ORDER :

[This Petition has been filed under Section 11(5) and 11(6) of the Arbitration and Conciliation Act 1996 to appoint an arbitrator to preside over the disputes between the parties herein and thus render justice and pass such or further orders that this Hon'ble Court deems fit in the interests of justice and equity.]

1. The petitioners seek the constitution of an arbitral tribunal to adjudicate the disputes between the petitioners, on the one hand, and the respondents, on the other. The petitioners state that they entered into a memorandum of agreement dated 12.11.2008 (the MoA) with the first respondent in relation to the development of land (the Land) owned by the first petitioner into a multi-storied residential or commercial building. For purposes of such development, it is stated that two general powers of attorney were executed by the first respondent on 12.11.2008 in favour of Mr.Naren Rajan, the then Managing Director of the first respondent. By relying on such powers of attorney, the Land was mortgaged in favour of the first respondent's lender, i.e. Indian Bank. The said lender/Indian Bank, in turn, assigned the debt to an asset reconstruction company, namely, Reliance Asset Reconstruction Company Limited (the ARC). The ARC initiated action to enforce the security interest. At that juncture, the petitioners redeemed the mortgage by paying a sum of Rs.9 crore in installments between December 2015 and April 2016.

2. The petitioners assert that the powers of attorney were executed for purposes of developing the Land. By playing fraud on the petitioners, the Managing Director of the first respondent, who was an “alter ego” of the first respondent, mortgaged the Land in favour of the Indian Bank and received a loan from the lender. Contrary to and in disregard of the terms of the MoA, the first respondent did not put up construction. The said agent, Mr.Naren Rajan, died on 21.05.2015. Upon his death, respondents 2 to 5 stepped into his shoes as his legal heirs.

3. According to the petitioners, the Land was put in the possession of the first respondent and Mr.Naren Rajan for the purposes of development by constructing a multi-storied building thereon. Instead of acting in accordance with the MoA, in breach of trust, the first respondent and Mr.Naren Rajan dealt with the Land for their personal enrichment. The dispute raised by the petitioners for adjudication by an arbitral tribunal is a claim for restitution of the unlawful proceeds arising out of breach of trust committed in relation to the Land.

4. Oral arguments on behalf of the petitioners were advanced by Mr.Anirudh Krishnan, learned counsel, and on behalf of the respondents by Mr.Sricharan Rangarajan, learned counsel.

5. The first contention of learned counsel for the petitioners was that the dispute is not barred by limitation and that the petitioners are entitled to the benefit of Section 10 of the Limitation Act, 1963 (the Limitation Act). According to learned counsel, Section 10 applies both to express and implied trusts and the latter falls into two categories, namely, constructive trusts and resulting trusts. The MoA between the petitioners and the first respondent read with the general powers of attorney executed by the first petitioner in favour of Mr.Naren Rajan resulted in the creation of a resulting trust. By contending that the characteristic feature of a resulting trust is the intention of parties to vest the property in the trustee for a specific purpose, it was submitted that the Land was vested in the first respondent and its Managing Director with the intention that the same would be used exclusively for purposes of developing a multi-storied building in accordance with the MoA. In support of the contention that Section 10 applies both to express and resulting trusts, such as the trust created in this case, learned counsel referred to and relied upon the following precedents:

(i) Barclays Bank Ltd. v. Quistclose Investments Ltd (1970) A.C.567: (1968