JUDGMENT

[VIA HYBRID MODE]

SANJEEV NARULA, J. (Oral):

1. The present appeal under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as the ‘Act’] impugns the order dated 19th August 2021 passed by the Ld. Sole Arbitrator, in an ongoing arbitration between Kwality Colonizers Pvt. Ltd. (being the Claimant therein) [hereinafter referred to as ‘Kwality’] and Respondent No. 1 – M/s. Shiva S. S. Strips Pvt. Ltd. [hereinafter referred to as ‘Shiva’] whereby an application under Section 17 of the Act, filed by Kwality, seeking to secure the amount in dispute and/or status quo order qua the land owned by Shiva, stands rejected.

2. The events leading up to the present dispute are as follows:

Who are the parties?

2.1. Kwality is inter alia engaged in real estate activities.

2.2. Shiva is the owner of a parcel of land on which a shopping mall–

cum–hotel was proposed to be built, admeasuring 10,600 sq. yds (approx.) situated in Khasra No. 7/14/2, 15,16 and 17 on the main highway in Zirakpur, (Dist. Mohali), Punjab, for which the status quo order was prayed for before the Arbitrator. Respondents No. 2 to 7 are its directors [hereinafter referred to as the ‘Subject Land’].

2.3. Respondent No. 8 - M/s. Royal A2Z Developers [hereinafter referred to as ‘Royal’] is a partnership firm, engaged in the business of development of properties, with R-9 & 10 as its partners.

What were the agreements?

2.4. On 17th September 2007, a Collaboration Agreement was executed between Kwality and Shiva, whereunder, the development of project, including obtaining of necessary sanctions and raising of construction was the responsibility of Kwality. As per profit sharing ratio of the total built-up area, Kwality was to get a share of 57.5% and Shiva was to get 42.5%.

2.5. On 31st March 2014, Royal came in as new developer and an MoU was executed between Kwality, Shiva and Royal to develop, construct and work on the subject land. [hereinafter referred to as the ‘2014 MoU’], and the earlier Agreement dated 17th September, 2007 was terminated. Thereunder, in lieu of the cost of construction borne by Royal, it was to receive 42.5% of the built-up area, and out of the remaining area, Shiva was to retain 42.5% and Kwality was to receive

15%.

2.6. Next, on 18th January 2015, a fresh Tripartite Collaboration Agreement was entered into between Shiva (42.5% share), Royal (42.5% share) and Kwality (15% share) [hereinafter referred to as ‘3rd Collaboration Agreement’] for the same. All future permissions were to be taken by Kwality. Apart from its share of 15%, Kwality was also entitled to an additional area of 11701 sq. ft. proportionately on each floor, and was also allegedly entitled to an undivided share in the land underneath, in lieu of advances received from buyers which were retained by Shiva. The entire cost of construction was to be borne by Royal.

What are the events leading up to the present appeal?

2.7. Royal failed to carry out further construction, and handed over peaceful vacant possession of the land to Shiva on 31st March 2017. It also made an affidavit dated 12th July 2017 admitting its inability to develop the project.

2.8. Thus, on 24th October 2019, Shiva terminated the 3rd Collaboration Agreement and sought damages of Rs. 4 lakh per month from 17th January 2017 in terms of Clause 19 of the 3rd Collaboration Agreement.

2.9. Kwality filed a petition under Section 9 of the Act before this court, seeking restrain on the cancellation of the third Collaboration Agreement. Status quo was granted in favour of Kwality on 21st November, 2019.

2.10. On 30th January 2020, Kwality sent a notice to Shiva, invoking arbitration in terms of Clause 30(g) of the 3rd Collaboration Agreement.

2.11. On 19th June, 2020, Shiva and Royal signed an MoU – to which Kwality was not made a party – inter alia settling their disputes, terminating the 3rd Collaboration Agreement, and deciding the new sharing of built-up land as 57.5% (Royal) and 42.5% (Shiva).

2.12.