2024 Supreme(Online)(DEL) 319
HIGH COURT OF DELHI
Jasmeet Singh, J
DEEPA CHAWLA – Appellant
Versus
RAHEJA DEVELOPERS LTD – Respondent
CS(OS)-416/2023
Advocates:
Mr. Arun Vohra, Adv., Mr. Gaurav Mitra, Ms. Manmeet Kaur, Ms. Suditi Batra, Mr. Chandan Malav, Mr. Ishan Roy Choudhary, Advs.
An arbitration clause in one agreement does not apply to another agreement unless explicitly referenced; the Second Agreement's terms exclude arbitration under the Flat Buyer's Agreement.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 8 - Application for reference to arbitration - Dispute arising from Flat Buyer’s Agreement and Second Agreement - The defendant sought to refer the matter to arbitration based on the arbitration clause in the Flat Buyer’s Agreement, while the plaintiff contended that the Second Agreement, which lacks an arbitration clause, governs the obligations. The court found that the Second Agreement has an overriding effect and does not incorporate the arbitration clause from the Flat Buyer’s Agreement. (Paras 1, 10, 20, 22, 26)
(B) Arbitration Clause - Incorporation by reference - A general reference to another contract does not automatically incorporate its arbitration clause unless explicitly stated. The court emphasized the necessity of a specific reference to the arbitration clause for it to apply. (Paras 10, 22)
(C) Distinction between agreements - The court noted that the two agreements operate in distinct fields, and obligations under the Second Agreement cannot be interpreted to fall under the Flat Buyer’s Agreement. (Paras 20, 21)
Facts of the case:
The plaintiff entered into a Flat Buyer’s Agreement for a flat purchase, with the defendant failing to deliver possession as per the agreed timelines. The plaintiff sought recovery of amounts due after the defendant's failure to fulfill obligations.
Findings of Court:
The court ruled that the Second Agreement's terms exclude the arbitration clause from the Flat Buyer’s Agreement, leading to the dismissal of the defendant's application for arbitration.
Issues: The main issues were whether the arbitration clause in the Flat Buyer’s Agreement applies to disputes arising from the Second Agreement and the interpretation of the agreements' interrelation.
Ratio Decidendi: The court held that the Second Agreement's explicit terms exclude the arbitration clause from the Flat Buyer’s Agreement, necessitating that disputes be resolved outside arbitration.
Result: Application dismissed.
JUDGEMENT: JASMEET SINGH, J I.A. 24812/2023
1. This is an application under section 8 of the Arbitration and Conciliation Act, 1996 filed by the defendant seeking reference of parties in the captioned suit to arbitration in terms of Clause 14.2 of the Flat Buyer‟s Agreement dated 03.12.2015.
2. The facts in brief giving rise to filing of the present suit are as follows:
a. The plaintiff agreed to purchase Flat bearing H-122, admeasuring 4804.20 sq.ft. super area on 12th floor and a court/terrace area admeasuring 970 sq.ft in H-Tower/Block, Sector 109, Gurgaon under the name and style of „Atharva‟ for a sum of Rs. 2,00,00,000/- vide a Flat Buyer‟s Agreement-Atharva dated 03.12.2015 (“Flat Buyer’s Agreement”).
b. The defendant company along with the abovesaid Flat Buyer‟s Agreement also entered into Agreement dated 03.12.2015 (“Second Agreement”) wherein the defendant agreed to complete the re- fabrication and finishing of the flat in question, handover vacant, peaceful and physical possession of the flat and get the Sale/Conveyance Deed registered in favour of the plaintiff on or before 02.12.2016. It was agreed that if the defendant failed to do the needful and complete the transaction on or before the said date, the Defendant shall refund the entire amount of Rs. 2,00,00,000/- without any delay. The Plaintiff paid the entire agreed consideration amount for the execution and signing of the Agreement. The defendant for the same purpose vide communication dated 03.12.2015 handed over a post- dated payment cheque bearing no. 075108 dated 02.12.2016 for an amount of Rs. 2,00,00,000/-. c. The defendant failed to complete the re-fabrication, finishing of the flat and failed to handover the possession within the agreed stipulated period. The defendant vide communication dated 01.12.2016 sought an extension of 12 months for delivering the possession of the suit property. The plaintiff granted the extension for 12 months, i.e. upto 02.12.2017, vide communication dated 02.12.2016. The defendant vide communication dated 03.12.2016 acknowledged the grant of extension and issued a post-dated cheque for the amount of Rs. 2,00,00,000/- bearing no. 739301 dated 03.12.2017 in lieu of the earlier cheque.
d. The defendant again failed to complete the refurbishing, finishing of flat and the handing over of the flat within the extended time of 02.12.2017. The defendant vide communication dated 01.12.2017 sought another extension of 12 months while offering to pay an assured return @24% per annum payable monthly on the total sale consideration amount till the delivery of the physical possession.
However, the plaintiff granted an extension of only six months, i.e. till 03.06.2018 on the abovesaid condition vide communication dated 02.12.2017. The same was acknowledged by the defendant vide communication dated 02.12.2017 and a post-dated cheque bearing no. 725391 dated 03.06.2018 was issued in lieu of the earlier post-dated cheque.
e. Another extension of six months was sought by the defendant vide communication dated 31.05.2018 on account of failure to complete the requisite refurbishment and handing over, on the same condition of assured return @ 24%. The same was granted by the plaintiff vide communication dated 02.06.2018. Hence, another post- dated cheque bearing number 947964 dated 03.12.2018 for Rs. 2,00,00,000/- was issued by the defendant in lieu of the earlier post- dated cheque.
f. Thereafter, the defendant failed to perform its obligations and sought another extension of six months with the commitment to pay assured return @24% per annum on total sale consideration amount, which was accepted by the plaintiff and another post-dated cheque bearing no. 932282 dated 30.06.2019 for the amount of Rs. 2,00,00,000/- was issued by the defendant in favour of the plaintiff.
g. The defendant issued and re-issued various cheques towards assured return from time to time. However, the defendant requested the plaintiff not to present these cheques for encashmen
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