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IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of Decision: 07^th October, 2021

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ARB.P. 591/2020

CANNES PROPERTY MANAGEMENT SERVICES PRIVATE

LIMITED

..... Petitioner

Through:

Ms. Kanika Agnihotri and Mr. Rohan

Anand, Advocates.

versus

ALLAHABAD BANK

..... Respondent

Through:

Mr. Ashish Rana and Mr. Anurag Kr.

Singh, Advocates.

CORAM:

HON'BLE MR. JUSTICE SANJEEV NARULA

JUDGMENT

SANJEEV NARULA, J. (Oral):

1. The present petition under Section 11(6) of the Arbitration and

Conciliation Act, 1996 [hereinafter referred to as the‘Act’] seeks

appointment of a Sole Arbitrator for adjudication of disputes arising from

and in relation to Maintenance Agreement dated 2^nd March, 2012.

2. The parties to the aforenoted Maintenance Agreement are the

Petitioner [hereinafter referred to as‘Cannes’], and one Surya Vinayaka

Industries Limited [hereinafter referred to as ‘Surya’], which is a not party

to the present proceedings. The Petitioner has instead preferred to proceed

against Allahabad Bank - the Respondent herein [hereinafter referred to as

the‘Bank’] - a non-signatory to the afore-noted Maintenance Agreement.

Thus, the short controversy that arises for determination is whether the

arbitration agreement contained in the Maintenance Agreement binds the

Bank or not.

3. In order to resolve the aforenoted quandry, a brief narration of facts,

to the extent necessary for deciding the present petition, is set out below.

3.1.

By way of a Sale Deed dated 23^rd December 2010, Surya purchased a

commercial unit bearing Private No. Anchor-I at ground floor and first floor

admeasuring 61212 sq. ft. (approx.) in TDI Mall, Kundli, Sonepat, Haryana

- owned, developed and sold by TDI Infrastructure Ltd. [hereinafter referred

to as‘suit property’].

3.2.

The said Mall requires maintenance of various services and facilities,

for which, TDI Infrastructure Limited appointed Cannes as the maintenance

agency. Surya as the owner of a unit in the mall, entered into the

Maintenance Agreement.

3.3

The afore-noted agreement, inter alia, contains an arbitration clause.

3.4.

The Bank granted finance facilities to Surya for purchase of the suit

property –the same was then mortgaged in favour of the Bank. Surya’s

failure to pay its dues to the Bank resulted in initiation of proceedings under

SARFAESI Act, 2002, pursuant whereto, the Bank itself purchased the

mortgaged property in an e-auction conducted by it. To this effect, a sale

certificate dated 4^th January, 2014 was issued in favour of the Bank.

CANNES’S CONTENTIONS

4. Ms. Kanika Agnihotri, counsel for Cannes, argues that the Bank

stepped into the shoes of Surya, as a subsequent owner of the suit property,

and is thus a party to the arbitration agreement which is embodied in the

Maintenance Agreement.

4.1.

The Bank stepped into the shoes of Surya

4.1.1.

Surya had mortgaged the suit property in favour of the Bank in

order to secure loan for payment of sale consideration. Upon Surya’s default

in repayment, the suit property was purchased by Bank on 4^th January, 2014.

The auction notice duly stipulated that the suit property was being offered

on ‘as is where is’ basis. In addition, Clause 2, titled ‘Inspection of Property

& title related Documents’, contained a sub-clause 2.2, stated as under:

Parliament Street, New Delhi or Consultants”

The above conditions, considered together with the fact that the suit property

was mortgaged with the Bank itself, is a conclusive proof of Bank’s

awareness of the stipulations, contracts, agreements and conditions

pertaining to the suit property. The Maintenance Agreement was executed

prior to purchase of the suit property by the Bank, and was within its

knowledge. It is unfathomable that Bank remained unbeknownst to the

Maintenance Agreement even after purchasing the property in e-auction

conducted by it. The Bank has stepped into the shoes of Surya