M/S. Smile Realtors Pvt. Ltd. Thr. ... vs Farmerbank Employees Co-Op. ...
2017 Latest Caselaw 7457 Bom

        J-mca829.17.odt                                                                                                   1/7


                    IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                           NAGPUR BENCH, NAGPUR


               Misc. Civil Application No.(Arbitration) No.829 OF 2017


        M/s. Smile Realtors Pvt. Ltd.,
        A company incorporated under 
        the Companies Act,
        having its office at 205/6, Palm Road,
        G.P.O. Square, Civil Lines, Nagpur,
        represented through its Director,
        Shri Anoj Agarwala, R/o. 'Shrimangal',
        159, Ramdaspeth, Nagpur.                                                    :      APPLICANT

                           ...VERSUS...

        Farmerbank Employees Co-operative 
        Housing Society,
        Having Registration No.NGP/HSG/749,
        Office at Building of M.S. Co-operative Bank Ltd.,
        Tilak Putla, Mahal, Nagpur,
        through President Shri Shekhar N. Saraf,
        R/o. Plot No.11, Laxminagar, Nagpur 
        and
        Secretary Shri S.P. Pande,
        R/o. Plot No.11, Laxminagar, Nagpur.             :      NON-APPLICANT

        =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
        Shri Avinash Gharote, Advocate for the Applicant.
        Non-applicant, Shri Shekhar N. Saraf, in-person.
        =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-


                                                      CORAM  :   S.B. SHUKRE, J.

nd SEPTEMBER, 2017.

                                                      DATE      :   22

        ORAL JUDGMENT   :

1. Heard Shri Gharote, learned counsel for the applicant and

J-mca829.17.odt 2/7

Shri Shekhar Saraf, President of the respondent-Society, who has been

authorized by the Society to represent it before this Court. Perused the

application and the documents filed along with it.

2. Rule. Rule made returnable forthwith. Heard finally by

consent.

3. On going through the agreement dated 30.11.2012, one can

seen that this applicant has been given the work of re-development of a

piece of land belonging to the respondent-society on which there is

already standing a building complex occupied by members of the society.

It is further seen that under the re-development scheme, building

complex is to be demolished and the entire piece of land is to be

re-developed for the re-allotment to and re-use of the members of the

Society. It is also seen that the applicant has been allotted this work

after its tender was accepted by the non-applicant Society. Accordingly,

there has been a MoU or agreement for re-development and power of

attorney which is executed on 30th November, 2012.

4. So far as execution of agreement dated 30.11.2012 is

concerned, there is no dispute between the parties. Parties admit that it

is an agreement entered into between them. This agreement contains a

clause, clause 39, which makes a provision for reference of the dispute

between the parties to the arbitration, if the dispute or the differences

between the parties arise out of the terms and conditions of the

J-mca829.17.odt 3/7

agreement dated 30th November, 2012. There is yet another clause in the

agreement, clause 40, which provides for alternate arrangement for

resolution of the dispute and differences between the parties and it is

through filing of an application under Section 91 of the Maharashtra

Co-operative Societies Act. As rightly submitted by the learned counsel

for the applicant, the alternate mechanism provided in the agreement for

resolution of the dispute now is redundant after it has become clear that

the dispute between a developer and a housing society cannot be raised

under Section 91 of the Maharashtra Co-operative Societies Act. So,

what now remains is only arbitration clause, which is clause No.39.

5. A closure scrutiny of clause No.39 discloses that there is a

definite procedure prescribed for reference of the dispute to the

arbitrator. This procedure is certain and also very simple. Under this

procedure, even name of the arbitrator has been mentioned. It says that

whenever the dispute between the parties arises, any of the parties shall

refer the dispute to the arbitration of the sole arbitrator Shri Sandeep

Shastri, Advocate, Bajaj Nagar, Nagpur. This means that under the

procedure, the arbitrator is already appointed and all that is required for

either of the parties or both of the parties is the reference of the dispute

in between them to the named arbitrator who is already in place.

