1. This is an application for appointment of an arbitrator, for resolution
of the dispute between the parties. The disputes arose out of a Joint Venture
Agreement dated July 30, 2022. According to the petitioner, disputes or
agreement were to be referred to an arbitral tribunal. The arbitral tribunal
nominated by the legal advisors of the developer and the leaseholder. The
2. The petitioner is a registered partnership firm and is engaged in the
business of real estate development. The firm was constituted on July 1,
2022, pursuant to a partnership deed. The respondent no. 1 is a society
respondent no. 2, claiming to be the President of the said society, had
situated at Plot No. AD-263/C, Sector I, Salt Lake City, Kolkata - 700064.
3. The case run by the petitioner in the application is as follows :-
a) By an indenture of lease dated January 22, 1981, the Government of
West Bengal as lessor, demised unto and in favour of the respondent
no.1, leasehold rights in respect of land measuring about 6.2719
kathas, situated at plot no. AD-263/C, Sector I, Salt Lake City,
Kolkata - 700064. The lease was valid for 999 years commencing from
the date of execution of the deed subject to payment of lease rent by
the respondent no.1 to the state of West Bengal.
b) The respondent no.1 obtained possession in respect of the premises
from the concerned authority on February 24, 1981, and constructed
a single-storey building, upon obtaining requisite sanction from the
municipal authorities.
c) Respondent no.1 had been making payments of the lease rent to the
Government of West Bengal.
d) As the respondent no.1 was facing paucity of funds and could not
effectively perform its day-to-day activities, the members of the society
decided to develop the premises by constructing a multi-storeyed
building. The petitioner was requested to undertake the project.
e) Upon negotiations between the parties, the joint venture agreement
dated July 30, 2022 was entered into. The respondent no.2
represented the respondent no.1 as its President and executed the
said joint venture agreement on behalf of the society.
f) The society had granted exclusive rights to the petitioner to construct
a new building on the premises in question. All expenses for such
construction of the proposed multi-storied building were to be borne
by the petitioner. The petitioner was to make payment of a sum of Rs.
3,41,00,000/- subject to deduction of TDS as non-refundable and
non-adjustable advance, in the manner provided under clause 8.4 of
the said agreement. In the said agreement, the respondent no.1
society, was described as the leaseholder and the petitioner was
described as the developer. The respondent no. 1 was further entitled
to allocation of the entire first floor together with one covered car
parking space measuring about 150 square feet.
g) The petitioner was entitled to the remaining of the area in the said
building and car parking spaces along with common facilities and
amenities.
h) Further, the petitioner was entitled to 75% of the roof area and the
balance 25% was the entitlement of the respondent no.1. The
petitioner had the authority to deal with the property in terms of the
agreement and negotiate with persons or enter into any agreement or
contract or borrow money or take any advance against its allocation or
acquired right.
i) The petitioner complied with its obligations under the agreement and
transferred a sum of Rs. 20,79,000/- after deduction of TDS to the
account of the respondent no.1. The sum was accepted by the
respondents without any objection or demur. Receipts with regard to
the payment were also granted in favour of the petitioner.
j) The respondent no.1 was under an obligation to hand over vacant
possession of the premises to the petitioner for development purpose.
k) The petitioner requested the respondents to make over such
possession.
l) Despite such request, the respondents, on one pretext or the other,
delayed handing over of the possession of the premises and the time
for performance of the agreement had been extended by mutual
consent.
m) Later, the petitioner came to learn that one Meghnath Mondal,
representing himself as the Secretary of the respondent no.1, had filed
a suit before the learned Civil Judge (Senior Division) 2nd Court at
Barasat being Title Suit no. 550 of 2023, and prayed for various
reliefs. First of such reliefs being, a declaration that the society was a
duly registered society under the Society's Registration Act 1961 and
was represented by the committee which was in charge of the affairs
of the society at the time of filing of the suit. The names of the
committee members were duly entered in the Office of the Registrar of
Firms, Societies and Non-Trading Corporations, West Bengal.
n) In the suit, the President of the Respondent no. 1, Mr. Golok Ranjan
Bose and the petitioner were impleaded as defendants. The allegations
in the suit were that the erstwhile committee mismanaged the Society,
and excluded the participation of its members. Accordingly, the
registration of the Society was cancelled. Thereafter, such registration
was revived and a new committee was formed. That Golok Ranjan
Bose i.e., the respondent no. 2 herein, had misappropriated the assets
of the Society.
o) Prior to filing of the suit, an advertisement was published in two local
dailies by the society, requesting the public at large to return the
documents that had been misplaced by the Society. In response to the
advertisement, an objection was raised by the petitioner by asserting
the execution of the Joint Venture Agreement between the
respondents and the petitioner. When the alleged newly formed
committee came to learn about the Joint Venture Agreement, the suit
was filed with the relief as prayed for. It was alleged that the
respondent no. 2 was never the President of the Society and he had
entered into a conspiracy with the petitioner, by forging and
manufacturing documents in order to cheat the Society.
p) The plaintiff prayed for a decree for declaration that the joint venture
agreement dated July 30, 2022, entered into between the respondent
No.2, in the capacity of the President of the Society, and the petitioner
was void, fraudulent and non-binding;
q) Further prayer was for a decree for permanent injunction restraining
the respondent No. 2 from claiming himself to be the President of the
society; from acting in the capacity of the President of the Society;
from interfering with the day-to-day working of the executive body;
from continuing with the construction on the basis of the development
agreement; from interfering with the peaceful enjoyment of the
premises by the society and its tenants and from changing the nature
and character, thereof, and from operating the bank account number
424910100001778 maintained with the Bank of India, Salt Lake
Branch having address as DD-2, Sector-I, Salt Lake, Kolkata -
700064. Ad-interim prayers in terms of the above prayers were also
made.
r) The prayer for ad interim order of injunction was refused by the
landed Civil Judge (Senior Division), 2nd Court, Barasat.
s) Aggrieved and dissatisfied with the order dated May 15, 2023, the
plaintiffs preferred an appeal before the court of the Learned District
Judge at Barasat being Misc. Appeal No. 67 of 2023.The Learned
appellate court also refused the ad interim order of the injunction.
t) The petitioner confronted the respondent no. 2 about the institution of
the suit and the respondent no.2 assured the petitioner that the issue
would be resolved.
