M/S Abw Suncity vs Tarun Malik And Ors
2021 Latest Caselaw 1764 P&H

  HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
                              ****
            RA-CR-25-2021 in ARB-52-2021 (O&M) and
                     ARB-52-2021 (O&M)
                    Reserved on 05.04.2021
                  Date of Decision: 12.05.2021
                              ****
M/s ABW Suncity                                ... Petitioner

                                        VS.


Tarun Malik & Ors.                                        ... Respondents
                                 ****
CORAM: HON'BLE MR.JUSTICE GIRISH AGNIHOTRI
                                 ****
Present:  Mr. Kuldip Kumar Kohli, Advocate
         for the review-applicant(s)s/respondents

            Mr. Aman Chaudhary, Advocate
            for non-applicant/petitioner

         Mr. Sumesh Malhotra, Advocate
         for the respondents (ARB-40 & 66-2021)
                                ****
GIRISH AGNIHOTRI, J. (Oral)

(1) The matter has been taken up through video conferencing on

account of restrictions due to outbreak of COVID-19 pandemic.

(2) This order shall dispose of the following Arbitration cases and

review applications collectively by way of a common order:-

             RA-CR-18-2021 IN ARB-48-2021            ARB-48-2021
             RA-CR-19-2021 IN ARB-16-2021            ARB-16-2021
             RA-CR-20-2021 IN ARB-45-2021            ARB-45-2021
             RA-CR-21-2021 IN ARB-25-2021            ARB-25-2021
             RA-CR-22-2021 IN ARB-26-2021            ARB-26-2021
             RA-CR-23-2021 IN ARB-27-2021            ARB-27-2021
             RA-CR-24-2021 IN ARB-28-2021            ARB-28-2021
             RA-CR-25-2021 IN ARB-52-2021            ARB-52-2021
             RA-CR-27-2021 IN ARB-39-2021            ARB-39-2021

(3)          For the sake of facts, order is being passed in RA-CR-25-2021

in/and ARB-52-2021 and for the sake of facts, reference is also being made to

ARB-52-2021 and ARB-25-2021.

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(4) Learned counsel for the review-applicant/appellant-respondent

submits that the written arguments submitted by the respondents in ARB-52-

2021 be treated the common stand of the respondents in all cases.

(5) Learned counsel for the non-applicant/petitioner submits that the

reply to the RA-CR-21-2021 in ARB-25-2021 be treated the common stand on

behalf of the petitioner(s) in all cases.

(6) ARB-52-2021 has been filed by M/s ABW Suncity in the nature

of petition under Section 11(6) of the Arbitration and Conciliation Act, 1996

inter alia with a prayer for appointment of a Sole Arbitrator to settle the

dispute inter se petitioner and the respondents.

(7) Records of the case show that when this case along with other

connected matters came up for hearing before this Court on 21.01.2021, this

Court had disposed of the present case vide order dated 21.01.2021. In that

order, reliance was also placed upon an earlier order passed by this Court dated

09.09.2020 in ARB-134-2020 titled as M/s ABW Suncity vs. Kishen M.

Seshadari & Ors.

(8) Thereafter RA-CR-25-2021 was filed in ARB-52-2021 under

Order XLVII Rule 1 read with Sections 114 and 151 CPC inter alia with a

prayer to review the order dated 21.01.2021 passed by this Court. In the

review application filed on behalf of the respondents, it has been contended

that the respondent(s) for whom learned advocate(s) appeared on 21.01.2021

had not given any instructions to the advocate(s) to the effect that they have no

objection in case the Arbitrator from the panel of arbitrators is appointed.

(9) At this stage, learned counsel for the respondents-review

applicants submits that it is correct that this Court on 21.01.2021 had directed

that counsel who are giving consent and have instructions from their respective

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clients that they have no objection in case an Arbitrator is appointed by this

Court, should convey their respective attendance to the admin of the video

conferencing group. It is also not disputed that counsel for the review-

applicant(s)(s)/respondent(s) had given their presence. However, learned

counsel has specifically contended that they had not correctly understood the

observations of the Court at the time of hearing and, therefore, in the review

applications inasmuch as the review applicant(s)/respondent(s) be allowed to

address the oral arguments in support of their review applications and against

the appointment of the Sole Arbitrator.

