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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Bharati Dangre, J.
Omkar Realtors & Developer Private Limited – Applicant
Versus
The Tenants Co-Op. Housing Soc. Ltd. & Anr. – Respondents
Commercial Arbitration Application(L) No. 39368 of 2022
Decided On : 09-03-2023
Arbitration and Conciliation Act, 1996 - Section 12(1)- and 11(8) – Tender - Redevelopment work of Tenants - Settlement of disputes – Arbitration - Respondent No.1-Society registered under Maharashtra Co-operative Societies Act, floated a Tender for redevelopment of their Society - Applicant in capacity of a Developer, having its registered office , submitted a Bid on which came to be accepted by the Respondent No.1 vide their letter dated - Fresh Letter of Intent was issued in favour of Applicant - However, in wake of certain discrepancies recorded in the Minutes of Annual General Meeting held , when Applicant made an attempt to set out correct facts, contents of letter were disputed by Respondent-Society, pursuant to which a joint meeting was held to discuss issue of redevelopment - Time to deposit additional amount was extended by Respondent No.1 and even amendment to Letter of Intent was proposed - Whether a clause providing for settlement of disputes in Tender, for redevelopment work of Tenants Co-Operative Housing Society Limited (for short TCHS) , would justify invocation of arbitration by Applicant-Developer, when the dispute arose between parties – Held, Applicant into Security Deposit and as per Applicant, the dispute arose on account of non-co-operation tactics played by Respondent, after appointment of newly elected managing committee and the Applicant was deliberately prevented from taking steps in the redevelopment process, which resulted into Respondent refunding partial security deposit to the Applicant - In any case, since Tender document stipulated an ‘arbitration clause’ and very same document clearly stipulated that issuance of Letter of Intent shall amount to commencement of work with a specific stipulation in form of clause 9.1 creating a deeming fiction, upon issuance of Letter of Acceptance by Society and Development Agreement was expected to be executed only when Developer was called upon to do so - Commercial Arbitration Application stand disposed off.
JUDGMENT :
1. A brief question that arise in the present Application is, whether a clause providing for settlement of disputes in the Tender, for redevelopment work of the Tenants Co-Operative Housing Society Limited (for short TCHS) , would justify invocation of arbitration by the Applicant-Developer, when the dispute arose between the parties.
2. Heard the learned counsel Mr.Prashant Naik a/w Alfiya Diamondwala i/b Diamondwala & Co. for the Applicant and Mr.Swanand Ganoo a/w Kishor Tembe for the Respondents.
3. The facts in the background would reveal that the Respondent No.1-Society registered under the Maharashtra Co-operative Societies Act, floated a Tender for redevelopment of their Society on 09.02.2012. The Applicant in the capacity of a Developer, having its registered office in Mumbai, submitted a Bid on 30.04.2012 which came to be accepted by the Respondent No.1 vide their letter dated 29.09.2012.
Upon the Letter of Acceptance, Respondent No.1 considered the earnest money deposit of Rs.2,00,00,000/- by the Applicant, as security deposit and also directed the Applicant to deposit balance security deposit of Rs.3,00,00,000/- against issuance of fresh Letter of Intent (LoI) incorporating amended terms and conditions.
According to the Applicant, the audio visual presentation of the redevelopment was also given to the members of the Society and various clauses of the approved Development Agreement were also discussed.
On 06.07.2013, a fresh Letter of Intent was issued in favour of the Applicant. However, in the wake of certain discrepancies recorded in the Minutes of Annual General Meeting held on 26.05.2014, when the Applicant made an attempt to set out the correct facts, the contents of letter were disputed by the Respondent-Society, pursuant to which a joint meeting was held to discuss the issue of redevelopment. The time to deposit additional amount of Rs.3,00,00,000/- was extended by the Respondent No.1 and even amendment to the Letter of Intent was proposed.
4. The dispute arose between the parties, since according to the Applicant, Respondent No.1 failed to consider the clarification offered by the Applicant, in the letters addressed to them and the Respondent insisted to set out progress of the proposed redevelopment.
In the meantime, the election of the managing committee was held resulting into appointment of new managing committee, which was not in favour of the Applicant and it set a tone of discord, ultimately resulting into a Letter of Termination dated 25.03.2019.
5. These background facts constrained the Applicant to invoke arbitration through a letter dated 23.06.2022, setting out factual scenario and placing reliance upon Clause 40 of the tender document. The notice also communicated the name of the Advocate to be appointed as Sole Arbitrator and the Respondents were called upon to confirm the appointment.
In response, the Respondents vide their letter dated 21.07.2022 denied existence of any dispute and difference between the parties and there was also specific denial of the arbitration agreement.
The Applicant clearly expressed an apprehension that the Respondents are in the process of inviting fresh proposal for redevelopment of the property, despite effective steps being taken by the Applicant by investing time, money and energy. The Applicant, therefore, filed Commercial Arbitration Petition (L) No.32933/2022 under Section 9 of the Arbitration and Conciliation Act, which is pending for adjudication.
6. Though there is divergence of opinion between the parties, about existence of disputes, it is not in dispute that a Tender Notice for redevelopment of the TCHS at Chunabhatti, over an area of 20,523 sq. mtrs. was floated by the Respondent Society. The tender invited sealed Bids from reputed developers having adequate resources and experience in the execution of similar works of comparable magnitude for the r
The existence of an arbitration agreement under Section 11 requires clear indication of a binding contract, which was absent in this case; the Letter of Intent was merely a precursor to an actual con....
The main legal point established in the judgment is the existence of an arbitration agreement between the parties for resolution of disputes as per clause 13.5 of the tender document, and the determi....
The court's jurisdiction under Section 11 of the A&C Act is limited to determining the existence of an agreement with an arbitration clause and the presence of arbitral disputes.
The Ld. Arbitrator's jurisdiction to consider the claims and counter claims, and the finding that the dispute raised by the respondent was arbitrable, were central legal points established in the jud....
The arbitration clause becomes operative only when a concluded contract exists, and the absence of a concluded contract renders the application for appointment of an Arbitrator under Section 11 (6) o....
The judgment establishes the requirement of a written agreement for arbitration, the interpretation of settlement of disputes clauses, and the significance of party conduct in determining the existen....
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