Delhi High Court
M/S Mapletree Property Pvt. Ltd. vs M/S Today Homes Property & ... on 29 January, 2010
Author: V.K. Shali
Bench: V.K. Shali
* 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
Arb. P. No.113/2008 Page 1 of 8
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.
Arb. P. No.113/2008 Page 2 of 8
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.
Arb. P. No.113/2008 Page 3 of 8
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
Arb. P. No.113/2008 Page 4 of 8
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
Arb. P. No.113/2008 Page 5 of 8
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.
Arb. P. No.113/2008 Page 6 of 8
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.
Arb. P. No.113/2008 Page 7 of 8
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 Arb. P. No.113/2008 Page 8 of 8