Delhi High Court - Orders
Ats Infrastructure Limited Having ... vs 1. Vishnu Vaibhav Industries Private ... on 5 September, 2022
Author: Neena Bansal Krishna
Bench: Neena Bansal Krishna
$~32 to 34
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 760/2020
ATS INFRASTRUCTURE LIMITED
Having Registered Office at 711/92,
Deepali, Nehru Place-110019 ..... Petitioner
Through: Appearance not given.
versus
1. VISHNU VAIBHAV INDUSTRIES PRIVATE LIMITED
Plot No. 371, Phase-2, Udyog Vihar,
Gurgaon-122015
2. ATS HOUSING PRIVATE LIMITED
Having Registered Office at 711/92,
Deepali, Nehru Place-110017 ..... Respondents
Through: Mr. Piyush Singh, Mr. Akshay
Srivastava & Mr. Amberish
Kharbanda, Advocates.
33
+ ARB.P. 761/2020
ATS INFRASTRUCTURE LIMITED
Having Registered Office at 711/92,
Deepali, Nehru Place-110019 ..... Petitioner
Through: Appearance not given.
versus
1. VANI RAHEJA
D/o Vipin Raheja,
H. No. C-5/6, Vasant Vihar,
New Delhi-110057
Signature Not Verified
Digitally Signed ARB.P. 760/2020 & connected matters Page 1 of 13
By:SAHIL SHARMA
Signing Date:13.09.2022
16:06:24
2. ATS HOUSING PRIVATE LIMITED
Having Registered Office at 711/92,
Deepali, Nehru Place, 110019 ..... Respondents
Through: Mr. Piyush Singh, Mr. Akshay
Srivastava & Mr. Amberish
Kharbanda, Advocates.
34
+ ARB.P. 764/2020
ATS INFRASTRUCTURE LIMITED
Having Registered Office at 711/92,
Deepali, Nehru Place-110019 ..... Petitioner
Through: Appearance not given.
versus
1. VAIBHAV RAHEJA
S/o Vipin Raheja,
H. No. C-5/6, Vasant Vihar,
New Delhi-110057
2. ATS HOUSING PRIVATE LIMITED
Having Registered Office at 711/92,
Deepali, Nehru Place, 110019 ..... Respondents
Through: Mr. Piyush Singh, Mr. Akshay
Srivastava & Mr. Amberish
Kharbanda, Advocates.
CORAM:
HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA
ORDER
% 05.09.2022 ARB.P. 760/2020, ARB.P. 761/2020 & ARB.P. 764/2020
1. The present petitions have been filed under Section 11(6) of the Signature Not Verified Digitally Signed ARB.P. 760/2020 & connected matters Page 2 of 13 By:SAHIL SHARMA Signing Date:13.09.2022 16:06:24 Arbitration and Conciliation Act, 1996 (hereinafter referred to as "A&C Act, 1996") on behalf of the petitioner seeking appointment of a Sole Arbitrator to adjudicate the disputes between the parties.
2. The facts as narrated in the petition are that the petitioner is engaged in business of construction and development of residential Group Housing projects, while the respondent No. 1 is a Company. It, together with Ms. Vani Raheja and Mr. Vaibhav Raheja, form part of the Raheja Family which entered into the following Agreements as part of the transaction with Raheja Group:
"1. Inter-Corporate Deposit Agreement dated 27th June, 2017 between the petitioner and the respondents;
2. Memorandum of Understanding dated 27th June, 2017 between the petitioner, respondent No. 2 and Mr. Vaibhav Raheja;
3. Memorandum of Understanding dated 27th June, 2017 between the petitioner, respondent No. 2 and Ms. Vani Raheja."
3. The afore-mentioned Agreements were entered into as part of one umbrella transaction between the Raheja Family and the ATS Group. The Agreements are inter-connected, the mother Agreement being the Inter- Corporate Deposit Agreement (hereinafter referred to as "ICDA") dated 27th June, 2017. Moreover, the obligations under these Agreements are inter-connected and incapable of being separated from each other.
