Case Note & Summary
The petitioner, Shree Kishore Jaiprakash Agarwal, filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator to resolve disputes regarding the fixation of lease rent for renewal of leases between the Surat Municipal Corporation (respondent No. 1) and a society (respondent No. 2). The petitioner is a member of the society. The sole basis for the petition was Clause 14 of lease agreements dated 18.04.1968, 05.11.1969, and 23.07.1970, which contained an arbitration clause. The petitioner alleged that the society illegally and clandestinely agreed to the valuation determined by the corporation for lease rent renewal without giving its members an opportunity to submit objections. The petitioner made representations to the society but received no response. The court examined whether the petitioner, as a member of the society, could invoke the arbitration clause. The court noted that the arbitration clause is contained in lease agreements entered into between the society and the corporation. The petitioner is not a party to those lease agreements. The court held that an arbitration agreement is binding only on the parties to the agreement. Since the petitioner is not a party to the lease agreements, he cannot invoke the arbitration clause. The court dismissed the petition as not maintainable, leaving it open to the petitioner to pursue other remedies available under the law.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11 of the Arbitration and Conciliation Act, 1996 - Party to Arbitration Agreement - The petitioner, a member of a society, sought appointment of an arbitrator under Clause 14 of lease agreements between the society and the municipal corporation. The court held that the arbitration clause is binding only on the parties to the lease agreement, i.e., the society and the corporation. The petitioner, not being a party to the lease agreement, cannot invoke the arbitration clause. The petition was dismissed as not maintainable. (Paras 1-5)
Issue of Consideration
Whether a member of a society can invoke an arbitration clause contained in a lease agreement between the society and a municipal corporation for appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
Final Decision
The petition is dismissed as not maintainable. The petitioner is at liberty to avail other remedies available under the law.
Law Points
- Arbitration agreement binding only on parties to the agreement
- Member of society cannot invoke arbitration clause in lease between society and corporation
- No arbitration agreement between petitioner and respondents
- Petition under Section 11 of Arbitration Act not maintainable
Case Details
2026 LawText (GUJ) (01) 80
R/PETN. UNDER ARBITRATION ACT NO. 200 of 2024
Mr. JV Japee, Mr. Kaushal D Pandya, Ms. Garima Malhotra
Shree Kishore Jaiprakash Agarwal
Surat Municipal Corporation & Anr.
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Nature of Litigation
Petition under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of arbitrator
Remedy Sought
Appointment of arbitrator to resolve disputes regarding fixation of lease rent for renewal of lease
Filing Reason
Alleged illegal and clandestine agreement by respondent No. 2 society to valuation determined by respondent No. 1 corporation without giving opportunity to members to object
Issues
Whether the petitioner, a member of the society, can invoke the arbitration clause contained in lease agreements between the society and the corporation.
Submissions/Arguments
Petitioner argued that the society illegally agreed to the valuation without giving members opportunity to object.
Petitioner made representations to the society but no heed was paid.
Ratio Decidendi
An arbitration agreement is binding only on the parties to the agreement. A member of a society who is not a party to a lease agreement containing an arbitration clause cannot invoke that clause for appointment of an arbitrator.
Judgment Excerpts
Having heard learned Counsel for the parties and perused the record, pertinent is to note that the sole basis for filing of this petition seeking for appointment of Arbitrator, invoking Arbitration Clause (Clause 14 of the lease agreements dated 18.04.1968, 05.11.1969 and 23.07.1970), is that the respondent No.2 – Society illegally, in a clandestine manner, without giving opportunity to its members to submit their objections, has agreed to the valuation determined by the respondent No.1 – Corporation, for fixation of the lease rent for renewal of the lease.
It is pertinent to note that Arbitration Clause 14 is contained in the lease agreement entered by the Society with the respondent No.1 – Corporation. The petitioner is not a party to the said lease agreement. The arbitration agreement is binding only on the parties to the agreement. The petitioner, being a member of the Society, cannot invoke the arbitration clause contained in the lease agreement between the Society and the Corporation.
The petition is dismissed as not maintainable. The petitioner is at liberty to avail other remedies available under the law.
Procedural History
The petitioner filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996 before the High Court of Gujarat seeking appointment of an arbitrator. The court heard the parties and dismissed the petition.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 11
