K.L. Hotels Pvt. Ltd. vs Bigjo'S Estate Ltd.
2008 Latest Caselaw 14 Del

JUDGMENT

Badar Durrez Ahmed, J.

1. Mr Jolly appears on behalf of the Income Tax Department. Mr Rajesh Kumar, Deputy Director of Income Tax (Investigation) is also present. He states that the investigation with regard to the sale of the property in question has already commenced and will be taken to its logical conclusion.

2. In view of this statement, no further directions are necessary to be given to the Income Tax Department. They are exempted from further appearance in this matter.

3. This is a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator. The facts of the case are that the petitioner had agreed to purchase office space from the respondent in the building to be constructed by the respondent at Plot No. A/8 Wazirpur District Centre, New Delhi. The agreement to purchase was entered into on 16.08.1995 and was in respect of office space having an approximate area of 2358 sq. ft. (219.15 sq. mts) on the 13th floor of the said building. The basic cost of the office space was agreed upon as Rs 46,68,840/- at the rate of Rs 1980 per sq. ft. The payment schedule was indicated in the agreement in Clause 8 thereof. 95% of the payment was required to be made up to the completion of the 12th floor roof. The balance 5% was to be paid at the time of possession. Clause 9 of the said agreement made it specifically clear that all payments and the schedule thereof envisaged in the agreement were the essence of the booking.

It was also made clear that the promoter (the respondent herein) would be entitled to cancel the booking and forfeit the money received till the date of cancellation, in case of any default in making the payment within 15 days of notice from the promoter demanding the amount. It was also provided that the promoter was under no obligation to give a notice of cancellation or forfeiture as aforesaid.

4. This agreement also contains Clause 14 which provided for arbitration of any disputes or differences which may arise out of, relating to or otherwise concerning the said booking. The arbitration was to be conducted by a sole arbitrator to be appointed by the promoter and the decision of the arbitrator was to be final and binding between the parties. The arbitration proceedings were required to be held at New Delhi.

5. Pursuant to the said agreement, the petitioner made payments as per the schedule and up to November 1997 the petitioner had paid Rs 42,73,942/- representing approximately 95% of the cost mentioned in the purchase agreement.

6. It was stated by the learned Counsel for the petitioner that the petitioner was ready and willing to make the balance payment of 5% on the handing over of possession which was not done by the respondents and that is the reason as to why the balance payment was not made. It is stated that instead of demanding the balance 5%, as indicated in the agreement, the respondent had sent a letter to the petitioner on 17.05.1999 demanding an amount of Rs 18.58 lacs approximately which was far beyond the amount agreed upon and representing the balance 5%. The petitioner had, supposedly, orally protested against the said demand. However, there is no letter on record. It is also pertinent to note that the 12th floor as well as the 13th floor were constructed by 30.08.1999 as would be indicated by the completion certificate issued on 31.08.2000. This belies the petitioner's contention that the building was not completed and that the 13th floor was not made ready for possession by the respondent.

7. There is a letter dated 25.03.2000 which had been issued by the respondent to the petitioner threatening cancellation of the allotment in case an amount of Rs 18.58 lacs is not paid by 31.03.2000. There is no reply to this letter by the petitioner. It is only contended by the petitioner that meetings were held with representatives of the respondent. There are no details of the said meetings nor is there any documentary evidence of the same. The letter dated 25.03.2000 was a letter which threatened cancellation. This was followed by the letter dated 08.10.2001 which was issued through the respondent's advocate. In the said letter it was specifically pointed out that an amount of Rs 13,90,353/- remained outstanding against the said provisional allotment. It was also stated that in case the said amount was not paid within the stipulated period of 10 days of receipt of the notice, the provisional allotment of the aforesaid made to the petitioner, would be deemed to have cancelled and that the respondent would be justified in forfeiting the payments made by the petitioner till date without any further reference. Despite receipt of this notice the petitioner did not send any reply nor did the petitioner make any payments. The next document that is on record is of 18.09.2006, which is a notice issued by the petitioner's advocate invoking the arbitration clause and requiring the respondent to nominate the arbitrator.

8. It is on the basis of these facts that the learned Counsel for the respondent submitted that this application is liable to be dismissed on the ground that the disputes, if any, between the parties are clearly time barred. It is submitted by the learned Counsel for the respondent that the cancellation notice was issued on 08.10.2001 and nothing was done by the petitioner between that date and 18.09.2006 when the notice invoking the arbitration clause was issued. He submitted that the petition itself was filed on 31.10.2006 which would be a little over 5 years after the cancellation letter dated 08.10.2001 had been received by the petitioner. He submitted that this was clearly beyond three years and, therefore, there did not exist any arbitral disputes between the parties.

9. In response, the learned Counsel for the petitioner tried to set up a case of acknowledgment by referring to the property tax notices dated 13.01.2003 and 27.08.2003 which had been issued to the petitioner in respect of the flat in question. The learned Counsel for the petitioner also referred to the rectification order dated 30.03.2005 passed by Additional Assessor and Collector, MCD in respect of the building at A-8, Netaji Subhash Place, Wazirpur District Centre, Delhi. The said rectification order pertains to the rateable value / annual value with effect from 01.04.1998, 30.08.1999 and 01.04.2000. The learned Counsel for the petitioner referred to an affidavit which had been filed on behalf of the respondent in the course of the said rectification proceedings. According to the affidavit, which was supposedly dated 16.03.2005, the petitioner has been shown in a list against flat No. 13FL as having purchased the said office space having an area of 2393 sq. ft. at the cost of Rs 47,38,140. It is, therefore, the case of the petitioner that the respondent had acknowledged that the petitioner was the owner of the said 13th floor office space and the acknowledgment was made on 16.03.2005. Consequently, it is submitted that the present petition, which has been filed in 2006, is within time inasmuch as not more than 3 years have elapsed since the said acknowledgment.

10. I have considered the arguments advanced by the counsel for the parties in the context of the facts narrated above. The position is very clear that after 08.10.2001 when the cancellation notice was issued to the petitioner by the respondent, there was no correspondence between the petitioner and the respondent till the issuance of the letter dated 18.09.2006 whereby the arbitration clause has been invoked. The only circumstance which is being pleaded by the petitioner is the circumstance of the property tax notice and the affidavit filed in the course of the rectification proceedings. I find that the rectification order pertained to the rateable values of the building in question fixed by the MCD in respect of the period 01.04.1998, 30.08.1999 and 01.04.2000. The affidavit that was given by the respondent has to be read in that context. The cancellation notice was issued much later on 08.10.2001. The affidavit and the so-called acknowledgment on the part of the respondent do not pertain or relate to the state of affairs as existing in 2005 but have reference to the situation as it existed in 1998, 1999 and 2000. Therefore, in my view the same cannot be considered or construed to be an acknowledgment for the purpose of extending period of limitation. That being the position the clock would start running from October, 2001 and since the arbitration clause was invoked much beyond three years after October, 2001 and this petition was also filed beyond the said period of three years, the dispute that is sought to be raised by the petitioner is clearly time barred . In this view of the matter, there would be no arbitrable disputes as on date, on account of limitation, and consequently, this petition is liable to be dismissed. It is dismissed. The interim order stands vacated.