(10) In view of the above, this Court in the peculiar facts and

circumstances stated above and in the interest of justice, decided to accept the

request of the review applicant(s)/respondent(s) through the counsel for the

respondent(s) to address the oral arguments on merits. Accordingly, earlier

order dated 21.01.2021 is recalled.

(11) Records would further show that on 03.03.2021 notice in the

review applications was issued to counsel for the non-applicant/petitioner. On

31.03.2021, the matter was adjourned to 05.04.2021. In the meantime,

respective counsel were directed to complete their pleadings. Accordingly, the

matter was heard in detail.

(12) This Court for the facts noticed hereinunder and reasons so

recorded, has accepted the prayer of the petitioners and further proceeds to

accept the petition under Section 11(6) of the 1996 Act and thereby appoint a

retired Hon'ble Judge of this Court as Sole Arbitrator.

(13) Learned counsel by making reference to the pleadings in the

petition submits that the petitioner had developed a residential group housing

project known as "the LA LAGUNE" situated in Sector 54, Golf Course Road,

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Gurugram. It is submitted that this was in accordance with the Licences

bearing No.1189 to 1193 all dated 28.09.2006 and also licences bearing

No.231 dated 10.10.2007 issued by the Town and Country Planning

Department, Haryana. It is pleaded that during the course of construction, the

original allottee had been allotted apartment No.B-1001, 10th Floor, B-Tower,

vide letter dated 05.02.2008 and thereafter the original allottee/transferee

executed an 'Apartment Buyers Agreement' dated 30.07.2009 (P2). The said

original allottee had then transferred/endorsed/assigned their rights in favour of

the respondent Tarun Malik and respondents No.2 to 4 vide endorsement dated

10.10.2011.

(14) On this issue, the petitioner thus concludes that respondents

accordingly undertook to be bound by the terms and conditions of the

'Apartment Buyers Agreement'. Subsequently, the petitioner

transferred/conveyed the said apartment to the respondents by executing the

conveyance deed dated 14.08.2013 and actual physical and vacant possession

of the apartment was also duly handed over to the respondents. The petitioner

specifically pleads that as per Clause C-20 of the agreement dated 30.07.2009,

the respondents categorically agreed to make payments of Wealth Tax,

Property Tax & Cesses. As per the petitioner, the liability of payment of taxes

was also subsequently acknowledged and confirmed by the respondents in the

conveyance deed so executed.

(15) At this stage, from the pleadings of the petitioner brief history

needs to be noticed. In the year 2003, the Haryana Value Added Tax, 2003

was enacted to provide for levy and collection of tax on the sale or purchase of

goods in the State of Haryana and matters incidental thereto and connected

therewith. However, till the judgment by the Hon'ble Supreme Court in the

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case of Larsen and Turbo vs. State of Karnataka & Anr., (2014) 1 SCC 708,

the Haryana Government did not insist on payment of any tax. However, after

the judgment, the Haryana Government re-agitated the demand of VAT

payable and in order to bring clarity/mechanism had formulated the amnesty

scheme named as the 'Haryana Alternative Tax Compliance Scheme for

Contractors, 2016' notified on 12.09.2016 for the recovery of tax interest or

penalty. It is specifically mentioned in para 11 of the petition that the

petitioner keeping in view the interest of the apartment owners availed the said

scheme by filing its application TC-I on 06.12.2016. Accordingly, Deputy

Excise and Taxation Commissioner (ST), Gurugram (East) vide order dated

20.01.2017 as supplemented on 27.01.2017 accepted the said declaration.