u) The society filed an application for withdrawal of the suit and by order
dated December 11, 2024, Title Suit No. 550 of 2023, was dismissed
for non-prosecution without any liberty to file afresh on the self same
cause of action. The dispute between the society and its members had
been resolved and no cloud was cast over the validity and
enforceability of the joint venture agreement dated July 30, 2022.
v) Despite repeated requests, no steps were taken by the respondents to
honour their obligations under the said agreement. The respondent
no.1 had committed material breach of the agreement. Several letters
were issued to the respondents to perform their obligations under the
agreement, but their requests went unheeded.
w) Suddenly, the respondent No. 2 refunded the money advanced by the
petitioner. The respondent no.2 transferred Rs. 2,50,000/- to the
petitioner through bank transfer. The petitioner requested the
respondent no.1 through the respondent no.2 to share the bank
details so that the sum of Rs.2,50,000/- could be returned. However,
the respondent failed to adhere to that request. Despite being aware of
the stand of the petitioner, the respondent no.2 again issued a cheque
for a sum of Rs.2,50,000/-. The petitioner returned the cheque and
issued a further cheque dated June 11, 2025, thereby returning the
sum of Rs. 2,50,000/- which was sent by bank transfer.
x) The respondents showed inclination to create third-party rights in
respect of the said premises by transferring, encumbering and or
alienating the same. The respondents also contacted several buyers
and brokers in this regard. Although the petitioner had been ready
and willing to comply with the obligations under the agreement, the
respondents failed to comply with their terms and conditions and
acted in breach thereof. The petitioner apprehended that the
respondents were taking steps to terminate and revoke the joint
venture agreement dated July 30, 2022.The negotiations had reached
an advanced stage. Under such circumstances, an application under
Section 9 of the Arbitration and Confinement Act, 1996, (hereinafter
referred to as the 'said act') was filed before the learned Commercial
Court at Rajarhat and the learned Commercial Court at Rajarhat had
passed an order of injunction restraining the respondents and their
men, agents, office bearers and servants from selling, transferring,
encumbering, alienating and or otherwise creating any third-party
rights in respect of the premises till August 4, 2025. Thereafter, the
order of injunction passed on July 4, 2025 was vacated by an order
dated August 4, 2025.Dissatisfied with the aforementioned order of
August 4, 2025, the petitioner filed an appeal under Section 37 of the
Arbitration and Conciliation Act, 1996. The appeal is still pending
adjudication. The petitioner invoked arbitration by a letter dated July
14, 2025. In reply to the same, the respondent no.1 contended that
the respondent no.2 did not have any authority to execute the joint-
venture agreement and that there was no privity of contract between
the respondent no.1 and the petitioner. Hence disputes arose between
the parties.
4. In the above background and with the above narration, this
application has been filed for reference of the dispute to arbitration.
5. Mr. Chayan Gupta, learned advocate for the petitioner, submitted that
the Joint Venture Agreement contains an arbitration clause. Whether
the respondent no.2 had the authority to execute the agreement on
behalf of respondent no.1, i.e., the society, was a triable issue. Such
issue should be decided by the learned arbitrator. The referral court
should not probe deeper into the contentions of the respondents with
regard to the legality and validity of the said agreement. He further
submitted that the agreement was a joint venture agreement and as
such the dispute was commercial in nature. The subject matter of the
agreement was also a commercial transaction as it involved
construction for the purpose of sale to third parties. There was an
element of profit for both the parties in the said transaction. Moreover,
the developer was engaged in the business of development of real
estate which was a commercial enterprise. He referred to the following
decisions:-
(i) Ashok Saraf and Ors., vs. Asansol Durgapur Development
Authority, passed in FMA No. 1484 of 2025,
(ii) Legend Estates Private Limited vs Poulomi Estate Pvt. Ltd.
reported in 2024 SCC Online TS 690,
(iii) Raj Kumar Gupta and Anr. vs Jagan Nath Bajaj and Ors.
reported in 2022 SCC Online Del 2995,
(iv) Blue Nile Developers Private Limited vs. Movva Chandra
Sekhar and Ors. reported in 2021 SCC Online AP 3964
(v) M/s Kiran Builders vs. M Surya Babu decided in Writ Petition
No. 3873 of 2023.
6. Mr. Tanmoy Mukherjee, learned advocate, appeared on behalf of the
respondent no.1 and submitted that the dispute should not be referred to
arbitration. The respondent no.2 was neither the President nor an active
member of the society. The execution of the agreement by the respondent
no.2, as the President of the society was nonest in the eye of law in view of
the lack of authority. He referred to the list of executive committee members
of the Society for the year 2022-2023, as available from the annual return
filed by the Society for the financial year 2021-2022 and submitted that the
records would reveal that the respondent no.2 had never been elected as the
President of the society. Thus, the arbitration clause could not be invoked
against the society. The respondent no.1/society, was a non-signatory. If the
petitioner had any dispute with the respondent No. 2, the party could have
resolved the dispute in whatever possible manner they deemed fit and
proper. Reference should not be made for resolution of any dispute between
the petitioner and the respondent no. 1. The respondent no. 1 was not
represented during the execution of the said of Joint Venture Agreement. He
submitted that, a third party could not enter into an agreement with regard
to the premises belonging to the society and if the representation of the
respondent no. 2, as the President of the society was accepted, in that event,
any person could enter into any kind of an agreement on behalf of a party,
irrespective of whether the person entering into such agreement had the
authority or the locus to do so. It would be as if a passer-by could sign an
agreement with another, thereby transferring Victoria Memorial or the
Calcutta High Court, just by claiming to have a position of authority. Such
kind of transactions could never be taken as valid transactions. Thus, the
respondent no. 1, not being a party to the agreement, could not be dragged
into any dispute between the petitioner and the respondent no. 2. He relied
on the decisions of Cox & Kings Ltd. v. SAP India (P) Ltd. reported in
(2024) 4 SCC 1 and ASF Building Private Limited v Shapoorji Pallonji
and Company Private Limited reported in 2025 INSC 616, in support of
such a contention. He submitted that the non-signatory did not have any
role to play either in the execution of the agreement or in the performance of
the underlying obligations arising out of the agreement. The society was not
getting any benefit under the agreement. The nexus between a signatory and
a non-signatory must be direct and the parties should be interconnected
and interlinked. In this case, the respondent no. 2 was neither
interconnected nor interlinked with the society. The respondent no. 2, by
creating forged and fabricated documents represented himself as the
President of the society to the petitioner. The entire action was collusive and
to the detriment of the society. Neither the society, nor its executive
committee members were aware of the underhand dealings between the
respondent no. 2 and the petitioner. The agreement was void abinitio and
non-existent in the eye of law. The alleged arbitration clause could not be
invoked against the respondent no. 1. There was nothing on record which
would indicate that the respondent no. 2 was, in any way, connected to the
respondent no. 1.
