The main legal point established in the judgment is that the issue of the involvement of a third party and the entitlement to the refundable security deposit, in the context of arbitration, is to be determined by the Arbitrator as per the Doctrine of Competence-Competence.

JUDGMENT :

Mukta Gupta, J.

1. By this petition, the petitioner seeks appointment of an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 (in short “the Act”).

2. According to the petitioner, the petitioner purchased the ground 7th, 8th, 9th, 10th, 11th and 12th floors of New Tower, Bhikaji Cama Place, R. K. Puram, New Delhi along with the respective car parking areas at the Hyatt Complex from the respondent vide four registered Sale Deeds dated 12th May, 2014 (in short the Agreements) along with perpetual right to use car parking area.

3. The petitioner transferred and assigned all rights and title in the premises to IndusInd Bank Limited along with perpetual right to use car parking area. Thereafter, the petitioner sought refund of the security deposit of Rs.15 Crores deposited by the petitioner pursuant to Refundable Security Deposit Agreement entered into between the petitioner and the respondent. Since, the claim of the petitioner now is in terms of the Refundable Security Deposit Agreements dated 12th May, 2014, Clause 7 whereof provides for an arbitration, the petitioner invoked arbitration and thereafter filed the present petition.

4. According to the petitioner on the disputes arising, petitioner issued a demand notice vide the letter dated 3rd July, 2021, which was not responded by the respondent and, thereafter, the petitioner issued notice dated 25th August, 2021 giving 30 days time for resolution of the disputes failing which the invocation of the arbitration in terms of the Agreements. Even this notice dated 25th August, 2021 was not replied by the respondent.

5. Clause 7 of the Refundable Security Deposit Agreements between the parties reads as under:

“7. If the dispute is not resolved though such discussion within 30 (thirty) days after one Party has served a written notice on the other Party requesting the commencement of discussions, then such dispute shall be referred at the request in writing of any Party to the dispute to binding arbitration in accordance with Arbitration and Conciliation Act, 1996 of India, as amended from time to time by a sole arbitrator to be mutually appointed by the Parties. All arbitration proceedings shall be conducted in the English language and the place of arbitration shall be New Delhi.

Costs: The costs and expenses of the arbitration, including, without limitation, the fees of the arbitrator shall be borne equally by each Party and each Part shall pay its own fees, disbursements and other charges of its counsel, except for the fees and costs in respect of the arbitrator which shall be borne equally by the Parties. The arbitrator shall have the power to award interest on any sum awarded pursuant to the arbitration proceedings and such sum would carry interest, if awarded, until the actual payment of such amounts.”

6. Though no reply affidavit has been filed to this petition despite time having been granted, the claim of the respondent before this Court is that in view of the third party intervention as the property has been sold off by the petitioner to some other party and the respondent has to take the refundable security deposit money from the said third party, the so called dispute cannot be referred to arbitration as the third party is not a signatory to the Refundable Security Deposit Agreements, Clause 7 whereof provides for reference of disputes to arbitration.

7. Clauses 2 and 3 of the Refundable Security Deposit Agreements between the petitioner and respondent read as under:

“2. Subject to clause 3 herein below, the amount of Refundable Security Deposit shall be refunded by AHNL to Vistrat within 07 days from the date on which Vistrat transfers the title of the Said Property to any third party along with transferable perpetual right to use of the Car Parking Area. Unless transfer of both the floors of the Said Property along with right to use Car Parking Area does not take place, AHNL shall continue to hold the Refundable Security Deposit. Delayed payme