Case Note & Summary
The applicant, M/s. Atul & Arkade Realty, a partnership firm engaged in real estate development, filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of a sole arbitrator to resolve disputes arising from a Joint Venture Agreement dated 28th March, 2007. The respondents were I.A. & I.C. Private Limited, Shah Pratap Industries Pvt. Ltd., and J.I.K. Industries Limited. The background facts reveal that respondent nos.1 and 2 owned land admeasuring 22358.48 sq. meters at Village Balkum, Thane, which was leased to respondent no.3 until 4th April, 2007. Respondent no.3 was declared a sick company by BIFR in 2007 and owed Rs.69.85 Crores to banks, which agreed to a One Time Settlement of Rs.23 Crores if paid by 31st March, 2007. Negotiations between the applicant and Shri Rajendra Parikh, Managing Director of respondent no.3, led to the applicant agreeing to bring in Rs.23 Crores with the understanding that a joint venture agreement would be executed for development of the property. The Joint Venture Agreement was executed on 28th March, 2007 between the applicant as developer, respondent nos.1 and 2 as owners, and respondent no.3 as confirming party. Disputes arose between the parties, and the applicant invoked the arbitration clause. The application remained pending due to peculiar facts and was taken up for hearing in view of an order dated 25th October, 2021 passed by the Supreme Court in Special Leave Petition (Civil) Diary No.24275 of 2021. The court examined the arbitration clause and found that it survived termination of the agreement. The court held that the disputes were arbitrable and appointed a sole arbitrator to adjudicate the disputes.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11 of the Arbitration and Conciliation Act, 1996 - Survival of Arbitration Clause - The court considered whether the arbitration clause in the Joint Venture Agreement survived termination of the agreement. Held that the arbitration clause is independent and survives termination, and disputes are referable to arbitration (Paras 1-42).
Issue of Consideration
Whether the disputes between the parties arising out of the Joint Venture Agreement dated 28th March, 2007 are arbitrable and whether a sole arbitrator should be appointed under Section 11 of the Arbitration and Conciliation Act, 1996.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties arising out of the Joint Venture Agreement dated 28th March, 2007.
Law Points
- Arbitration clause survives termination of agreement
- Section 11 of the Arbitration and Conciliation Act
- 1996
- appointment of sole arbitrator
- joint venture agreement
- disputes referable to arbitration
Case Details
2022 LawText (BOM) (05) 34
Arbitration Application No.72 of 2013
Mr. Aspi Chinoy, Senior Advocate with Mr. Rohaan Cama, Mr. Pranav Dessai, Mr. Krishna Balaji Moorthy, Mr. Shekhar Bishnoi i/by Wadia Ghandy and Co., for Applicant/Petitioner. Ms. Mamta Sadh i/by Mr. S.G. Lakhani, for Respondents.
M/s. Atul & Arkade Realty (Previously known as Atul Real Estate Holding)
I.A. & I.C. Private Limited, Shah Pratap Industries Pvt. Ltd., J.I.K. Industries Limited
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Nature of Litigation
Application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of sole arbitrator to resolve disputes arising from a Joint Venture Agreement.
Remedy Sought
Appointment of a retired Supreme Court or High Court Judge or any other person as sole arbitrator to arbitrate disputes in relation to the Joint Venture Agreement dated 28th March, 2007.
Filing Reason
Disputes arose between the applicant and respondents in relation to the Joint Venture Agreement dated 28th March, 2007.
Previous Decisions
The application remained pending before the High Court on account of peculiar facts and was taken up for hearing in view of the Order passed by the Supreme Court in Special Leave Petition (Civil) Diary No.24275 of 2021 dated 25th October, 2021.
Issues
Whether the disputes between the parties arising out of the Joint Venture Agreement dated 28th March, 2007 are arbitrable?
Whether a sole arbitrator should be appointed under Section 11 of the Arbitration and Conciliation Act, 1996?
Submissions/Arguments
Applicant submitted that disputes have arisen in relation to the Joint Venture Agreement and the arbitration clause therein should be invoked.
Respondents opposed the application, but the court found that the arbitration clause survived termination of the agreement.
Ratio Decidendi
The arbitration clause in a contract is independent and survives termination of the agreement. Disputes arising out of the agreement are referable to arbitration under Section 11 of the Arbitration and Conciliation Act, 1996.
Judgment Excerpts
This Application under Section 11 of the Arbitration and Conciliation Act, 1996 (‘the Act’) is filed to appoint a retired Supreme Court or High Court Judge or any other person as a sole arbitrator to arbitrate all the disputes which have arisen in relation to a Joint Venture Agreement dated 28th March, 2007.
This Application has remained pending before this Court on account peculiar facts and is taken up for hearing and disposal in view of the Order passed by the Supreme Court in Special Leave Petition (Civil) Diary No.24275 of 2021 dated 25th October, 2021.
Procedural History
The application was filed in 2013 and remained pending. It was taken up for hearing after the Supreme Court order dated 25th October, 2021 in SLP (Civil) Diary No.24275 of 2021. The court reserved judgment on 21st March, 2022 and pronounced on 6th May, 2022.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 11
