FAO No. 583 of 2010 (O&M) 1 In the High Court for the States of Punjab and Haryana at Chandigarh. Decided on May 21,2010. Ramji Bharany and others -- Appellants vs. M/S.Ambience Developers and Infrastructure Pvt.Ltd through its Director -- Respondent CORAM: HON'BLE MR.JUSTICE RAKESH KUMAR JAIN Present: Mr.M.L.Sarin,Sr.Advocate,with Ms.Jaishree Thakur,Advocate, for the appellants Mr.P.K.Aggarwal,Advocate,for the respondent Rakesh Kumar Jain, J, This appeal is directed against order dated 22.12.2009 passed by learned Addl.District Judge, Fast Track Court, Gurgaon, by which an application filed by the appellants under Section 9 of the Arbitration & Conciliation Act,1996 (for short, the Act), has been dismissed on the ground that application is not maintainable as no order could be passed sans an arbitration clause much less a duly executed agreement. The respondent had floated a Scheme of shopping mall in the name and style of AMBI Mall, Gurgaon, situated at Ambience Island Delhi-Jaipur National Highway (NH-8), Gurgaon, Haryana. The shopping FAO No. 583 of 2010 (O&M) 2 mall is hereinafter referred to as the 'Mall'. The appellant jointly agreed to purchase a commercial space from the respondent in the Mall. The respondent provided to the appellants a document containing detailed terms and conditions for allotment/purchase of commercial space. The respondent vide allotment letter dated 5.3.2004 accepted the terms and conditions and allotted a shop bearing No. 178 having a super area of 2,230.47 square ft. for a basic sale price of Rs. 4,240/- per square ft. and a further amount of Rs. 500/-per sq. ft. towards interest being maintenance security. The total consideration was Rs.1,05,72,427.80. Later on, vide letter dated 13.5.2005, due to change in the lay out plan, shop No.178 was changed to shop No. F-166 with a super area of 2478.30 square ft. The respondent enclosed a fresh payment plan, as per which the amount was required to be paid to the tune of Rs.,1,17,47,142/-. The respondent requested the appellants to make balance payment of Rs. 32,56,713/-. Again, vide letter dated 10.11.2005, the respondent informed the appellants that due to change in the layout plan, shop No. F-166 allotted to the appellants was changed to F-153 with an increased super area of 2542.03 square ft. and enclosed a new payment plan for a total sale consideration of Rs.1,20, 49,222/-. Vide letter dated 09.9.2005, the appellants were informed to make payment of Rs. 12,95,328/-. The appellants had thus made substantial payment of Rs.1,12,03,504/- against a total sale consideration of Rs.1,20,49,222/-. The payments so made were always accepted by the respondent without any protest or demur. The respondent, in terms of the conditions of allotment, was required to offer possession of the commercial space and execute the Commercial Space Buyer's Agreement but the respondent failed to execute the required documents despite having received FAO No. 583 of 2010 (O&M) 3 Rs.1,12,03,504/- as far back as on 21.4.2006 and the appellants were to pay a meagre amount of Rs.8,45,718/-, out of which Rs.2,69,455/- was payable at the time of offer of possession of the Commercial Space. The Mall was constructed in the month of November, 2007. The respondent was required to execute the necessary documents and hand over possession but the appellants came to know, vide letter of the respondent dated 22.10.2007, that respondent unauthorisedly, without the permission of the appellants, has inducted one tenant, namely, M/S.Zardozi Retailers Pvt.Ltd. in the commercial space allotted to them and has unilaterally changed the shop No. F-153 to F-160. Then the appellants, by notice, invoked the Arbitration Clause No. 38 of the terms and conditions of the allotment for referring their claims to the Sole Arbitrator, who is a Member of Indian Council of Arbitration. The appellants vide letter dated 7.12.2009, appoitned Mr.Ashwani Kumar Mata, Senior Advocate as Arbitrator, who is also a Member of Indian Council of Arbitration. Meanwhile, they also filed an application under Section 9 of the Act for appointment of a Receiver to take possession of Commercial Space No.F-160 in the Mall belonging to them and to restrain the respondent from creating any third party rights over that property and also to direct them to deposit in the Court the entire amounts illegally recovered by them as rent from the tenant. In reply to the application filed under Section 9 of the Act, receipt of amount of Rs.1,12,03,504/- was admitted. However, it is alleged that the appellants have no right, title or interest in respect of Commercial Space- F-160 in the Mall in respect of which an interim order has been sought. It was alleged that provisional allotment was made vide letter of FAO No. 583 of 2010 (O&M) 4 allotment dated 05.3.2004 subject to the