*1* 20-119-10 srj IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION APPLICATION NO.119 OF 2010 M/s. Time Gold Realties Pvt. Ltd. ..Applicant. v/s. Deepak C. Shah & Another ..Respondents. Mr. P.M.Shah, for Applicant. Mr. Pranav Sampat i/b. P.P.Kulkarni, for Respondents. CORAM : S.J. VAZIFDAR, J. DATE : 24 th JANUARY, 2011. P.C. :- 1 This is an application under section 11 of the Arbitration and Conciliation Act, 1996. 2 The parties admittedly executed the Memorandum of Understanding dated 12th November, 2009. Clause 24 thereof admittedly contains an arbitration agreement. The M.O.U. is a development agreement. 3 The only defence to this application is that the M.O.U. is an agreement to enter into an agreement and, is therefore, not enforceable. The submission is based on clauses 4,8,11 and 16 of the M.O.U. which read as under:- *2* 20-119-10 “4. Party of the First Part shall negotiate with the 12 Tenants and 2 Garage Owners and provide them with Permanent Alternate Accommodation on structural Ownership basis. The area at present occupied by each of the tenants of flat is 570 Sq.ft. approx. Carpet and as per the settlement with the tenants of flat occupiers the area of 70 Sq.ft. shall be allotted to them free of cost on ownership basis. Further the Developer shall pay to each of tenants of flat a sum of Rs.35,000/- per month as rent compensation for procuring temporary alternate accommodation during the period of construction.” “8. The Party of First and Second Part shall execute separate Agreement for Permanent Alternate Accommodation for the 12 Tenants on structural Ownership basis. The Party of Second Part shall also execute necessary agreement for the owners flat being entire floor on 5th or 6th floor of the proposed new building free of cost.” “11. The Owners shall settle the claim of one Mr. Paresh Pujara of M/s. Pujara Developers and get the Development Right Agreement and/or MOU cancelled and obtain an NOC at their cost and expenses within a period of 30 Days hereof.” “16. The Developers do hereby declare and confirm that they shall get the plans sanctioned after the execution of regular Development Agreement duly registered with Sub-Registrar of Assurances.” 4 None of these clauses renders the agreement a mere agreement to enter into an agreement. The rights under each of these clauses are enforceable by the parties. 5 Under clause 4, the Respondents are bound to negotiate with the tenant and to provide them permanent alternate accommodation. The effect of their failing to do so is another matter altogether. 6 Clause 8 of the M.O.U. requires the parties to execute separate agreements with the tenants. This obviously is in pursuance inter alia, of clause 4 of the agreement. Here again, the clause is enforceable. The *3* 20-119-10 mere fact that the party may not do so and the effect thereof is a different matter. 7 Similarly, under clause 11, it is the Respondents’ obligation to settle the claim of a third party. Merely because the Respondents do not do so or are unable to do so, it cannot be stated that the agreement is not enforceable. 8 Clause 16 is the usual provision in a development agreement to the extent that it requires the plans to be sanctioned after a regular development agreement is executed. The requirement under clause 16 for the parties to execute the regular development agreement also does not rendered the M.O.U. a mere agreement to enter into an agreement. Considering the nature of the M.O.U., the execution of a formal agreement was not a term of the contract. All that the parties contemplated was to execute the development agreement formally. This is evident from the fact that all the necessary terms and conditions including the consideration to constitute a concluded agreement between the parties have been stipulated in the M.O.U. 9 It is true that by an ad-interim order dated 22th June, 2006 in Arbitration Petition No.939 of 2010 filed by the Applicant under section 9, the learned Judge observed: “ by this M.O.U., parties have agreed to entered into agreement”. This observation was made at the ad-interim stage and is, therefore, not binding at the final hearing of this application. Further, it is pertinent to note that the learned Judge in fact, ordered the Respondents to deposit the advance payment of Rs.30 lakhs received by them. If there was no agreement, the learned Judge would not have *4* 20-119-10 passed the said order in the application under section 9. Thus, the earlier observation was clearly only prima facie. 10 In this view, it is not necessary to decide whether the arbitration clause contained in an agreement to into an agreement can be invoked. 11 The arbitration application is, therefore, disposed of by appointing Mr. Shailesh Shah, an Advocate of this Court, as the sole arbitrator to decide the dispute between the parties.