Full Text
HIGH COURT OF DELHI
O.M.P.(T) 6/2015
LEISURE BUILDERPVT. LTD. Petitioner
Through: Mr. Vikas Dhawan and Mr. S. Panda, Advocates.
AND p. 80/2015 LEISURE BUILDER PVT. LTD. Petitioner
Through: Mr. Vikas Dhawan and Mr. S. Panda, Advocates.
Through: Mr. Avinash Kumar, Advocate.
ORDER
1. These are two petitions filed by Leisure Builder Pvt. Ltd. ('LBPL') (hereafter the builder) against Ms. Shanti Swarup Bhadana (hereafter the owner) arising in the background of a collaboration agreement dated OMP (T) 6/2015 &Arb.P. 80/2015 „, Page 1 of[9] 2015:DHC:10742 h November2010 enteredbetweentheparties wherebythebuilderhad agreed to develop the property ofthe owner at A-44, New Friends Colony, New Delhi.
2. Clause 28 ofthe collaboration agreementreads as under: "28. That all disputes and differences arising between the parties mrespect of this Agreement shall be first resolved f amicably through mutual negotiation, failing which, the parties shall refer the disputes to a sole arbitration to be mutually agreed upon. Mr. Jatish Virmani, whose decision/award shall be final and binding on theparties. The place ofarbitration shall be atNewDelhi and the provisions of the Arbitration and Conciliation Act, 1996 will be applicable."
3. The case ofthe builderisthatalthoughhe completedthe construction,the * ownerallegedthattherewasdelayindoingsoandclaimedcompensation.It IS stated that with the owner refusing to take possession, several meetings were held between theparties with Mr. Jatish Virmani, the named Arbitrator negotiatingthe settlement. On 23-^ October 2013, asettlementwas arrived at betweentheparties. According to the builder, the ownerwas represented by Mr. Virmani. It is stated thatpursuantto the settlementthe builderdelivered OMP (T) 6/2015 &Arb.P. 80/2015 Page 2 of[9] afl.ll and final payment of Rs 7,50,00 under cover of letter dated 23« October 2013 to Mr. Vinnani towards the total penalty in favour of the owneras fi.ll and final setUement. Atranscript ofthe audio recording ofthe negotiationsprecedingthesettlement, arrived atinthe presenceand with the participation ofMr. Virmani, has beenplaced onrecord.
4. It must be noted here that according to the Respondent, the letter dated 23"" October 2013 under the cover ofwhich payments were made to Mr. Virmani is false and fabricated. It is, however, not denied that the builder did give acheque in the sum ofRs.7.50 lakhs to the owner but it is stated that this was with the understanding that afull and final payment would be made atthetime ofhanding overofthepossessionofthe ovmer's shareafter removal ofthe defects pointed out by him.
5. It is not in dispute that there was no formal invocation of arbitration clause by the owner. Yet, the arbitral proceeding commenced before Mr. Virmani as is evident fi-om the record ofthe arbitral proceedings copies of which have been placed on record. It is also not in dispute that before Mr. Virmam the builder filed several applications including ones under Sections 12, 13 and 16 of the Arbitration and Conciliation Act, 1996 ('Act') Page 3 of[9] questioning the Arbitrator's impartiality as well as hisjurisdiction. It is also not in dispute that the said applications were not decided by the learned Arbitrator and were kept pending.
6. While the above applications were pending, the Respondent formally mvokedthe arbitrationclause byanotice dated31"December2014 andalso filed an application before Mr. Virmani seeking leave to withdraw the statement ofclaims already filed and proceed with the arbitration afresh in terms ofthe letter ofinvocation dated 31^'December2014.
7. On 24 January 2015, the said application ofthe owner was allowed by the learned Arbitrator by adetailed order holding that the owner can be permittedto withdraw the original claim and granted libertyto proceed with the arbitration as persubsequentinvocation letterdated 31«December2014. Mr.Virmam then proceeded, by the same order dated 24" January 2015, to dispose of the arbitration proceedings itself along with the applications which were pending.
8. According to the Respondent after passing of the above order, Mr. Virmani purportedly addressed aletter on 5"' Februaiy 2015 to the builder and the owner informing them of his having entered upon reference and OMP (I) 6/2015 &Arb.P. 80/2015 Page 4 of[9] a fixing fte date ofhearing as 13-^ Februa.y2015. Alftough learned counsel for the Respondent/owner relies on thepostal receipt ofthe said date i.e. 6^ Februao' 2015 to state that there must be presumption ofdeliveiy ofsuch notice upon the builderin terms ofSection 27 ofthe General Clauses Act,
1897. the case ofthe builder is that he never received any such notice and that It was only on lO'" February 2015 that an email was received from the learnedArbitratorstatingthathehadtaken cognizance ofthe letterreceived from the owner and was entering upon reference.
