Case Note & Summary
The applicant, Bhupinder Singh Balwant Singh, filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator to adjudicate disputes arising from a Memorandum of Understanding (MOU) dated 12/09/2018 and an Agreement for Sale dated 13/02/2019. The applicant claimed that he entered into an Agreement for Sale for purchase of a property for consideration of Rs.5,15,00,000/- and made an advance payment of Rs.4,40,00,000/-, with the balance of Rs.75,00,000/- to be paid at the time of handing over possession within five months. The respondents appointed a power of attorney to transfer the property, but later restrained the applicant from taking vacant possession. The applicant also learned that the respondents signed another MOU with a third party. The applicant invoked arbitration, but the respondents failed to appoint an arbitrator, leading to the present application. The respondents opposed the application, arguing that the Agreement for Sale was not signed by them and that the arbitration clause was not binding. The court, after considering the submissions, held that at the stage of Section 11 application, only a prima facie existence of an arbitration agreement is required. The court found that the MOU contained an arbitration clause and that the Agreement for Sale, though not signed by the respondents, was signed by their power of attorney, which was valid. The court also noted that the applicant had filed a Section 9 application for interim relief, which was pending. The court appointed a sole arbitrator to adjudicate the disputes, leaving the issue of the validity of the arbitration agreement to the arbitral tribunal. The court directed the parties to appear before the arbitrator on a specified date.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) Arbitration and Conciliation Act, 1996 - Existence of Arbitration Agreement - The court considered whether an arbitration clause in an MOU and an Agreement for Sale could be enforced when the respondent claimed not to have signed the agreement. The court held that at the stage of Section 11 application, only a prima facie existence of an arbitration agreement is required, and the dispute regarding signing is a matter for the arbitral tribunal. (Paras 1-10) B) Contract Law - Power of Attorney - Validity of Agreement - The respondent appointed a power of attorney who signed the Agreement for Sale. The court held that the power of attorney was valid and the agreement was binding on the respondent, as the power of attorney was authorized to execute the sale. (Paras 11-15) C) Arbitration Law - Interim Measures - Section 9 Arbitration and Conciliation Act, 1996 - The court noted that the applicant had already filed a Section 9 application for interim relief, which was pending, and that the appointment of an arbitrator would not prejudice that application. (Paras 16-20)
Issue of Consideration
Whether an arbitrator should be appointed under Section 11(6) of the Arbitration and Conciliation Act, 1996, when the respondent disputes the existence of a valid arbitration agreement due to non-signing of the Agreement for Sale.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties. The parties were directed to appear before the arbitrator on a date to be fixed by the arbitrator.
Law Points
- Section 11(6) of Arbitration and Conciliation Act
- 1996
- Appointment of Arbitrator
- Existence of Arbitration Agreement
- Prima Facie Test
- Non-signing of Agreement
- Power of Attorney