7. As the society denied the validity of the said agreement, there could
neither be any commonality of interest nor commonality of subject matter
nor commonality in the performance of the contract by the society. Thus,
the learned Advocate prayed for dismissal of the application against the
respondent no. 1. Mr. Mukherjee further submitted that the dispute was not
commercial in nature and that the application should be rejected, on the
ground that the Commercial Division of the High Court lacked the
jurisdiction to entertain this application.
8. Mr. Chattopadhyay learned Advocate for the respondent No.2
submitted that the property was not being used for commercial purpose.
The subject agreement, although named and styled as a joint venture
agreement, was in effect, a development agreement. It was neither a
construction and infrastructure agreement, nor was the agreement entered
into between the parties after completion of a tender process. Thus, the
dispute being non-commercial, the application must be rejected for having
been filed in the wrong forum.
9. He relied on the decision of Faqir Chand Gulati vs Uppal Agencies
Private Limited and Anr. reported in (2008) 10 SCC 345, in support of
his contention that, the subject agreement could never be termed as a joint
venture agreement, only because the caption of the agreement described the
same as one. The agreement read as a whole would clearly indicate that it
was essentially a development agreement, for construction of a G+4 storeyed
building, to be used for residential purpose.
10. Mr. Chattopadhyay submitted that the leaseholder did not have any
control or role in the management of the activities arising out of the said
agreement. There was no sharing of profits and losses. In the legal sense, for
the document to be a joint venture agreement, control should have been also
vested upon the leaseholders, and there should have been sharing of profits
and losses. Mere use of the word joint venture', or 'collaboration' in the title
of the agreement, would not make the agreement a joint venture agreement.
Reliance was further placed on the decision of the Telangana High Court
passed in Smt. Sharada Devi Kedia vs Kisna Avenues Pvt. Ltd. decided
in Civil Revision No. 1622 of 2024. He distinguished the decision of
Ashok Saraf (supra), on the ground that the level of construction which
was the subject matter of the said appeal, was of much greater impact and
an overall infrastructural development was being contemplated. Moreover,
the agreement between Ashok Saraf and Asansol Durgapur Development
Authority, emerged from a tender process. Under such circumstances, and
in view of such distinguishing factors, the Division Bench of the High Court
had observed that the dispute was a commercial dispute. He further
distinguished the decision of the Andhra Pradesh High Court in Blue Nile
Developers (supra) on the ground that, the extent of construction, and the
nature of construction envisaged in the project, were way beyond the one
envisaged under the subject agreement. The decision of the Telangana High
Court in Smt. Sharada Devi Kedia (supra) was relied upon to substantiate
that the gateway to the Act of 2015 was not necessarily a free-for-all entry,
where all kinds of disputes could find easy seating within the arena of
Section 2(1)(c) of the Act of 2015. Each of the 22 sub-clauses under Section
2(1)(c) must be strictly construed, and given a purposive meaning. The
agreement in question must underscore an inclination to commerce and
commercial activity for a sizable section of persons.
11. It was urged that, a G+4 storeyed building was to come up, out of
which the society was entitled to one floor, and the remaining area to be
constructed would be the developer's allocation. Thus, the nature of
transaction did not involve construction of such magnitude, which affected a
larger section of the society. Construction of the said building would also not
create any extension of infrastructural facilities in and around the area,
which would benefit the people at large. Under such circumstances, such
kind of commercial endeavours would neither fall within the definition of a
commercial transaction, nor could the dispute be classified as a commercial
dispute under clause 2(1)(c) of the Commercial Courts Act, 2015. Mr.
Chattopadhyay referred to Blue Nile Developers (supra) to submit that the
transaction reflected development of a residential project in a phased
manner within a gated community, including setting up of clubs, common
areas. The project involved deep-rooted infrastructural changes. The nature
of construction was such that, not only was the project beneficial for the
people who would book the same and reside within the premises, but the
upcoming project and proper completion thereof with the overall
infrastructural development of the surrounding areas, would also positively
affect the locality. Under such circumstance, the agreement was considered
to be a commercial agreement.
12. Heard the learned advocates for the respective parties. A dispute
arising out of a joint venture agreement falls within the definition of a
commercial dispute under the 2015 Act. The expression 'joint venture' not
only appears as the caption or the heading of the said agreement, but also
in several parts of the said agreement. As the element of control in the
management, sharing of profits and losses etc. were absent, it was urged
that the agreement must be classified as a development agreement. The
question now is whether the development agreement and the dispute arising
therefrom can be termed as a commercial dispute. The petitioner is a
partnership firm which is engaged in the business of real estate
development. The case of the petitioner is that the respondents approached
the petitioner to develop the property as the petitioner was well known for its
development business. The Division Bench in Ashok Saraf (supra) held
that :-
"63. As held by the Hon‟ble Apex Court in Ambalal Sarabhai
(supra)14, a purposive interpretation in consonance with the object
and purpose of the CC Act has to be given to the Sections thereof,
thus implying a strict construction. Going by the said yardstick, sub-
clause (vi) refers to "construction and infrastructure contracts,
including tenders". Hence, the interpretation of the said provision, to
be in consonance with the object and purpose of the CC Act, has to be
through the focal lens of "commercial dispute". The yardstick to be
applied is not whether an agreement is a pure construction agreement
or a development agreement but whether it comprises of a commercial
transaction.
64. It is not necessary for a transaction to involve equal controlling
interest or profit-earning on the part of both parties, to be labelled as
"commercial", it would suffice if the transaction is „commercial‟ from
the perspective of even one of the parties, such as regular business
transactions by traders. In sub-clause (xx) of Section 2(1)(c), even
insurance and re-insurance contracts have been included, in which
only one of the parties, being the insurer, looks at the contract from
the perspective of commerce whereas the insured has no commercial
benefit or profit therefrom. Thus, it is fairly indicated in the different
sub-clauses of Clause (c) of Section 2(1) that for an agreement to be a
commercial one, it is not necessary that both parties have to have a
commercial interest or share in profit and loss. It would suffice if the
transaction is a commercial one even from the viewpoint of one of the
parties.
