Case Note & Summary
The Applicant, Ivory Properties & Hotels Pvt. Ltd., filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator to resolve disputes arising from an agreement dated 2 January 1995 with the Respondent, Nusli Neville Wadia. The agreement required the Applicant to develop property and pay the Respondent 12% of sale proceeds. Disputes arose, and the Respondent filed a civil suit on 4 February 2008 alleging fraud, misappropriation, and that the Applicant transferred properties to related entities instead of genuine third parties, seeking declarations, injunctions, and damages of Rs. 350.99 crores. The Applicant contended that the disputes were covered by the arbitration clause. The court held that where serious allegations of fraud and misappropriation are made, the dispute is not arbitrable and must be adjudicated by a civil court. The application was dismissed.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) Arbitration and Conciliation Act, 1996 - Existence of Arbitration Agreement - The court must examine the existence of an arbitration agreement and whether the dispute is arbitrable. Where serious allegations of fraud and misappropriation are made, the dispute may not be capable of resolution by arbitration. (Paras 1-4) B) Arbitration Law - Non-Arbitrable Disputes - Fraud - Serious Allegations - Where the Respondent alleges that the Applicant committed fraud by transferring properties to related entities and not paying the agreed share, such disputes involving fraud and misappropriation are not arbitrable and must be decided by a civil court. (Paras 3-4)
Issue of Consideration
Whether the disputes between the parties are arbitrable in view of the serious allegations of fraud and misappropriation raised by the Respondent, and whether an arbitrator should be appointed under Section 11(6) of the Arbitration and Conciliation Act, 1996.
Final Decision
The application under Section 11(6) of the Arbitration and Conciliation Act, 1996 is dismissed.
Law Points
- Arbitration agreement
- existence of
- Section 11(6) Arbitration and Conciliation Act
- 1996
- fraud
- serious allegations
- non-arbitrable
- court's jurisdiction
- prima facie existence
