of 1996. The Learned Judge distinguished the decision in Alupro Building Systems Pvt. Ltd. (Supra) on facts and noted that in that case there was no notice to the respondents at all. However, in the present case, as I have recorded my opinion above, the petitioner’s letter dated 01.02.2019 clearly contemplated disputes between the parties and resolution of such disputes through the process of arbitration, in the event the disputes were not resolved amicably.”
The court thus ruled, “In view of the aforesaid, all the objections raised by the respondents to resist this application fail. This application is allowed. The remuneration of the Arbitrator and the secretarial staff will be borne equally by the parties. Since no venue of arbitration is mentioned in the arbitration clause, the arbitration will be held in Calcutta at a place to be decided by the Arbitrator.”
Read Judgment @Latestlaws.com
Picture Source :
