Delhi High Court
Era Infra Engineering Limited vs Central Park Estate Pvt Ltd on 10 October, 2017
$~OS-3
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 10.10.2017
+ ARB.P. 89/2017
ERA INFRA ENGINEERING LIMITED ..... Petitioner
Through Mr.Manoj K.Singh, Mr.Nilava
Bandhopadhyay and Mr.Rahul
Pandey, Advs.
versus
CENTRAL PARK ESTATE PVT LTD ..... Respondent
Through Ms.Sadhana Sharma, Adv. for R-1
Mr.Ravi K.Chandna and Ms.Bindiya
L.Airi, Advs. for the proposed
respondent
CORAM:
HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J.(ORAL)
1. Present petition is filed under section 11 of the Arbitration and
Conciliation Act 1996 seeking to appoint an independent Arbitrator to
adjudicate the disputes between the parties. The case of the petitioner is that
on 7.2.2008 the respondent issued an invitation for bids for construction and
development of Central Park II, Sector-48, Sohna Road, Gurgaon (Haryana)
Subsequently on 11.3.2008 a Letter of Intent was issued by the respondent.
A formal Contract Agreement (work order) was entered into between the
parties on 26.03.2008. On 11.6.2013 the petitioner is stated to have
submitted its final bill to the respondent amounting to Rs.64,55,26,207/-.
The bill is said to have been disputed. It is urged that the petitioner also
approached the Chief Executive Officer for settlement of claims vide letter
dated 31.3.2016. As the Chief Executive Officer was unable to resolve the
ARB.P.89/2017 Page 1
disputes/claims the arbitration clause was invoked by a communication
dated 19.7.2016.
2. Reliance is placed on the arbitration clause, which is clause 7.46 (c) of
the MOU, which reads as follows:-
"7.46 DISPUTES, SETTLEMENTS AND ARBITRATION:
(a)......
(b)......
(c) All disputes and difference whatsoever, which shall at
any time hereafter arise between the Parties hereto,
touching or concerning this Agreement or its interpretation
or effect or as to the rights, duties, obligations and liabilities
of the Parties hereto or either of them under or by virtue of
this Agreement or otherwise as to any other matter in any
way connected with or arising out of or in relation to the
subject matter of this Agreement shall be referred to the
Arbitration in accordance with the provisions of Arbitration
and Conciliation Act 1996. The Parties agree that the
reference of the disputes and difference between the Parties
would be made to the Sole Arbitration, to be appointed by
the Owner."
3. The respondent has taken an objection to the present petition. It is
their case that there is no privity of contract between the parties and that the
respondent is not a party to the Agreement in question. It is urged that the
contract in question was actually executed between the petitioner and
M/s.Sweta Estates Pvt. Ltd and that the respondent was only the Project
Manager and Attorney of the said M/s.Sweta Estates Pvt. Ltd. Hence, the
respondent has urged that there is no arbitration agreement between the
petitioner and the respondent.
4. Keeping in mind the above objections of the respondent the petitioner
has filed an application being IA No.7822/2017 for impleadment of the said
ARB.P.89/2017 Page 2
M/s.Sweta Estates Pvt. Ltd. M/s.Sweta Estates Pvt. Ltd has filed their reply.
In the reply the said M/s.Sweta Estates Pvt. Ltd states that the Contract
Agreement dated 10.4.2008 was executed between the said M/s.Sweta
Estates Pvt. Ltd and the petitioner and that the respondent was only an
attorney holder. It also stated that coming to know about the present petition
and the disputes raised by the petitioner, the said M/s.Sweta Estates Pvt. Ltd
has already appointed Shri Prithvi Singh Gumber as the Sole Arbitrator on
14.02.2017 and that the petitioner has joined the arbitration proceedings
which are pending adjudication. Based on the above, it is urged that the
present petition is misplaced.
5. I have heard learned counsel for the parties.
6. Learned counsel for the respondent has reiterated the submissions that
the respondent is merely a Project Manager and Attorney of M/s.Sweta
Estates Pvt. Ltd. He relies upon the Agreement dated 11.3.2008 to point out
that the respondent has clearly stated in the Agreement that they are acting
for and on behalf of M/s.Sweta Estates Pvt. Ltd. Hence, it is urged that there
is no arbitration agreement between the parties. It is urged that disputes are
actually between the petitioner and M/s.Sweta Estates Pvt. Ltd.
7. Learned counsel for M/s.Sweta Estates Pvt. Ltd. insisted that in
compliance of the arbitration clause the Arbitrator stands appointed and
hence the present petition in any case is infructuous. He reiterates that the
petitioner has joined the arbitration proceedings.