terms and conditions given in the Commercial Space Buyer's Agreement which has not been signed and executed and as such, there was no complete contract of sale between the parties. It was further alleged that as per the terms and conditions of the agreement, the respondent was entitled to rent out the property to any national/international brand and the allottees were not to take physical possession of the same nor were entitled to put the same to its own use. Accordingly, vide its letter dated 22.10.2007, the respondent informed the appellants that the said site, provisionally allotted to them had been allotted to M/S.Zardozi Retailers Pvt. Ltd. on a monthly rent of Rs.2,04,459.75 besides electricity and other expenses and maintenance charges. It was alleged that the respondent has always been ready and willing and still ready to refund the entire amount received from the appellants alongwith applicable interest and in the absence of any enforceable agreement between the parties, neither arbitration clause can be invoked nor application under Section 9 of the Act could be maintained. While deciding application under Section 9 of the Act, learned Court below has observed that material question for consideration is “as to whether there is any arbitration clause or agreement between the parties?. It was observed that the appellants did not produce any duly executed agreement between the parties. It was observed that the appellants have relied upon document Annexure .P-3 on record which is an application for allotment of Commercial Space to which terms and conditions have already been annexed in which Clause 38 pertains to arbitration. Learned Court below has held that document Annexure P-3 FAO No. 583 of 2010 (O&M) 5 has not been signed by both the parties and is not an agrement, but an application. It was obseved that no Commercial Space or Buyer's Agreement has been signed between the parties. There is no complete contract between the parties. On these premises, it was held that in the absence of bilateral agreement executed between the parties, the application is not maintainable and in case, the appellants claim to have been cheated or defrauded by the respondent, efficacious remedy is registration of a criminal case. While attacking the order of the Court below, Mr.M.L.Sarin, learned senior counsel appearing for the appellants has drawn the attention of this Court to document Annexure P-4, which is a letter dated 05.3.2004 which reads as under:- “To Mr. Remji Bharany and Mr.Mahesh Bharany 14, Sunder Nagar Market, New Delhi: & Mr & Mrs.Janak Raj Seth and M/s. Seth Enterprises Pvt.Ltd, 30,Maqbool Road, Amritsar. Subject: Allotment letter for the booking of Shop No.176 at 'Ambi Mall' in Ambience Island, NH-8, Gurgaon,Haryana. Dear Sir.Madam, This has reference to our meeting held at our corporate office, we are pleased to allot you Shop No 176, on the First Floor at 'Ambi Mall in Ambience Island, NH-8, Gurgaon, Haryana. The super area of Shop No. 176 is 2230.47 sq. ft. equivalent to 207.22 sq.mtrs.. The basic sale price will be Rs.4240/- per sq.ft. Which was mutually agreed in between us during the meting. In addition, interest bearing maintenance security deposit Rs.500/- per sq.ft, bulk electricity charges etc. as per policy of the company will be charged extra. Detailed terms and conditions shall be given in the standard printed Space Buyer's Agreement to be signed and FAO No. 583 of 2010 (O&M) 6 executed by you in due course of time. Please feel free to contact the undersigned for any further clarifications. Please sign and return the duplicate of this letter as token of acceptance of the offer. Thanking you and assuring you of the best services at all times. Regards. For Ambience Infrastructure Pvt.Ltd Sd/- (Raj Singh Gehlot) Director Note: Copy of the Instalment Plan is enclosed” He further referred a letter dated 13.5.2005 (Annexure P6) written by the respodnent which reads as under:- Dated : 13.05.2005 To, Mr. Ramji Bharany & Mr. Janak Raj Seth No. 14, Sunder Nagar Market, No.30, Maqbool Road, Amritsar. Sub: Payment of Instalments. Ref: Shop No.F-166 (previously F-178) on First Floor in “Ambi Mall” at Ambience Island, NH-8, Gurgaon. Dear Sir, We are pleased to inform you that the construction of 'Ambi Mall' at Ambience Island, NH-8, Gurgaon is going on in full swing as per plan. So far we have completed the construction of Second Floor and structure work of the Third Floor is in progress. This is further for your information that due to change in the layout plan your Shop No. has become F-166 instead of F-178 and the area of the said FAO No. 583 of 2010 (O&M) 7 Shop No. F-166 has become 2478.30 sq. ft. The following payment has already become due to us against the said Shop as per detail given below: - Particulars Amount (Rs.) Total amount due