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2021 Supreme(Bom) 619

IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT GOA
M.S. Sonak, J.
Raghunath Madhukar Mandrekar - Appellant
Versus
Prabhakar Vernekar & Anr. - Respondents
Application For Appointment Of Arbitrator No. 2 of 2018, 18 of 2017, 24 of 2017, 25 of 2017, 26 of 2017
Decided On : 28-01-2021

Advocates appeared:
J. Mulgaonkar, Advocate, Parikshit Sawant, Advocate, Vishnuprasad Lawande, Advocate

The cause of action for the appointment of an arbitrator arises when the named arbitrator refuses to enter arbitration, and the issue of whether claims before the arbitrator are barred by limitation is to be decided by the arbitrator.

Headnote:

Arbitration - Appointment of Arbitrator - Arbitration and Conciliation Act, 1996 - Section 8, Section 11(8), Section 12(1)(b)

Fact of the Case:

The applicants sought appointment of an arbitrator due to disputes arising from agreements with the builders. The Consumer Forum rejected the builders' application for arbitration, but the Commission allowed it. The named arbitrator declined to enter arbitration, leading to the applicants filing for the appointment of an arbitrator by the Court.

Finding of the Court:

The Court found the objections raised by the respondents to be without merit and not bonafide. It held that the cause of action for the appointment of an arbitrator arose when the named arbitrator refused to enter arbitration, not in 2013 as argued by the respondents. The Court also kept open the issue of whether the claims before the arbitrator were barred by limitation. The Court appointed Mr. Vishwesh Kamat as the arbitrator.

Issues: The issues included the validity of the objections raised by the respondents, the cause of action for the appointment of an arbitrator, and the potential limitation of the claims before the arbitrator.

Ratio Decidendi: The Court determined that the cause of action for the appointment of an arbitrator arose when the named arbitrator refused to enter arbitration, not in 2013 as argued by the respondents. It also held that the issue of whether the claims before the arbitrator were barred by limitation would be decided by the arbitrator.

Final Decision: The Court appointed Mr. Vishwesh Kamat as the arbitrator and directed the parties to proceed with arbitration. It clarified that it had not adjudicated on the merits of the disputes and that the arbitrator would decide the disputes on their own merits and in accordance with the law.

JUDGMENT

M S Sonak, J. - Heard Mr. J.J. Mulgaonkar for the Applicants, Mr. Parikshit Sawant for Respondent No.1 and Mr. V.A. Lawande for Respondents 2(b) to 2(f).

2. These are applications seeking appointment of an arbitrator since the disputes have arisen between the parties in connection with the agreements entered into between the parties which, admittedly, contain an arbitration clause.

3. On 22nd January, 2021, after hearing the parties, the following order was made :

" Heard Mr. J. Mulgaonkar for the Applicants, Mr. Parikshit Sawant for Respondent no.1, and Mr. Vishnuprasad Lawande for Respondents no.2(b), 2(c), 2(d), 2(e), and 2(f).

2. Mr. Mulgaonkar, learned counsel for the applicants submits that all the respondents have been duly served. Today, Mr. Sawant and Mr. Lawande appear on behalf of some of the respondents and oppose these applications seeking the appointment of an arbitrator.

3. Learned counsel for the parties submit that the facts involved in all these applications are similar and therefore, there will be no difficulty in disposing of all these applications by a common order. Application for appointment of arbitrator no.2/2018 made by Shri Raghunath Mandrekar is treated as the lead application for sake of convenience.

4. The applicants are purchasers of flats in a building named Prabhavati Apartments constructed by the respondents/predecessors in the title of the respondents. Therefore, for the sake of convenience, respondents will be collectively referred to as the "builders".

5. It is the case of the applicants that the builders have not complied with certain terms and conditions of the agreement for sale based on which they have been put in possession of the flats in Prabhavati Apartments (said building). One of the grievances relates to the nonexecution of the sale deed/conveyance.

6. The applicants instituted proceedings before the Consumer Forum being Complaint No.103/2012. The builders took out an application under Section 8 of the Arbitration and Conciliation Act, 1996 (said Act) urging reference to arbitration since there was an arbitration clause in the agreement between the parties and even the disputes had arisen under the said agreement itself. The Consumer Forum rejected the builders' application under Section 8 of the said Act by holding that the jurisdiction of the Forum was not excluded despite the existence of the arbitration clause in the agreement between the parties.

7. The builders instituted a revision petition before the Goa State Consumer Disputes Redressal Commission (Commission) questioning the orders of the Consumer Forum. By a common order dated 27.03.2014, the Commission, allowed builders' revisions and upheld the builders' objection in terms of Section 8 of the said Act. The applications of the builders were allowed and the parties were referred to arbitration by the named arbitrator Architect Shri Falari to decide the disputes raised by the applicants.

8. The operative portion of the Commission's common judgment and order dated 27.03.2014 is to be found in paragraph 28 and the same reads as follows:

"In view of the above discussion, and following the ratio of Prasad K. Amonkar, supra, we allow these revision petitions, and set aside the impugned orders of the Lr. District Forum. Consequently, we allow the applications for reference filed by the OPs and refer the parties to the named arbitrator Architect Shri. Falari to decide the dispute raised by the complainants. We hope that Shri. Falari will now initiate arbitration proceedings in terms of the request made by both the parties as expeditiously as possible, and, in any event within a period of two months and conclude the same within the next 3 months or so, and thus save time, money, and energy of both the parties."

9. The applicants, did not carry the matter any further but rather, submitted to the directions in the Commission's order dated 27.03.2014. This is evident from the fact that the applicants through their advocate addressed

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