M/S Mapletree Property Pvt. Ltd. vs M/S Today Homes Property & ...
2010 Latest Caselaw 504 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                     ARB. P. NO.113/2008

                                      Date of Decision : 29.1.2010

M/S MAPLETREE PROPERTY PVT. LTD.    ......     Applicant
                    Through: Mr.     H.Devarajan    &
                              Mr.Ashok   Rajagopalan,
                              Advocates.

                                 Versus

M/S TODAY HOMES PROPERTY & INFRASTRUCTURE
                                     ...... Respondent

                    Through: Mr.Vivek    Sibal    and
                             Mr.Rahul         Sharma,
                             Advocates for respondent
                             Nos.1 to 4.
                             Mr.Kirti Kumar proxy
                             counsel for respondent
                             no.5.

CORAM :
HON'BLE MR. JUSTICE V.K. SHALI

1.     Whether Reporters of local papers may be
       allowed to see the judgment?                  YES
2.     To be referred to the Reporter or not ?       NO

3.     Whether the judgment should be reported
       in the Digest ?                               NO

V.K. SHALI, J. (oral)

1. This is a petition filed by the petitioner under Section 11 of

the Arbitration and Conciliation Act, 1996 for appointment

of an Arbitrator.

2. The case of the applicant is that it is a company

incorporated under the Companies Act, 1956 having its

office at 140, Sunama House, August Kranti Marg,

Mumbai-400 036. The petition was filed through one of the

authorized representative of the company. It was alleged

that the respondent no.1 is also a company and misleading

the members of the Consortium along with the respondent

Nos.2 to 4. The respondent Nos.1 to 4 are the members of

Consortium which bid for development of City Centre

Project for Ludhiana. It is alleged that respondent no.5 is

also a statutory authority and is called the Ludhiana

Improvement Trust vested with the responsibility of

development of City of Ludhiana. It is alleged that

respondent no.5 had invited tenders from eligible entities

for implementing the construction of the City Centre Project

at Ludhiana.

3. Pursuant to the said invitation, the respondent Nos.1 to 4

were one of the successful bidders for the said construction

and had signed the Memorandum of Understanding with

the respondent no.5 on 04.5.2005. It is alleged that the

respondent no.5 had put respondent no.1 a member of the

Consortium in physical possession of the plot according to

the agreement executed on 24.5.2005, along with the power

of attorney dated 29.8.2005 executed by respondent no.5 in

favour of respondent no.1.

4. It is alleged that by an agreement dated 10.1.2006, the

applicant purchased a property measuring 1,50,000 sq. ft.

area on the lower ground floor of the building proposed to

be constructed by the respondent Nos.1 to 4 at the said

City Centre for Rs.51.84 crores @ Rs.3456/- per sq. ft.

along with the undivided proportionate share in the land.

The said agreement was that the respondent no.1 for and

on behalf of respondent Nos.1 to 4 as well as respondent

no.5 in the capacity of an attorney had signed an

agreement of sale of certain built up area proposed to be

constructed in Ludhiana.

5.     The     agreement   recorded    total    sale     consideration        of

       Rs.51,84,00,000/-       out     of      which       a    sum           of

Rs.15,55,20,000/- was paid by the applicant by way of two

demand drafts bearing Nos.177466 dated 19.12.2005 and

177282 dated 07.1.2006 in favour of the respondent Nos.1

to 4. It is alleged that clause 50 of the said agreement

contained an arbitration clause that in the event of any

dispute relating to the said agreement arising between the

parties, the same would be referred to a sole arbitrator in

accordance with the Arbitration and Conciliation Act, 1996

with the Seat of Arbitration at Delhi.

6. It is alleged that the respondent Nos.1 to 4 could not

develop the said City Centre on account of the dispute

having arisen between the respondent no.5 on the one

hand and respondent Nos.1 to 4 on the other as there was

a change of Government in the State of Punjab. The

applicant had accordingly prayed for appointment of an

arbitrator to the respondent Nos.1 to 4 and since the

respondents had failed to appoint an arbitrator,

consequently, the present petition has been filed.

7. The respondent nos.1 to 4 filed their response to the

petition and contested the claim of the applicant on various

grounds initially. The respondent no.5 also filed the

response to the application/petition for appointment of an

arbitrator.

8. I have heard the learned counsel for the parties and

perused the record.

9. So far as the objections of the respondent Nos.1 to 4 are

concerned, they are in fact not considered on merit, on

account of the fact that during the course of arguments,

the respondent Nos.1 to 4 have very fairly conceded that

they have no objection for appointment of an arbitrator for

adjudication of the dispute purported to be raised by the

applicant with the respondents. Both the learned counsel

for the applicant and respondent Nos.1 to 4 had agreed to

the name of Hon'ble Ms.Justice Usha Mehra, retired Judge

of this Court to act as the sole arbitrator for the purpose of

adjudication of the dispute arisen between the parties.

