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2018 Supreme(Del) 1200
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
ECONOMIC TRANSPORT ORGANISATION - Petitioner
Versus
SPLENDOR BUILDWELL PVT. LTD. - Respondent
O.M.P. (COMM) 162 of 2018 & IA Nos. 5225 of 2018 & 5226 of 2018
Decided On : 09-05-2018
For the Petitioner: Mr. Sujeet Kumar Mishra, Mr. Haider Ali and Mr. Abhishek Panwar.
For the Respondent: Ms. Namitha Mathews, Ms. Poorva Pant and Mr. Pulkit Malhotra with Mr. Manish Prakash AR.
The main legal point established in the judgment is the interpretation and application of the provisions of the Arbitration and Conciliation Act, 1996, specifically regarding the termination of arbitral proceedings, challengeability of orders under Section 34, and the extension of the Arbitral Tribunal's mandate.
Headnote:
Arbitration - Space Buyer Agreement - Arbitration and Conciliation Act, 1996, Section 34 - 25(a), 29A - The court upheld the termination of arbitral proceedings due to the claimant's failure to file a statement of claims, as provided under Section 25(a) of the Act. The court also found that the impugned order terminating the proceedings was not an award and therefore not challengeable under Section 34 of the Act. The court further held that the mandate of the Arbitral Tribunal could have been extended by the court, even after the specified period, as per Section 29A(4) of the Act.
Fact of the Case:
The petitioner, a logistics company, entered into a Space Buyer Agreement with the respondent for a property in Gurgaon. Disputes arose regarding payment demands and cancellation of the agreement, leading to arbitration proceedings. The petitioner failed to file a statement of claims, and the Arbitral Tribunal terminated the proceedings.
Finding of the Court:
The court found that the termination of arbitral proceedings was justified due to the claimant's lack of diligence in pursuing its claims. The court also concluded that the impugned order was not an award and therefore not challengeable under Section 34 of the Act. Additionally, the court held that the mandate of the Arbitral Tribunal could have been extended by the court, even after the specified period.
Issues: The issues involved the claimant's failure to file a statement of claims, the challenge to the impugned order under Section 34 of the Act, and the termination of the Arbitral Tribunal's mandate.
Ratio Decidendi: The court's decision was based on the provisions of the Arbitration and Conciliation Act, 1996, specifically Sections 25(a) and 29A. The court interpreted these provisions to uphold the termination of proceedings due to the claimant's failure to file a statement of claims and to determine the challengeability of the impugned order under Section 34. The court also considered the possibility of extending the mandate of the Arbitral Tribunal under Section 29A(4) of the Act.
Final Decision: The petition was dismissed, and all pending applications were disposed of. The court held that the impugned order was not challengeable under Section 34 of the Act and that the mandate of the Arbitral Tribunal could have been extended by the court, even after the specified period.
VIBHU BAKHRU, J.
1. The petitioner has filed the instant petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter ‘the Act’), inter alia, impugning an order dated 29.11.2017 (hereafter ‘the impugned order’) passed by the Arbitral Tribunal consisting of the sole arbitrator, Mr. Mohinder Singh, Advocate (hereafter ‘the Arbitral Tribunal’).
2. The Arbitral Tribunal was constituted to adjudicate the disputes that have arisen between the parties in relation to the ‘Space Buyer Agreement’ (hereafter ‘the Agreement’) entered into by them.
3. The Arbitral Tribunal has observed, in the impugned order that the petitioner (claimant before the Arbitral Tribunal) was neither interested in final submission of the claims nor desired to withdraw the claims from the Arbitral Tribunal and was only interested in delaying the proceedings on one pretext or the other. Accordingly, by the impugned order, the Arbitral Tribunal terminated the arbitral proceedings under Section 25(a) of the Act in view of the failure of the petitioner to file the Statement of Claims despite several opportunities.
4. The learned counsel for the petitioner has assailed the impugned order, essentially, two grounds. First, that the Arbitral Tribunal had erred in holding that the petitioner had been provided ample opportunities to file a statement of claim and the arbitral proceedings were terminated without any prior notice informing the petitioner as to any such action; and Second, that the mandate of the Arbitral Tribunal to make any order or award stood terminated on 18.11.2017 (one year from the date of the Arbitrator entering reference) in terms of Section 29A of the Act and, therefore, the Arbitral Tribunal had no jurisdiction to pass the impugned order.
5. Briefly stated, the relevant facts necessary to address the controversy are as under :-
5.1 The petitioner is a company engaged in logistics, project transportation, parcel services, bulk movement, and warehousing. The Respondent – Splendor Buildwell Pvt. Ltd. – is a company, inter alia, engaged in the business of developing and dealing with real estate.
5.2 M/s Star India Projects – a registered partnership firm – and the petitioner entered into a Memorandum of Understanding (hereafter ‘the MOU’) dated 14.04.2012, whereby the petitioner agreed to buy a total area of 3675 sq. ft. of space at a Basic Sale Price (BSP) of Rs. 4800/- per sq. ft. along with seven car parking slots at the rate of Rs. 2,00,000/- each in an IT/ITES project named as “Splendor Spectrum One” located at Sector-58, Gurgaon (hereafter ‘the Property’). As per the MOU, the petitioner was to pay a sum of Rs. 1,76,40,000/- for the Property and an additional sum of Rs. 2,00,000/- for seven car parking spots, each. The petitioner claims that in terms of the MOU, it paid certain amounts in installments.
5.3 The petitioner claims that certain disputes arose in respect of the MOU mainly on account of demands of payment of further installments for the Property. The petitioner contends that the respondent had not obtained necessary sanctions from the concerned authorities and, consequently, construction of the Property had not commenced and, therefore, the demands made were unjustified.
5.4 Thereafter, the parties entered in to a Space Buyer Agreement (‘the Agreement’) dated nil (stamp paper purchased on 12.03.2014). M/s Ishayu Builders and Developers Private Limited also signed the Agreement as a confirming party.
5.5 Thereafter, on 31.10.2015, the respondent sent a notice of cancellation informing the petitioner that its booking of space admeasuring 3675 sq. ft. super area in the project ‘Spectrum One’ was cancelled and the earnest money of Rs. 35,28,000/- along with a non-refundable amount of Rs. 41,78,590/- including service tax, interest and brokerage stood forfeited.
5.6 The petitioner responded by issuing a legal notice dated 03.02.2016 calling upon the respondent to withdraw the earlier notice dated 23.01.2016 and also to
