The essential elements of a valid arbitration agreement and the requirement for parties to engage in mutual discussion as stipulated in the arbitration clause before seeking arbitration.

KAILASH GAMBHIR, J.

1. This order will dispose of an application filed by the defendant under Section 5 and 8 of the Arbitration and Conciliation Act, 1996 read with Order 7 Rule 11 and Section 151 Code of Civil Procedure, 1908.

2. Brief facts of the case that have led to the filing of the present suit by the plaintiff are that the plaintiff in response to the advertisement given by the defendant in various newspapers and also via published brochures and other publicity material had made a request to the defendant to book 8000-10000 sq.ft. commercial space in the DLF towers at Okhla, New Delhi vide its letter dated 25.2.2008. The plaintiff had also sent a cheque of Rs. 50 lakhs vide cheque bearing No. 454109 dated 25.2.2008 drawn on State Bank of India, Nehru Place Branch, New Delhi as an initial token amount for the booking of the said space in the said commercial complex. After making the payment of Rs. 50 lakhs, the plaintiff made various requests/ representations to the defendant to sign and execute the Space Buyers Agreement so that the terms and conditions of the contract are agreed between the parties, but the defendant kept on avoiding the issue on one pretext or the other and instead sent the notices dated 22.5.2008, 4.7.2008 and 8.7.2008 calling upon the plaintiff to make the balance payments in terms of the payment schedule. The plaintiff consequently made a further payment of Rs. 50 lakhs vide cheque bearing No. 454134 dated 12th July, 2008 on the assurance given by the defendant to execute the Space Buyers Agreement but even after the receipt of the second installment of Rs. 50 lakhs the defendant did not execute the Space Buyers Agreement and yet again sent a reminder dated 31st July, 2008 to the plaintiff to pay the balance amount in terms of the payment schedule. Constrained by the delay on the part of the defendant in executing the Space Buyers Agreement, the plaintiff approached the defendant with the request to refund Rs. 1 crore along with interest but instead the defendant sent a cancellation letter dated 5.8.2008 thereby cancelling the allotment of property bearing No. DOB603 in DLF Towers, Okhla Phase-I, New Delhi. Terming the cancellation letter dated 5.8.2008 and the decision of the defendant to forfeit the said advance amount of Rs. 1 crore as illegal, perverse and contrary to the provisions of Indian Contract Act the plaintiff through legal notice dated 1.6.2009 called upon the defendant to refund the said amount of Rs. 1 crore along with interest @ 18% p.a. and on the failure of the defendant to pay the said amount the plaintiff has filed the present suit for the recovery of Rs. 1,30,75,000/-.

3. Challenging the maintainability of the present suit in the above application, the defendant has taken a stand that the disputes between the parties are subject to arbitration in terms of clause 34 of the application form dated 25.2.2008, which as per the defendant forms part of the agreement governing the parties. The defendant has also taken a stand that the plaintiff has intentionally withheld the said vital document and the fact of the existence of the arbitration clause and such an act of the plaintiff is an abuse of the process of the Court. The defendant has further taken a stand that the application form was duly signed by Mr. Manohar Lal Agarwal, Chairman and Managing Director of the plaintiff company and, therefore, the plaintiff cannot wriggle out from the terms of the said application form especially Clause 34 of the same. The defendant has further submitted that there exists a valid and legal arbitration agreement in terms of Section 7 of the A&C Act, therefore, the present suit filed by the plaintiff, which forms part of the subject matter of the arbitration agreement in terms of clause 34 of the application is not legally maintainable. Based on these averments, the defendant has prayed that the plaint presented by the plaintiff to recover the suit amount deserves rejection in terms of