10. So far as the respondent no.5 is concerned, it did not

appear at the time when the matter was conceded by the

learned counsel for respondent Nos.1 to 4. Therefore, the

Court did not have the advantage of hearing arguments on

the basis of objections which are purported to be raised by

respondent no.5 to the application of the applicant for

appointment of an arbitrator. However, their response can

be construed from the reply which is filed by them to the

application under Section 11 of the Arbitration and

Conciliation Act.

11. A perusal of the said reply by respondent no.5 shows that

the main objection which has been raised by the

respondent no.5 to the appointment of an arbitrator is that

the agreement dated 24.5.2005 which is purported to have

been executed between the respondent Nos.1 to 4 for and

on behalf of the respondent no.5 in the capacity of an

attorney could not be a ground for entitling the applicant to

appoint an arbitrator in terms of the said agreement. It is

alleged that the entire agreement dated 24.5.2005 was

based on fraud, forgery and cheating as a consequence of

which after vigilance inquiry against the officials of

Ludhiana Improvement Trust by the IGP (Vigilance), a case

bearing FIR No.5/2007 was registered on 23.3.2007 under

Sections 409, 420, 467, 468, 471 & 120-B IPC and

Sections 7. 13 (1) (c) (d) read with Section 13(2), 14 of the

Prevention of Corruption Act, 1988 in Police Station

Vigilance Bureau, Ludhiana. It is alleged that a charge

sheet has since been filed and therefore, as the agreement

itself between the respondent no.5 and respondent Nos.1 to

4 is based on fraud and forgery, therefore, it should not be

made as a basis of appointment of an arbitrator for

adjudication of the so called dispute between the applicant

/petitioner and the respondent Nos.1 to 4. It was also

alleged that on the basis of the same reasoning, the

respondent nos.1 to 4 could not be treated to be as

attorneys of the respondent no.5.

12. Next, it has been urged that before filing the present

petition under Section 11 of the Arbitration and

Conciliation Act, 1996, two attempts were already made by

the applicant before Punjab and Haryana High Court by

filing applications under Section 11 of the Arbitration and

Conciliation Act. The first case was registered as an

arbitration case bearing No.263/2006 titled Today Homes

and Infrastructure Pvt. Ltd. Vs. Ludhiana Improvement

Trust and Anr., which was dismissed on 27.8.2007.

Another petition came to be registered as Arbitration case

No.76/2007 in which the Punjab and Haryana High Court

was pleased to appoint Sh. R.C.Lahoti, former Chief Justice

of India as the sole arbitrator vide order dated 04.4.2008.

The appointment of Hon'ble Mr.Justice Lahoti, former Chief

Justice as the sole arbitrator was ultimately set aside by

the Apex Court and the matter was remanded back to the

High Court. It has been thus averred that after the receipt

of the said order, the respondent Nos.1 to 4 have now

chosen to get the dispute adjudicated between the

respondent Nos.1 to 4 and the respondent no.5 with the

help of the applicant/petitioner by filing the present

application as a surrogate petition.

13. I have carefully considered the plea of the respondent no.5

as given in their reply.

14. The sum and substance of the challenge of the respondent

no.5 is essentially challenging the jurisdiction of the

arbitrator to adjudicate the dispute as well as the very

factum of appointment of an arbitrator in terms of the

arbitration clause between the parties on the ground of the

agreement being vitiated by fraud, forgery, etc.

15. It is now settled legal position that by virtue of Section 16

of the Arbitration and Conciliation Act, 1996, the question

as to whether the arbitrator has the jurisdiction to

adjudicate the dispute arising between the parties or not

is essentially to be decided by the arbitrator himself and

the same cannot be adjudicated by the Courts anymore. If

that be so then all the pleas which are sought to be raised

by the respondent no.5 in the present reply can be raised

by them before the learned Arbitrator. Therefore, I do not

find that there is any merit in the contentions which are

averred in the reply of the respondent no.5 which will in

any manner prevent this Court from appointing an

arbitrator for adjudication of the dispute.

16. For the reasons mentioned above, the objections which

have been filed by the respondent no.5 are dismissed. The

matter is referred to the sole arbitration of Hon'ble

Ms.Justice Usha Mehra, a former Judge of this Court for

adjudication between the parties. The learned Arbitrator

shall fix her own fees.

17. Copy of this order be sent to the learned Arbitrator and be

given dasti to the learned counsel for the parties.

18. Petition is accordingly allowed.

V.K. SHALI, J.

JANUARY 29, 2010 RN