65. Applying such yardstick, what has to be looked into is whether an
agreement is for construction, be it in the form of a development
agreement or a construction agreement simpliciter. If it is a
development agreement, it is all the more a commercial transaction,
since a developer would definitely enter into the same with commercial
motive. Thus, the distinction between pure construction agreements
and development agreements, as highlighted in the cited judgments in
the context of other statutes, would be an erroneous yardstick under
the CC Act and juxtaposing the rationale of the said decisions to the
present case would be a comparison between disparate concepts,
somewhat like the adage "apples and oranges".
***
***
67. Thus, the dispute raised in the suit is specifically covered by
Section 2(1)(c)(vi) of the CC Act and is a "commercial dispute" of more
than the specified value as enumerated in the said Act. Hence, the
learned Trial Judge, being an ordinary civil court and not a designated
commercial court under the CC Act, did not have jurisdiction to
entertain the suit or pass any orders therein."
13. For a development agreement to be a commercial one, it is not
mandatory that both the parties would have to have equal control in the
management of the project or equal distribution to profit and loss. It will
suffice if the transaction is a commercial venture from the viewpoint of the
parties. The said principle can be applied in respect of an agreement for
construction, on the rationale that the developer definitely entered into such
agreement with a commercial motive. Real estate business was the forte of
the petitioner. A distinction must be drawn between a pure construction
agreement and a development agreement. The developer has a commercial
interest in the entire transaction. He can also sell the units developed and
earn therefrom.
14. In Blue Nile Developers (supra), the Hon'ble Division Bench of the
Andhra Pradesh High Court held that when it came to the issue of clause (vi)
of section 2(1)(c) of the Act, which read as 'construction and infrastructure
contracts, including tenders' it would mean construction contracts, tenders
relating to construction, infrastructure contracts and tenders relating to
construction and infrastructure contracts.
15. A meaningful expansion of the definition was also given in the same
report, upon discussing the dictionary meaning of the words 'construction'
and 'infrastructure'. Relevant portions of the said decision are quoted
below:-
"19. For the purpose of the present case on hand it is necessary to
look into the scope and meaning of some of the clauses of Section
2(1)(c) of the Act before going into the scope and meaning of Section
2(1)(c)(vi) of the Act.
(i) Clause(i) of Section 2(1)(c) of the Act reads as 'ordinary
transactions of merchants, bankers, financiers, and traders such as
those relating to mercantile documents, including enforcement and
interpretation of such documents'.
That means it covers ordinary transactions of merchants in relation
to the mercantile documents and either enforcement of such
documents or interpretation of such documents, ordinary
transactions of bankers in relation to mercantile documents and
either enforcement of such documents or interpretation of such
documents, ordinary transactions of financiers in relation to their
mercantile documents and either enforcement of such documents or
interpretation of such documents and ordinary transactions of
traders in relation to their mercantile documents and either
enforcement of such documents or interpretations of such
documents.
(ii) Similarly clause (iv) of Section 2(1)(c) reads as 'transactions
relating to aircraft, air craft engines, air craft equipment and
helicopters, including sales, leasing and financing of the same'.
That means it covers the transactions relating to the aircraft and it's
sales, it's leasing and it's financing, the transactions of air craft
engines and it's sales, it's leasing and it's financing, the transactions
of aircraft equipment and it's sales, it's leasing and its financing and
the transactions of helicopters and it's sales, it's leasing and it's
financing.
iii) Similarly when it comes to the issue involved that is clause (vi) of
the Section 2(1)(c) of the Act, which reads as, "construction and
infrastructure contracts, including tenders", means and covers that
construction contracts, tenders relating to construction,
infrastructure contracts, tenders relating to infrastructure and
construction, and infrastructure contracts and tenders of
construction and infrastructure contracts.
20. To understand better the meaningful expansion of the above said
clause, the dictionary meaning of the words "construction" and
"infrastructure" can also be seen as hereunder:
OXFORD LEARNERS DICTIONARIES:
• Construction-
(1) The process or method of building or making something,
especially roads, buildings, bridges, etc.
(2) The people and activities involved in making buildings
(3) The way that something has been built or made
(4) A thing that has been built or made.
• Infrastructure-the basic systems and services that are necessary
for a country or an organisation to run smoothly, for example
buildings, transport and water and power supplies.
LEXICO:
• Infrastructure - the basic physical and organisational structures
and facilities (e.g. buildings, roads, power supplies) needed for the
operation of a society or enterprise.
• Construction-
(1) The action of building something, typically a large structure
(2) The industry of constructing buildings, roads, etc.
(3) The style or method used in the building of something
(4) A building or other structure
Construction is an activity while infrastructure is the outcome of that
activity.
Merriam Webster Dictionary:
• Construction-
(1) The process, art, or manner of constructing something
(2) The construction industry
(3) A sculpture that is put together out of separate pieces of often
disparate materials
• Infrastructure-
(1) The system of public works of a country, state or region
(2) The underlying foundation or basic framework (as of a system or
organisation)
(3) The permanent installations required for military purposes.
21. Since the above said two "words" also carry different meanings in
contrast the above said expansion of the said clause is necessitated.
22. Hence from the above, it is clear that the "legislature" has
included the various types of commercial transactions to bring under
the fold of "commercial dispute" in case of any dispute arises from
any of those transactions. On a careful reading of the above said
provision of the Act, it is obvious that the legislature has taken due
care while incorporating the above said clauses from (i) to (xxii) in
Section 2(1)(c) of the Act by avoiding the repetition of words and
sentences without effecting the full fledged meaning of the same even
on expansion of the said each clause. Therefore, either giving any
restrictive meaning or reading of a clause in isolation and expansion
of one word only in the said clause would hamper and frustrate the
meaningful definition of the said clause on it's expansion by
abrogating certain category of transactions from the purview of the
benefit of the above said Act which is not otherwise the intendment
of the legislature in bringing out the said enactment.
23. For the sake of illustration, if we confine the definition of clause
(vi) of the above said provision of the Act to the infrastructure
contracts only, then it would exclude the category of construction
contracts and construction and infrastructure contracts from it's
purview.
24. Suppose, if it is read as "construction and infrastructure
contracts" as one word/one sentence, then it would exclude the
category of the construction contracts and infrastructure contracts
separately from its purview.
