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2023 Supreme(Del) 841

IN THE HIGH COURT OF DELHI AT NEW DELHI
Chandra Dhari Singh, J.
Gtm Builders And Promoters Pvt. Ltd. – Appellant
Versus
Sneh Development Pvt. Ltd. – Respondent
Arb.P. 283 of 2023 & I.A. 5064 of 2023
Decided On : 15-03-2023

Advocates appeared:
Mr. Ashish Kumar, Advocate, for the Petitioner.
Nemo, for the Respondent.

The main legal point established is that for a dispute to be referred to an arbitrator under Section 11(6) of the Arbitration Act, it must arise from the agreement and be arbitrable in nature.

Headnote:

Arbitration Act - Appointment of Arbitrator - Section 11(6)

Fact of the Case:

The petitioner, a construction company, sought the appointment of a sole arbitrator to adjudicate upon disputes arising from a construction agreement. The petitioner claimed that the respondent was responsible for delays and sought recovery of costs incurred due to compensation to homebuyers. The respondent had undertaken to indemnify the petitioner against any loss or harm due to delays in construction and completion of the project.

Finding of the Court:

The court found that the dispute raised by the petitioner was not arbitrable and did not arise from the agreement between the parties. The court dismissed the petition as the dispute did not warrant the court's intervention.

Issues: The issues revolved around the arbitrability of the dispute, the interpretation of the arbitration clause, and the respondent's liability for the delays and compensation to homebuyers.

Ratio Decidendi: The court emphasized that the dispute must arise from the agreement and be arbitrable in nature to warrant the appointment of an arbitrator. Mere existence of an arbitration agreement is not sufficient if the dispute does not correlate to the agreement.

Final Decision: The court dismissed the petition as the dispute did not arise from the agreement and was not arbitrable, hence not warranting the court's intervention.

ORDER

Chandra Dhari Singh, J. (Oral)--The instant petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter "the Arbitration Act") has been filed on behalf of the petitioner seeking the following reliefs:

    "a) appoint a sole arbitrator to adjudicate upon the disputes arising out of agreement dated 10.03.2005 executed between the parties;

    b) Any other relief which this Hon'ble Court may be pleased to grant in the present facts and circumstances."

2. The petitioner is a construction company that launched its Project, GTM Residency Tower No.11, New Valley View Estate, Gurgaon, for construction of a group housing society on a part of the plot admeasuring 22 Acres 3 Kanal 14 Marlas in Gwal Pahari, Gurgaon, Haryana (hereinafter "the Project"). The respondent is a company engaged in the business of construction that takes up projects on a turnkey basis.

3. The parties entered into an Agreement dated 10th March 2005 with the object of constructing the Project. However, during the course of the Project being carried out certain disputes arose amongst the parties.

4. This Court, in the previous round of litigation, vide Order dated 6th January 2010 appointed a Sole Arbitrator to adjudicate the said disputes who passed the Award dated 1st August 2015. The said Award came to be challenged by the petitioner under Section 34 of the Arbitration Act. The said challenge under OMP (COMM) 10/2016 was decided partly setting aside the Award dated 3rd July 2018, which was subsequently revised on 5th July 2019.

5. Apart from the said challenges, certain homebuyers in the Project instituted complaints against the petitioner before the State Consumer Disputes Redressal Commission alleging delay in completion of Project and handing over of possession of the flats. In the complaint proceedings, the State Consumer Disputes Redressal Commission, vide its Order dated 29th October 2013 concluded that there was no delay on the part of the petitioner in handing over possession to the home buyers.

6. Aggrieved by the Order dated 29th October 2013, some of the homebuyers preferred an appeal before the National Consumer Disputes Redressal Commission, New Delhi (hereinafter "NCDRC"). In the said appeals, the NCDRC held the petitioner liable for the delay in handing over the possession to the buyers and directed the petitioner to pay compensation to the home buyers therein @ Rs.5 per sq. ft. per month.

7. It is the case of the petitioner that the respondent, by the virtue of an indemnity bond as well as an undertaking, was responsible for paying the petitioner to the extent of any harm or loss that ay be suffered in the course of the Project. The petitioner sent a Notice dated 27th December 2022 to the respondent communicating its claims and that in case of non-compliance, the petitioner would take necessary actions for appointment of the arbitrator to adjudicate the claims of the petitioner. Therefore, the petitioner is before this Court seeking the aforementioned prayers.

8. The learned counsel appearing on behalf of the petitioner submitted that the NCDRC has erroneously held the petitioner liable for the delay caused in handing over of possession and payment of the compensation thereof.

9. It is submitted that the respondent, by way of an undertaking dated 31st August 2007, had specifically undertaken that in the event the petitioner suffers any loss which includes interest or harm on account of the respondent or due to any act/omission of the respondent, the respondent shall pay the petitioner to the extent of the harm and loss suffered.

10. It is further submitted that in another undertaking cum indemnity bond dated 25th March 2008, the respondent had agreed indemnify petitioner against any loss, harm or injury which may be caused to the petitioner on account of delay in construction and subsequent completion of the project.

11. The learned counsel for the petitioner submitted that the petitioner sent the Notice dated 27th

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