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2025 DIGILAW 1614 (JHR)

Arun Kumar Rajgariha, S/o Late Sanwar Mull Rajgariah v. Prarthana Creations Private Limited

2025-08-05

GAUTAM KUMAR CHOUDHARY

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JUDGMENT : Gautam Kumar Choudhary, J . Heard, learned counsel for the parties. 1. The order passed in Original Suit No. 816/2024 to refer the matter for arbitration under Section 8 of the Arbitration and Conciliation Act, 1996 is under-challenge by the plaintiff/ petitioner in the instant Civil Miscellaneous Petition. 2. Plaintiff is the land owner, whereas defendants-Opp. Parties are the builders and the other co-owner(s) of the land. Plaintiff entered into a development agreement with respondent no. 1 and 2 on 19.11.2022 for development of the land by respondent nos. 1 and 2 as per the terms of agreement of the land fully detailed in the schedule of the agreement. 3. The dispute arose with respect to the claim of the plaintiff/ petitioner for one shop to be constructed by the developer for the plaintiff on the front side as per the understanding between the parties. It is contended that Clause 4 in the agreement is to the extent that before plan/map was to be presented for sanction to the Ranchi Municipal Corporation (O.P. No.20). The developer will present the same with the land owner for his written approval. 4. The cause of action arose when the defendants without getting the approval presented the map for sanctioning before Ranchi Municipal Corporation [Opp. Party No.20]. 5. Plaintiff filed the suit, inter alia, for the relief of mandatory injunction on the ongoing construction of the building on account of breach of the terms of the agreement. 6. The learned Trial Court vide impugned order referred the dispute for arbitration which is under challenge before this Court. 7. The relevant arbitral clause is extracted below: “The any dispute or difference between the parties arising out of the meaning constitute or impart of this agreement or the right and liabilities hereunder shall be referred to the Arbitration of two independent Arbitrators one to be appointed by the LAND OWNERS and other by the BUILDER who shall appoint an umpire at the commencement of the reference, and award of the arbitrator/umpire shall be final and conclusive specially as between the parties and this clause shall be deemed to be the submissions within the meaning of the Arbitration and Conciliation Act, 1996 and its statutory modification thereof from time to time. In the event of breach of this Development Agreement and or Abuse/misuse of General Power of Attorney, either by the BUILDERS or the LAND OWNERS the defaulting party will be decided by the Arbitrator or Competent Court under the terms and conditions of this agreement within Ranchi the Capital of Jharkhand State.” 8. It is argued by the learned counsel on behalf of the petitioner that there are two parts of the above mentioned arbitral clause. The first is with regard to the construction of the term of agreement, which is to be referred the matter for arbitration, and then there is second part which is with regard to breach of terms of the agreement. Here, there was no dispute with regard to the terms of agreement, so there was no requirement to refer to arbitration. As it was involving breach of the development agreement, therefore it was not mandatorily to be referred for arbitration, which will be evident from use of the expression “and or Abuse/misuse of General power of Attorney either by the builder or the land owner, the dispute was decided by the Arbitrator” in the said agreement. 9. It is submitted by learned counsel that in view of the use of word ‘OR’ in this clause, the power of the Trial Court to adjudicate the dispute was not foreclosed. It is argued that all the parties have not been made party to the arbitral agreement, and therefore arbitrator cannot decide the dispute affecting the right and interest of the parties who were not parties to the suit. Law is settled that non-signatories cannot be bound by the arbitral award, when they are not party to the arbitral agreement. Partial bifurcation of suit, so as to refer a part of suit to arbitration is impermissible. Reliance is placed on [ (2023) 7 SCC 193 ], Gujarat Composite Limited vs. A Infrastructure Limited and Ors. 10. Learned counsel for the petitioner in support of his submission has further relied upon the judgment rendered in the case of BGM and M- RPL- JMCT (JV) vs. Eastern Coalfields Limited , reported in 2025 SCC OnLine SC 1471. 11. Learned counsel appearing on behalf of the opposite party no. 1 and 2 submits that the dispute was both about the construction of the terms of the agreement as well as the rights and liabilities arising therefrom. 12. 11. Learned counsel appearing on behalf of the opposite party no. 1 and 2 submits that the dispute was both about the construction of the terms of the agreement as well as the rights and liabilities arising therefrom. 12. The second part of the clause specifically refers that the matter had to be referred to the Arbitrator and, therefore, there was no infirmity in the impugned order. It is also submitted that the reliefs for which suit has been filed cannot be adjudicated by the Arbitrator. Learned counsel for the Opp. Party(s) in support of his submission has relied upon the following authorities:- (i) (2007) 3 SCC 686 [Agri Gold EXIMS Ltd. vs. Sri Lakshmi Knits & Wovens and Ors.]. (ii) (2024) 6 SCC 630 [Asian Avenues Private Limited vs. Syed Shoukat Hussain] (iii) (2025) 2 SCC 147 at Para-81 [Ajay Madhusudan Patel vs. Jyotrindra S. Patel]. 13. Having considered the submissions advanced on behalf of both the sides and perusing the materials on record, the arbitral clause in the said agreement is also not in dispute. Reference to arbitration is contested by the Plaintiff and not by the other defendants, who were not party to the development agreement. Dispute is essentially between the Plaintiff who is the landowner and Defendant Nos 1 &2 who are the developers, about the claim of a constructed shop on the front side. 14. Whether there was any express or implied term in the development agreement for constructing a shop for the Plaintiff, in view of the express term to seek permission of the plaintiff to refer the building plan for sanction by the Municipal Corporation, lies in the heart of the dispute. 15. Therefore, the plea that dispute did not involve the construction of the terms of agreement is devoid of merit. Had there been an express term for construction of the shop, then it could have been legitimately contended that it was all about breach of the terms of agreement. Counsel on behalf of OP No.1 & 2 is right that dispute was about construction of the terms of agreement, and claim of breach if any of the said term, Arbitral clause adequately covers the area of dispute. 16. Counsel on behalf of OP No.1 & 2 is right that dispute was about construction of the terms of agreement, and claim of breach if any of the said term, Arbitral clause adequately covers the area of dispute. 16. As discussed above, since the dispute covers mainly the owner of land/ Plaintiff and the developer, therefore the other parties having not joined the development agreement, it does not affect the merit of the case for referring the dispute to arbitration. Law is settled that where there is an arbitration agreement, reference to arbitrator is pre-emptory in nature. [See Agri Gold Exims Ltd. supra]. Further even a non- signatory can be bound to the arbitral award in given facts and situation as held in Ajay Madhusudan Patel VS Jyotrindra S. Patel, (2025) 2 SCC 147 wherein it has been held as under:- “It is evident that the intention of the parties to be bound by an arbitration agreement can be gauged from the circumstances that surround the participation of the non-signatory party in the negotiation, performance, and termination of the underlying contract containing such an agreement. Further, when the conduct of the non-signatory is in harmony with the conduct of the others, it might lead the other party or parties to legitimately believe that the non-signatory was a veritable party to the contract containing the arbitration agreement. However, in order to infer consent of the non-signatory party, their involvement in the negotiation or performance of the contract must be positive, direct and substantial and not be merely incidental. Thus, the conduct of the non- signatory party along with the other attending circumstances may lead the referral court to draw a legitimate inference that it is a veritable party to the arbitration agreement”. 17. Under the circumstance, as clause to refer the dispute to arbitration constituted part of the development agreement, therefore the trial Court was right in referring the matter for arbitration. For the reasons discussed above this Court does not find any infirmity in the impugned order. Civil Miscellaneous Petition stands dismissed. Pending I.A., if any, also stands disposed of.