IMPORTANT POINT
The main legal point established in the judgment is the principle of privity of contract, emphasizing that a third party cannot enforce the terms of a contract to which it is not a party.

JUDGMENT :

1. The petition seeks appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 to adjudicate disputes arising out of a Memorandum of Understanding (“MOU”) dated 16th June 2011.

2. The Petitioner is a company engaged in a business of construction and land development and the Respondent is a public trust registered under the provisions of the Bombay Public Trust Act, 1950. It is the case of the Petitioner that the Pimpri-Chinchwad Municipal Corporation (“PCMC”), by an agreement dated 2nd November 2007 vested certain rights in land bearing Survey No.09(Part) admeasuring approximately 2.56 Hectares at village Theargaon, Pune for a period of 30 years in the Trust. The Trust was permitted to construct a playground and run a Cricket Academy/Gymkhana providing International Standard Training and Coaching facilities to young cricket aspirants from Pimpri-Chinchwad and other adjoining areas free of cost.

3. A MOU dated 16th June 2011 was executed by and between the Respondent Trust and one Shri. Dhanraj Keshrimal Sonigara referred to as ‘Promoter’ in the MOU. In terms of MoU a special purpose entity namely ‘DV Gymkhana and Clubhouse’ (“DVGC”) was to be incorporated to undertake the responsibility of development of the playground and the Cricket Academy. It was agreed that the DVGC shall engage the promoter or his agent/assignee for undertaking the activities on terms and conditions mutually agreed upon by the parties.

4. The relevant clauses of the MOU read as thus:

“1. Appointment of Promoter: (DVF) is responsible for development of said property in terms of NOV 07 agreement and wishes to undertake the said activities by forming of special purpose entity. The said special purpose entity i.e. DVGC shall undertake the work of constructing and developing Cricket ground and Cricket Academy/Gymkhana and shall also be responsible for development of Club and facilities therein which would be essential for financing the running, maintenance and future development of Cricket Academy/Gymkhana. The DVGC shall engage the Promoter or his agents/assigns for undertaking the said activities for such concessions and terms and conditions as mutually agreed between the parties.

2. Agreement between DVF & DVGC: DVF shall therefore enter into an agreement with DVGC for carrying out the development activities on the said property in the light of responsibilities cast on it by the NOV'07 Agreement for such consideration and on such terms and conditions which are briefly set out in Appendix 1 to this MOU.

3. Agreement(s) with the Promoter: The said DVGC, not having direct experience or exposure in matters related construction and development; running and managing a Club with all its amenities and services or in regard to raising finance for such ventures shall enter into contract/s with the Promoter who shall act as project consultants and advisers on a turnkey basis. The said promoter has also expressed willingness to undertake some or all of the assigned tasks either directly or through entities or agents designated/authorized by them for the purposes of achieving the agreed objectives. It is understood by the parties hereto that the detailed terms shall be agreed upon taking into consideration comparable prices and offers made by other entities. However, other things being equal, the entities suggested by the promoter would be preferred by DVF/DVGC in light of the assistance and advice rendered by the promoter in formulating this venture. Accordingly, as per the advice given by the promoter in regard to the overall scheme of the project, the following three broad areas for which contracts would be entered into are mentioned hereunder:

i. Construction of Cricket Gymkhana appurtenent to the cricket ground which is already in the charge and possession of DVF, Pavilion and incidental infrastructure and cricket facilities which would be used as Cricket Academy, and further the construction of Club House and sports and recre