upto completion of Second Floor Roof Slab 73,55,593.00 Less: Total amount received till date 40,98,880.00 Total amount outstanding as on date 32,56,713.00 It is, therefore, requested that the said amount of Rs.32,56,713/- may please be remitted to us on or before 25.05.2005 by way of Bank Draft or MICR Cheque payable at New Delhi, favouring 'Ambience Infrastructure Private Limited'. We are enclosing herewith a fresh payment plan of the abovesaid Retail Shop No.F-166, which you are requested to follow to make the payment of remaining instalments. This may please be noted that timely payment of the instalments shall not only help us in completing the proposed Mall as per the schedule but also save you from the penal interest etc. on delayed instalments. We are sure that you will be prompt enough in complying with the stated payment plan and schedule in order to avoid action including cancellation of the abovesaid shop. Thanking you and assuring you of our best services at all times. Thanking you, Yours faithfully, For Ambience Infrastructure Pvt. Ltd. Sd/- Authorised Signatory FAO No. 583 of 2010 (O&M) 8 Encls.: As above CC: Mr. Janak Raj Seth Note: Please note that out of total outstanding amount of Rs.32,56,713/- share of Rs.16,28,356.50 is to be paid by Mr. Janak Raj Seth.” It is further submitted by learned counsel for the appellants that in a similar circumstance, commercial space was allotted by the respondent to M/S. Sandhar Estates Private Limited. Allotment letter dated 17.4.2004 (Annexure R-1) is reproduced below:- “To, M/s Sandhar Estates Pvt. Ltd. C/o M/s Sandhar Locking Devices, Sector-18, Gurgaon. Sub: Allotment of Space for Retail Shop in “Ambi Mall” at Ambience Island on Delhi-Jaipur National Highway (NH-8), Gurgaon, Haryana. Dear Sir/Madam, In response to your application dated ____________ for allotment of space for Retail Shop in “Ambi Mall” at Ambience Island on Delhi-Jaipur National Highway (NH-8), Gurgaon, Haryana and your agreeing to the terms and conditions enumerated therein, we are pleased to allot you Retail Shop No. 177, having approximately 2232.02 sq. ft. (207.36 sq. mtr.) of Super Area of space on First Floor under Down Payment/Instalment Payment Plan as per details given in the enclosed Payment Plan. Kindly note that the above allotment is subject to your execution of the Commercial Space Buyers' Agreement on Company's standard format, contents of which have been explained and understood by you and your compliance of all the FAO No. 583 of 2010 (O&M) 9 terms and conditions as given in your application for allotment of space and due performance and compliance of all your obligations as contained in the said Application Form and Commercial Space Buyers' Agreement. Please sign the duplicate copy of the letter of allotment and the payment plan as a token of acceptance. Thanking you, Yours faithfully, For Ambience Infrastructure Pvt. Ltd. Sd/- (Raj Singh Gehlot) Director” Learned counsel submits that neither the agreement in the case of the appellant was signed by the respondent nor in the case ofM/S.Sandhar Estates Pvt.Limited. In both the cases, the agreements (Annexure P-3 and Annexure R-2) have been signed by the Buyers only. However, when cheated at the hands of the respondent, M/S. Sandhar Estates Pvt.Ltd, filed a Civil Suit for a decree of possession by way of specific performance. The respondent in order to defeat the right of the said appellants, namely M/S. Sandhar Estates Pvt.Ltd took a stand in the written statement that Civil Suit is not maintainable since there is a arbitration clause in the application for allotment of space. Learned counsel for the appellants has further submitted that incidently, this plea has been taken by them in the grounds of appeal at page 24 of the paper book and the respondent has filed a reply to the grounds of appeal admitting the averments made therein. For ready reference, the plea taken in the memo of appeal and the reply thereto, are FAO No. 583 of 2010 (O&M) 10 reproduced below:- “ In fact, even in the Ambi Mall the Respondent has defrauded other allottees and with a malafide intention cancelled their allotment of various commercial spaces after receiving the entire consideration amount. It is submitted that few of the said allottees have prefered civil suits in the District Courts, Gurgaon for decree of possession by specific performance in respect of the respective commercial spaces allotted to them. The Respondent in those cases has filed it's written statement wherein it has taken a categorical objection that the said civil suits are not maintainable since there is an arbitration clause in the application for allotment of the commercial space. In para 32 of the said written statements, the Respondent contends as follows”. “32. Para 32 of the plaint as alleged is wrong and denied. It