The court affirmed the necessity of arbitration for resolving disputes as per the agreement, highlighting the binding nature of the arbitration clause.

Order (Oral)

15/07/2025

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 development agreement dated 10.12.2009.

2. The applicant is a duly registered company under the Companies Act, 1956, and is engaged in the business of infrastructure development.

2.1. The non-applicant, through his late father Shri Parakram Singh Dangi, approached the applicant with a proposal for development of agricultural land situated at Dangi Factory, Old Bus Stand, Bhilwara, bearing Aaraji Nos. 3021, 3022, and 3023. It was agreed that the non-applicant would get the land converted to residential use at their own cost, and thereafter, the applicant would undertake infrastructure development on the said land.

2.2. Based on this mutual understanding, the parties executed a Memorandum of Understanding and a Property Development Agreement, both dated 10.12.2009. The applicant also paid a security amount of Rs. 1,57,00,000/- to the non-applicant.

2.3. In furtherance of the agreement, the applicant fulfilled its obligations and, on request of the non-applicant, also extended financial assistance of Rs. 9,21,81,250/- to facilitate land conversion.

2.4. It is alleged that despite repeated requests by the non- applicant, vide communications dated 01.06.2016, 17.02.2016, and 06.04.2016, for performance of the obligations stipulated in the agreement, the applicant failed to provide the necessary approvals for the proposed site plan and construction maps, thereby stalling the project. In such circumstances, the non- applicant, vide notice dated 07.06.2017, terminated the agreement in question, stating that the applicant had failed to perform its part of the agreement.

2.5. The applicant, thereafter issued a letter dated 20.03.2023, calling upon the non-applicant to adhere to the terms of the agreement and give consent to the proposed site plan. The non- applicant, in response dated 28.03.2023, claimed that the agreement had already been cancelled through an earlier letter dated 07.06.2017.

2.6. The applicant then issued a legal notice dated 11.05.2023, refuting the claims of the non-applicant and once again calling upon it to comply with its obligations under the agreements, but to no avail.

2.7. Meanwhile, to safeguard its interest in the subject land, the applicant filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 before the Commercial Court, Bhilwara. The application was registered as Case No. 15/2023. The Court, vide order dated 10.10.2023, granted interim relief directing the non-applicant to maintain status quo on the said land. In view of the non-applicant’s failure to perform their obligations under the agreements dated 10.12.2009, disputes have arisen between the parties.

3. Learned counsel for the applicant submits that despite the applicant having fulfilled its obligations under the Property Development Agreement dated 10.12.2009, the non-applicant has failed to perform its part, resulting in disputes between the parties, thereby necessitating invocation of arbitration under Clause 37 of the said Agreement.

4. Learned counsel for the non-applicant opposes the objection qua the limitation on the ground that it is a continuous cause of action and the so-called termination of the agreement was never conveyed to the applicant. He submits that limitation being mixed question of facts and law, cannot be summarily decided without letting the parties to adduce respective