6. Learned counsel for the applicant submits that a dispute

arose between the applicant and the non-applicant after the

J-mca829.17.odt 4/7

non-applicant refused to cooperate in the matter. He submits that a

building plan was submitted to the Corporation Authority for its sanction

and while processing it, certain objections were raised by the Authority.

Those objections related to the area of the piece of land shown in the

record of the City Survey Office. He submits that this fact was brought to

the notice of the respondent and a request was made to it to sort out the

matter at the office of the City Survey, Nagpur. But, till date the Society

did not do so. He submits that the applicant also brought in T.D.R.

which he was to do so under the terms and conditions of the agreement.

He submits that as the non-applicant has refused to sort out the issues,

which are in fact a hurdle to the implementation of various terms and

conditions of the contract, there is a dispute between the parties which is

required to be referred to the arbitrator as contemplated under clause 39

of the agreement.

7. This has not been agreed to by Shri Shekhar Saraf. He

submits that neither the applicant nor the non-applicant has done

anything towards execution of any of the terms of the agreement. He

submits that if neither of the parties has implemented or given effect to

any of the terms of the agreement, there would not be any dispute

between the parties and as such there is no need for referring the matter

to the arbitration. He also submits that the statement made regarding

the T.D.R. is misleading as whatever T.D.R. which has been alleged to be

J-mca829.17.odt 5/7

brought in by the applicant is really not the T.D.R. He also submits that

as per clause 50 of the agreement dated 30 th November, 2012, this

agreement cannot be read for any purpose, it being a simple copy and

not a copy of the duly registered agreement.

8. The rival submissions summarized in the earlier paragraph

and what has been found by this Court already in the present matter,

would be sufficient for me to conclude that there is a dispute between the

parties and this dispute arises out of enforcement of the terms and

conditions of the agreement admittedly executed between the parties.

Therefore, a resort to clause 39 of the agreement would become

necessary because, ultimately some impartial agency would be required

to adjudicate upon the dispute between the parties. Such agency would

be either the Court or the Lok-adalat or the Agency appointed under the

agreement itself. Since the parties have agreed to one particular agency

i.e. of the arbitration, this Court will have no option but to refer the

dispute between the parties to the arbitration. As regards the

contentions of the parties including the contention of the non-applicant

that this agreement cannot be enforced or read for any purpose in any

proceeding, it being an invalid agreement, same can be raised and

determined by the learned arbitrator, as the arbitrator is invested with

ample power in this regard under the provisions of the Aarbitration and

Conciliation Act, 1996, which are broadly referable to those conferred

J-mca829.17.odt 6/7

under Section 16 of this Act. So, all these contentions can be kept upon

and left to be appropriately decided by the learned arbitrator.

9. Now, about the difficulty faced by the named arbitrator.

Learned counsel for the applicant has invited my attention to the reply

given by the named arbitrator Shri Sandeep Shastri. This reply given to

the notice dated 9.10.2015 issued by the applicant is of the date of

23.9.2016 (Annexure-5). By this reply, Shri Sandeep Shastri has

expressed his personal difficulty in acting as an arbitrator in the matter

and therefore he has recused himself from this matter. The non-

applicant admits such recusal by the named arbitrator. In view of this,

this Court would have to hold and it holds that mandate of the named

arbitrator has stood terminated the moment the named arbitrator

recused himself, in view of the provision of Section 15(1)(a) and it can

also be found that the named arbitrator has failed to perform the

function entrusted to him under the agreement agreement, in view of the

provision of Section 11(6)(c) of the Arbitration and Conciliation Act. It

would then follow that this Court would be required to appoint an

arbitrator to resolve the dispute between the parties.

10. In the circumstances, the application is allowed.

11. The dispute be referred to the arbitration.

12. Hon'ble Shri Justice (Retired) A.P. Deshpande is appointed as

the Arbitrator.

J-mca829.17.odt 7/7

13. The applicant shall deposit Rs.25,000/- as the processing fees

within two weeks from the date of order, failing which this application

shall stand dismissed without reference to the Court. After depositing

processing fees, matter be referred to the learned arbitrator for his

arbitration.

14. Parties to bear their own costs.

15. Rule is made absolute in these terms.

JUDGE okMksns