Case Note & Summary
The petitioner, Discovery Properties & Hotels Pvt. Ltd., filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator in a dispute with the respondent, City and Industrial Development Corporation of Maharashtra Ltd. (CIDCO). The dispute arose from a letter dated 10 December 2007 by which CIDCO accepted the petitioner's offer for allotment of a plot at Kharghar, Navi Mumbai, for construction of a five-star hotel. The total consideration was Rs. 78.28 crores, with an earnest money deposit of Rs. 2.5 crores already paid. By a letter dated 3 February 2009, CIDCO demanded payment of the balance lease premium, threatening termination and forfeiture of earnest money and 25% of the agreed premium. The petitioner responded on 12 March 2009, stating it had paid Rs. 39.14 crores as first instalment but was ready to pay the second instalment only if CIDCO completed certain milestones, including construction of an international airport, a flyover, a special economic zone, road projects, and a central park and golf course. The petitioner also sought permission for mixed development and additional FSI. The petitioner invoked arbitration by nominating Mr. G.S. Gill, Managing Director of CIDCO, as arbitrator under Clause 44 of the Letter of Allotment, which the petitioner contended contained an arbitration agreement. The respondent opposed the petition, arguing that Clause 44 only provided for reference to the Managing Director for decision and did not constitute an arbitration agreement. The court examined Clause 44 of the Letter of Allotment and Clause 41 of the bid document. Clause 44 stated that disputes shall be referred to the Managing Director of CIDCO whose decision shall be final and binding. Clause 41 provided for interpretation of general terms and conditions. The court held that Clause 44 constituted an arbitration agreement as it provided for reference of disputes to a named person whose decision would be final and binding. The court noted that the Managing Director was not an employee of CIDCO but a statutory authority, and the clause did not require consent of both parties for appointment. The court allowed the petition and appointed a sole arbitrator to adjudicate the disputes between the parties.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) Arbitration and Conciliation Act, 1996 - Existence of Arbitration Agreement - Dispute arose from allotment of plot for hotel construction - Petitioner sought appointment of arbitrator citing Clause 44 of Letter of Allotment and Clause 41 of bid document - Court held that the clauses constitute an arbitration agreement and appointed an arbitrator (Paras 1-10).
Issue of Consideration
Whether there exists an arbitration agreement between the parties and whether the petitioner is entitled to appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.
Final Decision
The petition is allowed. A sole arbitrator is appointed to adjudicate the disputes between the parties.
Law Points
- Section 11(6) of the Arbitration and Conciliation Act
- 1996
- Appointment of Arbitrator
- Existence of Arbitration Agreement
- Clause 44 of Letter of Allotment
- Clause 41 of Bid Document