4. It is submitted that the respondent No.1, which is a party and signatory to the Arbitration Agreement, has a direct relationship with Mr. Vaibhav Raheja and Ms. Vani Raheja, the signatories to the MoUs insofar as both of them are part of the common Raheja Family with which the ATS Group entered into the transaction. Mr. Vaibhav Raheja is the key Signature Not Verified Digitally Signed ARB.P. 760/2020 & connected matters Page 3 of 13 By:SAHIL SHARMA Signing Date:13.09.2022 16:06:24 Direction/Managerial Personnel of the respondent No. 1. Furthermore, all the communications for these Agreements were also being made from the e- mail of Mr. Vaibhav Raheja as is evident from Clause 11 of the MoUs and Clause 10 of the ICDA dated 27th June, 2017.
5. It is further asserted that the aforesaid Agreements were entered into for achieving the common object of Raheja Family investing into the ATS Group and this is evident from the terms and conditions of the said Agreements. As such, there is a direct commonality of the subject matter in the said Agreements and they were entered into as part of a composite transaction involving Raheja Family investing into the ATS Group.
6. The ICDA contains Clause 9 which is wide enough to cover the disputes under the MoUs as well. Clause 9 of ICDA reads as under:
"9. GOVERNING LAW AND ARBITRATION 9.1. Any dispute, controversy, claim or disagreement of any kind whatsoever between or among the Parties in connection or arising out of this Agreement, and the Allotment Letters or the breach, termination or invalidity thereof (hereinafter referred to as a 'Dispute') shall, so far as possible, be settled amicably between the parties within a period of 30 (thirty) days from the Dispute having arisen.
9.2 Failing such amicable settlement, either of the Parties shall be free to refer the Dispute to arbitration under the Arbitration and Conciliation Act, 1996. The arbitration tribunal shall consist of a sole arbitrator, too be mutually appointed by the Parties. The venue of arbitration shall be New Delhi. The arbitration proceedings shall be conducted in English. Any award made in such arbitration will be final and binding on the Parties.
9.3 This Agreement, and the Allotment Letters shall be governed and interpreted by, and construed in accordance with the Laws of India, and subject to Clause 9.1 and 9.2, the courts of New Delhi shall have exclusive jurisdiction in respect of all Signature Not Verified Digitally Signed ARB.P. 760/2020 & connected matters Page 4 of 13 By:SAHIL SHARMA Signing Date:13.09.2022 16:06:24 matters relating to or arising out of this Agreement, and the Allotment Letters."
7. Clause 9 of ICDA is of the widest amplitude and broad enough to cover "any dispute, controversy, claim or disagreement of any kind whatsoever" i.e., disputes under the other connected Agreements as well.
8. It is asserted that in the absence of a composite reference of disputes to arbitration, it would lead to multiplicity of proceedings and consequent possibility of conflicting decisions even though the subject matter and issues involved are similar. It is evident that the parties always intended the Agreements to together have a common function of enabling the transaction between the Raheja Family and the ATS Group. These disputes under the Agreements ought to be resolved together in a composite reference under Clause 9 of ICDA. It is pertinent to mention that the disputes under three Agreements be compositely referred to arbitration under Clause 9 of the ICDA.
9. It is further submitted that the respondent No.1 created an ICD in favour of the petitioner for Rs. 3.675 crores in terms of the ICDA. Furthermore, the petitioner furnished post-dated cheques to respondent No.1 in good faith and in view of the long-standing relationship between the parties. Certain disputes have arisen between the parties in regard to the aforesaid transactions, owing to which the petitioner and the Raheja Family were in talks to reach a holistic, amicable settlement. However, while the talks were going on, the respondent No.1 wrongly deposited the post-dated cheques despite no sums being due. Thereafter, the respondent No. 1 issued a purported statutory Notice dated 20th October, 2020 under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 and the Signature Not Verified Digitally Signed ARB.P. 760/2020 & connected matters Page 5 of 13 By:SAHIL SHARMA Signing Date:13.09.2022 16:06:24 respondent No.1 also wrongly claimed that the petitioner was guilty of purported acts under the Negotiable Instruments Act, 1881 inter alia cheating and fraud.
