Delhi High Court - Orders
Gsba Builders Pvt. Ltd vs Siddharth Sareen on 9 February, 2022
Author: C.Hari Shankar
Bench: C.Hari Shankar
$~5(Original)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 352/2021
GSBA BUILDERS PVT. LTD. ..... Petitioner
Through: Mr. Rajshekhar Rao, Sr. Adv.
with Mr. Ravi Kapoor, Mr.
Karthik Sundar and Mr. Rishav
Ambastha, Advocates
versus
SIDDHARTH SAREEN ..... Respondent
Through: Mr. Siddharth Iyer & Mr.
Shikhar Sarin, Advs.
CORAM:
HON'BLE MR. JUSTICE C.HARI SHANKAR
O R D E R (O R A L)
% 09.02.2022 (By Video Conference on account of COVID-2019)
1. After some hearing, Mr. Siddharth Iyer, learned Counsel for the respondent submits, on instructions, that his client is agreeable to an arbitrator being appointed to arbitrate on the disputes between the parties, leaving all questions of fact and law open to be agitated before the arbitrator including the arbitrability of the dispute and the applicability of the arbitration clause/clauses on which the petitioner seeks to place reliance.
2. Without intending to express any opinion on the aforesaid aspects or on the disputes between the parties and only for the sake of capitalisation of the overall structure of the dispute, a brief recital of facts may be provided at this juncture.
Signature Not Verified Digitally Signed ARB.P. 352/2021 Page 1 of 8 By:SUNIL SINGH NEGI Signing Date:14.02.2022 10:35:253. It appears that the respondent desired to engage the services of the petitioner for construction of his residence and that, after negotiations took place, the petitioner addressed a communication to the respondent on 11th May, 2015, annexing, to the communication, the terms and conditions of the contract between the petitioner and the respondent. Clause 10 of the said terms and conditions provided for arbitration and read thus:
"10. ARBITRATION All disputes and differences regarding execution of contract or allied matters shall be referred to be adjudicated upon by a mutually agreed arbitrator. The Venue shall be Delhi."
4. Mr. Rajshekhar Rao, learned Senior Counsel for the petitioner emphasizes the fact that the aforesaid communication and the terms and conditions annexed therewith were signed on every page by the respondent.
5. The respondent wrote to the petitioner on 14th May, 2015, and Mr. Rao has invited my especial attention to Paras 2, 3 and 4 of the said communication, which read thus:
"2) Please ensure that until detailed Work Order/ Construction Agreement have been settled kindly do not incur any expense without our written approval or no work shall be taken up at site before issue of Mobilisation Advance.
3) Kindly sign and stamp this letter as a token of your acceptance.
4) The earlier written communication based on our Tender Contract / Drawings shall be the part of the Signature Not Verified Digitally Signed ARB.P. 352/2021 Page 2 of 8 By:SUNIL SINGH NEGI Signing Date:14.02.2022 10:35:25 construction agreement."
6. On the next day, i.e. 15th May, 2015, a Construction Contract was executed between the petitioner and the respondent, whereby the petitioner undertook to construct the residence of the respondent. Recital 'b' towards the commencement of the contract noted the fact that the respondent had engaged the architectural services of M/s Incubis Consultants (I) Private Limited ("Incubis" hereinafter). Clause 29 of the Construction Contract stipulated thus:
"29. The revised offer of Contractor (Ref No. SSR/ 15P11/105 dated 11.05.2015) and Tender Drawings and written communications during negotiation shall form part of the Agreement."
Clause 32 provided for arbitration, in the following terms:
"32. All disputes or differences arising under this Construction Agreement including those relating to interpretation, or the specifications, architectural and interior designs, drawings, quality of workmanship or material used in the work or as to any other question arising out of or relating to the contract, design, drawings, specifications, orders or otherwise in connection with the agreement or the carrying out of the works, whether during the progress of the work or after the completion or abandonment thereof, shall be referred to the sole arbitration of an Arbitrator appointed with mutual consent of Mr. Amit Gulati of M/s Incubis Consultants (I) Pvt. Ltd. and M/s. Gurbakhsh Singh B.A. Builders Pvt. Ltd. under the provisions of Arbitration and Conciliation Act, 1996 or any statutory modifications thereof. The Place of Arbitration shall be Delhi."