is,however, not denied that the application filed by the plaintiff for the allotment of the commercial space contained an arbitration clause. The above suit is liable to be referred to the Arbitrator under Section 8 of the Arbitration and Conciliation Act. It is wrong and denied that the Arbitraion Agreement is not applicable or that this Hon'ble Court should try and decide the present suit. It is wrong and denied that the arbitration clause is not in writing or that the matter is not liable to be referred. It is wrong and denied that the shop in question is lying vacant. The shop in question has already been let out to the tenant. It is wrong and denied that the FAO No. 583 of 2010 (O&M) 11 defendants would let out the property to some imaginary party as falsely alleged”. In reply to the above para, it is stated by the respondent as under:- “That the petitioners have filed written statement of the respondent and application form in the case of “M/s Sandhar Estates Pvt. Ltd. V/s. M/s. Ambience Developers and Infrastructure Pvt. Ltd. & Ors.” For the first time before this Hon'ble Court. The said documents were not on the original record of the proceedings before the Learned Additional District Judge. The said case was materially different. In the said case, the allotment was made on the basis of the formal application moved by M/s. Sandhar Estates Pvt. Ltd. Copy of the incomplete application of M/s. Sandhar Estates Pvt. Ltd. has been filed by the petitioners. The petitioners have not filed the letter of allotment. Copy of the letter of allotment in the case of M/s Sandhar Estates Pvt. Ltd. is annexed herewith and marked as Annexure – 'R-1'. Copy of the application for allotment in the case of M/s. Sandhar Estates Pvt. Ltd. is annexed herewith and marked as Annexure- 'R- 2'. In the letter of allotment it is clearly stated that the said allotment has been made on the basis of the application of the allottee and that the allottee would be bound by the terms and conditions as given in the application for allotment of space etc. In the present case, in the allotment letter it has been clearly stated that the allotment has been made on the basis of the personal meeting and not on the basis of any application filed by the petitioners. The allotment letters in the two cases are materially different”. Learned counsel for the appellants has submitted that the respondent is trying to wriggle out of the written statement filed in the case of M/S.Sandhar Estates Pvt.Ltd by alleging that the allotment letter of their FAO No. 583 of 2010 (O&M) 12 case is different, because the alleged allotment letter relied upon by the appellants and in the case of M/S.Sandhar Estates Pvt.Ltd are only signed by the purchasers and not the seller. Therefore, the respondent cannot take the plea that allotment letters were different because each and everything is the same as the allotment letter is on a printed form application. Thus, the learned counsel for the appellant submits that the respondent cannot be allowed to blow hot and cold in the same breath. He further submitted that even if the agreement is signed only by the buyers/appellants, that would be deemed to be an agrement in the eyes of law as the same has been acted upon by the respondent who has received almost the entire amount of the shop to the tune of Rs.1,12,03,504/- by demanding it from the appellants as is apparent from document Annexure P-6. In this regard, reliance has been placed on a decision of the Apex Court in the case UNISSI (INDIA) PRIVATE LIMITED Vs. POST GRADUATE INSTITUTE OF MEDICAL EDUCATION AND RESEARCH (2009) Supreme Court Cases 107. On the other hand, Mr.P.K.Aggarwal, learned counsel for the respondent, while defending the order passed by the Court below, has vehemently argued that Section 7 of the Act provides as to what constitutes a valid agreement. It is submitted that case of the appellants cannot be equated with the case of M/S.Sandhar Estates Pvt.Ltd because in the case of the appellants, none of the columns has been filled up, whereas in the case of M/S.Sandhar Estates Pvt.Ltd, the form is duly filled up. He further submitted that the appeal has been filed by Ramji Bharany whereas he is not the signatory to the agreement which is unilateral. It is alleged that the appellants have been asking for refund of their amount FAO No. 583 of 2010 (O&M) 13 from the respondent who is ready and willing to return the same with applicable interest and also with the amount of rent recovered from M/S. Zardozi Pvt.Ltd but the application is not maintainable in the absence of legally executed agreement. In this regard, learned counsel has relied upon a decision of the Supreme Court in the case of Jagdish Chander Vs.Ramesh Chander and others (2007) 5 Supreme Court Cases 719. In rebuttal, Mr.Sarin, has submitted that