10. It is submitted that the post-dated cheques were issued by the petitioner in good faith and since, no amounts were due; the same could not have been represented by the respondent No. 1 for encashment.
11. The petitioner vide its Letter dated 31st October, 2020 replied the Notice dated 20th October, 2020 of the respondent No. 1, whereby all the allegations made were denied by the petitioner. The petitioner further stated that in the absence of respondent No. 1 taking steps stated in the petitioner's Notice dated 31st October, 2020 within 7 days from the receipt of the Notice, it was evident that there were serious commercial differences and disputes between the parties under the Agreement which would need resolution and it was further clarified that failing this, the Notice dated 31st October, 2020 be treated as the Notice invoking arbitration.
12. Learned counsel on behalf of the petitioner has countered the argument of respondent and asserted that in all three petitions, Mr. Vaibhav Raheja is a common party, the nature of transactions are the same and all three Agreements were entered into on the same date i.e., 27th June, 2017. The transactions are intertwined and interconnected and in the MoUs are in fact, governed by the terms and conditions contained in the umbrella agreement i.e., ICDA. It is further submitted that all the communications in respect of three Agreements took place together and all communications, letters and correspondences were in reference to all three Agreements. Therefore, they were common transactions and a common reference must be made of all the disputes to the Arbitrator. The petitioner nominated Mr. Signature Not Verified Digitally Signed ARB.P. 760/2020 & connected matters Page 6 of 13 By:SAHIL SHARMA Signing Date:13.09.2022 16:06:24 Justice H.R. Malhotra (Retd.) as the Sole Arbitrator for adjudication of all the disputes and requested the respondent No. 1 to consent to his name. However, the respondent No. 1 vide its Letter dated 31st November, 2020 categorically refused to refer the disputes that had arisen between the parties to arbitration. Hence, the present petition has been filed for appointment of the Arbitrator.
13. Learned counsel on behalf of the respondent has submitted that ICDA dated 27th June, 2017 contains Clause 9 which specifically provides for arbitration and the matter is referable to arbitration. However, in the other two petitions i.e., ARB.P. 761/2020 and ARB.P. 764/2020, the parties had entered into MoUs dated 27th June, 2017 which are independent Agreements and ICDA was not a composite or an umbrella Agreement governing the MoUs which are subject matter of the other two petitions.
14. Learned counsel for the respondent has referred to Clause 10 of MoU which provides for governing law on the dispute resolution which specifically provides that "the Agreement and the Allotment Letter shall be governed and incorporated and construed in accordance with law and the Courts of Uttar Pradesh shall have jurisdiction". It is thus submitted that MoUs are independent contracts and are not part of ICDA. Since two MoUs do not contain any arbitration clause, those two arbitration petitions cannot be referred to arbitration.
15. Learned counsel on behalf of the respondent has further submitted that even though three Agreements, which are the subject matter of three petitions, had been arrived at on the same date i.e., 27th June, 2017 and there may have been joint negotiations conducted or common correspondences exchanged between the parties, but these are three independent Agreements Signature Not Verified Digitally Signed ARB.P. 760/2020 & connected matters Page 7 of 13 By:SAHIL SHARMA Signing Date:13.09.2022 16:06:24 and ICDA is not an umbrella agreement as has been argued. The intention of the parties in two MoUs dated 27th June, 2017 was not to refer the disputes arising under two Agreements as is evident from Clause 10 respectively of two MoUs where it has been specifically provided that in case of disputes, the Courts of Uttar Pradesh shall have the jurisdiction. There is no arbitration clause in two MoUs which are subject matter of ARB.P. 761/2020 and ARB.P. 764/2020 and these two petitions cannot be referred to arbitration. Since ICDA has a valid arbitration agreement, there is no objection to petition bearing No. ARB.P. 760/2020 being allowed and an Arbitrator being appointed in the said petition.
16. Learned counsel for the respondent has placed reliance on M.R. Engineers & Contractors Private Limited vs. Som Datt Builder Limited (2009) 7 SCC 696 in support of his assertions.
