$~10

*

IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of Decision: 23^rd November, 2021

+

ARB. A. (COMM.) 44/2021 & I.As. 11280-283/2021

M/S. KWALITY COLONISERS PVT. LTD.

..... Petitioner

Through:

Mr. Rajeev Virmani, Senior Advocate

with Mr. Raktim Gogoi, Mr. Kartikeya

Singh and Mr. Samarth Shandiliya,

Advocates.

versus

M/S. SHIVA S. S. STRIPS PVT. LTD. AND ORS. ..... Respondents

Through:

Mr. Saurabh Kirpal, Senior Advocate

with Ms. Smita Maan, Advocate for

R-1 to 7.

CORAM:

HON'BLE MR. JUSTICE SANJEEV NARULA

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 19^th 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,

2021:DHC:3786

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:

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.

2.4.On 17^th 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 31^st 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 17^th September, 2007 was

2021:DHC:3786

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 18^th 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

‘3^rdCollaboration 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 31^st March 2017. It

also made an affidavit dated 12^th July 2017 admitting its inability to

develop the project.

2.8.Thus, on 24^th October 2019, Shiva terminated the 3^rd Collaboration

Agreement and sought damages of Rs. 4 lakh per month from 17^th

January 2017 in terms of Clause 19 of the 3^rd Collaboration

Agreement.

2.9.K