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Delhi HC: “There is a Clear and Fair Relation Between Petitioner and Respondent in the Terms of Civil Matters”

-Report by Mehul Jain

It was held by the Delhi High Court in the case of Daulat Ram Dharam Bir Auto Private Limited & Ors Vs Pivotal Infrastructure Private Limited & Ors. that on April 27, the learned Arbitrator shall fix his fee in consultation with the counsel for the parties. All the contentions of the parties are left open to be decided by the learned Arbitrator. The learned Arbitrator shall give his disclosure in terms of section 12 of the Act of 1996. It is the conclusion of the Delhi High Court.

FACTS

The judgment is made by the learned Single Judge bench “Hon’ble Mr Justice V. Kameswar Rao” On 27 April 2023. 

It is a case where the petitioner’s Nos. 1 to 3 („Petitioner Group‟) are companies duly incorporated under the provisions of the Companies Act, 1956 („Act of 1956‟), have filed the instant petition under section 11 of the Arbitration and Conciliation Act, 1996. Whereas respondent No. 1 herein, is also a company duly incorporated under the provisions of the Act of 1956, having its registered office at Plot No.12, Sector-4, Faridabad, Haryana-121004. It is stated that respondent No. 2 is also a company duly incorporated under the provisions of the Act of 1956 and was earlier a part of the Petitioner Group. However, currently the same is under liquidation and is thus being sued through its Liquidator appointed by the National Company Law Tribunal. 

Facts leading to the filing of the instant petition (as it relates to the Petitioner Group) are: that the Petitioner Group together with respondent No.2, each of whom owned a piece of land, handed over the possession of a parcel of their lands to the respondent No.3 (which is also a company incorporated under the provisions of the Act of 1956, [„Original Developer‟ herein]) and permitted the latter to develop, construct and complete the building on such lands, i.e., built-up area at projects titled as „Royal Heritage‟ & „Faridabad Eye‟ under License No. 78 of 2009 & 33 of 2010, granted by Directorate of Town and Country Planning, Haryana, („DTCP‟), Haryana, [„project land‟]. While the Petitioner Group and Respondent No.2 provided their piece of land for the development and construction of buildings, respondent No.3, in exchange for the same, undertook the obligation to provide a 10% share in the built-up area of the project land to the Petitioner Group.

It is stated, the Petitioner Group and the Respondent No. 2 companies transferred the development rights over the said project land to Respondent No.3 through Collaboration Agreements dated June 04, 2007, while retaining the rights, title and interest to the land underneath amongst themselves. So, in light of forgoing facts and circumstances, the Petitioner Group has filed the present petition seeking the appointment of a Sole Arbitrator for adjudication of disputes which have arisen between the Petitioner Group and respondent No.1.

PETITIONER’S CONTENTION

Whereas it has been extensively submitted by Mr Rajiv Bajaj, learned counsel appearing on behalf of the Petitioner Group that the obligation of giving 10% of the built-up area back to the Petitioner Group became legally ascertainable only on the issuance of the Occupation Certificates (i.e., on November 30, 2017, June 25, 2018, and August 17, 2020) by the DTCP, Haryana and as on date Occupation Certificates in respect of Towers no. l and no. 2, are yet to be received by respondent no. l. Reliance in this regard has been placed on section 264 of the Haryana Municipality Act, 1994.

They submitted that the claim of 10% built-up area has never been sought before any Court or Tribunal as the same became legally ascertainable only when the Flats built on the project land received necessary approvals in the form of Occupation Certificates. 

They submitted that the claims sought by the Petitioner Group are well within the period of limitation as the project is yet to be completed, and even otherwise, before the grant of the Occupation Certificate, the units could not have been identified and allocated to the Petitioner Group. So, they contended that the present petition is well within the period of limitation and thus, the same should be allowed and disputes be referred to arbitration. 

So, it is the case of the Petitioner Group and so contended by Mr Rajiv Bajaj, learned counsel appearing on behalf of the Petitioner Group that if the afore-said reliefs, as sought, are not granted then they shall be left with no remedy, as the respondent No.1 shall, alienate the 10% built-up area falling under the share of the Petitioner Group under the Collaboration Agreements, Deed of Assignment and all other documentations, to unaware homebuyers.

RESPONDENT’S CONTENTION

Mr Harish Malhotra learned senior counsel appearing for respondent No.2, that the obligation of giving 10% built-up area back to the Petitioner Group became legally ascertainable only on the issuance of the Occupation Certificates (i.e., on November 30, 2017, June 25, 2018, and August 17, 2020) by the DTCP, Haryana and as on date Occupation Certificates in respect of Towers no. l and no. 2, are yet to be received by respondent no. l. Reliance in this regard has been placed on section 264 of the Haryana Municipality Act, 1994.

It is also their submission that the present dispute arises out of respondent No.1 undertaking the obligations of respondent No.3 (Original Developer) under the Collaboration Agreements by way of the Deed of Assignment.

It is also their submission that the present petition is not barred by the contours of res judicata (constructive as well) or Order II Rule 2 of the CPC.

On the other hand, in essence, it is Mr Singh’s primary submission that claims sought to be referred to arbitration by the Petitioner Group: (i) are not arbitrable; (ii) are barred by limitation; and (iii) have already been adjudicated between the parties in previous civil and arbitral proceedings. So, he submitted that when the petition under section 11 of the Act of 1996 is itself not maintainable then on this ground alone, the instant petition should also be dismissed.

So, on the afore-said grounds, Mr Singh has argued for the dismissal of the instant petition.

COURT’S DECISION

Having heard the learned counsel for the parties and perused the record, at the outset, it may be stated, this petition has been filed by the Petitioner Group. A prayer has also been made on behalf of respondent No.2 for allowing it to participate in the arbitral proceedings as the claimant for its share in the built-up area, to avoid multiplicity of litigation. The Notice invoking the Arbitration Clause was sent by respondent No.2 only on October 19, 2022, i.e., during the pendency of these proceedings. It is not known whether any reply has been sent by respondent No.1 to the said Notice. In any case, in the absence of a substantive petition by respondent No.2, the aforesaid prayer in these proceedings cannot be accepted. Nonetheless, nothing precludes respondent No.2 to seek reference following the law. 

The reliance placed by Mr Malhotra on the judgment of the Co-ordinate Bench of this Court in the case of Raghuvir Buildcon Pvt. Ltd. v. Ircon International Limited, (2021) SCC OnLine Del 2491, in support of his contention that the claim of 10% share in the developed area by the Land Owners has not been settled by former the arbitration proceedings. Because of my above discussion, the petition under section 11 of the Act of 1996 needs to be allowed. 

I accordingly appoint Justice Rajiv Sahai Endlaw, former Judge of this Court as the learned Arbitrator to adjudicate the dispute(s) which have arisen between the Petitioner Group and respondent No.1, in respect of 10% of the built-up land. 

The learned Arbitrator shall fix his fee in consultation with the counsel for the parties. All the contentions of the parties are left open to be decided by the learned Arbitrator. The learned Arbitrator shall give his disclosure in terms of section 12 of the Act of 1996.

READ FULL JUDGEMENT: https://bit.ly/3ACLnu9

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