17. Submissions heard.
18. Admittedly, ICDA dated 27th June, 2017 was entered into between Vishnu Vaibhav Industries Private Limited through its authorized signatory Mr. Vaibhav Raheja and M/s. ATS Housing Private Limited. As per the terms of this Agreement, Vishnu Vaibhav Industries Private Limited termed as the Depositor had agreed to lend to ATS Infrastructure Limited a sum of Rs. 3,67,50,000/- and such amounts as may be referred to as the ICD. It was agreed that their respective rights and obligations with regard to their relationship shall be interpreted, acted upon and governed solely in accordance with the terms and conditions of this Agreement. It also contains Clause 9 for referral of disputes to Arbitration.
19. The MoU dated 27th June, 2017 in petition bearing No. ARB.P. 761/2020 was between M/s. ATS Housing Private Limited (as developer) Signature Not Verified Digitally Signed ARB.P. 760/2020 & connected matters Page 8 of 13 By:SAHIL SHARMA Signing Date:13.09.2022 16:06:24 and Ms. Vani Raheja (as seller) and M/s. ATS Infrastructure Limited (as purchaser). The said Agreement pertained to purchase of four apartments along with two parking space in its Group Housing Residential Scheme located at Plot No. S-1/A1, Sector 150, Noida, Uttar Pradesh for which a sum of Rs. 2,00,47,500/- was paid to the developer vide Cheque No. 000056 dated 23rd June, 2017 drawn on HDFC Bank, IMT Manesar, Haryana. In the said Agreement, Clause 10 provided for Governing Law and Dispute Resolution which reads as under:
"10. Governing Law and Dispute Resolution - This Agreement and the Allotment Letters shall be governed and interpreted by, and construed in accordance with the Laws of India, the courts of Uttar Pradesh shall have exclusive jurisdiction in respect of all matters relating to or arising out of this Agreement and the Allotment Letters."
20. Specific covenants of the developer, covenants of the seller and the covenants of purchaser were agreed between the parties in terms of Clauses 3, 4 and 5 respectively.
21. Likewise, MoU dated 27th June, 2017 in petition bearing No. ARB.P. 764/2020 was entered into between ATS Housing Private Limited, Vaibhav Raheja and M/s. ATS Infrastructure Limited for purchase of three flats on payment of Rs. 1,50,35,625/-. Covenants of the developer, the covenants of the seller and the covenants of purchaser were specifically spelled out in Clauses 3, 4 and 5 respectively. Clause 10 provided for Governing Law and Dispute Resolution, which is similar to the earlier referred MoU dated 27th June, 2017 in petition bearing No. ARB.P. 761/2020.
22. It is evident from the aforementioned terms and conditions specified in three documents that ICDA was a standalone document and was in no Signature Not Verified Digitally Signed ARB.P. 760/2020 & connected matters Page 9 of 13 By:SAHIL SHARMA Signing Date:13.09.2022 16:06:24 way concerned or connected with other two MoUs dated 27th June, 2017 entered into by the ATS Housing Private Limited with Ms. Vani Raheja and Mr. Vaibhav Raheja respectively. The parties to three Agreements are different; it may be that Mr. Vaibhav Raheja and Ms. Vani Raheja may be holding interest in Vishnu Vaibhav Industries Private Limited being part of a family, but it is a settled proposition of law that Company has a separate entity from its Director and Mr. Vaibhav Raheja and Ms. Vani Raheja had entered into two MoUs respectively in their independent capacity. It cannot be said that the parties to the Agreements or the transactions which were the subject matter of all three documents, are the same. Merely because the correspondence was carried out jointly would not be a ground to hold that ICDA is an umbrella Agreement governing the terms and conditions of other two MoUs.
23. Section 7 of A&C Act, 1996 defines "arbitration agreement". Sub-sections (1) and (5) of Section 7 are relevant which read as under:
"7. Arbitration Agreement.- (1) In this Part, 'arbitration agreement' means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
XXXX XXXX XXXX XXXX XXXX (5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract."
