Ravi Gupta & Another vs M/S Unitech Ltd & Others
2013 Latest Caselaw 4256 Del

A-9

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                      Reserved on:       12.08.2013
                                      Pronounced on:     18.09.2013

+      IA No. 18828/2011 in CS(OS) 1795/2011

       RAVI GUPTA & ANOTHER                   ..... Plaintiffs
                     Through Mr D.K. Thakur and Mr.R.S.
                             Chauhan, Advocate
                     versus

       M/S UNITECH LTD & OTHERS                 .... Defendants
                     Through  Mr. Sunil Goel, Mr. Susheel Bhartiya
                              and Mr.Pranav Sapra, Advocate
       CORAM:
       HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J.

IA No. 18828/2011 (u/S 8 of the Arbitration and Conciliation Act, 1996 )

1. This is an application filed by the defendant under Section 8 of the Arbitration & Conciliation Act, 1996 for referring the matter to Arbitration. The present application has been filed by the defendant stating that the plaintiff has entered into an agreement with the defendants for purchase/allotment of a commercial unit in the complex known as „Unitech Commercial Centre‟ in Gurgaon, Haryana. It is stated that the Agreement (akin to agreement to sell) is contained in the Application Form coupled with the general terms and conditions which are duly signed by the plaintiff. The plaintiff has filed the accompanying suit stating that defendants No.2 to 4 launched a scheme to jointly develop commercial complex in District

Gurgaon by the name and style of "Unitech Commercial Centre". On several assurances and representations of the defendant the plaintiff stated to have booked a commercial unit in the said centre measuring 2,500 sq. ft. at Rs.6,000/- per sq. ft by paying Rs.15,00,000/- on 28.6.2008. On 23.7.2008 another sum of Rs.39 lacs was paid. Hence, a total sum of Rs.54 lacs was paid. It is further stated that necessary application form for allotment of the commercial unit which is a printed format provided by the office of defendant No.1 was also submitted. It is further stated that the progress of the project was extremely slow and as late as in January 2009 even bhumi pujan had not taken place. The plaintiff submits that on several occasions the plaintiff demanded refund of the amount as there was absolutely no progress in the project. The defendant kept on delaying the matter. It is stated that there was no sign of any bhumi pujan or official launch or foundation stone laying ceremony as had been promised by the defendant. Hence, on 21.12.2010 the plaintiffs sent a legal notice to the defendant calling upon them to refund the amount of Rs.54 lacs with 18% interest and damages within 15 days. On receipt of the legal notice the defendant through their counsel sent a reply on 4.1.2011. The reply was evasive vis-a- vis the issue of refund. Hence, it is stated that the plaintiff filed a complaint at Police Station Saket New Delhi on 24.3.2011 against the defendants. On directions of the Deputy Commissioner of Police an FIR was registered. Pursuant thereto on 28.5.2011 defendants No.2 to 4 wrote a letter to the plaintiff cancelling the allotment of the commercial unit and refunded a sum of Rs.39 lacs. The defendants stated that 15 lacs have been forfeited as earnest money. Hence, the plaintiff has filed the present Suit for recovery of the said sum of Rs.15 lacs as interest and damages.

2. Along with the written statement the defendants have filed the present application under Section 8 of The Arbitration and Conciliation Act stating that there exists Arbitration Clause and hence the parties be referred to Arbitration.

3. Learned counsel appearing for the plaintiff submits that no agreement between the parties ever took place. Only application form was given which according to the defendants is not traceable. Reliance is also placed legal reply sent by the defendant on 4.1.2011 through their counsel to the legal notice where they have said that the defendant does not recognise Ms.Sanya Gupta the plaintiff No.2 who has signed the application form. It is further submitted by the counsel for the plaintiff that no arbitration agreement exists and no such arbitration agreement was executed by the parties to the present suit. It is stated that the application form is not a valid arbitration agreement. It is stated that the application was to be accepted and signed by the defendants and a final agreement was to be executed on allotment by the defendants. However, as defendants never signed or executed the Agreement and failed to make the allotment in favour of the plaintiffs there is no valid arbitration agreement or agreement.