Vide demand letter dated 27.06.2017, the petitioner further apprised the

respondent(s) about the applicability of VAT and requested them to make

payment of total amount of Rs.1,80,687/- within 30 days failing which interest

shall be leviable. The petitioner made efforts through various meetings with

the members of the Resident Welfare Association, however, was constrained to

file civil suit titled as "ABW Suncity vs. Tarun Malik & Ors." bearing

CS37/163/2019 inter alia with a prayer in the nature of summary suit under

Order 37 of CPC for recovery of Rs.2,27,666/- along with interest. In this suit,

the respondent himself moved an application under Section 8 of the 1996 Act

claiming that there is an arbitration clause applicable between the parties. The

petitioner, therefore, deemed it appropriate to withdraw the suit to pursue the

dispute through arbitration vide order (P8). Thereafter, the petitioner by

making reference to Clause 75 of the agreement dated 30.07.2009 issued notice

dated 15.01.2020 proposing the name who may act as Sole Arbitrator for

adjudication of the dispute. It is, however, pleaded that the respondent(s),

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however, denied to give consent. It is thus the specific case of the petitioner

that as per the arbitration clause, the dispute was to be decided by the Sole

Arbitrator, however, keeping in view the judgment of the Hon'ble Supreme

Court in Perkins Eastman Architects DPC & Anr. Vs. HSCC (India) Ltd.

(2019) SCC OnLine SC 1517, the petitioner has filed the petition under

Section 11(6) of the 1996 Act for appointment of the Sole Arbitrator to settle

the dispute. The petitioner has also relied upon the earlier order dated

09.09.2020 passed by this Court in ARB No.134 of 2020 whereby this Court

had appointed a retired District & Sessions Judge as Arbitrator (P9).

(16) As noticed above, this Court vide order dated 21.01.2021 had

disposed of the petition i.e. ARB case No.52 of 2021. The proceedings

thereafter have already been noticed in the foregoing paras. Briefly it would be

appropriate to record here that the review application i.e. RA-CR-25-2021 was

filed in this case. Notice of the review application was issued on 03.03.2021

for 31.03.2021. In the review application, it was inter alia prayed that the

review application be allowed to address the oral arguments against the

appointment of Sole Arbitrator. Learned counsel for the review

applicant(s)/respondent(s) had filed written arguments on 24.03.2021. It was

also submitted that the said written arguments be treated as submissions on

behalf of review-applicant(s)/respondent(s) in other connected/similar matters.

(17)           Heard learned counsel for the parties.

(18)           For the facts noticed above, and for the reasons recorded

hereinunder, this Court finds merit in the submissions made by learned counsel

for the petitioner.

(19) The first objection of learned counsel for the review-

applicant(s)/respondent(s) inter alia is that the application filed on behalf of

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the defendants in the civil suit(s) filed by the petitioner [before the learned

Civil Judge (Jr.Divn.), Gurgaon] cannot be treated as their 'consent' for

referring the matter to arbitration. In support of this submission, learned

counsel by referring to para 22 of the petition, submits that the arbitration

agreement, which was part of the Buyers Agreement was not in existence at

the time of invocation of the arbitration clause through the notice dated

15.01.2020. It is submitted that this new document had been executed

immediately on the execution of sale deed. Further the plea of learned counsel

for the review-applicant(s)/respondent(s) is that in fact, in the reply to the

application under Section 8 of the 1996 Act, the petitioner is alleged to have

taken a stand that there is no such dispute left to be decided between the

parties. In this regard, the extracts reproduced by the respondents in their

written arguments allegedly showing the stand of the petitioner is reproduced

hereinunder:-

"The terms and conditions of the Apartment Buyer's Agreement were superseded by the Conveyance Deed and no specific reference of Arbitration Agreement was given in the said conveyance deed. The defendant is residing in the same after obtaining actual, physical and peaceful possession of the said Apartment. Hence there is no such dispute left to be decided between the parties on the basis of the said apartment buyer's agreement."

