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IN THE HIGH COURT OF DELHI
C. Hari Shankar, J.
Samyak Project Pvt. Ltd. - Appellant
Versus
Ansal Housing Limited - Respondent
O.M.P.(I) (COMM.) 58 of 2021 & I.A. 2292 of 2021 and O.M.P.(I) (COMM.) 59 of 2021 & I.A. 2302 of 2021
Decided On : 15-02-2021
The court affirmed that contractual provisions regarding escrow accounts in Joint Development Agreements must be adhered to, pending resolution through arbitration.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 9 and 17 - Disputes arising from Joint Development Agreements (JDA) regarding the distribution of receivables - The court permits the reference of disputes to an arbitrator and directs the opening of escrow accounts as required per JDAs. (Paras 4, 11, 13)
(B) Consent to arbitration - Parties consented to refer disputes to an arbitrator, underlining the collaborative resolution of conflicts and the importance of adherence to contractual obligations. (Paras 4, 12)
Facts of the case:
The petitioners and respondents entered into multiple JDAs for property developments, with disputes regarding the distribution of receivables. The requirement of an escrow account as per JDAs was disputed.
Findings of Court:
The court ruled that the escrow account must be opened as per the JDA and that all related receivables should be deposited therein pending arbitration.
Issues: The court addressed whether the JDA required an escrow account and the distribution of project receivables.
Ratio Decidendi: The court determined that contractual obligations relating to escrow accounts should be upheld and enforced pending arbitration decisions.
Result: Both petitions disposed of with orders for arbitration and establishing an escrow account.
| Table of Content |
|---|
| 1. disputes over joint development agreements. (Para 2 , 3 , 6 , 7 , 8 , 9) |
| 2. requirements for escrow account discussed. (Para 4 , 11 , 12 , 13) |
| 3. appointment of arbitrator and their role. (Para 14) |
| 4. management of arbitration proceedings. (Para 15 , 16 , 17 , 18 , 19) |
ORDER (Oral)
(Video-Conferencing)
1. Detailed arguments were advanced by Mr. Vivek Kohli, learned senior counsel on behalf of the petitioner and by Mr. Sachin Datta, learned senior counsel on behalf of the respondent, in both these matters.
2. It appears that four projects form the subject matter of agreements between the petitioner and the respondent, of which each of these petitions is concerned with one project. OMP (I) (COMM) 58/2021 is concerned with the Ansal Hub project and OMP (I) (COMM) 59/2021 is concerned with the Ansal Height Project at Sectors 83 and 92, Gurugram, respectively.
3. Disputes have cropped up, between the petitioner and the respondent, in all these four projects. In respect of one of the projects, namely the Ansal Boulevard project, the matter already stands referred to arbitration by Hon'ble Mr. Justice A. K. Sikri, an eminent former judge of the Supreme Court, pursuant to a petition, under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the 1996 Act"), filed by the respondent in the present petitions.
4. By consent, learned counsel for the parties agree to a reference of the disputes between them, forming subject matter of these petitions, to Hon'ble Mr. Justice Sikri, and for these petitions to be decided by the learned arbitrator treating them as applications under Section 17 of the 1996 Act.
5. There is, however, one difference between these two petitions.
6. Both the petitions deal with Joint Development Agreements (JDAs), the JDA in OMP (I) (COMM) 58/2021 having been executed on 24th June, 2013 and the JDA in OMP (I) (COMM) 59/2021 having been executed on 18th April, 2011.
7. The grievance of the petitioner, in both the petitions, is, primarily, that the receivables from the projects have not been distributed by the respondent in accordance with the shares specified in the JDAs.
8. Additionally, in OMP (I) (COMM) 58/2021, the petitioner points out that the JDA dated 24th June, 2013, in that case, specifically required opening of an escrow account by the respondent, into which the receivables from the project were to be deposited and from which they were to be distributed between the petitioner and the respondent in a pre-determined ratio specified in the JDA dated 24th June, 2013.
9. Learned counsels are ad idem that there is no such requirement of an escrow account in the JDA executed on 18th April, 2011, forming subject matter of OMP (I) (COMM) 59/2021, though Mr. Vivek Kohli, learned senior counsel for the petitioner emphasizes that, in the Memorandum of Understanding dated 15th December, 2010, which preceded the JDA in that case, there was a specific stipulation for opening of an escrow account, which was not diluted either in the JDA or in the supplementary agreement that came to be executed between the parties thereafter. He, therefore, contends that the requirement of opening of escrow account, as contained in the MoU, ought to be treated as a part of the JDA and the supplementary agreement between the parties.
10. In my view, the question of whether an escrow account was required to be opened in OMP (I) (COMM) 59/2021, would require greater deliberation which, in the fitness of things, ought to be undertaken by the learned arbitrator rather than this court expressing any opinion even prima facie in that regard.
11. However, so far as OMP (I) (COMM) 58/2021 is concerned, there is no dispute that the JDA required opening of an escrow account and dissemination, between the petitioner and the respondent, of the receivables from the project, after they were deposited therein, in the ratio specified in the JDA dated 24th June, 2013. Mr. Sachin Datta, lear
