Mr. Satish Kumar Bakshi vs M/S Kohli Realtors Pvt. Ltd.
2011 Latest Caselaw 1313 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                     ARB.P. NO.256/2010

                                            Date of Decision : 07.03.2011

Mr. Satish Kumar Bakshi                               ......Petitioner
                                  Through:      Mr.   Hemant   Malhotra,
                                                Advocate.

                                       Versus

M/s Kohli Realtors Pvt. Ltd.                     ......       Respondent
                          Through:              Mr. Dinesh Garg, Adv.


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

1.     Whether Reporters of local papers may be
       allowed to see the judgment?                       NO
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.

1. This order shall dispose of the Arbitration Petition filed by the

petitioner Mr. Satish Kumar Bakshi against M/s. Kohli

Realtors Private Limited, under Section 11 of the Arbitration

and Conciliation Act, 1996.

2. Briefly stated, the facts of the case are that the petitioner is

the owner of property bearing Plot No. A-304, Defence Colony,

New Delhi, measuring 217 Sq. Yds. The petitioner entered

into a collaboration agreement in respect of re-building of his

entire property with the respondent M/s. Kohli Realtors

Private Limited vide collaboration agreement dated

07.01.2008. According to the collaboration agreement, the

respondent agreed to pay a total consideration of `35 lakhs to

the petitioner and also to bear the entire cost of construction

to be raised on the said building in accordance with the

sanctioned plan. The built-up portion of the area was to be

shared by the parties in certain proportions after ear-marking

common areas, the details of which are given in the

agreement itself. The specifications for the construction were

given in the collaboration agreement by way of Annexure „A‟

which were broadly of class „A‟ construction. The time for

construction was also enunciated in the collaboration

agreement. The relevant clause for our purpose, on the basis

of which the present petition has been filed is contained in

Clause 22, which reads as under :-

"That in the event of any question or dispute arising in connection with or incidental or in respect of interpretation or scope of this agreement or any part thereof then the same shall be referred to the arbitration who is mutually appointed arbitrator and the decision of the mutually appointed arbitrator will be binding on both the parties on this agreement."

3. It is alleged by the petitioner that after the rebuilding of the

entire property, he was put in the possession of his portion of

the property in question except the first floor, with one

servant quarter having common toilet both on the top terrace

floor and one car parking space inside the building with

undivided, indivisible, unpartable land rights underneath

exclusively as it was to fall to the share of the respondent.

4. The petitioner alleges that after using the premises in

question, he felt that the work which was carried out by

the respondent was not in accordance with the terms

agreed to, apart from the fact that certain deficiencies in

the execution of the work were pointed out. These

deficiencies which are enumerated by the petitioner are

broadly given as under :-

(i) That as per clause 15 of the agreed specifications it was, inter alia, agreed and provided that the basement of the property will be water proofed by the process of guniting to avoid dampness and seepage. However, shortly after taking over the possession, the basement of the property showed signs of dampness and today the basement is totally damped clearly indicating that no guniting work has been done. Besides there are other structural defects also in the basement. As per the estimate obtained by my client, the present cost of redoing the basement is approximately Rs.7,00,000/- (Rupees Seven Lakhs Only).

(ii) That as per clause 12 and 13 of the specifications you were required to make provisions of grills in the apartment and also make provisions of 300 sq. feet temporary cover on the terrace. The same has also not been done/provided. The estimated cost for providing the same is approximately Rs. 2,00,000/- (Rupees Two Lakhs Only).

(iii) That vide clause 14 of the specifications it was, inter alia, agreed between the parties that a lift as per approved design would be provided by you for all the floors i.e. from basement upto the terrace. However, as already pointed out to you that lift provided by you covered only upto the terrace but has not covered the basement of the property. The present estimated cost of carrying out necessary rectifications and alterations etc. in respect thereof is approximately Rs. 15,00,000/- (Rupees Fifteen Lakhs Only).

(iv) Payment of electricity bill pertaining to period August, 2009 to December, 2009 i.e. relating to the period of construction which amount/liability, as per the agreed terms, was to be borne by you. The said liability comes to Rs.14,600/- (Rupees Fourteen Thousand Six Hundred Only) which is to be borne by you.

(v) The parts of flushing cisterns have not been installed by you due to which water pipes are full of debris causing frequent malfunctioning of the said systems. The estimated cost of rectification/ replacement is Rs. 15,000/- (Rupees Fifteen Thousand Only).