(20) Learned counsel for the petitioner however submits that in fact the

above plea was taken inter alia to highlight that in fact since there is a kind of

admitted liability, therefore, the said suit was maintainable, however, he

submits that in fact if the respondents actually dispute the liability then the said

dispute as per their own application under Section 8 of the 1996 Act filed in

the suit deserves to be referred to the Sole Arbitrator. Learned counsel by

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making reference to the preliminary submission No.1 of the reply to the review

application filed in RA-CR-21-2021 submits that this ground is no more

available to the review-applicant(s)/respondent(s) as Section 11(6-A) has

already been omitted vide Amendment Act, 2019. Learned counsel for the

petitioner further submits that the petitioner had filed about 43 civil suits for

the recovery of VAT amounts, which is subject matter of present petition. The

averments made in Para 2 of the said reply is further referred to but this Court,

for the sake of brevity, deems it appropriate not to refer the same in detail as it

is already part of the pleadings.

(21) This Court finds force in the submission of learned counsel for the

petitioner. It cannot be lost sight of that in fact it is a matter of record that the

defendants (respondent herein) in the suit had actually filed application under

Section 8 of the 1996 Act. In para 2 of the application, the defendants-

respondents had taken a stand that they have been denying the liability

altogether. In para 5 of the application, the defendants have specifically

averred that "...the defendants were and are always ready and willing to refer

the such disputes and differences to arbitration for adjudication...".

(22) The second objection raised by counsel for the review-

applicant(s)/respondent(s) is that if the true intent and scope of Section 7 of the

1996 Act is considered, it would show that in the present case also, there is a

difference between the reference to another document in contract and

incorporation of another document in a contract. Learned counsel in this

regard once again, inter alia, makes specific reference to para 33 of the written

arguments to submit that the arbitration provision under the Apartment Buyers

Agreement expired upon execution of conveyance deed. It is submitted that

the clear intent behind the conveyance deed is that the governing provision

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shall be clause 40 of the conveyance deed. He, therefore, submits that clause

40 of the conveyance deed specifically states that only Courts at Gurgaon shall

have exclusive jurisdiction in the matter.

(23) Learned counsel for the petitioner by making reference to para 1

of the preliminary submissions of the reply filed in RA-CR-21-2021 submits

that inter alia, the above submission of the review-applicant(s)/respondent(s) is

misconceived. This Court finds force in the contention of the learned counsel

for the petitioner. He makes specific reference to para 36 of the conveyance

deed to submit that all the terms and conditions of Apartment Buyers

Agreement signed by the vendee shall be deemed to have been incorporated in

conveyance deed. Para 36 as referred to by counsel for the petitioner is

reproduced hereinunder:-

"All the terms and conditions of the Apartment Buyer's Agreement dated 30.11.2009 signed by the Vendee shall be deemed to have been incorporated in this deed and shall continue to be binding save and except those of the terms and conditions contained in his Deed in which case the terms and conditions of this Deed shall prevail."

(24) Learned counsel for the review-applicant(s)/respondent(s) refers

to Clauses 36 & 41 of the conveyance deed/sale deed, reference of which has

been made at page 64 of the written arguments filed by the review-

applicant(s)/respondent(s). Learned counsel then refers to clause 2 of the

conveyance deed/sale deed to submit that in fact the sale price so mentioned

and that the same was received by the vendor. Therefore, the plea of learned

counsel for the respondent(s) is that in fact no dispute subsists. Counsel for the

respondent(s), based upon the submissions, inter alia as noticed above, has

urged that the petition be dismissed as allegedly no amount is due and payable

by the respondent(s) to the petitioner.

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 RA-CR-25-2021 in ARB-52-2021                                           - 10 -



(25)         Learned counsel for the petitioner, however, submits that the

respondent(s) cannot blow hot and cold in the same breath. Initially, they filed

Section 8 application to get the Civil Suits filed by the petitioner, dismissed

and now when the petitioner had made a prayer for appointment of a Sole

Arbitrator in accordance with the provisions of the arbitration agreement and

clause 75 containing the arbitration clause, the respondents' objections

deserves to be rejected being misconceived. This Court is in agreement with

the plea of the petitioner.