8. Some facts are noteworthy. The notice of invocation of arbitration
was sent by the petitioner on 19.7.2016. The respondent does not deny
receipt of this notice of invocation. There is no reply given by the
respondent in any manner whatsoever pleading that the notice has been sent
ARB.P.89/2017 Page 3
to a wrong entity or that as power of attorney holders of M/s.Sweta Estates
Pvt. Ltd they do not have any authority to accept the notice on its behalf.
9. What follows is that essentially the respondent and M/s.Sweta Estates
Pvt. Ltd. are urging that for the purpose of carrying transactions with the
petitioner, the respondent acted as the attorney of M/s.Sweta Estates Pvt.
Ltd. However, for the purpose of present proceedings and on the issue of
appointment of an arbitrator, it is sought to be urged that the respondent is
not the attorney of M/s.Sweta Estates Pvt. Ltd.
10. This Court requested the counsel for the respondent and M/s.Sweta
Estates Pvt. Ltd. to show the power of attorney executed by M/s.Sweta
Estates Pvt. Ltd. in favour of the respondent. However, the court was
informed that copy of the Power of Attorney has not been placed on record.
11. The pleas that the respondent was not authorised to accept any notice
on behalf of M/s.Sweta Estates Pvt. Ltd. hence, cannot be accepted. The best
document which was available with the respondent/M/s.Sweta Estates Pvt.
Ltd. has been hidden from the Court. It is manifest that the respondent/
M/s.Sweta Estates Pvt. Ltd. is trying to take advantage of technicalities to
defeat the present petition.
12. Further the conduct of the respondent and M/s.Sweta Estates Pvt. Ltd.
shows that the respondent even for the purpose of present proceedings has
acted as the attorney of M/s.Sweta Estates Pvt. Ltd. The petitioner has sent a
notice invoking the arbitration clause on 19.07.2016 that was sent to the
respondent. Thereafter, the petitioner has filed the present petition on
21.01.2017. M/s.Sweta Estates Pvt. Ltd. based on these two events has
appointed the arbitrator despite the fact that notice of invocation was not
addressed to it and that it was not a party in the present petition. Hence, the
ARB.P.89/2017 Page 4
plea of the respondent and M/s.Sweta Estates Pvt. Ltd. cannot be accepted
that the present petition is not maintainable as the said respondent is not a
party to the arbitration agreement. The respondent is clearly the attorney
holder of M/s.Sweta Estates Pvt. Ltd. and has acted for and on its behalf.
The two of them, namely, the respondent and M/s.Sweta Estates Pvt. Ltd.
have acted in tandem for the purpose of appointment of an arbitrator.
13. In my opinion, the respondent having always acted as an Attorney of
M/s.Sweta Estates Pvt. Ltd. cannot now try and wriggle out claiming that it
has no authority to act on behalf of M/s.Sweta Estates Pvt. Ltd. for the
present purpose/proceedings.
14. I may also note that the petitioner has clarified that they have, at no
stage, participated in the arbitration proceedings before the Arbitrator
appointed by M/s.Sweta Estates Pvt. Ltd. Reliance is placed on a
communication dated 14.4.2017 which was sent to the learned Arbitrator
pointing out that the present petition is pending adjudication before this
Court.
15. To avoid any technicality, it is in the interest of justice that the
application filed by the petitioner under Order 1 Rule 10 CPC be allowed
and the said M/s.Sweta Estates Pvt. Ltd. be also added as a party to the
present petition as respondent No.2. I may also note that M/s.Sweta Estates
Pvt. Ltd. is a necessary and proper party to the present petition.
16. The issue now comes as to whether respondent No.2 M/s.Sweta
Estates Pvt. Ltd. could appoint an arbitrator after the petitioner had already
filed the present petition under Section 11 of the Act before this court.
17. The present petition was filed on 21.1.2017. As per M/s.Sweta Estates
Pvt. Ltd. the appointment of Arbitrator has taken place on 14.2.2017 after
ARB.P.89/2017 Page 5
the filing of the present petition. Notice of invocation of the arbitration
clause took place on 19.02.2016 to respondent No.1 who was the attorney of
M/s.Sweta Estates Pvt. Ltd. Accordingly, respondent/ M/s.Sweta Estates
Pvt. Ltd. had lost their right to appoint an Arbitrator in view of the judgment
of the Supreme Court in Datar Switchgears vs. Tata Finance Ltd., (2000) 8
SCC 151.
18. Accordingly, I appoint Shri B.B.Gupta, Senior Advocate (Mobile
No.9811348989) as a Sole Arbitrator to adjudicate the dispute between the
parties. The Arbitration shall take place under the aegis of the Delhi
International Arbitration Centre.
19. Petition stands disposed of. All pending applications, if any, also
stand disposed of.
JAYANT NATH, J.
OCTOBER 10, 2017/n
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