The scope of a Section 11 referral court is limited to confirming the prima facie existence of an arbitration agreement; questions concerning the limitation of underlying claims or the impact of collateral civil proceedings are mixed questions of fact and law to be decided by the Arbitral Tribunal.

Judgment :

Gaurang Kanth, J.

1. The present petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 ("the Act") seeking appointment of a Sole Arbitrator to adjudicate disputes arising between the parties out of a registered Development Agreement dated 04.12.2014.

2. The subject property is a one-storeyed building together with land admeasuring approximately 01 Cottah 10 Chittak, being Premises No. 160, G.T. Road, P.S. & P.O. Bally, Ward No. 9, Bally Municipality, Bally and Late Shri Ashim Kumar, husband of Respondent No. 1 and father of Respondents No. 2 and 3 was the sole and absolute owner of the said property.

3. During his lifetime, Late Shri Ashim Kumar entered into a registered Development Agreement dated 04.12.2014 with M/s Adyama Construction as the Developer, the Petitioners being partners of the said firm, with the Respondents joining as confirming parties. In furtherance of the said Development Agreement, Late Shri Ashim Kumar executed a registered Power of Attorney dated 30.11.2016 in favour of M/s Adyama Construction, authorising it to undertake all acts, deeds, and things necessary for the construction and development of the said premises.

4. Under the terms of the Development Agreement dated 04.12.2014, the Developer was obligated to obtain building sanction from the Bally Municipality for construction of a G+3 storeyed building in the name of the Owner and the owner was to hand over peaceful vacant possession of the premises to the Developer within 30 days from execution of the said Development agreement dated 04.12.2014. The Developer was required to complete the construction within 2 years from the date of the sanctioned plan, entirely at its own cost. Upon completion, the Owner was entitled to 40% of the constructed area and the Developer to the remaining 60%. Additionally, the Developer was obligated to pay an adjustable/refundable sum of Rs. 2,00,000/- to the Owner.

5. In performance of the aforesaid Agreement, the Petitioner paid Rs. 2,00,000/- to Late Shri Ashim Kumar as stipulated. Building sanction was thereafter obtained vide Plan No. B/P 402 dated 27.02.2015 from the Bally Municipality, for which the Petitioner incurred an expenditure of Rs. 16,00,000/-. The Petitioner also paid Rs. 12,00,000/- to Late Shri Ashim Kumar from time to time at his request. However, notwithstanding the foregoing, Late Shri Ashim Kumar failed to deliver vacant possession of the premises to the Petitioner, as the property was occupied by tenants, thereby rendering it impossible for the Petitioner to carry out the development work.

6. Thereafter, through a communication dated 29.03.2023 addressed by his legal counsel to the Petitioner, Late Shri Ashim Kumar sought revocation and cancellation of the Development Agreement dated 04.12.2014. In response, the Petitioner, through its counsel vide letter dated 27.04.2023, indicated its willingness to consider cancellation of the Agreement, subject to payment of Rs. 35,00,000/- by Late Shri Ashim Kumar.

7. Late Shri Ashim Kumar passed away intestate on 31.05.2023, leaving behind the Respondents as his legal heirs and successors-in-interest. Following the demise of Late Shri Ashim Kumar, the Petitioner called upon the Respondents to execute a fresh Power of Attorney in favour of the Petitioner to enable continuation of the development work, as the earlier Power of Attorney had stood automatically revoked upon the death of the grantor. The Respondents, however, failed and neglected to comply with the said reque