(26) For the reasons afore-stated, this Court is inclined to accept the

prayer made by the petitioner for appointment of Sole Arbitrator. In this

regard, reference is made to the operative part of the judgment dated

08.03.2021 in Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engineering

Pvt. Ltd, (2021) SCC OnLine SC 190, In the said judgment, inter alia, the

appeal had arisen out of a petition filed under Section 11 (C) of the 1996 Act

for appointment of Sole Arbitrator for adjudication of the disputes between the

parties. The judgment of learned Single Judge of Delhi High Court was

impugned before the Apex Court. In the judgment, inter alia, consultancy

agreement dated 07.07.2014 and the correspondence was referred to. Vide the

impugned judgment, the parties were referred to for arbitration of disputes by

appointing a former Judge of the Delhi High Court as Sole Arbitrator. The

plea, however, of the appellant therein inter alia was that the said agreement

was in fact a concocted document. The operative part of the judgment reads as

under:-

"......The prima facie review spoken of in Vidya Dhrolia (supra)

can lead to only one conclusion on the facts of this case - that a

deeper consideration of whether an arbitration agreement exists

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RA-CR-25-2021 in ARB-52-2021 - 11 -

between the parties must be left to an Arbitrator who is to

examine the documentary evidence produced before him in detail

after witnesses are cross-examined on the same. For all these

reasons, we set aside the impugned judgment of the Delhi High

Court in so far as it conclusively finds that there is an Arbitration

Agreement between the parties. However, we uphold the ultimate

order appointing Justice G.S. Sistani, a retired Delhi High Court

Judge as a Sole Arbitrator. The learned Judge will first determine

as a preliminary issue as to whether an Arbitration Agreement

exists between the parties, and go on to decide the merits of the

case only if it is first found that such an agreement exists. It is

clarified that all issues will be decided without being influenced

by the observations made by this court which are only prima facie

in nature. The appeal is allowed in the aforesaid terms."

(27) This Court thus deems it appropriate to refer the matter to the Sole

Arbitrator who may examine the pleas raised by the parties inter alia regarding

the existence of an arbitration agreement and also the contrary pleas e.g.

reference of para 36 of the conveyance deed and the connected issues. It is

made clear that nothing observed in the foregoing paras above shall be

construed to be any findings of this Court on any issue. The Arbitrator may

proceed to decide the issue de hors the prima facie observations made above.

It is also made clear that this Court has given common orders in connected

case(s) as mentioned in the foregoing paras, but the Arbitrator may take up

each case as independent case and hear/deal with the dispute raised by each of

the party, independently.

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 RA-CR-25-2021 in ARB-52-2021                                             - 12 -



(28)          After hearing learned counsel for the parties, Justice Dr. Bharat

Bhushan Parsoon (Retd.), a former Judge of this Court, is appointed as the Sole

Arbitrator. However, such appointment would be subject to the declaration to

be made by Justice Dr. Bharat Bhushan Parsoon, under Section 12 of the Act;

with regard to his independence and impartiality to settle the disputes between

the parties. The Arbitrator is requested to examine the objection/dispute raised

by the parties and decide the same in accordance with law especially in view of

the observations of the Hon'ble Supreme Court in Pravin Electricals Pvt. Ltd.

(supra).

(29) The Arbitrator is requested to complete the proceedings within the

time limit specified under Section 29A of the Act.

(30) The Arbitrator shall be paid fee in accordance with the Fourth

Schedule of the Act, as amended or as may be mutually settled by the parties

and the Arbitrator.

(31) A copy of the order be forwarded to Justice Dr. Bharat Bhushan

Parsoon at the given address:-

# 154, Sector 35A Chandigarh M. No.8558809906 Landline No.0172-4666606

(32) After seeking the convenience of the Arbitrator, the parties are

directed to appear before him (through video conferencing, if suitable) within

one month from the date of receipt of a certified copy of this order.

(33) Accordingly, all the arbitration cases along with miscellaneous

applications along with review applications are disposed of in the above terms.

12.05.2021                                          (Girish Agnihotri)
Vvishal
                                                          Judge
1. Whether speaking/reasoned?              Yes/No
2. Whether reportable?                     Yes/No

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