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IN THE HIGH COURT OF DELHI AT NEW DELHI
Dinesh Kumar Sharma, J.
Railtech Infraventure Pvt. Ltd. - Appellant
Versus
Rail Land Development Authority - Respondent
Arb.P. 546 of 2023
Decided On : 29-01-2024
Arbitration - Lease Agreement - A&C Act 1996 - Section 11(6)
Fact of the Case:
The petitioner sought the appointment of a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 for a dispute arising from a tender for Lease for Residential Development on Railway land. The petitioner alleged that the site had encroachments, contrary to the Bid documents' representations, and that the respondent demanded the first installment of the lease premium despite the encroachments.
Finding of the Court:
The court found that an agreement containing an arbitration clause existed between the parties, and arbitral disputes had arisen. The court appointed an arbitrator and directed the parties to approach the arbitrator within two weeks.
Issues: Existence of an agreement with an arbitration clause, fulfillment of contractual obligations, and arbitrability of the dispute.
Ratio Decidendi: The court held that an agreement with an arbitration clause existed, and the disputes were arbitrable. The court's jurisdiction under Section 11 was limited to determining the existence of an agreement with an arbitration clause and the presence of arbitral disputes.
Final Decision: The court referred the disputes to an arbitral tribunal and appointed an arbitrator to adjudicate the disputes between the parties.
JUDGMENT
Dinesh Kumar Sharma, J. - The present petition has been filed under Section 11(6) of the Arbitration and Conciliation Act (hereinafter referred to as the "A&C Act"), 1996 for the appointment of a sole arbitrator.
2. Briefly stated the facts of the case are that the petitioner in response to a tender floated by the respondent for Lease for Residential Development on Railway land in Gata No.26 at Jhusi Land Plot, Prayagraj under Varanasi Division, deposited bid security of Rs.1 crore along with its bid as per terms of the Bid documents. Subsequently, the bid of the petitioner was accepted by the respondent and a Letter of Acceptance (hereinafter referred to as "LOA") dated 29.07.2022 was issued. The respondent informed the petitioner that the petitioner company's eligibility proposal and financial proposal opened on 17.06.2022 and 29.07.2022 respectively and the same has been accepted at the offered value of Rs.79,40,00,001/- (Rupees Seventy Nine Crore Forty Lakh and One Only) towards Lease Premium with respect to the land for "Grant for Residential Development on Railway Land approx area 70606 sq. mtr at Jhusi Land Plot, Prayagraj under Varanasi Division of NER (U.P.) for 99 years. The respondent vide LOA dated 29.07.2022 also demanded Rs.15,88,00,000/- (Rupees Fifteen crores Eighty-Eight lakhs only) towards the payment of the first installment of lease premium within 60 days from the date from which the LOA was issued. Furthermore, the petitioner vide letter dated 29.07.2022 was also asked to fulfill the conditions as per Clause 26.0 of Part-I (Regulations for Bids and Lease Agreement) along with Clause 12 of Part III (Instruction to Bidders and Bid forms) of the Bid documents leading to the execution of the Lease Agreement with Rail Development Authority (hereinafter referred to as "RLDA") and all other conditions of the Bid document referred above. The letter issued by the Respondent also stated, that till such time the Lease Agreement is executed between RLDA and the Special Purpose Company (SPC) created by the petitioner, this Letter of Acceptance dated 29.07.2022 shall constitute a binding contract. The LOA also stated that the same shall be read in conjunction with the Bid document and all the terms and conditions of the Bid document will be binding on the petitioner and furthermore, in case of any conflict between the LOA and the Bid document, the Bid document shall prevail over the LOA. The petitioner also paid a sum of Rs.11,01,825/- towards the first installment of the success fee to the respondent.
2.1. Learned counsel for the petitioner submitted that the Bid documents as per Regulations for Bids and Lease Agreement (Part I) shall mean and include the following documents collectively:
i. Part-I, Regulations for Bids and Lease Agreements (the "Regulations")7
ii. Part-II, General Conditions of Lease Agreement and Annexures (the "GCLA");
iii. Part-III, Instructions to Bidders and Bid Forms (the "ITB");
iv. Part-IV, Special Conditions of Lease Agreement (the "SCLA");
v. Part-V, Schedule and Specifications;
vi. Additional drawings and instructions, if any.
3. Learned counsel for the petitioner further submits that as per Clause 1.1.1 of GCLA, "Agreement" shall mean jointly the Lease Agreement (Recital), the General Conditions of the Lease Agreement (hereinafter referred to as "GCLA"), the Special Conditions of Lease Agreement (hereinafter referred to as "SCLA") and the Schedules and Appendices thereto. It was further submitted that the Bid documents i.e. General Conditions of Lease Agreement (GCLA), Special Conditions of Lease Agreement (SCLA), and Schedules and Appendices thereto are also part of the agreement between the petitioner and the respondent.
4. Learned counsel for the petitioner further submitted that as per clause l.2.15 of GCLA, the agreements and all other bid documents forming part of or referred to in the agreement are to be taken as mutually explanatory and unless otherwise expressly provided elsewhere i
The court's jurisdiction under Section 11 of the A&C Act is limited to determining the existence of an agreement with an arbitration clause and the presence of arbitral disputes.
The court affirmed that the inquiry under Section 11(6) of the Arbitration Act is restricted to the existence of an arbitration agreement, allowing disputes to proceed to arbitration without mandator....
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.
The relief sought under Section 9 of the Arbitration Act must be in the nature of interim measures to protect the subject matter of the arbitration and cannot extend to permanent injunctions.
A conditional Letter of Acceptance does not create a binding contract or arbitration agreement if its conditions remain unfulfilled.
The arbitration agreement binds all parties, including non-signatories, and disputes must be referred to arbitration despite objections on limitation and jurisdiction.
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