The court ruled that disputes must be resolved via arbitration as specified in the binding arbitration clause, despite prior civil litigation attempts.

Order(Oral)

02/07/2025

1. Application herein is under Section 11 of the Arbitration & Conciliation Act, 1996 with the prayer to appoint a sole arbitrator to decide/ adjudicate upon the dispute between the parties arising out of the Development Agreement dated 19.07.2013 (registered on 30.07.2013).

2. The applicant is a registered partnership firm engaged in land development and construction. The non-applicant, who owns plots admeasuring 2,107 square yards at Patel Nagar, Bikaner, entered into a Development Agreement with the applicant on 19.07.2013, registered on 30.07.2013, for the construction of a multi-storey building.

3. As per the agreement, the applicant paid Rs. 1 crore to the non-applicant as refundable security—50% refundable after completion of RCC work, and the remaining after completion of construction.

4. It is stated in the application that the non-applicant allegedly failed to comply with key obligations, including submission of necessary applications to the Urban Improvement Trust (UIT) for depositing Floor Area Ratio (FAR)charges (challan dated 29.01.2014). This prevented the applicant from proceeding with the development. Dispute is that after receiving Rs. 1 crore, the non-applicant backed out of the agreement. He neither returned the amount nor reimbursed the applicant for costs incurred on registration, hiring engineers/architects, and other project-related expenses.

5. A legal notice was served on 25.09.2018, invoking the Arbitration Clause (Clause 17) of the Development Agreement but to no avail. Left with no choice, the applicant filed a civil suit (No. 58/2019) before the Commercial Court, Jodhpur. On 31.08.2022, the Court returned the plaint to the applicant to approach the Arbitrator in view of Clause 17 of the development agreement.

6. Learned counsel for the applicant submits that Clause 17 of the Development Agreement provides for resolution of disputes through arbitration. He further states that since the parties are not ad idem regarding the appointment of a Sole Arbitrator, the present application has been filed in terms of the said clause.

7. Learned counsel for the respondent argues that the applicant had earlier filed a civil suit for adjudication of the dispute between the parties which was not entertained by the learned court. Present application at this stage is now time barred, he would further contend.

8. I have gone through the record and heard the learned counsel for the parties.

9. The arbitration Clause-17 as contained in the agreement is reproduced herein below:-

"17. That all disputes in relation to the interpretation of the any terms and conditions of this agreement and rights and liabilities of both the parties or any dispute arising out of this agreement shall be referred to an arbitrator and whose decision shall be final and binding upon the parties and for all proceedings of arbitration, the jurisdiction shall be Bikaner only and all the provisions of the Arbitration and Conciliation Act, 1996 shall apply."

10. The applicant when earlier approached the civil Court, the respondent opposed the forum on the ground that it ought to invoke arbitration proceeding as per clause 17 ibid. Now that the instant application has been filed before this Court seeking arbitration proceeding the same is being opposed on the ground that the applicant had earlier approached the civil Court.

11. The aforesaid arbitration clause is not disputed. Moreover, there is no quibble about the fact that there is an existing dispute between the parties, but there is a dispute as to which forum should adjudicate the same. However, on a court query qua t