Case Note & Summary
The matter arose under Section 11 of the Arbitration and Conciliation Act, 1996 concerning a Development Agreement dated 24 September 2007. The petitioner, a sole proprietor of a developer firm, sought appointment of an arbitrator after the agreement was terminated on 15 October 2020. The petitioner issued an invocation notice on 10 November 2023, thereby commencing arbitral proceedings under Section 21. Shortly thereafter, the counterparties executed an agreement for sale on 28 December 2023 and a sale deed on 19 January 2024 conveying the same property to M/s Say-Sai Infra, proposed Respondent No.9. The petitioner filed the present arbitration petition and an interim application to implead the transferee as Respondent No.9, contending that the transferee acquired the property with knowledge of the pending arbitration and the pre-existing development agreement. During the proceedings, some original respondents, including signatories to the arbitration agreement, expired, and the petitioner sought to bring their legal heirs on record. The principal legal issues were whether a valid, formally executed arbitration agreement existed despite the arbitrator's name being left blank and certain parties having died, and whether the non-signatory transferee should be impleaded at the Section 11 stage or left to the arbitral tribunal. The petitioner argued that the arbitration clause was valid and binding on all respondents including legal heirs; that the invocation notice fixed the date of commencement; and that the subsequent transferee purchased with eyes open, as reflected in recitals acknowledging the development agreement and its termination. The petitioner also pointed to agreements dated 9 August 2022 with tenants, witnessed by some respondents, as evidence that termination had been retracted. Respondents 2 and 4 contended that termination remained valid and that their signatures as witnesses were contested facts for the tribunal. The court examined the array of respondents against the signatories and found that some respondents were personally signatories, others were legal heirs of deceased signatories, and a formally executed arbitration agreement existed. On the death of parties, the court applied the law that arbitration agreements survive and bind legal heirs. Regarding proposed Respondent No.9, the court noted the chronology: sale documents executed after invocation notice, making lis pendens and joinder questions mixed with facts. Relying on the Supreme Court decisions in ASF Buildtech Private Limited v. Shapoorji Pallonji and Company Private Limited and Adavya Projects Pvt. Ltd. v. Vishal Structurals Pvt. Ltd., the court held that the arbitral tribunal is the appropriate forum to decide whether a non-signatory should be added. It therefore disposed of the petition by appointing Justice (Retd.) Sadhana Jadhav as sole arbitrator, directing parties to appear before her, and granting liberty to the petitioner to file an application before the tribunal for joining Respondent No.9 and to bring legal heirs on record. All issues on merits were expressly kept open.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Existence of Valid Arbitration Agreement - Arbitration and Conciliation Act, 1996, Section 11 - Petition under Section 11 arose from Development Agreement dated 24-09-2007 containing arbitration clause 15; name of arbitrator left blank but parties and legal heirs bound; court appointed sole arbitrator after finding formally executed arbitration agreement existed (Paras 1,6,8). B) Arbitration Law - Commencement of Arbitral Proceedings - Date of Invocation Notice - Arbitration and Conciliation Act, 1996, Section 21 - Petitioner issued invocation notice on 10-11-2023; subsequent agreement for sale dated 28-12-2023 and sale deed dated 19-01-2024 executed with proposed Respondent No.9 after commencement; held transferee prima facie acquired property with notice (Paras 3-4). C) Arbitration Law - Impleadment of Non-Signatory Transferee - Power of Arbitral Tribunal - Arbitration and Conciliation Act, 1996, Sections 11 and 16 - Question whether Respondent No.9 should be joined and whether conveyance hit by lis pendens was mixed question of fact and law; following ASF Buildtech and Adavya Projects, court left issue to arbitral tribunal; petitioner may file application before tribunal (Paras 7,9). D) Arbitration Law - Effect of Death of Party - Survival of Arbitration Agreement - Arbitration and Conciliation Act, 1996, no specific section cited - Court noted signatories and some respondents expired during proceedings; their legal heirs bound and arbitration agreement survived; petitioner allowed to bring legal heirs on record before arbitral tribunal (Paras 6,10).
Issue of Consideration
Whether a formally executed arbitration agreement existed despite the arbitrator's name being left blank and death of some signatories; whether proposed Respondent No.9, a non-signatory transferee, should be impleaded at the Section 11 stage or by the arbitral tribunal.
Final Decision
The arbitration petition was finally disposed of by appointing Justice (Retd.) Sadhana Jadhav as sole arbitrator and referring parties to arbitration; the petitioner was granted liberty to file an application before the arbitral tribunal for impleadment of Respondent No.9 and to bring legal heirs of deceased respondents on record; all merits kept open.
Law Points
- Arbitration agreement must be formally executed
- name of arbitrator left blank does not invalidate clause
- arbitration commences on invocation notice under Section 21
- non-signatory transferee with knowledge subject to arbitral tribunal's scrutiny
- death of party does not invalidate arbitration agreement
- legal heirs bound by agreement
- arbitral tribunal has power to implead necessary parties per ASF Buildtech and Adavya Projects.