7. The present petition seeks to invoke Clause 10 of the terms and conditions annexed to the letter dated 11th May, 2015 supra as well as Signature Not Verified Digitally Signed ARB.P. 352/2021 Page 3 of 8 By:SUNIL SINGH NEGI Signing Date:14.02.2022 10:35:25 Clause 32 of the Construction Contract.
8. Notice invoking arbitration was issued by the petitioner to the respondent on 20th October, 2020. Essentially, the petitioner alleges that the respondent had caused delays in providing drawings, decisions, instructions and had also defaulted and delayed in payment of the bills to the petitioner, resulting in avoidable prejudice to the petitioner.
9. As the aforesaid notice did not result in any arbitrator being appointed, the petitioner has approached this Court under Section 11(6) of the 1996 Act, seeking the intervention of this Court in that regard.
10. Consequent to the issuance of notice, a counter affidavit has been filed by the respondent.
11. The stand of the respondent, as contained in the counter affidavit, is reflected in the following paragraphs:
"3. It is submitted that it is the case of the Petitioner herein, that pursuant to the document dated 11.05.2015, i.e. the offer letter and document dated 15.05.2015, i.e. the construction agreement there exists an Arbitration Clause between the parties for disputes relating to the alleged payment / non-payment of the dues of the Petitioner. However, it is submitted that such a dispute was never contemplated in these documents, and the dispute which the Petitioner seeks to raise is not part of the Arbitration Agreements cited.
4. It is submitted that on 11.05.2015, the Petitioner submitted the offer letter to the Respondent for consideration, Signature Not Verified Digitally Signed ARB.P. 352/2021 Page 4 of 8 By:SUNIL SINGH NEGI Signing Date:14.02.2022 10:35:25 for the construction of the residence of the Respondent, at B- 101, G.K. - I, New Delhi. Importantly, it is submitted that this document, i.e. the letter dated 11.05.2015 and its allied terms and conditions, were only an offer letter, issued by the Petitioner to the Respondent. They did not and do not represent a binding contract in respect of the actual construction of the residential premises of the Respondent herein.
5. It is submitted that as per clause 10 of this offer letter, all disputes and differences regarding the execution of the contract, were to be referred to be adjudicated by an arbitrator. The clause is extracted below:
10. ARBITRATION All disputes and differences regarding execution of contract or allied matters shall be referred to be adjudicated upon by a mutually agreed arbitrator. The Venue shall be Delhi.
6. It is contended that a bare perusal of this clause reveals, that it's limited purpose was for the execution of the contract itself, and did not relate to the actual performance of the contract. It is further contended that scope of the Arbitration Agreement therein was only limited to actual execution of the contract, and only disputes relating to whether the contract stood executed or not were the subject matter of this Arbitration Clause. It is contended that since the contract stood executed, and that there is no dispute contemplated in the Arbitration Clause, capable of being adjudicated.
8. It is submitted that subsequently, the Petitioner and the Respondent entered into a construction agreement on 15.05.2021. It is submitted that as per the terms of this Agreement, the Respondent engaged the services of M/s Incubis Consultants (I) Pvt. Ltd., (hereinafter referred to as the "Architect") for the sole purpose of designing the architectural, structural and service drawings, for the residential house of the Respondent herein. It is submitted that as per the terms and conditions of this agreement, the Petitioner was required to carry out the construction strictly on the basis of the drawings prepared by the Architect.Signature Not Verified Digitally Signed ARB.P. 352/2021 Page 5 of 8 By:SUNIL SINGH NEGI Signing Date:14.02.2022 10:35:25
9. It is submitted as per the terms of this agreement; the Petitioner and the Architect were required to co-ordinate for the completion of the contract. It is submitted that the role of the Architect was a very specific one, and that only job of the Petitioner herein was to comply with the instructions of the Architect. The Architect however, was not acting as the agent of the Respondent, with unlimited authority. The role of the Architect was specific, and only related to the manner in which the designs were to be carried out.
