Geeta Poddar v. Satya Developers Private Limited

1. Allowed, subject to just exceptions. ARB.P. 133/2019

2. This is a petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 (for short ‘1996 Act’).

3. Briefly, learned counsel for the petitioner argues that the incumbent Arbitrator cannot continue with the proceedings. 3.[1] In this behalf, reliance is placed by the learned counsel on the arbitration agreement which is incorporated in Clause 20 of the Buyers Agreement dated 6.9.2014. 3.[2] Clause 20 reads as follows: “20.

ARBITRATON 20.[1] It is agreed between the parties that any dispute which may be in relation to this present Agreement would not be taken up by the parties against each other in any criminal complaint either to the police or any Court. Both parties specifically waive their rights to do so against each other. The Buyer also waives his right to file Consumer Complaint on any issue which may be connected or arise out of 2019:DHC:1287 ARB.P. 133/2019 Pg. 2 of 4 this Agreement. Parties agree to resolve their entire disputes through the Dispute Resolution Mechanism agreed herein below. 20.[2] That in case of any dispute or controversy arising out of or in connection with this Agreement the same shall be referred to the Arbitration of a sole Arbitrator to be appointed by the Managing Director of the Developer. The arbitration proceedings shall be held in accordance with the Arbitration & Conciliation Act, 1996, and the Rules made thereunder as amended from time to time. The place of arbitration shall be New Delhi only and the language of the arbitration proceedings shall be English. The cost of arbitration including the arbitrator's fee shall be shared jointly by the Developer and the Buyer. The parties agree that during the pendency of the Arbitration, the parties shall continue to discharge their respective obligations under this Agreement. 20.[3] The rights and obligations of the parties under or arising out of this Agreement shall be construed and enforced in accordance with laws of India."

4. In support of this submission, the learned counsel seeks to place reliance on the judgment of the Supreme Court rendered in TRF Limited vs. Energo Engineering Projects Limited (2017) 8 SCC 377. 4.[1] In particular, the learned counsel for the petitioner seeks to rely upon the observations made by the Supreme Court in paragraph 54.

5. I must indicate herein that prior to the incumbent Arbitrator another Arbitrator was appointed whose appointment was challenged on similar grounds.

6. The learned counsel for the petitioner in the arbitration proceedings dated 13.1.2018 had raised this very objection. ARB.P. 133/2019 Pg. 3 of 4

7. It is, however, not disputed by the counsel for the petitioner that after that several hearings were held and thereafter, the learned Arbitrator withdrew from the proceedings.

8. I am told by the counsel for the petitioner that the Arbitrator withdrew from the proceedings as lack of trust was expressed by the petitioner. 8.[1] It is, in these circumstances, that the incumbent Arbitrator came to be appointed.

9. To my mind, in order to appreciate the ratio of the judgment of the TRF Limited, one would have to advert to the arbitration agreement which obtained between the parties in that case. 9.[1] Para 8 of the judgment refers to Clause 33 which incorporated the arbitration agreement. 9.[2] For the sake of convenience, the same is extracted herein. “33. Resolution of dispute/arbitration a. In case any disagreement or dispute arises between the buyer and the seller under or in connection with the PO, both shall make every effort to resolve it amicably by direct informal negotiation. b. If, even after 30 days from the commencement of such informal negotiation, seller and the buyer have not been able to resolve the dispute amicably, either party may require that the dispute be referred for resolution to the formal mechanism of arbitration. c. All disputes which cannot be settled by mutual negotiation shall be referred to and determined by arbitration as per the Arbitration and Conciliation, 1996 as amended. d. Unless otherwise provided, any dispute or difference between the parties in connection with this agreement shall be referred to sole arbitration of the Managing Director of Buyer or his ARB.P. 133/2019 Pg. 4 of 4 nominee. Venue of arbitration shall be Delhi, and the arbitration shall be conducted in English language. e. The award of the tribunal shall be final and binding on both; buyer and seller.”

10. A close perusal of Clause 33 would show that in the TRF Limited case the reference of disputes was to be made to the Managing Director of one of the parties i.e. the buyer or his nominee.

11. In the instant case, the Managing Director of the respondent is not the Arbitrator.

12. Under Clause 20 of the subject Buyers Agreement, the Managing Director has been given the authority to appoint an Arbitrator.

13. In my view, this presents a materially different circumstance in contradistinction to what obtained in TRF Limited case.

14. Therefore, the ratio of the judgment in TRF Limited case has to be understood in the light of Clause 33 which captured the arbitration agreement obtaining between parties in that case.