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2024 Supreme(Online)(DEL) 8088
HIGH COURT OF DELHI
Dinesh Kumar Sharma, J
VINGRO DEVELOPERS PVT. LTD. – Appellant
Versus
NITYA SHREE DEVELOPERS PVT. LTD. – Respondent
ARB.P. 667/2023
For the Appellants/Petitioners: Mr. Mohit Potalia
For the Respondents: Mr.Nityanand Singh, Ms.Aachal Sah
The jurisdiction of the court under Section 11 is limited to examining the existence of an arbitration agreement and whether the parties have made out a prima facie arbitrable case.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11 - Petition for appointment of arbitrator - Disputes arose from Builder Buyer Agreements pertaining to land acquisition - Respondents failed to deliver plots as agreed, despite payment made by Petitioner. (Paras 4, 27)
(B) Group of Companies Doctrine - Recognized applicability to bind non-signatories to arbitration agreements - Court elucidated requirements for binding non-signatories in arbitration contexts. (Paras 11, 24)
(C) Jurisdiction of High Court - Limited to existence of arbitration agreement and prima facie arbitrable case; other issues not evaluated at this stage. (Paras 19, 20)
Facts of the case:
The Petitioner entered into agreements for purchasing plots but possession was not delivered, leading to legal notices and invocation of arbitration.
Findings of Court:
Petition is allowed to refer the matter to arbitration, appointing an arbitrator.
Issues: The primary challenge was the inclusion of non-signatories in arbitration.
Ratio Decidendi: The court found Respondent No. 2 and 3 cannot be bound by the agreements, as they acted as agents of the principal, Respondent No. 1.
Result: The matter is referred to arbitration sans Respondents No. 2 and 3.
| Table of Content |
|---|
| 1. details of agreements and payments made to respond to possession delivery obligations. (Para 4 , 9 , 10) |
| 2. arguments regarding non-signatory liability in arbitration agreements. (Para 11 , 12 , 18) |
| 3. clarification of jurisdiction under section 11 concerning arbitration agreement existence. (Para 19 , 20 , 25) |
| 4. principle of agent liability and group of companies doctrine regarding binding agreements. (Para 22 , 24 , 26) |
| 5. final decision to refer arbitration while excluding non-signatories. (Para 27 , 28 , 35) |
JUDGMENT
DINESH KUMAR SHARMA, J.
1. The present petition has been filed under section 11 of the Arbitration and Conciliation Act, 1996 , seeking appointment of an arbitrator for adjudication of the disputes inter-se having been arisen between the parties out of agreements dated 18.11.2016 and 08.02.2017 with respect to the purchase of plots in the Respondent‟s project.
2. A bare perusal of the material on record reflects that Respondent No.1 being engaged in the business of development and construction of real estate entered the two Builder Buyer Agreements dated 18.11.2016 and 08.02.2017 with the Petitioner with respect to the Respondent‟s Residential Township Project namely “RLF City” situated at Khasra No. 118, Khasra No. 120 & Khasra No. 431/119 at Village Salarpur, Tehsil Tijara, District Alwar Rajasthan 301019. The Respondent no. 2 and 3 are the directors and authorised representatives of Respondent No.1 and thereby, in this capacity, Respondent No.2 signed the Builder Buyer Agreements on behalf of Respondent no.1.
3. The parties executed 8 Builder Buyer Agreements dated 18.11.2016 for 8 plots of land admeasuring 125 sq. yds each and subsequently, 4 additional Builder Buyer Agreements dated 8.02.2017 were executed for four plots of land measuring 125sq. yds each. In total, agreements were executed with respect to 12 plots of land in the project.
4. The clause 29 and 30 of the Builder Buyer Agreements holds as is under:
“29. The Developer shall complete the development of the plot/project latest by December 30, 2016, except for any delay of not more than 60 days due to forcemajeure conditions as mentioned in clause 30 hereunder.”
“30. The Developer shall not be held responsible or liable for not performing any of its obligations or undertaking provided for in this Agreement if such performance is prevented, delayed or hindered by an act of God, Fire, Flood, Explosion, War, Riot, Terrorist acts, Sabotage. The Developer shall not be held liable for any delay in delivery or possession of the said plot to the BUYER if the delay is caused due to carrying out any alternate/ additional work demanded by the BUYER in the said plot at any point of time during development of the said plot.
If for Force Majeure reasons, the whole or part of the project is abandoned or delayed beyond 60 days, no other claim will be preferred except that BUYER will be refunded all amounts paid on demand along with interest @ 10% p.a. (calculated on monthly basis).”
5. In contravention of the terms stipulated within the agreements, the respondent no.1 has not yet handed over the possession of the plots to the petitioners despite many reassurances from the former‟s end. Pursuant to non-delivery, the petitioner sent a legal notice dated 12.10.2022 asking for a refund of the amount paid by the petitioners along with interest. Being not satisfied with the respondent‟s reply, the petitioner sent another notice dated 10.12.2022 for the same, which remained unacknowledged. The petitioner invoked arbitration vide notice dated 16.01.2023 as under Section 21 of the Arbitration & Conciliation Act, 1966 and as stipulated in the arbitration clause of the agreements dated 18.11.2016 and 08.02.2017 which provides as under:
“47. (c) All or any disputes arising out of or touching upon or in relations to the term of this Letter of Allotment including the interpretations and validity of the terms thereof and the respective rights and obligations of the parti