10. Accordingly, it is submitted that Clause 32 of the Agreement was inserted in the agreement in relation to any disputes or differences between the Petitioner and the Architect. It is submitted that keeping in view the nature of the contract, it was imperative that a solution was found to resolve any disputes between the Architect and the Petitioner.
It is submitted that since the Architect was the person who was to determine whether the work had been completed properly, it was imperative that a mode of dispute resolution was created. Clause 32, was to satisfy this requirement, and is extracted below:
32. All disputes arising under this Construction Agreement including those relating to interpretation, or the specifications, architectural and interior designs, drawings, quality of workmanship, or material used in the work or as to any other question arising out of or relating to the contract, design, drawings, specifications, orders or otherwise in connection with the agreement or the carrying out of the works, whether during the progress of the work or after the completion or abandonment thereof, shall be referred to the sole arbitration of an Arbitrator appointed by mutual consent of Mr. Amit Gulati of M/s Incubis Consultants (I) Pvt. Ltd. And M/s Gurbakhsh Singh, B.A. Builders Pvt. Ltd. Under the provisions of Arbitration and Conciliation Act, 1996 or any statutory modifications thereof. The place of Arbitration shall be Delhi.
11. It is submitted that therefore certain disputes, i.e. disputes between the Architect and the Petitioner, in respect of completion of works was contemplated as the subject matter of the Arbitration Agreement. It is submitted that Signature Not Verified Digitally Signed ARB.P. 352/2021 Page 6 of 8 By:SUNIL SINGH NEGI Signing Date:14.02.2022 10:35:25 specifically to deal with the scope of disputes between the Architect and the Petitioner, clause 32 was inserted, which did not extend to recovery of monies or payments from the Respondent.
12. It is submitted that the purpose of this Clause was only to seek compliance of the work of the Petitioner, in accordance with the instructions of the Architect. It is further submitted that it is for this very reason that the only parties which were appointing the arbitrators, were the Architect and the Petitioner. It is submitted that this Arbitration Clause did not contemplate disputes or differences between the Petitioner and the Respondent, and certainly did not envisage alleged non-payment of dues, or loss of profit, for failure to complete works, between the Petitioner and the Respondent.
13. Unfortunately, this Arbitration Clause between the Architect and the Petitioner, too is unenforceable, as the Architect is not a party to this agreement. This so-called Arbitration Agreement is therefore void ab initio, and is incapable of being performed. It is submitted this is because Architect could not have been bound to an agreement, to which he did not enter into. It is submitted that it was erroneous of the Petitioner and the Respondent to enter into such an agreement, which is not a valid arbitration agreement."
12. Though detailed submissions were advanced by Mr. Rajshekhar Rao, to the effect that the defence of the respondent was practically moonshine and a clear case for arbitration of disputes existed, in view of Mr. Iyer's submissions, on instructions, that his client was amenable to the disputes being referred to arbitration, keeping all questions of fact and law open, this Court refrains from expressing any opinion in that regard.
13. In view of the aforesaid, this Court appoints Ishkaran Singh Bhandari ([email protected]; 9810170087) as the arbitrator to Signature Not Verified Digitally Signed ARB.P. 352/2021 Page 7 of 8 By:SUNIL SINGH NEGI Signing Date:14.02.2022 10:35:25 arbitrate on the disputes between the parties.
14. The learned arbitrator would be entitled to charge fees in accordance with the Fourth Schedule to the 1996 Act, or as otherwise decided by the arbitrator in consultation with the parties.
15. The learned arbitrator is requested to furnish the requisite disclosure under Section 12(2) of the 1996 Act, within a week of entering on reference.
16. This Court makes it clear that the observations in this order should not be treated as an expression of opinion on the rival stands of the parties. All questions of fact and law including the arbitrability of the dispute and the application of the arbitration clause are left open to be decided by the arbitrator.
17. The petition stands disposed of in the aforesaid terms with no orders as to costs.
C.HARI SHANKAR, J FEBRUARY 9, 2022 SS Signature Not Verified Digitally Signed ARB.P. 352/2021 Page 8 of 8 By:SUNIL SINGH NEGI Signing Date:14.02.2022 10:35:25