5. The case which has been set up by the petitioner now is that

since the respondent has not carried out the construction in

accordance with the terms and conditions of the collaboration

agreement, he approached the respondent a number of times

for rectification of deficiencies who assured him to rectify the

same. Since the repeated attempts on the part of the

petitioner to get the deficiencies rectified did not yield any

fruitful result, he was constrained to issue a notice on

11.05.2010 to the respondent invoking the arbitration clause

contained in Clause 22 of the collaboration agreement for

reference of the dispute enumerated hereinabove for

adjudication by a Sole Arbitrator to be appointed mutually.

6. The respondent replied to the said notice on 27.05.2010 and

stated that the entire work of rebuilding was carried out to

the full and final satisfaction of the petitioner, whereupon he

had also taken the possession of his share and signed in

token of having done the same. It is only after satisfying

himself that the petitioner has now, with a view to coerce the

respondent to agree to his unreasonable demands, issued a

notice to him for rectifying the deficiencies and for raising the

construction which would be unauthorized and not approved

by the MCD. It was in this context that the respondent stated

that the lift could not go to the basement while as the

petitioner wanted the lift to go right up to the basement.

7. The petitioner gave a response to the reply of the respondent

vide letter dated 12.07.2010 denying the same and reiterated

his plea of appointment of an independent arbitrator. Since

this was not done, the petitioner was constrained to file the

present petition for appointment of an independent arbitrator

for adjudication of the disputes between the parties. It was

contended that the respondent has now forfeited his right to

appoint the arbitrator.

8. The respondent filed the reply to the petition and contested

the prayer of the petitioner. It was stated in the reply that the

present petition has been filed only for the purpose of black

mailing the respondent to agree to the unreasonable demands

of the petitioner. Apart from this, it was contended that the

petitioner had received the possession of his share vide a

written document on 24.12.2009 wherein he had specifically

stated that the suit property had been rebuilt according to the

terms and conditions of the collaboration agreement dated

07.01.2008 and the entire construction had been completed

to his satisfaction. The petitioner also accorded his consent

that all his bills were fully cleared and settled and, therefore,

it was contended that there exists no live dispute between the

petitioner and the respondent and the collaboration

agreement which contained the arbitration clause stood

discharged. The petitioner filed his rejoinder to the reply and

contested the claim and reiterated the points made in the

petition.

9. I have heard the learned counsel for the parties and perused

the record.

10. It has been contended by the learned counsel for the

petitioner that merely because the petitioner has received and

signed the possession letter wherein it has been observed that

the entire work has been carried out in accordance with the

terms and conditions of the collaboration agreement and the

petitioner is satisfied, it does not mean that the petitioner

cannot get the dispute adjudicated through the mechanism

envisaged in clause 22. It was contended that the signatures

of the petitioner on the possession letter were obtained under

coercion and undue influence. Even otherwise, if the

petitioner has signed the said letter, still the respondent could

not be permitted to evade his duty of carrying out the

requisite work with regard to seepage in the basement and

removing other deficiencies as these deficiencies would come

into notice after the actual user of the premises and not at

the time of signing of the possession letter. The learned

counsel stated that there was neither any intention nor any

reason for the petitioner to sign the discharge document of

the collaboration agreement and, therefore, the dispute has to

be necessarily adjudicated by the learned arbitrator. In order

to support his contention that merely the signature of the

petitioner on the letter of possession or a receipt would not be

sufficient to absolve the respondent from the responsibility of

getting the dispute adjudicated by an arbitrator, reliance was

placed on the case titled National Insurance Co. Ltd. Vs.

M/s Boghar Polyjab Pvt. Ltd. AIR 2009 SC 170.

11. The learned counsel for the respondent had taken the plea

that the petitioner not only concealed the information with

regard to having taken the possession but also did not reveal

the exact contents of the said possession letter. It is stated

that the possession letter dated 24.12.2009 specifically

records the satisfaction of the petitioner, that the respondent

had built the entire property on the plot of land in question in

accordance with the collaboration agreement and the terms

and conditions annexed thereto. The petitioner had satisfied

himself regarding the quality of construction and only

thereafter appended his signature. Once the petitioner signs

the document of possession and records his satisfaction, the

collaboration agreement under which the construction was

raised, stands concluded and the petitioner after a lapse of 7-

8 months could not be permitted to raise a dispute with

regard to the interpretation of the collaboration agreement or

the so-called deficiencies in the construction of the building.

