IMPORTANT POINT
Arbitral Tribunal is competent to decide on its own competence – Plea of fraud must be serious in nature in order to oust jurisdiction of Arbitrator.

JUDGMENT :

SUDHANSHU DHULIA, J.

1. The appellants before this Court were the plaintiffs in a civil suit, filed in the year 2021, seeking declaration that the Conveyance Deed dated 17.12.2019 to be declared null and void, and that the registered Development Agreements dated 17.09.2007, 20.11.2007, 30.11.2007, 03.12.2007 and 27.02.2008 stand validly terminated. The respondents/ defendants moved an application under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “Arbitration Act”) for referring the matter to arbitration by relying upon the arbitral clause in the two agreements dated 31.03.2007 and 25.07.2008. It was contended that the aforesaid agreements formed the basis of the Conveyance Deed and the Development Agreements which are subject matter of the suit. The Trial Court allowed the application of the defendant and referred the matter for arbitration, vide its order dated 13.10.2021. This order was challenged in Writ Petition No. 8836 of 2021 by the appellants/plaintiffs before the Bombay High Court, which was dismissed vide order dated 10.12.2021. Aggrieved by these two orders, the appellants/plaintiffs are now before this Court.

2. The only question to be decided by us here is whether the Trial Court and the High Court have rightly referred the matter to arbitration or the dispute is of such a nature that it is not liable to be referred to arbitration, as there was no arbitration clause in the Conveyance Deed dated 17.12.2019 or if there was, yet the matter in any case is such that it is not arbitrable. The brief facts of the case are as follows:

M/s Emerald Acres Private Limited (respondent no. 2) was incorporated by Late Mr. Shivkumar Daga and his wife, Mrs. Sushma Shivkumar Daga (appellant no. 1) on 18.04.2006 to carry on the business of real-estate development. Subsequently, two Tripartite Agreements were signed between Shivkumar Daga (hereinafter referred to as ‘SD’) Madhurkumar Ramakrishnaji Bajaj and Others (hereinafter referred to as ‘MB’) and M/s. Emerald Acres Private Limited (hereinafter referred to as ‘EAPL’) to develop, trade, and deal with the property and also to acquire such further properties as may be mutually agreed between the parties. Both the Tripartite Agreements dated 31.03.2007 and 25.07.2008 contain the following arbitration clause:

“It is agreed between Parties that in the event of any disputes or differences between the Parties hereto in relation to this Agreement or in relation to any matter touching or arising from this Agreement, the parties shall refer such disputes and differences to the arbitration under the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modification thereof.”

3. Shivkumar Daga died on 08.05.2011, bequeathing his assets through a will dated 10.02.2011 to his wife (appellant no. 1) and his son (appellant no. 2), in which a probate petition has already been filed and as per the records before us the case is still pending.

4. The appellants i.e. SD’s wife and his son then filed a suit seeking, inter-alia, a declaration that the Deed of Conveyance dated 17.12.2019 be declared null and void, and that the Development Agreements entered into pursuant to the two Tripartite Agreements be declared validly terminated.

5. The Conveyance Deed dated 17.12.2019 sought to be declared void and the five Development Agreements dated 17.09.2007, 20.11.2007, 30.11.2007, 03.12.2007 and 27.02.2008 sought to be declared as validly terminated by the appellants, all find their source in the two Tripartite Agreements dated 31.03.2007 and 25.07.2008.

6. The first prerequisite for an application under Section 8, of an arbitration agreement being there in the 2007 and 2008 Tripartite agreements cannot be denied, as all the other Development Agreements find their source in the aforesaid two Tripartite Agreements. The Trial Court and the High Court have rightly held that the broad language of the “arbitration clause” in the two Tripartite Agreement