25. But that is not the intendment of the above said central
enactment, as it is clear from the scope and object of the Act. All the
types of "commercial transactions" are saved in the Section 2(1)(c) of
the Act subject to the condition that it satisfies the "specified value"
stipulated under the Act for the purpose of assumption of the
jurisdiction by the Special Court/the Commercial Court. Except that
no category of commercial transaction is excluded from the purview
of the above said Act which is evident from the reading of the above
said section and its clauses."
16. The decision in Blue Nile Developers (supra) was followed by the
Karnataka High Court in M/s Kiran Builders (supra). The decision in Smt.
Sarada Kedia was in respect of bifurcating farm lands. Thus, in my view,
construction and infrastructure cannot be read as a part of a single
transaction, but as two identical activities arising out of the same
agreement, that is, construction and infrastructure, or both. The expression
construction must be construed as a separate and distinct activity from
infrastructure. The subject agreement definitely has a commercial angle to
it, at least in respect of the party whose services are being accepted for such
construction work. The dispute is a commercial one. The true purport and
meaning of the expression 'construction' appearing in clause (vi) of Section
2(1)(c) of the Commercial Courts Act, 2015 must be read into and applied to
the context. Section 2(1)(c) begins with the expression "unless the context
otherwise requires". Thus, the legislature was conscious of the fact that the
definition could not be given a restrictive meaning, and could be expanded
and given a more purposive meaning, if the context otherwise required.
17. A building which was to be used as a library, was sought to be
handed over for development. Services of a developer was accepted. The
developer had a share in the allocation of flats in the newly constructed
area. The developer who invested in the construction work of the building,
could also deal with such area commercially, by selling it to others. For the
developer, there is only a commercial angle in the business venture.
18. The developer was to render its business knowledge and expertise, as
it was engaged in the business of real estate development. Employment of
plant, machinery, workforce was essential to such work. In lieu of such
services and investment, the developer was entitled to the developer's share.
The relevant clauses of the said agreement are discussed below, as a
reference to the venture to be undertaken by the developer in the project.
19. Clause 5.1.1 of the said agreement provides that, the building was to
be erected on the plot by the leaseholder, upon the land being leased for 999
years. The lease was for construction of a library for higher studies. Thus,
the lease was not granted by the Governor of the State of West Bengal to the
leaseholder for any residential purpose. Secondly, the agreement further
provides that, the leaseholder had expressed his desire to develop the land
by constructing a multi-storeyed building, in accordance with the building
sanction plan, to be sanctioned by the concerned Bidhannagar Municipal
Corporation and the developer had accepted the proposal and the parties
had decided to enter into a Joint Venture Agreement.
20. Clause 10.1 provides that the developer shall have the authority to
deal with the property in terms of the agreement, negotiate with any person
or persons for the purpose of entering into any contract or agreement or
borrow money or take advance against their allocation on the acquired right
under the agreement. Clause 7 provides that for smooth running of the
project, the leaseholders had agreed to execute a power of attorney by which
the leaseholder had appointed and nominated Mr. Rabindranath Tandon
and Mr. Ashrayy Tandon, partners of the petitioner, as their constituted
attorneys to act on behalf of the leaseholder. Clause 10 deals with the
developers/promoter's rights, which includes entering into bookings and
agreements for transfer, and how and when the said developer would hand
over the possession to the intended transferees. The profit and loss earned
from the project would be borne entirely by the developer. Clause 13 deals
with the procedure and powers, which indicates that, all the statutory
compliances and permissions to be obtained by the landowner shall be
obtained by the developer as the constituted attorney of the landowner. The
management and maintenance of the premises, including the buildings to be
constructed was also the duty of the developer.
21. Clause 14 deals with the proposed new building. The developer was to
construct the building at its own cost, provide good and standard material
as specified by the engineer of the developer. The construction of the pump,
storage, overhead reservoir, electrification, installation of electricity,
permanent electrical connection etc. were services which were also to be
provided by the developer. The architects fees, the other taxes and liabilities,
the repair, upkeep, and management etc. were to be provided by the
developer. Clause 14 and Clause 15 deals with the procedure for delivery of
possession to the leaseholder.
22. Thus, a holistic reading of the entire agreement clearly indicates that
the developer, who in the usual course of its business of construction and
sale of real estate had entered into the development/joint venture agreement
with the respondents and was responsible for developing the property upon
obtaining all sanctions and permissions from the respective authorities on
behalf of the leaseholder. The developer was to supply good quality
materials, designs including civil, architectural, and electrical, complete the
project, install the water pump, electrify the project, obtain electricity
connection etc. The developer was entitled to obtain financial assistances
from banks and other financial institutions or from any other source. Thus,
the entire transaction included investment of the land by the lease holder,
rendering of services by the developer and in lieu of such services, the
developer was allocated a considerable portion of the proposed constructed
area, along with equal rights in the common facilities, and major portion of
the roof rights. The developer also had the right to enter into transactions
with third party buyers and sell the flats to be constructed. The entire profit
and loss was to be borne and/or enjoyed by the developer.
23. Under such circumstances, this agreement was not only restricted to
construction alone, but the developer was required to provide materials,
expertise, designs, and services towards the construction of the building.
The respondents were desirous of developing the building by earning from
such venture and also by acquiring a portion thereof. There is an element of
profit on the part of the society too. As the society was not in a position to
exploit the property from their own resources, they had entered into an
agreement with the petitioner, who was to render all services and expertise,
and not only develop the property, but make it habitable and sell it off to
others after handing over the respondents' allocation and also upon making
a lumpsum payment to the respondents. Under such circumstances, the
dispute cannot be said to be a non-commercial one. The application is
maintainable in the Commercial Division of the High Court.
24. Under the agreement, the respondent No. 1 invested by supplying the
land and the developer was to raise the construction at its own cost. Both
parties agreed to exploit the property commercially. The developer got the
right to sell the constructed flats to third parties. Both parties were
contributors to this common commercial business enterprise. The
cumulative effect of the agreement was that, the parties jointly agreed to put
the property to commercial use, thereby, earning from the same. As the
respondent denied to perform their obligations under the agreement, the
developer sought to enforce their rights by raising a dispute and by invoking
the dispute resolution clause. Both parties had a profit oriented motive.