9. It is contended by Mr. Vikas Dhawan, learned counsel for the Petitioner (builder) that even prior to receiving the aforementioned email dated lo" February 2015, the builder had filed on 9" February 2015 Arbitration Petition 80 of2015 under Section 11(6) ofthe Act seeking the appointment of an Arbitrator. Notice was issued by the Court in the said arbitration petition on 25" February 2015. On the strength ofthe decision in Datar SwitchgearsLtd. v. TataFinanceLtd. (2000) 8SCCISIit is submittedthat the owner eam,ot insist that it is the named Arbitrator who should continue as such.
10. To complete the narration, it requires to be noticed that even after the OMP (D 6/2015 &Arb.P. 80/2015 Page 5 of[9] f •0 builderinformedMr. Virmani thatapetitionunderSection 11 (6)oftlieAct was pending, Mr. Virmani appears to have held asitting on 13"Februaiy 2015 andproceededwith the arbitration on the ground that no stayhas been granted ofthe proceedings before him by the Court.
11. Whenthiswas broughttothenoticeoftheCourtbythebuilderbyfiling OMP (T) 6/2015 under Section 14 ofthe Act seeking termination ofthe mandate ofMr. Virmani, this Court by an order dated IS" Februao' 2015 while directing notice to issue in the application, directed that further proceedings beforeMr. Virmani shall remain stayed.
12. In the rejoinderfiled by the builder it is reiterated that the buildernever received acopy of the letter addressed by the learned Arbitrator to the parties on 5"^ February 2015. Relying on the orderpassed by the Designate of the Chief Justice of India in Bipromasz Bipron Trading v. Bharat ElectronicsLimited(2012) 6SCC384it is contended that for the puq>oses ofSection 3(2) ofthe Act awritten communication is deemed to have been received only "on the date so delivered". It is contended that till the email dated 10"' Febmao' 2015, the builder did not receive any letter dated S'' February 2015 ofthe learned Arbitrator. OMP (T) 6/201S &Arb.P. 80/2015 Page 6 of[9] r
13. Mr. AvinashKumar, learnedcounsel for the owner, onthe otherhand, submittedthatwiththepostalreceipthavingbeenplacedonrecord itshould bepresumedthatthebuilderdidreceivethenoticeevenpriortothefiling of the present petition under Section 11(6) ofthe Act. It is further submitted that none ofthe grounds under Section 14 ofthe Act was attracted as it could no. be said that Arbitrator was dejure incapable ofproceeding ^ withthematter. Itissubmittedthatoncethere isanamed Arbitratorinthe agreement between the parties, the Court should not interfere in his continuing as such.
14. Having considered the above submissions, it appears to the Court that the learned Arbitrator Mr. Viimani having brought the arbitration proceedings to aclose by his order dated 24'" January 2015 could not have ^ possiblyagainentereduponreference withoutthere beingaspecificrequest m that regard by either party. Neither in his letter dated 5® February 2015 written to thepartiesnorinthe email dated lo"February2015 addressed by him to the builder, is there any reference to the precise date on which Mr. Virmani received aletter, ifat all, from the owner requesting him to enter upon reference. No copy of such letter has also been placed on record. Strangely, the email dated 10^Februaty2015 addressed bytheArbitratorto Page 7of[9] V the buildermakesnoreferencetoanydispatchofaletterearliertothe owner by the Arbitrator.
15. Independent of the above, the Court finds it strange that having, termmated the arbitral proceedings bythe order dated 24'" Januaiy 2015 the Arbitrator should immediately thereafter enter upon reference. The Court ako finds merit in the contention of the learned counsel for the Petitioner/builder that given the facts and circumstances ofthe case, where the learnedArbitratorappears tohave beenpresemwhen the settlementtook place between the parties and was aprivy to the negotiations between the parties, he could not be expected to be wholly impartial and unbiased This IS anon-negotiable prerequisite ofan Arbitrator.
16. In the absence ofproofin the form ofatracking report beingplaced on record to show that the Petitioner did have notice ofthe learned Arbitrator having entered upon reference on 5'" February 2015 itself, the Court is satisfiedthatthePetitionerhad approached this Court with thepetition under Section 11 (6) of the Act even prior to the notice being received by the Petitioner ofthe Arbitrator entering upon reference for the second time. In the circumstances, the Respondent cannot insist that the named Arbitrator Page 8 of[9] alone should continue with the proceedings.
17. Forall ofthe aforementioned reasons, the Courtterminates the mandate ofMr. Jatish Virmani as Arbitrator. The Courtappoints Mr. Rajesh Kumar, aformer Additional District Judge, Delhi, residing at 8/13, Roop Nagar, Delhi-110007 (Mob. No. 9868215299) as sole Arbitrator to adjudicate the disputes between the parties including their claims and counter-claims. The arbitration shall take place under the aegis of the Delhi International Arbitration Centre ('DAC'). The fees ofthe learned Arbitrator will be in terms ofthe Delhi International Arbitration Centre Arbitration Proceedings (Arbitrators' Fees) Rules.
18. Thepetitions are disposed ofinthe above terms. Acopy ofthis orderbe delivered to the learned Arbitrator as well as Additional Coordinator, DAC forthwith.
APRIL 13,2015 S. MURALIDHAR, J dn Page 9 0/9