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HIGH COURT OF DELHI
GURINA KAUR – Appellant
Versus
NARANG INFRASTRUCTURE PVT. LTD. & ANR. – Respondent
ARB.P.-371/2019
An arbitration clause in an original agreement can be discharged by a subsequent agreement that settles all disputes between the parties and does not contain an arbitration clause.
Headnote:
ARBITRATION - DISCHARGE OF ARBITRATION CLAUSE - SUBSEQUENT AGREEMENT - [The arbitration clause in the original agreement was discharged by a subsequent agreement (MoU-II) that settled all disputes between the parties. The MoU-II did not contain an arbitration clause, and the parties were required to perform the MoU-II, not the original agreement.]
Fact of the Case:
The petitioner and the respondent entered into a Memorandum of Understanding (MoU) for the development of a property. The MoU contained an arbitration clause. Subsequently, the parties entered into another Memorandum of Understanding (MoU-II) with a third party (New Developer) to settle their disputes and develop the property. The petitioner claimed damages from the respondent for delay in developing the property in terms of the MoU.
Finding of the Court:
The court held that the MoU was discharged by the subsequent MoU-II, which settled all disputes between the parties. The court found that the MoU-II did not contain an arbitration clause and that the parties were required to perform the MoU-II, not the original agreement. Therefore, the arbitration clause in the MoU was discharged.
Issues: Whether the arbitration clause in the original agreement was discharged by the subsequent agreement (MoU-II).
Ratio Decidendi: The court relied on the principle that parties can discharge an arbitration agreement by entering into a subsequent agreement that settles their disputes and does not contain an arbitration clause. The court found that the MoU-II settled all disputes between the parties and did not contain an arbitration clause. Therefore, the court held that the arbitration clause in the MoU was discharged.
Final Decision: The court dismissed the petition, holding that there was no arbitration agreement between the parties for the adjudication of the disputes raised by the petitioner.
ARB.P. No.371/2019
Page 1 of 5
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IN THE HIGH COURT OF DELHI AT NEW DELHI
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Date of Decision: 12th January, 2022
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ARB.P.371/2019
GURINA KAUR
..... Petitioner
Through:
Mr Vaibhav Mahajan, Ms Tanya
Harnal and Mr Nikhil Aswani,
Advocates.
versus
M/S. NARANG INFRASTRUCTURE
PVT. LTD. & ANR.
..... Respondents
Through:
Mr Rajiv K. Garg, Advocate for R-1
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
VIBHU BAKHRU, J. (ORAL)
[Hearing Held Through Videoconferencing]
1.
The petitioner has filed the present petition under Section 11 of
the Arbitration and Conciliation Act, 1996 (hereafter ‘the A&C Act’)
praying that an arbitrator be appointed to adjudicate the disputes that
have arisen between the parties in connection with the Memorandum of
Understanding dated 16.05.2016 (hereafter ‘the MoU’).
2.
The petitioner (Ms Gurina Kaur), respondent no.2 (Mr Dinesh
Dheman) and respondent no.1 company (hereafter ‘the Developer’)
had entered into the MoU dated 16.05.2016 for developing a property
admeasuring 250 sq. yards bearing No. E-381, situated at Greater
Kailash, Part II, New Delhi (hereafter ‘the property’). The property
(then a vacant plot of land) was purchased by one Mr Narain Singh
This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000337
ARB.P. No.371/2019
Page 2 of 5
from DLF Housing Construction Pvt. Ltd. He constructed a residential
building on the property from his own funds and resources. Thereafter,
he sold the property to one Mr Kartar Singh by a sale deed dated
08.12.1969.
3.
Mr Kartar Singh expired on 27.10.1995 and the property
devolved on his four children including respondent no.2 (Mr Dheman).
The said owners entered into an agreement and transferred the entire
ground floor and first floor of the property to the Developer (respondent
no.1) along with 55% of the undivided rights in the plot of land
underneath the built up property. The said legal heirs also sold the entire
terrace rights over and above the second floor to Ms Gurina Kaur (the
petitioner) along with 22.5% of the undivided rights in the land
underneath the property. The siblings of Mr Dheman (other heirs of
Kartar Singh) relinquished their remaining rights and interest in the
property to Mr Dheman.
4.
Thus, the property came to be owned by the Developer to the
extent of 55%; Ms Gurina Kaur to the extent of 22.5%; and Mr Dheman
to the extent of 22.5%. The said parties entered into the MoU for
development of the property. In terms of the said MoU, the Developer
agreed to demolish the existing building on the property and redevelop
the same by constructing a basement, stilt, ground floor, first floor,
second floor and a third floor, at its own cost and resources, within a
period of fifteen months, after obtaining the necessary sanction from the
Delhi Municipal Corporation.
This is a digitally signed Judgement.
NEUTRAL CITATION NO: 2022/DHC/000337
ARB.P. No.371/2019
Page 3 of 5
5.
In terms of the MoU, the petitioner would be entitled to the entire
third floor of the developed property along with the terrace rights over
and above the newly constructed residential property; space for two car
parking on the stilt floor; and space for utility with the common WC on
the stilt floor. The petitioner would continue to hold 22.5% of the
undivided interest rights in the land underneath.
6.
The Developer did not take the necessary steps for developing
the property and according to the petitioner (Ms Gurina Kaur) the
Developer had breached the terms of the MoU.
7.
In the circumstances, the petitioner filed a suit against the
Developer. However, it appears that the parties decided to resolve their