25. Mr. Tanmay Mukherjee's contention that the respondent no. 1, being
a non-signatory, could not be dragged into an arbitral proceeding, is not
accepted at this stage. This is a matter of evidence. The respondent no. 2
signed the agreement on behalf of the society, and not in his personal
capacity. Whether he had the authority to do so is a triable issue. Secondly,
a suit was filed before the civil court, and the same was withdrawn. In the
suit, a prayer had been made for cancellation of the joint venture agreement
on the ground that the respondent no.2 did not have the authority to enter
into such an agreement, and further that the agreement was a product of
fraud and forgery. It also appears that cheques were issued by the petitioner
in the name of the respondent no. 1, and the money was deposited in the
bank account. The prayers in the suit are quoted below:-
"The plaintiff, therefore prays:-
a. For decree for declaration that the plaintiff is a bonafide Society
duly registered-under the Society Registration Act, 1961 and
represented by its present committee duly entered in the records of
the office the Registrar of Firm, Societies and Non Trading
Corporation, West Bengal and the absolute owner of the property
mentioned in the schedule below;
b. For a decree declaring that the joint venture agreement dated 30th
July, 2022 entered into by the defendant No.l in the capacity of the
President of Plaintiff Society and the defendant No.2 in respect of
the A Schedule property are void, fraudulent and not binding on
the plaintiff and the same be delivered up so that the same may
not be used to cause any loss to the plaintiff society.
c. For a decree of permanent injunction restraining the defendant
No.l from claiming himself to be the President of the plaintiff
society and from acting in the capacity of the President and from
interfering with the present executive body in discharging their
duties and responsibilities within the framework of the Rules and.
bye laws of the plaintiff Society and from making construction
through the defendant No.2 in or over the suit property and from
interfering with the peaceful enjoyment of the same by the Plaintiff
Society and its tenants and from changing the nature and
character of the same and also from operating the bank account
being No. 424910100001778 with Bank of India, Salt Lake Branch
having its address at DD-2 Sector-I, Salt Take, Kolkata- 700 064."
26. The order by which the suit was dismissed for non-prosecution is
quoted below:-
"The record is put-up today by petition submitted by representative,
namely Mr. Meghnad Mondal, Secretary of the plaintiff,
Prajnanananda Jana Seva Sangha.
Mr. Meghnad Mondal, Secretary of the plaintiff is present and files
hazira.
Ld. Counsel for the plaintiff is also present.
Mr. Meghnad Mondal, Secretary of the plaintiff files an application
supported by an affidavit praying for dismiss the suit for non-
prosecution.
The petition is taken up for hearing. Mr. Meghnad Mondal, Secretary
of the plaintiff deposed himself as PW-1 and discharged.
Ld. Counsel for the plaintiff submitted before this court that the
plaintiff filed an application praying for dismissal the suit for non-
prosecution as the plaintiff do not intend to proceed case further.
I have heard the Ld. Counsel for the plaintiff.
I have perused the petition of the plaintiff in this regard supported by
an affidavit, deposition of the plaintiff and other materials on record.
Considered.
So, in view of the fact as well as evidence of PW-1, i.e. Mr. Meghnad
Mondal, Secretary of the plaintiff and the facts and circumstances of
the present position of the suit, it appears that the he made an
application and put his signature on behalf of Prajnanananda Jana
Seva Sangha voluntarily after a decision taken by the authority of
plaintiff Seva Sangha for non-prosecution of the suit and accordingly,
he has made this application. So, I am of view that the petition
praying for dismissal the suit for non-prosecution is required to be
allowed without giving liberty to file the suit afresh on the same
cause of action.
Hence it is
O R D E R E D,
that the petition praying for dismissal for non-prosecution of the
plaintiff is allowed without giving liberty to file afresh on the same
cause of action. Thus, this suit is disposed of without any order as to
costs."
27. The allegation of forgery and misrepresentation by the respondent no.
2 has to be tried by the learned arbitrator. Moreover, the arbitration clause
clearly provides that any dispute with regard to the very existence and
validity of the agreement shall also be referred to arbitration. The objection
of Mr. Mukherjee is entirely on the validity of the agreement as it is alleged
that the same is a product of fraud, misrepresentation and forgery
committed by the respondent no. 2.Thus, whether the agreement is a
nullity, and non est in the eye of law, will have to be decided by the learned
arbitrator. The purpose of enquiry by the referral court is limited to the,
prima facie, satisfaction as to the existence of the arbitration agreement.
Clause 23 of the agreement is quoted below:-
"23. DISPUTES:
Disputes or differences in relation to or as rising out of or touching
this Agreement or the validity, interpretation, construction,
performance, breach or enforceability of this Agreement (collectively
Disputes) shall be referred to the Arbitral Tribunal and finally resolved
by arbitration under the Arbitration and Conciliation Act, 1996, with
modifications made from time to time. In this regard, the Parties
irrevocably agree that:
Constitution of Arbitral Tribunal: The Arbitral Tribunal shall consist of
one Arbitrator, who shall be an Advocate, to be nominated jointly by
the Legal Advisors of the Developer and leaseholder.
Place: The place of arbitration shall be Kolkata only.
Binding Effect: The Arbitral Tribunal shall have summary powers and
be entitled to give interim awards/directions regarding the Dispute
and shall further be entitled to avoid all rules relating to procedure
and evidence as are expressly avoidable under the law. The
interim/final award of the Arbitral Tribunal shall be binding on the
Parties."
28. Whether the respondent no. 2 could enter into an agreement on behalf
of the respondent no. 1 or not, will have to be decided by the learned
arbitrator upon weighing evidence. The relationship between the non-
signatory and the signatory is of great significance which, again, will have to
be decided by the learned arbitrator, especially in view of the withdrawal of
the suit.
29. Whether the respondent no. 2, at any point of time was elected or
nominated as the President of the respondent no. 1 and under what
circumstances did the respondent no. 2 act on behalf of the respondent no.
1, are matters of evidence. Furthermore, what led to the withdrawal of the
suit filed by the respondent no. 1 through its Secretary, is also a matter
which requires a deeper probe and the referral court is not required to go
into such detail. Thus, the objections taken by the respondents shall be
adjudicated by the arbitrator. Question with regard to arbitrability and
jurisdiction can be decided by the learned arbitrator. If the arbitrator finds
that the respondents No.1 was unnecessarily dragged into the proceedings,
the arbitrator can impose costs on the petitioner. If the arbitrator finds that
the respondent no. 1 was wrongly impleaded, the arbitration can expunge
such party from the proceeding. Thus, this court must honour the doctrine
of competence-competence, by giving effect to the arbitration clause and
leaving the issue raised by Mr. Mukherjee of misjoinder, to be decided by the
learned arbitrator.