4. Learned counsel for the defendant has, however, relied on the application form. He submits that the moment the defendant accepted the application form and the payments made by the plaintiff, it tantamount to acceptance of the application form and a binding contract came about between the parties. This application form has various terms and conditions including an Arbitration Agreement. Learned counsel for the defendant,

however, admits that as per order dated 16.11.2012 passed by this Court the original application form containing the arbitration clause is not on record. He, however, submits that it would make no difference as a photocopy of the same has been placed on record by the plaintiff and the defendant accepts the same.

5. Section 8 of the Arbitration and Conciliation Act reads as under:-

"8.Power to refer parties to arbitration where there is an arbitration agreement-(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made."

6. The existence of an arbitration agreement as defined under Section 7 of the Act is a condition precedent for exercise of power to appoint an arbitrator. The Supreme Court in the case of P. Anand Gajapathi Raji & Ors. vs. P.V.G. Raju, (AIR 2000 SC 1886) spelt out the following conditions for application of Section 8 of the Arbitration and Conciliation Act:-

"5. The conditions which are required to be satisfied under sub-sections (1) and (2) of Section 8 before the Court can exercise its powers are: (1) there is an arbitration agreement; (2) a party to the agreement brings an action in the Court against

the other party; (3) subject matter of the action is the same as the subject matter of the arbitration agreement; (4) the other party moves the Court for referring the parties to arbitration before it submits his first statement on the substance of the dispute. This last provision creates a right in the person bringing the action to have the dispute adjudicated by Court, once the other party has submitted his first statement of defence. But if the party, who wants the matter to be referred to arbitration applies to the Court after submission of his statement and the party who has brought the action does no objection, as is the case before us, there is no bar on the Court referring the parties to arbitration."

The above partition was also reiterated by the Supreme Court in Branch Manager, M/s. Magma Leasing and Finance Ltd. & Ar. V. Potluri Madhavilata & Anr., AIR 2010 SC 488

7. Hence, what has to be seen is whether a concluded arbitration agreement came into being between the parties. The controversy revolves around an application form which admittedly as per the parties was filed by the plaintiffs with the defendant on 23.7.2008 when the second cheque of Rs.39 lacs was paid by the plaintiff. The application form itself is undated. The original of the application form has not been filed by any of the parties. The issue is whether filing of this application form with the defendant and the payment tendered to the defendants tantamount to a concluded agreement between the parties. This application form contains the Arbitration Clause. Hence if the parties are bound by the terms and conditions as stated in the application form, the Arbitration Clause would apply.

8. Under the Indian Contract Act, when a person signifies to another his willingness to do or abstain from doing anything with a view to obtain the assent to the other to such act or abstinence, it is called a proposal. When a person to whom proposal is made signifies his assent the proposal is accepted. A proposal when accepted becomes a promise. Every promise and every set of promises forming the consideration for each other is an agreement.

9. It would be useful to refer to the judgment of the Hon‟ble Supreme Court in the case of Bank of India vs O.P.Swaranakar, (AIR 2003 SC 858). The said matter pertained to a policy decision of nationalised banks to launch a scheme known as Employees Voluntary Retirement Scheme. The general terms and conditions of the policy stated that a request of employee seeking voluntary retirement under the scheme will not take effect until and unless it is accepted in writing by the competent authority. Relevant portion of paragraphs 65 and 74 of the abovesaid judgment read as follows:-

"65. A proposal is made when one person signifies to another his willingness to do or abstain from doing anything with a view to obtaining the assent of the other to such act or abstinence (See Section 2(a)). Herein the banks by reason of the scheme or otherwise have not expressed their willingness to do or abstain from doing anything with a view to obtaining assent of the employees to such act. It will bear repetition to state that not only the power of the bank to accept or reject such application is absolutely discretionary, it , as noticed herein before, could also amend or rescind the scheme. The Scheme, therefore, cannot be said to be an offer which, on the acceptance by the employee, would fructify in a concluded contract."

