Ankit Tracom Pvt Ltd v. Imperia Structures Ltd

1. The present petitions filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter ‘the A&C Act’) seek constitution of an arbitral tribunal to adjudicate the disputes between the parties.

2. These petitions have been filed on the basis of an arbitration clause in the Unit Buyer Agreement/s (hereinafter ‘the UBA’), entered into between the petitioners and the respondent, for the purchase of office units in the real estate project under the name and style of ‘Imperia Mindspace’, situated at Sector-62, Gurugram, Haryana-122001, being delivered by the respondent.

3. It is the case of the petitioner in each of these petitions that in terms of the relevant UBA, the petitioner was entitled to receive assured returns for a period of three years, from the date of notice of possession. In this regard, reliance is placed on Clause-34 of the UBA. However, it is alleged that the respondent has failed to make any such payments. Further, it is stated that the respondent sought to unilaterally alter the terms of the agreement and raised unreasonable additional monetary demands on the petitioner. The petitioner is stated to have addressed several e-mails, calling upon the respondent to make the requisite payment on account of assured returns in terms of the UBA.

4. It is stated in CP IB (IBC) No.525/2022 in Chirag Jain and Ors v. Imperia Structures Limited, the respondent was admitted into insolvency vide order dated 31.08.2023 passed by NCLT. Eventually however, by order dated 01.02.2024, the NCLT in Comp. App. (AT) (Insolvency) No.1192/2023 in Harpreet Singh Bara Suspended Directors of Imperia Structures Limited v. Gaurav Katiyar Interim Resolution Professional and Others closed the ongoing CIRP against the respondent. Subsequently, the petitioners sold their units to a third party by way of registered sale deeds.

5. The petitioners also invoked the arbitration clause in the UBA and sought to nominate a Sole Arbitrator to adjudicate the disputes between the parties. Since the respondent did not respond thereto, the present petitions have been filed by the petitioners.

6. As recorded in the order dated 17.12.2024, two objections have been raised by learned counsel for the respondent. First, it is contended that the arbitration agreement between the parties is no longer subsisting. It is submitted that initially a unit buyer agreement was entered into between the parties (which contained an arbitration clause). However, the same was thereafter superceded by sale deed/s, duly executed by the respondent in favour of the petitioner/s. It is contended that the said sale deed does not contain any arbitration agreement, and hence, there no longer subsists an arbitration agreement between the parties. Second, it is contended that the petitioner, although being an original allottee of the unit in question, has transferred/executed sale deeds in respect of the unit/s in favour of certain third parties. Those third parties have not been made parties to the present petition. According to the respondent, the present petition deserves to be dismissed on this ground as well. Reliance has been placed on the judgments in BKS Galaxy Realtors LLP (previously known as BKS Galaxy Realtors Pvt. Ltd.) v. Sharp Properties Arbitration Appeal No. 72/2024 2024:BHC- AS:43163 and Ansal Housing & Construction Ltd. v. Samyak Projects Pvt. Ltd. 2018 SCC OnLine Del 12866 which was affirmed by the division bench in Samyak Projects Pvt. Ltd. v. Ansal Housing & Construction Limited

7. On a prima facie conspectus and for the purpose of these proceedings, this Court does not find any merit in the objections raised by the respondent for the purpose of these proceedings.

8. As held in a catena of judgments, the present proceedings are in the nature of summary proceedings[1] NTPC Ltd. v. M/s. SPML Infra Ltd. (2023) 9 SCC 385. and the jurisdiction of this Court is limited to ascertaining, on a prima facie basis, as to whether there exists a valid arbitration agreement between the parties. It is not disputed that the UBA, which was executed between the petitioner and the respondent, contains the following arbitration clause: “57.