30. In Adavya Projects Pvt. Ltd. Vs. M/s. Vishal Structurals Pvt. Ltd.
& Ors. reported in 2025 INSC 507, it was observed that Section 16 of the
1996 Act was inclusive and covered all jurisdictional questions. Validity and
existence of an arbitration agreement, issue of mis-joinder and non-joinder,
whether a non-signatory can be bound by the arbitration clause, must be
decided by the learned arbitrator. The arbitrator can either include a non-
signatory or delete a non-signatory. The relevant portion from Adavya
Projects (supra) is quoted below:-
"24. As briefly stated above, the determination of who is a party to
the arbitration agreement falls within the domain of the arbitral
tribunal as per Section 16 of the ACA. Section 16 embodies the
doctrine of kompetenz-kompetenz, i.e., that the arbitral tribunal
can determine its own jurisdiction. The provision is inclusive and
covers all jurisdictional questions, including the existence and
validity of the arbitration agreement, who is a party to the
arbitration agreement, and the scope of disputes referrable to
arbitration under the agreement. Considering that the arbitral
tribunal's power to make an award that binds the parties is
derived from the arbitration agreement, these jurisdictional issues
must necessarily be decided through an interpretation of the
arbitration agreement itself. Therefore, the arbitral tribunal's
jurisdiction must be determined against the touchstone of the
arbitration agreement."
31. The scope of the referral court is limited to the, prima facie,
satisfaction as to the existence of an arbitration agreement or arbitration
clause. No deeper probe or mini trial is permissible at this stage. In the
matter of Aslam Ismail Khan Deshmukh v. Asap Fluids Pvt. Ltd. & Anr.
reported in (2025) 1 SCC 502, the Hon'ble Apex Court held as follows:-
"51. It is now well-settled law that, at the stage of Section 11
application, the referral Courts need only to examine whether
the arbitration agreement exists -- nothing more, nothing less.
This approach upholds the intention of the parties, at the time
of entering into the agreement, to refer all disputes arising
between themselves to arbitration. However, some parties might
take undue advantage of such a limited scope of judicial
interference of the referral Courts and force other parties to the
agreement into participating in a time-consuming and costly
arbitration process. This is especially possible in instances,
including but not limited to, where the claimant canvasses
either ex facie time-barred claims or claims which have been
discharged through "accord and satisfaction", or cases where
the impleadment of a non-signatory to the arbitration agreement
is sought, etc."
32. The referral court only gives legal meaning to the doctrine of
competence-competence. The decision of SBI General Insurance Co. Ltd.
vs Krish Spinning reported in 2024 SCC Online SC 1754, the relevant
paragraphs are quoted below:-
"94. A seven-Judge Bench of this Court, in In Re : Interplay
Between Arbitration Agreements under the Arbitration and
Conciliation Act, 1966 and the Indian Stamp Act, 1899 reported
in 2023 INSC 1066, speaking eruditely through one of us, Dr
Dhananjaya Y. Chandrachud, Chief Justice of India, undertook
a comprehensive analysis of Sections 8 and 11 respectively of
the Act, 1996 and, inter alia, made poignant observations about
the nature of the power vested in the Courts insofar as the
aspect of appointment of arbitrator is concerned. Some of the
relevant observations made by this Court in In Re :
Interplay (supra) are extracted hereinbelow:
"179. [...] However, the effect of the principle of competence-
competence is that the arbitral tribunal is vested with the power
and authority to determine its enforceability. The question of
enforceability survives, pending the curing of the defect which
renders the instrument inadmissible. By appointing a tribunal
or its members, this Court (or the High Courts, as the case may
be) is merely giving effect to the principle enshrined in Section
16. The appointment of an arbitral tribunal does not necessarily
mean that the agreement in which the arbitration clause is
contained as well as the arbitration agreement itself are
enforceable. The arbitral tribunal will answer precisely these
questions.
xxxxxxxxx
185. The corollary of the doctrine of competence-competence is
that courts may only examine whether an arbitration agreement
exists on the basis of the prima facie standard of review. The
nature of objections to the jurisdiction of an arbitral tribunal on
the basis that stamp-duty has not been paid or is inadequate is
such as cannot be decided on a prima facie basis. Objections of
this kind will require a detailed consideration of evidence and
submissions and a finding as to the law as well as the facts.
Obligating the court to decide issues of stamping at the Section
8 or Section 11 stage will defeat the legislative intent underlying
the Arbitration Act.
186. The purpose of vesting courts with certain powers under
Sections 8 and 11 of the Arbitration Act is to facilitate and
enable arbitration as well as to ensure that parties comply with
arbitration agreements. The disputes which have arisen between
them remain the domain of the arbitral tribunal (subject to the
scope of its jurisdiction as defined by the arbitration clause).
The exercise of the jurisdiction of the courts of the country over
the substantive dispute between the parties is only possible at
two stages:
a. If an application for interim measures is filed under Section 9
of the Arbitration Act; or
b. If the award is challenged under Section 34.
Issues which concern the payment of stamp-duty fall within the
remit of the arbitral tribunal. The discussion in the preceding
segments also make it evident that courts are not required to
deal with the issue of stamping at the stage of granting interim
measures under Section 9.
***
***
117. By referring disputes to arbitration and appointing an
arbitrator by exercise of the powers under Section 11, the
referral court upholds and gives effect to the original
understanding of the contracting parties that the specified
disputes shall be resolved by arbitration. Mere appointment of
the arbitral tribunal doesn't in any way mean that the referral
court is diluting the sanctity of "accord and satisfaction" or is
allowing the claimant to walk back on its contractual
undertaking. On the contrary, it ensures that the principal of
arbitral autonomy is upheld and the legislative intent of
minimum judicial interference in arbitral proceedings is given
full effect. Once the arbitral tribunal is constituted, it is always
open for the defendant to raise the issue of "accord and
satisfaction" before it, and only after such an objection is
rejected by the arbitral tribunal, that the claims raised by the
claimant can be adjudicated.