....

74. We, therefore, have no hesitation in coming to the conclusion that the voluntary scheme was not a proposal or an offer but merely an invitation to treat and the applications filed by the employees constituted „offer‟.

10. Hence, the issue would arise is as to whether the application form filled by the plaintiff here would be a proposal and the acceptance of the application form by the defendant would tantamount to a acceptance of the proposal leading to a concluded contract. Reference may be had to the application form in question. The first two clauses of the said application form reads as follows:-

"Dear Sirs, I/We (hereinafter referred to as „Intending Allotee(s)") request that the Intending Allottee(s) may be registered for provisional allotment of a unit(s) {hereinafter referred to as the "Commercial Unit(s)" in the complex by the name and style of "Unitech Commercial Centre" proposed to be developed jointly by M/s.Unitech Real Tech Properties Private Limited. M/s. Unitech Industries Limited and M/s. Samyog Builders Limited (collectively hereinafter referred to as the "Developer") over a plot of land measuring 16.9 acres (approx) at Sector 71, village Fazilpur Jharsa, Tehsil and District Gurgaon, Haryana (hereinafter referred to as the „Land').

The Intending Allottee(s) agree to sign and execute the definitive agreement(s) and such other documents in relation to provisional allotment and the sale transaction with the Developer on their standard format(s) as explained/shown to me/us by the Developer and understood by me/us. The Intending Allotee(s) have read and understood in detail the „General Terms and Conditions' of the provisional allotment of the Commercial Unit(s) at "Unitech Commercial Centre" and agree to abide by the same. Further, the intending Allotee(s) have clearly understood that this application does

not constitute an agreement to sell and the Intending Allotee(s) do not become entitled to the provisional and/or allotment of the Commercial Unit(s) notwithstanding the fact that the Developer may have issued a receipt in acknowledgement of the money tendered with this application. It is only after the Intending Allotee(s) sign and execute the definite agreement(s) and such other documents in relation to provisional allotment and the sale transaction with the Developer on their standard format(s) agreeing to abide by the terms and conditions laid down therein that the allotment shall become final and binding upon the Developer."(emphasis added)

11. The application form very categorically states that the intending allotee would not be entitled to a provisional and/or allotment of the commercial unit(s) notwithstanding the fact that the developer (defendant herein) may have issued a receipt in acknowledgment of the money tendered with the application. It is categorically stated that only after the intending allottee sign and execute the definitive agreement(s) and such other documents in relation to provisional allotment and the sale transaction with the Developer on their standard format(s) agreeing to abide by the terms and conditions laid down therein that the allotment will become final and binding upon the developer. In view of this categorical clause, it is not possible to accept the contention of the learned counsel for the defendant that mere acceptance of the cheque by the defendant tantamount to acceptance of the offer which was contained in the application form. The binding contract would come between the parties only after an agreement was executed between the parties on the standard format of the defendant. The parties had clearly intended that they would be bound only when a formal agreement was executed. As no formal agreement was signed, the

application of the terms as contained therein would not tantamount to be binding on the parties.

12. The fact of the matter is that after the application form was submitted by the plaintiff, there is no communication between the parties to show that the defendant at any stage accepted the application form or allotted any particular flat/area to the plaintiff. It was on 21.12.2010 that the plaintiff issued a legal notice demanding refund of entire dues as according to the plaintiff there has been no progress in the project whatsoever. Clearly the offer as contained in the application form made by the plaintiff was never accepted by the defendant. No concluded agreement came into between the parties. In view thereof, there is no arbitration agreement between the parties.

13. The present application is without merit and is accordingly dismissed.

CS(OS) 1795/2011 and I.A. No. 12652/2013 List the matter on 23rd October, 2013.

JAYANT NATH, J SEPTEMBER 18, 2013 n