The court's scope in a petition under Section 11 of the Arbitration and Conciliation Act, 1996 is limited to examining the existence of the Arbitration Agreement.

JUDGMENT

Jyoti Singh, J. - Present petition has been filed under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") for appointment of a Sole Arbitrator to adjudicate the disputes between the parties.

2. The brief facts as averred in the petition are that Respondent invited tenders from private parties for development (including re-development of an existing Railway Colony) of a plot measuring approximately 15.27 hectares situated at Sarai Rohilla, Kishan Ganj, New Delhi (hereinafter referred to as "Project Land") on 18.01.2010 through IL & FS Infrastructure Development Corporation Ltd.

3. Respondent represented that Project Land belonged to Indian Railways and the tender was issued to put the land to effective commercial utilization. Project was to be executed through a Special Purpose Vehicle (hereinafter referred to as "SPV") i.e. Petitioner no.2. Project included re-development of existing Railway Colony over 4.37 hectares and development of balance 10.9 hectares.

4. Tender process was in two phases wherein those bidders who qualified the requirements under Request for Qualification document were allowed to place their financial bids. Petitioner no.1 was declared successful with its bid of Rs.1651.51 Crores on 12.11.2010 and Respondent issued a Letter of Demand dated 12.11.2010 demanding payment of Rs.33,03,02,000/- as Commitment Security to commence and complete the Project. Petitioner no.1 paid the said amount from the account of SPV vide letter dated 25.11.2010.

5. Respondent thereafter issued Letter of Acceptance dated 26.11.2010 awarding the work to Petitioner no.1. Respondent was aware that SPV was to implement the Project and finally by letter dated 07.02.2011, approved the work to be executed by the SPV.

6. On 29.03.2011 and 31.03.2011, Petitioner no.1 paid to the Respondent, amounts towards first instalment in terms of the RFP (Request For Proposal). As requested by the Respondent, Petitioner no.1 paid interest at the rate of 18% for delayed payment of first instalment, under protest. Petitioner no.1 requested the Respondent vide letter dated 12.02.2011 to waive and alter the condition precedent in relation to Performance Bank Guarantee (hereinafter referred to as "PBG") to the extent that it shall be allowed to submit the PBG before execution of first Lease Deed or from eighteen months of the effective date, whichever is earlier. However, as a measure of comfort, Petitioner no.1 authorised the Respondent to forfeit an amount equal to the amount of the proposed PBG from the amount of first instalment in addition to the element of 15% of the paid lease premium, which was forfeitable by Respondent. This request was accepted by the Respondent and it allowed Petitioner no.1 to submit PBG within six months after signing the Development Agreement (hereinafter referred to as the "DA").

7. However, within days of granting the approval, Respondent withdrew its consent vide letter dated 16.03.2011 pursuant to instruction from the Railway Board to ensure that open and transparent tendering process is followed for selecting bidders for commercial development of land.

8. Contemporaneously, Government informed the Railway Board that a Policy was under way with respect to alienation of land held by the Government and a specific approval of the Cabinet was required in case of long term Lease or sale. In this background, Respondent was perhaps incapacitated from entering into the DA. Instead of notifying the incapacity, Respondent vide letter dated 22.03.2011 insisted on submission of PBG for execution of DA and directed Petitioner no.1 to pay the first instalment within seven days with interest. Finally, on 13.07.2011, Respondent unilaterally withdrew its consent accorded to the SPV disbalancing the entire plan of Petitioner no.1.

9. After delay of several months, approval for the SPV was granted on 02.08.2012 but the DA was not executed as the Respondent did not have Schedule "L" o