Allied Strips Ltd & Ors v. BDRBuilders and Developers Pvt Ltd

1. The challenge in this appeal under Section 37 ofthe Arbitration and Conciliation Act, 196 ('Act') is to an interim order dated 27'^' April, 2015 passed by the Sole Arbitrator in the disputes between the parties.

2. Clause 17 of the agreement between the parties envisages that a Sole Arbitrator will be appointed by the Director of the Respondent. The Sole Arbitrator was appointed by anotice dated 18^^ April, 2015 sent by the counsel for the Respondent to the counsel for the Appellants. On 27"^ April, 2015, the learned Arbitrator sent a'Notiee of Appearance' to the parties statingthat he had been appointed as such by aletterdated 24""April, 2015; ARB.A. 28/2015 Page 1 of[3] 2015:DHC:11790 v s that the Respondent had filed an application under Section 17 of the Act; that the Appellant should appear before him on 9"^ May 2015 along with reply to the said application and that the Respondent had been directed to serve acopy of the application and documents "as well as the order dated th 27 April, 2015 to the Respondent". It appears that on 27''^ April 2015 itself the impugned exparte orderwas passed by the learned Arbitrator restraining the Appellants from selling, transferring, alienating or creating third party rights in respect of11 flats at DLF Tower, Shivaji Marg, New Delhi.

3. It is not disputed by Mr. Sanjeev Goswami, the learned Counsel for the Respondent, that no foimal statement of claims has yet been filed by the Respondent before the learned Arbitrator. Straightway an application under Section 17 ofthe Act was filed on the date on which learned Arbitrator was appointed and in which within 3days thereafter he passed the impugned exparte order.

4. The Court is informed by Mr. Sumeet Bansal, learned counsel for the Appellants, that the said 11 flats are mortgaged in favour of the TATA Capital Financial Services Limited. The possession ofthe flats is still with ARB.A. 28/2015 Page 2 of[3] "A DLF. Had the learnedArbitrator been apprised ofthe above facts, theremay have been no occasion to pass the impugned interim order. The learned Arbitrator could haveproceeded afterhearing the Appellants.

5. Mr. Bansal expressed reservations on the manner ofappointment and the conduct ofthe Arbitrator. This Court considers that issue to be outside the scope ofthe present appeal. It will be open to the Appellants to proceed in ^ terms ofthe provisions ofthe Act as far as that grievance is concerned.

6. For the above reasons, the impugned order dated 27'^ April 2015 ofthe learned Arbitrator is hereby set aside. Fresh orders will be passed by the learned Arbitrator on the application under Section 17 of the Act after hearing both sides. The Respondent should file its statement of claims before the learned Arbitrator before the next date in the arbitral proceedings * th I.e. 24 July, 2015. In the meanwhile, any fresh application is filed by the Respondent, will be considered by the learned Arbitrator only after ensuring that the Appellants have been duly served with an advance copy. MAY21,2015/rs S.MURALIDHAR,J ARB.A. 28/2015 p. Page 3 of[3]