DISPUTE RESOLUTION BY ARBITRATION: All or any disputes arising out of or touching upon or in relation to the terms of this Agreement or its termination including the interpretation and validity of the terms hereof and the respective rights and obligations of the Parties shall be settled amicably by mutual discussions, failing which the same shall be settled through reference to a sole Arbitrator to be appointed by the Company, whose decision shall be final and binding upon the Parties. The Allottee hereby confirms that it shall have no objection to the appointment of such Sole Arbitrator and the Allottee hereby accepts and agrees that this shall not constitute a ground for challenge to the independence or impartiality of the said Sole Arbitrator to conduct the arbitration. The arbitration shall be governed by the Arbitration and Conciliation Act, 1996 or any statutory amendments/modifications thereto and shall be held at the Company's offices or at a location designated by the said Sole Arbitrator in Delhi. The language of the arbitration proceedings and the Award shall be in English. The Award of the Sole Arbitrator shall be final and binding on the parties. Both the Parties will share the fees of the Arbitrator in equal proportion.”

9. On a prima facie conspectus, this Court finds merit in the contentions of learned counsel for the petitioner that the disputes between the parties essentially pertains to payment of the assured returns, for which a specific covenant was incorporated in the UBA. Moreover, it is pointed out by learned counsel for the petitioner that the disputes between the parties largely pertain to the entitlement of the petitioners to this assured return, for the period prior to the execution of the sale deed/s in respect of the premises in question. Also, in any event, the issue as to whether or not the sale deed extinguishes or completely absolves the respondent from paying the assured returns is an aspect that will involve an adjudicatory exercise, which is best left to be done by a duly constituted arbitral tribunal. As held in In Re: Interplay between Arbitration Agreement under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899, 2023 SCC OnLine SC 1666, the scope of examination in the present proceedings is confined to examine the prima facie existence of an arbitration agreement and not other issues.

10. The same position has been reiterated in SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 INSC 532, wherein it has been held as under: “113. Referring to the Statement of Objects and Reasons of the Arbitration and Conciliation (Amendment) Act, 2015, it was observed in In Re: Interplay (supra) that the High Court and the Supreme Court at the stage of appointment of arbitrator shall examine the existence of a prima facie arbitration agreement and not any other issues. The relevant observations are extracted hereinbelow: “209. The above extract indicates that the Supreme Court or High Court at the stage of the appointment of an arbitrator shall “examine the existence of a prima facie arbitration agreement and not other issues”. These other issues not only pertain to the validity of the arbitration agreement, but also include any other issues which are a consequence of unnecessary judicial interference in the arbitration proceedings. Accordingly, the “other issues” also include examination and impounding of an unstamped instrument by the referral court at the Section 8 or Section 11 stage. The process of examination, impounding, and dealing with an unstamped instrument under the Stamp Act is not a timebound process, and therefore does not align with the stated goal of the Arbitration Act to ensure expeditious and time-bound appointment of arbitrators. […]” (emphasis supplied)

114. In view of the observations made by this Court in In Re. Interplay, it is clear that the scope of enquiry at the stage of appointment of arbitrator is limited to the scrutiny of prima facie existence of the arbitration agreement, and nothing else. * * * For this reason, we find it difficult to hold that the observations made in Vidya Drolia and adopted in NTPC v. SPML Infra Ltd. that the jurisdiction of the referral court when dealing with the issue of “accord and satisfaction” under Section 11 extends to weeding out ex-facie non-arbitrable and frivolous disputes would continue to apply despite the subsequent decision in In Re. Interplay.

123. The power available to the referral courts has to be construed in the light of the fact that no right to appeal is available against any order passed by the referral court under Section 11 for either appointing or refusing to appoint an arbitrator. Thus, by delving into the domain of the arbitral tribunal at the nascent stage of Section 11, the referral courts also run the risk of leaving the claimant in a situation wherein it does not have any forum to approach for the adjudication of its claims, if it Section 11 application is rejected.” (emphasis supplied)

11. As such, for the purpose of the present proceedings, this Court is unable to accept the contention of the respondent that the execution of the sale deed obliterates the arbitration agreement contained in the UBA and/or the obligations as regards assured returns created under the said agreement.

12. Also, this Court is not inclined to accept the contentions / objections on behalf of the respondent that non-impleadment of the parties to whom the petitioners have subsequently sold their units, preclude the petitioners from invoking the arbitration clause contained in the UBA. As emphasized by learned counsel for the petitioner, the primary issue sought to be agitated by the petitioners is as regards their entitlement to the assured returns, allegedly payable under the UBA. The impleadment of the subsequent transferee/s is, prima facie, not necessary for adjudication of this aspect.