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2008 DIGILAW 863 (DEL)

Shanti Mann v. Moral Properties Pvt. Ltd.

2008-09-08

RAJIV SAHAI ENDLAW

body2008
JUDGMENT Rajiv Sahai Endlaw, J. 1. I.A No. 10202/2008 of the defendant Nos. 1 and 2 under Section 8 of the Arbitration and Conciliation Act, 1996 in C.S. (OS) No. 463 of 2008. 2. The Counsel for the defendant Nos. 1 and 2, who now appears for defendant No. 3 as well, states that the defendant No. 3 is also a director of the defendant No. 1 and the application may be treated as on behalf of all the defendants. 2. No reply to the application has been filed by the plaintiff. However, the counsel for the plaintiff has handed over a reply in the Court and the same is taken on record. 3. The plaintiff has instituted this suit for specific performance of an agreement dated 26.4.2004 of sale of immovable property. The said agreement on page four thereof contains the following clauses: That if the second party fails to make the payment of the balance amount as agreed upon, at the time of vacant physical possession and clear of NOC from the Land Acquisition Department, from date of this Agreement. The transaction will be considered as cancelled and the earnest money will be forfeited by the first party. That if the first party refuse or fails to complete the bargain within the prescribed time the second party shall be entitled claim and receive double the amount of earnest money paid by him/her to the first party. That if the first party infringes the terms and conditions of this agreement, the second party shall be entitled to get the implementation thereof effected through Court of law by specific performance of this agreement or any other law for the time being in force at the costs and risks of the first party or may rescind this agreement, and in that eventuality, the first party shall be liable and responsible for making good the losses which may be suffered incurred, undergone and or sustained by the second party as a result thereof and this Agreement between the party. That in the eventuality of any dispute in between the parties on any manner incidental thereof the same shall be referred to an arbitrator appointed mutually and a decision of the arbitrator shall be final and binding in between the parties. 4. The defendants before filing the written statement have applied for the parties to be referred to arbitration. 5. That in the eventuality of any dispute in between the parties on any manner incidental thereof the same shall be referred to an arbitrator appointed mutually and a decision of the arbitrator shall be final and binding in between the parties. 4. The defendants before filing the written statement have applied for the parties to be referred to arbitration. 5. The Counsel for the plaintiff has contended that the agreement between the parties provides for the plaintiff to approach a Court of law for specific performance of the agreement and thus contends that the clause for arbitration which appears later in position in the agreement, to the clause for specific performance by a Court of law, does not apply when the dispute is of specific performance. It is also contended that the relief of specific performance can be granted by the Court alone. The plaintiff contends that the defendants have already delayed the matter any if the matter is referred to arbitrator, the defendants are likely to delay the same further. The Counsel for the plaintiff has further contended that what can be referred to arbitration are only the disputes and the application of the defendants does not specify and dispute between the parties and for this reason also Section 8 of the Arbitration Act does not apply. 6. The agreement is between the defendant No. 1 acting through its directors defendant Nos. 2 and 3 and the plaintiff. The defendant Nos. 2 and 3 do not claim any independent right and have been impleaded in the suit also in their capacity only as the directors of the defendant No. 1. Thus, the parties to the present suit are the same arbitration agreement. 7. As far as the plea of the Counsel for the plaintiff with respect to the issue of specific performance being not referable to arbitration is concerned, the question has been settled in Olympus Infrastructure v. Meena Vijay Khaitan and Ors. [1999] 3 SCR 490 . 8. The contention that the dispute of specific performance was not included in the arbitration clause also cannot be accepted. The agreement provides for the consequences flowing from the breach by either party of the agreement. First, it is provided that upon the failure of the plaintiff to make the payment of the balance/sale consideration, the earnest money paid by the plaintiff will be forfeited. The agreement provides for the consequences flowing from the breach by either party of the agreement. First, it is provided that upon the failure of the plaintiff to make the payment of the balance/sale consideration, the earnest money paid by the plaintiff will be forfeited. Thereafter, it is provided that conversely if the defendant fails to complete the transactions, the plaintiff shall be entitled to claim double the amount of earnest money. The agreement further provides that upon the defendant infringing the terms of the agreement, the plaintiff shall be entitled to the relief of specific performance. 9. In the absence of said clause, it could have been contended that even if the defendant was in breach, the plaintiff had agreed to limit the claim to double the earnest money and was not entitled to specific performance. Merely because in connection with such right the expression "Court" is used does not mean that the dispute of specific performance lies before the Court only and not before the adjudicatory mechanism of arbitration agreed by the parties. A reading of all the said to exclude the dispute of specific performance from the purview of arbitration. If that had been so, the parties would have provided that "other disputes" would be referred to arbitration. On the contrary, the parties agreed to refer "any dispute" arising out of the agreement or incidental thereto to arbitration. 10. As far as the objections of the Counsel for the plaintiff with respect to there being no dispute is concerned, the plaintiff herself has in the plaint stated that the defendants are not intending to get the sale deed executed in pursuance to the agreement. The plaintiff has thus admitted the existence of dispute between the parties. 11. I, therefore, do not find the objections of the plaintiff to arbitrarily sustainable. The application is allowed. The Counsel for the defendants, to allay the fear of the plaintiff of delay, has fairly offered that the Arbitrator be appointed by the order of the Court only as there is no possibility of agreement between the parties in this regard. I, accordingly appoint Honble Justice P.K. Bahri (Retired), as the sole arbitrator to adjudicate the claims and counter claims of the parties arising out of or incidental to agreement dated 26.4.2004 between the plaintiff and the defendant No. 1. I, accordingly appoint Honble Justice P.K. Bahri (Retired), as the sole arbitrator to adjudicate the claims and counter claims of the parties arising out of or incidental to agreement dated 26.4.2004 between the plaintiff and the defendant No. 1. The parties to appear before Justice P.K. Bahri after fixing appointment with him on 4th October, 2008. 12. Let the original documents be returned to the plaintiff as per rules for the same to be filed before the Arbitrator. Arbitrator to fix his own fee in consultation with the parties. Let a copy of this order be also forwarded to the appointed Arbitrator. 13. The Counsel for the plaintiff orally prays that since the parties have been referred to arbitration, which is one of the modes prescribed in Section 89 of the CPC and further since not much proceedings have taken place before this Court, the plaintiff be refunded the Court fees under Section 16 of the Court Fees Act. There is merit in the prayer of plaintiff. Let the necessary certificate be issued to the plaintiff. 14. The suit is disposed of by referring the parties to arbitration as aforesaid. 15. Order be given dasti to the counsel for the parties. Petition allowed