It is alleged by the learned counsel for the respondent that if

the petitioner was aggrieved on account of discharge of the

agreement, he should have revealed in the notice that his

signatures were appended on the possession letter by

coercion or inducement or without prejudice to his rights.

Since this has not been done, therefore, it is contended that

there is no occasion for reference of the matter to arbitration

as there is no dispute much less the same being a live

dispute. Reliance in this regard has been placed by the

respondent on Prime Engineers and Consultants Vs.

Punjab National Bank, 103 (2003) DLT 133 and

Pollytron & Fragrance Industries (P) Limited Vs. National

Insurance Co. Ltd. 159 (2009) DLT 534.

12. I have thoughtfully considered the submissions made by the

learned counsel for the parties. There is no dispute about the

fact that the consistent view has been taken by the courts

that in order to get the dispute between the two parties

adjudicated by an Arbitral Tribunal in terms of the arbitration

clause, there must not only be an arbitration agreement but

also a live dispute. Conversely meaning that the agreement

which contained the arbitration clause should not have been

discharged or come to an end on account of either

cancellation or by its performance. In the instant case, the

letter of possession purported to have been issued by the

petitioner to the respondent clearly shows that the

collaboration agreement dated 07.12.2008 executed between

the petitioner and the respondent has come to an end on

account of its performance. Not only it has come to an end by

the petitioner having taken the possession he has fully

recorded his satisfaction to the effect that the construction

has been raised in accordance with the terms and conditions

of the collaboration agreement and the construction has been

raised according to the specifications attached to the

document. Once this has been done, the arbitration

agreement between the parties ceases to exist and, therefore,

the respondent is well within his right to contest the plea of

the petitioner that there is no live dispute between the

petitioner and the respondent for reference of the same to an

Arbitral Tribunal. It does not mean that the petitioner may

not have his remedy. He may have his remedy by either

approaching a different forum or by using a different

modality. But certainly the arbitration is ruled out on

account of his signing the satisfaction agreement.

13. It has been contended by the petitioner during the course of

the argument that his signatures on the possession letter

were obtained by coercion and fraud and, therefore, in terms

of the judgment of the Apex Court in case of National

Insurance Company's Case it could not be said that the

satisfaction of the petitioner could be the basis for ousting the

jurisdiction of the Court for appointing an arbitrator.

14. I do not agree with the contention made by the learned

counsel in this regard. The facts of the case which have been

relied upon by the petitioner in National Insurance

Company's Case are totally different from the facts of the

present case. In the said case, there was a claim which was

preceded by a certificate of satisfaction having been signed by

him before he had actually received the claim. Further, this

was his plea in the petition itself and, therefore, he had

pleaded that his signatures on the satisfaction certificate or

no claim certificate were obtained by fraud or undue influence

which the Apex Court observed, has to be decided either by

the Court which appoints an arbitrator or alternatively has to

be left to be decided by the Arbitrator himself.

15. So far as the facts of the present case are concerned, the

petitioner in his petition, has nowhere stated that he had

received the possession of his share in terms of the

collaboration agreement nor has he made any reference to the

said letter having recorded his satisfaction. In other words, it

could be said that the petitioner has tried to conceal this vital

information from the Court that he was signatory to a

certificate/letter purported to be issued by him where he has

reiterated his satisfaction and this ground in itself will make

the Court to exercise its discretion in his favour by

appointing an Arbitrator.

16. Even otherwise, on the merits also, this has not been his case

that his signatures on the possession letter were obtained by

coercion or fraud. This is a point which should have been

urged by the petitioner during the course of the oral

submission whereas there is no plea in this regard.

Therefore, I feel that the judgment which has been relied

upon by the petitioner is not at all applicable to the facts of

the present case. The submission made by the respondent

that the notice issued by the petitioner for appointment of an

arbitrator is on account of ulterior motives, cannot be said to

be totally without merit. In any case, the point whether it

was guided by ulterior motive or motive becomes irrelevant

because the collaboration agreement having been acted upon

and thereby having been discharged, on account of the

project having been completed and the possession having

been handed over to the petitioner, who has recorded his

satisfaction, there is no live dispute between the parties

which can be referred to an arbitrator.

17. Accordingly, I feel that the petition is totally without any merit

and the same is dismissed. Parties to bear their own costs.

V.K. SHALI, J.

MARCH 07, 2011 MA