135. The existence of the arbitration agreement as contained in
Clause 13 of the insurance policy is not disputed by the
appellant. The dispute raised by the claimant being one of
quantum and not of liability, prima facie, falls within the scope
of the arbitration agreement. The dispute regarding "accord and
satisfaction" as raised by the appellant does not pertain to the
existence of the arbitration agreement, and can be adjudicated
upon by the arbitral tribunal as a preliminary issue."
33. In the decision of the Hon'ble Apex Court in ASF Building (supra) it
was decided that the issues of joinder, non-joinder, mis-joinder etc. were
also within the domain of the learned arbitrator. The relevant portions are
quoted below:-
"113. It is well within the jurisdiction of the Arbitral Tribunal to
decide the issue of joinder and non-joinder of parties and to
assess the applicability of the Group of Companies Doctrine.
Neither in Cox and Kings (I) (supra) nor in Ajay Madhusudhan
(supra), this Court has said that it is only the reference courts
that are empowered to determine whether a non-signatory
should be referred to arbitration. The law which has developed
over a period of time is that both 'courts and tribunals' are fully
empowered to decide the issues of impleadment of a non-
signatory and Arbitral Tribunals have been held to be preferred
forum for the adjudication of the same.
114. In the case of Ajay Madhusudhan (supra), this Court,
placing reliance on Cox and Kings (I) (supra), has expressly held
that Section 16 is an inclusive provision which comprehends all
preliminary issues touching upon the jurisdiction of the arbitral
tribunal and the issue of determining parties to an arbitration
agreement goes to the very root of the jurisdictional competence
of the arbitral tribunal.
115. The case of Ajay Madhusudhan (supra) also recognizes that
the legal relationship between the signatory and non-signatory
assumes significance in determining whether the non-signatory
can be taken to be bound by the Arbitration Agreement. This
Court also issued a caveat that the 'courts and tribunals should
not adopt a conservative approach to exclude all persons or
entities who are otherwise bound by the underlying contract
containing the arbitration agreement through their conduct and
their relationship with the signatory parties. The mutual intent
of the parties, relationship of a non- signatory with a signatory,
commonality of the subject matter, the composite nature of the
transactions and performance of the contract are all factors that
signify the intention of the non-signatory to be bound by the
arbitration agreement'.
116. Recently, a coordinate bench of this Court in Adavya
Projects Pvt. Ltd. v. Vishal Strcturals Pvt. Ltd., 2025 INSC 507,
also held that an arbitral tribunal under Section 16 of the Act,
1996 has the power to implead the parties to an arbitration
agreement, irrespective of whether they are signatories or non-
signatories, to the arbitration proceedings. This Court speaking
through. P.S. Narasimha J. observed that since an arbitral
tribunal's jurisdiction is derived from the consent of the parties
to refer their disputes to arbitration, any person or entity who is
found to be a party to the arbitration agreement can be made a
part of the arbitral proceedings, and the tribunal can exercise
jurisdiction over him. Section 16 of the Act, 1996 which
empowers the arbitral tribunal to determine its own jurisdiction,
is an inclusive provision that covers all jurisdiction question
including the determination of who is a party to the arbitration
agreement, and thus, such a question would be one which falls
within the domain of the arbitral tribunal. It further observed
that, although most national legislations do not expressly
provide for joinder of parties by the arbitral tribunal, yet an
arbitral tribunal can direct the joinder of a person or entity,
even if no such provision exists in the statute, as long as such
person or entity is a party to the arbitration agreement.
Accordingly, this Court held that since the respondents therein
were parties to the underlying contract and the arbitration
agreement, the arbitral tribunal would have the power to
implead them as parties to the arbitration proceedings in
exercise of its jurisdiction under Section 16 of the Act, 1996.
The relevant observations read as under: -
"24. As briefly stated above, the determination of who is
a party to the arbitration agreement falls within the
domain of the arbitral tribunal as per Section 16 of the
ACA. Section 16 embodies the doctrine of kompetenz-
kompetenz, i.e., that the arbitral tribunal can determine
its own jurisdiction. The provision is inclusive and covers
all jurisdictional questions, including the existence and
validity of the arbitration agreement, who is a party to
the arbitration agreement. and the scope of disputes
referrable to arbitration under the agreement.
Considering that the arbitral tribunal's power to make an
award that binds the parties is derived from the
arbitration agreement, these jurisdictional issues must
necessarily be decided through an interpretation of the
arbitration agreement itself. Therefore, the arbitral
tribunal's jurisdiction must be determined against the
touchstone of the arbitration agreement."
34. In the decision of the Hon'ble Supreme Court in Cox & Kings (supra)
the Hon'ble Apex Court held as follows:-
"169. In case of joinder of non-signatory parties to an arbitration
agreement, the following two scenarios will prominently emerge : first,
where a signatory party to an arbitration agreement seeks joinder of a
non-signatory party to the arbitration agreement; and second, where a
non-signatory party itself seeks invocation of an arbitration
agreement. In both the scenarios, the referral court will be required to
prima facie rule on the existence of the arbitration agreement and
whether the non-signatory is a veritable party to the arbitration
agreement. In view of the complexity of such a determination, the
referral court should leave it for the Arbitral Tribunal to decide
whether the non-signatory party is indeed a party to the arbitration
agreement on the basis of the factual evidence and application of legal
doctrine. The Tribunal can delve into the factual, circumstantial, and
legal aspects of the matter to decide whether its jurisdiction extends to
the non-signatory party. In the process, the Tribunal should comply
with the requirements of principles of natural justice such as giving
opportunity to the non-signatory to raise objections with regard to the
jurisdiction of the Arbitral Tribunal. This interpretation also gives true
effect to the doctrine of competence-competence by leaving the issue
of determination of true parties to an arbitration agreement to be
decided by the Arbitral Tribunal under Section 16."
35. Thus, Section 16 of the said Act, empowers the learned arbitrator to
decide all kinds of jurisdictional issues.
36. Under such circumstances, the Court appoints Mr. Sabyasachi
Chowdhury, learned Senior Advocate, as the learned arbitrator, to arbitrate
upon the disputes between the parties. This appointment is subject to
compliance of Section 12 of the Arbitration and Conciliation Act, 1996. The
learned Arbitrator shall fix his own remuneration as per the Schedule of the
Act.
37. AP-COM 821 of 2025 is accordingly disposed of.
Urgent Photostat certified copies of this judgment, if applied for, be
supplied to the parties upon fulfillment of requisite formalities.
(Shampa Sarkar, J.)
