The main legal point established in the judgment is the limited application of the doctrine of indoor management and the exceptions to its protection, as well as the interpretation of the Arbitration and Conciliation Act, 1996, in determining the existence of an arbitration agreement.

JUDGMENT :

1. The petitioners have filed the present petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereafter ‘the A&C Act’), inter-alia, praying that an arbitrator be appointed to adjudicate the disputes that have arisen between the parties in connection with the Agreement to Develop dated 29.10.2012 (hereafter referred to as ‘the Agreement’). The Agreement was executed by respondent no.1 (Ms. Shefali Varma) in her individual capacity claiming to be the legal beneficiary of the estate of her father, late Sh. Ashok Varma. She had also signed the Agreement on behalf of respondent nos. 2 to 12 (hereafter referred to as ‘the Companies’) as their Director. The recitals of the Agreement record that the Companies, acting through Ms. Shefali Varma as a Director, had entered into an agreement dated 24.02.2011 with petitioner no.1 (Shashank Bhagat) for undertaking a group housing project under joint development on a plot of land, measuring 11.26 acres approximately, located in Sector-56 Gurgaon. The said agreement was referred to as ‘Agreement with SV’ in the Agreement (it is hereafter referred to as ‘the 2011 Agreement’). Pursuant to the 2011 Agreement, petitioner no.1 had made a payment of Rs.5,00,00,000/- (Rupees Five Crores) to Ms Shefali Varma which she had admitted having received for and on behalf of the Companies. In terms of the 2011 Agreement, petitioner no.1 had agreed to pay a consideration of Rs.50 crores to the Companies for developing a housing project at his own expense. In turn, petitioner no.1 was entitled to 60% of the total built up area as well as proportionate common areas and the remaining 40% area would fall to the share of the Companies. It was also recorded that petitioner no.1 was entitled to enter into a tie-up with another developer and had, in fact, done so by entering into an agreement dated 02.03.2011 with M/s Eldeco Infrastructure and Properties Pvt. Ltd. for developing a housing project on the aforesaid land (land measuring 11.26 acres approximately, located in Sector-56, Gurgaon).

2. The Agreement also recorded that further addenda (four in number) to the 2011 Agreement had been entered and description of which was noted.

3. In terms of the Agreement, petitioner no.2 (Silverglades Holdings Private Limited) was appointed as the principal developer along with petitioner no.1 as a co-developer for developing the project on a minimum area of 10 acres, located within Ardee City in Sector-52, Gurgaon. The said land included a parcel of land measuring 5.78 acres being a part of the Group Housing Scheme known as ‘Residency’. In consideration of the development rights, it was agreed that petitioner no.2 shall pay an aggregate consideration of Rs.50 crores to the Companies. It was also acknowledged that Ms Shefali Varma had received an aggregate sum of Rs.9 crores on behalf of the Companies, as detailed in the Agreement and the balance amount of Rs.41 crores was agreed to be paid to the Companies in proportion of their land holding and in a manner as stipulated therein.

4. The petitioners claim that the disputes have arisen in connection with the Agreement and the same are required to be resolved by arbitration in terms of Clause 16 of the Agreement. The said clause is set out below:

“16. Arbitration

16.1 The Parties herein agree that any dispute or difference arising between the Parties under the Agreement shall be resolved amicably in the first instance. In case the Parties fail to arrive at a amicable settlement within 30 days of reference thereof for amicable discussions, such unresolved disputes or differences shall be settled by arbitration referred to a sole arbitrator, to be mutually appointed by the disputing Parties in accordance with the provisions of the Arbitration and Conciliation Act, 1996 and any statutory amendments thereto from time to time.

16.2 The award of the Arbitrators shall be final and binding m1 the Parties to the Agreement. Neither Party shall be entitled to commen