24. Learned counsel for the respondent has placed reliance on M.R. Engineers & Contractors Private Limited (supra), wherein after making a reference to Section 7, it was observed that wording of Section 7(5) of A&C Signature Not Verified Digitally Signed ARB.P. 760/2020 & connected matters Page 10 of 13 By:SAHIL SHARMA Signing Date:13.09.2022 16:06:24 Act, 1996 makes it clear that a mere reference to a document would not have the effect of making an Arbitration Clause from that document, a part of the contract. The reference to the document in the contract should be such that it shows the intention to incorporate the Arbitration clause contained in the document into the contract. If the legislative intent was to import an Arbitration Clause from another document merely on reference to such document in the contract, sub-section (5) would not contain the significant later part which reads: "and the reference is such as to make that arbitration clause part of the contract", but would have stopped with the first part which reads: "the reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing...". It was concluded that Section 7(5) requires a conscious acceptance of the Arbitration Clause from another document by the parties as a part of their contract, before such Arbitration Clause can be read as a part of the contract between the parties.
25. It was further observed that there is a difference between reference to another document in a contract and incorporation of another document in a contract, by reference. In the first case, the parties intend to adopt only specific portions or part of the referred document for the purposes of the contract. In the second case, the parties intend to incorporate the referred document in entirety, into the contract. Therefore, when there is a reference to a document in a contract, the court has to consider whether the reference to the document is with the intention of incorporating the contents of that document in entirety into the contract, or with the intention of adopting or borrowing specific portions of the said document for application to the contract. It was also observed that a general reference to another contract Signature Not Verified Digitally Signed ARB.P. 760/2020 & connected matters Page 11 of 13 By:SAHIL SHARMA Signing Date:13.09.2022 16:06:24 will not be sufficient to incorporate the Arbitration Clause from the referred contract into the contract under consideration. There should be a special reference indicating a mutual intention to incorporate the Arbitration Clause from another document into the contract. The exception to the requirement of special reference is where the referred document is not another contract, but a standard form of terms and conditions of trade associations or regulatory institutions which publish or circulate such standard terms and conditions for the benefit of the members or others who want to adopt the same.
26. It is thus evident from the observations made in M.R. Engineers & Contractors Private Limited (supra) that a general reference to another contract will not be sufficient to incorporate the arbitration clause from the referred contract into the contract under consideration.
27. In the present case, in fact, two MoUs are independent of ICDA and do not contain any reference whatsoever to ICDA. Moreover, there is a specific intention of not referring the disputes arising therein to arbitration as it clearly provides in Clause 10 that the disputes shall be referable to the Courts in Uttar Pradesh.
28. It thus leads to necessary conclusion that there is no Arbitration Clause in writing in petitions bearing No. ARB.P. 761/2020 and ARB.P. 764/2020 which are the subject matter of the MoUs dated 27th June, 2017.
29. The respondent, on being put a specific query, declined to agree to arbitration in the petitions bearing No. ARB.P. 761/2020 and ARB.P. 764/2020 and claimed that these disputes are not amenable to arbitration.
30. In these circumstances, the petitions bearing No. ARB.P. 761/2020 and ARB.P. 764/2020 are hereby dismissed, since there is no arbitration Signature Not Verified Digitally Signed ARB.P. 760/2020 & connected matters Page 12 of 13 By:SAHIL SHARMA Signing Date:13.09.2022 16:06:24 clause.
31. Considering the facts and submissions made, the petition bearing No. ARB.P. 760/2020 is hereby allowed and Ms. Justice Sunita Gupta (Retd.), Delhi High Court, Mobile No. 9910384628, is hereby appointed as the Sole Arbitrator to adjudicate the disputes between the parties.
32. This subject to the learned Arbitrator making the necessary disclosure under Section 12(1) of the A&C Act, 1996 and not being ineligible under Section 12(5) of the A&C Act, 1996.
33. The petition bearing No. ARB.P. 760/2020 is accordingly disposed of.
NEENA BANSAL KRISHNA, J SEPTEMBER 5, 2022 S.Sharma Signature Not Verified Digitally Signed ARB.P. 760/2020 & connected matters Page 13 of 13 By:SAHIL SHARMA Signing Date:13.09.2022 16:06:24