case of the appellants is similar to the case of M/S.Sandhar Estates Pvt.Ltd because it would hardly make any difference as to whether form is filled up or not because the question involved is as to whether said agreement can be taken into consideration as a legally executed agreement in the absence of signatures of the respondent, which is the position in both the cases. It is further submitted that so far document Annexure R-1 is concerned, it is in favour of M/S.Sandhar Estates Pvt.Ltd which is having blank spaces. I have heard learned counsel for the parties and have perused the record with their able assistance. In this case, admittedly, an amount of Rs.1,12,03,504/- out of the total sale consideration of Rs,1,20,49,222/- has already been paid by the appellants to the respondent as far back as on 21.4.2006 and were liable to pay a very small amount of Rs.8,45,718/-. The amount paid by the appellants is at the instance of the respondent which is apparent from Annexure P-6 as the respondent has been asking for payment from the appellants during construction of the Mall by unilaterally changing their commercial space in the name of change in lay out plan by claiming increased amount of consideration. In my view, this fact alone is sufficient to hold that there was bilateral agreement between the parties, though terms FAO No. 583 of 2010 (O&M) 14 and conditions are only signed by the purchasers/appellants. In support of my view, I rely upon the decision of the Supreme Court in UNISSI (INDIA) PRIVATE LIMITED (Supra) in which the facts were that Post Graduate Institute of Medical Education and Research (for short,PGI) floated a tender for the purchase of pulse oxymeters on 21.12.2000, the format of which contained an arbitration clause. The appellant gave an offer for the tender on 15.1.2001 which was accepted by PGI. Purchase orders were placed and in compliance with the said order, the appellant had supplied equipments. The delivery of equipments was also accepted by PGI and the machines were installed. PGI demanded the execution of an agreement containing an arbitration clause on a non-judicial stamp paper duly signed. The appellant in the said case signed the agreement and sent it to PGI but the signature of the authorities of PGI was never acquired. In these circumstances, the Supreme Court has held that:- “Keeping the aforesaid principles, as quoted hereinabove, in the aforesaid decisions of this Court in mind, in fact what constitutes an arbitration agreement between the parties, we have to examine whether there exists an arbitration agreement between the parties or not in the facts and circumstances of the case. Let us, therefore, consider the gist of the facts involved in this case. Tender Enquiry No. 2PGI/OGL/2K/6281 dated 21.12.2000 for purchase of pulse oxymeters was floated by PGI. It is an admitted position that the appellant submitted their tender vide their Offer No. UIPL/331177/00-01 dated 15.01.2001. The tender of the appellant was accepted by PGI vide their Letter No. PGI/P- 61/02/477/11936-51 dated 29.09.2002 for supplying forty-one FAO No. 583 of 2010 (O&M) 15 pulse oxymeters to their different departments. The tender documents themselves contain an arbitration clause and by reason of acceptance of the tender of the appellant by PGI, it must be held that there was a valid arbitration agreement between the parties. The appellant supplied forty-one pulse oxymeters and the receipt thereof was duly acknowledged on behalf of PGI on the delivery challans. The service/installation reports of the aforesaid machines were duly signed on behalf of PGI. In the letters issued by PGI, there was an apparent acknowledgment of supply of the aforesaid meters by the appellant and also reference to the aforementioned tender enquiry number. It is an admitted position that the appellant had sent the agreement containing the arbitration clause, as per the format provided by PGI, after duly signing the same on requisite value of stamp paper for signing of the same by PGI. PGI though admittedly received the same, did not send back the agreement to the appellant after signing it as per the agreement between the parties. PGI admittedly had used the machines for about an year and thereafter returned the same to the appellant. Subsequently, the bank guarantee furnished by the appellant for Rs. 2,13, 160 and the earnest money deposit of Rs.45,000/- was encashed and forfeited by PGI. In view of the aforesaid facts and the correspondences between the parties, particularly the tender offer made by the appellant dated 15.1.2001and supply order of PGI dated 29.09.2002, and, in our view, to constitute an FAO No. 583 of 2010 (O&M) 16 arbitration agreement between the parties and the action taken on behalf of the appellant and in view of Section 7 of the Act and considering