The Letter of Intent issued in an auction is not binding until all payment conditions are satisfied, and a petitioner cannot invoke arbitration provisions prior to issuing a letter of allotment.

JUDGMENT

Harpreet Kaur Jeewan, J.

The present appeal under Section 13 of COMMERCIAL COURTS ACT , 2015, (for short the "Act of 2015") read with Section 37 of Arbitration and Conciliation Act, 1996, (for short the "Act of 1996") has been filed assailing the order dated 21.09.2023, passed by the Additional District Judge-cum-Presiding Judge, Exclusive Commercial Courts at Gurugram, (for short "Commercial Court") whereby the petition filed by the appellant under Section 9 of the Act of 1996, was dismissed.

2. It is contended by the appellant that on 12.03.2022, the respondent had issued an advertisement for auction of 3.54 acre of commercial land in Sector 43, Urban Estate, Gurgaon-II by way of publication in newspaper. On 30.03.2022, the appellant had deposited an amount of Rs. 20,19,41,600/- towards 5% earnest money and on 31.03.2022, he was declared as a highest bidder for Rs. 495,11,61,200/- in the e-auction. Thereafter, on 04.04.2022, he further deposited a sum of Rs. 29,31,76,520/- to make a total deposit of Rs. 49,51,16,120/- to make the good 10% of the bid amount. On 19.05.2022, the Letter of Intent dated 19.05.2022 (Annexure P-6) (for short "the LOI") was issued in favour of the appellant by the respondent. On 23.05.2022, the appellant sent a letter dated 23.05.2022 (Annexure P-7) to the Chief Administrator, HSVP for clarification regarding difference of the area as mentioned in the LOI and as existed at the site; existence of a wine shop and other unauthorized construction; and further requested to modify the LOI by way of providing an option to pay 75% of the balance amount, as per point 31 of the e- auction policy dated 28.03.2022 (Annexure A-1) (for short the "2022 policy").

2.1. On 16.06.2022, the appellant deposited a sum of Rs. 74,26,74,180/- to complete the payment of 25% of the bid amount. On 17.06.2022 the appellant sent a letter (Annexure A-8), and requested the respondent to take action on the previous letter dated 23.05.2022 (Annexure A-7). On 21.07.2022, the respondent issued a memo Annexure A-9 giving a response to the appellant's letter dated 23.05.2022 (Annexure A-7) wherein it was mentioned that the contention for making the payment of 75% of the bid amount in 6 half yearly installments can be considered only if the appellant furnishes a bank guarantee equivalent to 75% of the bid amount with 03 yearly validity. On 09.08.2022, the appellant sent a reply dated 09.08.2022 (Annexure A-10), requesting to withdraw the demand of bank guarantee and seeking permission to pay the balance amount in 6 half yearly installments spread over 3 years, in terms of 2022 policy. On 14.09.2022 the appellant further made a similar formal request on the portal of the respondent (Annexure A-11).

2.2. On 19.11.2022, a petition under Section 9 of the Act of 1996 (Annexure A-12) before Commercial Court, Gurugram, was filed seeking a direction not to cancel the LOI of the appellant, not to change the zoning plan provided to the appellant at the time of auction. Request was also made for issuance of a fresh LOI and allotment letter after conducting the demarcation and to withdraw the demand of bank guarantee in respect of the remaining 75% of the sale consideration. Prayer was also made to direct the respondents to get the wine shop and trees removed from the spot.

2.3. On 23.11.2022 (Annexure A-13) an interim order was passed by the Commercial Court not to cancel the LOI issued in favour of the appellant nor to change the zoning plan of the land in question till the next date of hearing.

2.4. On 10.02.2023 (Annexure A-15), the respondent issued a public notice giving last and final chance to the bidders/allottees who had purchased the residential, commercial and institutional plots in the e-auction after 22.06.2021 and whose