Case Note & Summary
The Petitioner, Della Developers Private Limited, entered into a Development Agreement dated 17th March 2006 with the Respondents, Noble Organics Private Limited and Noble Paints Private Limited, for joint development of a property. The Petitioner was to contribute Rs.7.50 Crores and the Respondents were to contribute the land. Disputes arose and the matter was referred to a sole Arbitrator. During the arbitration, the Petitioner filed an application under Section 17 of the Arbitration and Conciliation Act, 1996 seeking interim protection. The Arbitrator rejected the application on two grounds: (i) the agreement was a pure development agreement and not a joint venture, so specific performance was not available; (ii) the Petitioner had failed to perform its obligations and the balance of convenience was against it. The Petitioner challenged this order under Section 37 of the Act before the Bombay High Court. The Court held that the scope of interference under Section 37 is limited and does not permit reappreciation of the Arbitrator's prima facie findings unless they are perverse or capricious. Since the Arbitrator's view was plausible, the Court dismissed the petition.
Headnote
A) Arbitration Law - Interim Measures - Section 17 of Arbitration and Conciliation Act, 1996 - Appeal under Section 37 - Scope of Interference - The Court examined whether the order of the Arbitrator rejecting interim relief could be interfered with in appeal. Held that the appellate court under Section 37 does not sit in appeal over the prima facie findings of the Arbitrator unless the order is perverse, capricious, or based on no evidence. The Arbitrator's view being a plausible one, no interference is warranted (Paras 1-4).
Issue of Consideration
Whether the impugned order passed by the sole Arbitrator rejecting the application under Section 17 of the Arbitration and Conciliation Act, 1996 is liable to be interfered with under Section 37 of the Act.
Final Decision
The High Court dismissed the Arbitration Petition, holding that the scope of interference under Section 37 of the Arbitration and Conciliation Act, 1996 is limited and the Arbitrator's prima facie findings were plausible and not perverse or capricious.
Law Points
- Scope of appeal under Section 37 of Arbitration and Conciliation Act
- 1996 is limited
- Interference with interim orders under Section 17 is permissible only if order is perverse or capricious
- Arbitrator's prima facie findings on nature of agreement and balance of convenience are not to be reappreciated in appeal
Case Details
2010 LawText (BOM) (01) 28
Arbitration Petition No.528 of 2008
Ms. Rajani Iyer with Mr. M.S. Doctor with Ms. Kirtida Chandarana i/b M. Humranwala for Petitioners; Mr. R.M. Kadam, Advocate General with Mr. S.U. Kamdar & Mr. A.S. Kamat i/b Kartikeya & Associates for Respondents
Della Developers Private Limited
Noble Organics Private Limited & Noble Paints Private Limited
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Nature of Litigation
Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against an order of the sole Arbitrator rejecting an application under Section 17 of the Act for interim relief.
Remedy Sought
The Petitioner sought to set aside the Arbitrator's order and obtain interim protection during the pendency of arbitration proceedings.
Filing Reason
The Petitioner was aggrieved by the Arbitrator's rejection of its application for interim relief under Section 17 of the Act.
Previous Decisions
The sole Arbitrator rejected the Petitioner's application under Section 17 of the Act by order dated 1st August 2008.
Issues
Whether the impugned order passed by the sole Arbitrator rejecting the application under Section 17 of the Arbitration and Conciliation Act, 1996 is liable to be interfered with under Section 37 of the Act.
Submissions/Arguments
The Petitioner argued that the Arbitrator's findings were manifestly wrong and incorrect, and that the agreement was a joint venture arrangement, not a pure development agreement.
The Petitioner also argued that the Arbitrator erred in holding that the Petitioner had failed to perform its obligations and that the balance of convenience was against it.
Ratio Decidendi
The appellate court under Section 37 of the Arbitration and Conciliation Act, 1996 does not sit in appeal over the prima facie findings of the Arbitrator on an application under Section 17. Interference is warranted only if the order is perverse, capricious, or based on no evidence. Since the Arbitrator's view was plausible, no interference is called for.
Judgment Excerpts
This Petition under Section 37 of the Arbitration and Conciliation Act, 1996 takes exception to the order passed by the sole Arbitrator dated 1st August 2008 on Application dated 14th April 2008 filed under Section 17 of the Act in the Arbitration Dispute between the parties herein.
The prima facie opinion recorded by the sole Arbitrator in rejecting the Application preferred by the Petitioners is broadly on two considerations.
Procedural History
The Petitioner and Respondents entered into a Development Agreement on 17th March 2006. Disputes arose and were referred to a sole Arbitrator. The Petitioner filed an application under Section 17 of the Arbitration and Conciliation Act, 1996 for interim relief, which was rejected by the Arbitrator on 1st August 2008. The Petitioner then filed the present petition under Section 37 of the Act before the Bombay High Court, which was dismissed on 4th January 2010.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 17, Section 37
