Arbitrator to be appointed even after respondent’s explicit refusal of the proposed arbitrator : Delhi High Court

IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 26.07.2021 ARB.P. 558 2021 RAJ SUJAN & ANR. Mr. D. Abhinav Rao Adv. Petitioners MS GEAR UP BUILDERS PVT LTD & ORS. Respondents Through Mr. Navneet Dugar Adv. HON BLE MR. JUSTICE SURESH KUMAR KAIT JUDGMENTThe hearing has been conducted through video conferencing. The present petition is preferred by the petitioners under Section 11 5) and 11 of the Arbitration & Conciliation Act 1996 seeking appointment of an Arbitrator for adjudicating the disputes between the terms of the Development Agreement cum GPA dated 14.05.2012. The petitioners herein are the absolute owners of Plot No. 21 admeasuring 1076.40 sq. yards equivalent to 900 sq. mtrs. situated at Huda Enclave Jubilee Hills Hyderabad. ARB.P. 558 2021 3. The respondent No. 1 M s. Gear Up Builders Limited is a company registered under the Companies Act and respondent No. 2 Mr. B.V. Rajesh is the Managing Director of the respondent No. 1 company. Petitioners entered into a registered Development Agreement cum GPA dated 14.05.2012 with the respondent No. 1 for development on the aforesaid property of petitioners and respondent No.2 had signed the same on behalf of respondent No. 1. According to terms of aforesaid Agreement respondents were required to complete the construction within 21 months or in any case within a grace period of 3 months i.e. by 23.10.2014. However respondents were unable to complete the project on time and sought for further extension of time and the same was extended by 5 months and in this way the construction was to be completed by 31.03.2015. But even after extension of time the construction was not completed. According to petitioners various communications were made to respondents through email and respondents kept on assuring petitioners that the construction will be completed at the earliest. But after causing substantial delay the respondents abandoned the work on site and refused to engage with the petitioners and in such circumstances petitioners were constrained to send legal notice dated 15.03.2021 through their counsel to ARB.P. 558 2021 respondent No. 1 seeking appointment of Sole Arbitrator. However respondent No. 1 through its counsel sent a reply dated 27.03.2021 declining appointment of the proposed Arbitrator mentioned in the aforesaid notice dated 15.03.2021. At the hearing learned counsel for petitioners submitted that respondents have abandoned the work of petitioners and various disputes have arisen between them and these disputes can be resolved in terms of Clause 38 of Development Agreement cum GPA dated 14.05.2012. Further submitted that petitioners have claim of Rs.2 32 09 336 against the respondents. The aforesaid submission of petitioners’ counsel is disputed by counsel for respondents however existence of Development Agreement cum GPA dated 14.05.2012 is not disputed. I have heard learned counsel for the parties and have gone through the The relevant Clause 38 of Development Agreement cum GPA dated material placed on record. 14.05.2012 reads as under: “In the event of any dispute arising between the parties herein touching these presents such dispute shall be ARB.P. 558 2021 referred to a Sole Arbitrator duly appointed by both the parties and his her award shall be final and binding on both the parties. The venue of arbitration shall be New Delhi and the Arbitration and Conciliation Act 1996 shall apply.” the provisions of In the aforesaid view of the matter the present petition is allowed. Accordingly Justice H.R.Malhotra (Mobile: 9311510400) is appointed Sole Arbitrator to adjudicate the dispute between the parties. 11. The fee of the learned Arbitrator shall be governed by the Fourth Schedule of the Arbitration and Conciliation Act 1996. 12. The learned Arbitrator shall ensure compliance of Section 12 of Arbitration and Conciliation Act 1996 before commencing the arbitration. 13. Needless to say all issues are left open for agitation by the parties and consideration by the learned Arbitrator. 14. A copy of this order be sent to learned Arbitrator for information. 15. With aforesaid directions the present petition is accordingly disposed SURESH KUMAR KAIT) of. JULY 26 2021 ARB.P. 558 2021 

Summary: Resolving disputes that are bound to arise between parties in contract through arbitration clause is an age-old practice, however in the situation where one party refuses to comply and respect the arbitration clause in the contract, it provides the other party the right to seek its invocation in court and have a arbitrator be rightfully appointed. This was held in the judgment passed by a single bench judge comprising HON’BLE MR. JUSTICE SURESH KUMAR KAIT, in the matter of RAJ SUJAN &amp; ANR V. MS GEAR UP BUILDERS PVT LTD &amp; ORS.( ARB.P. 558/2021) dealt with an issue where the petitioner filed for appointment of an arbitrator in compliance to terms of the Development Agreement-cum-GPA, in the situation of respondent’s refusal of appointment of the proposed Arbitrator the petitioner to resolve the disputes. The petitioners are the absolute owners of a plot in Jubilee Hills, Hyderabad, for which they had entered into a registered Development Agreement-cum GPA dated 14.05.2012 with the respondent for development on the aforesaid property of petitioners. The respondents were required to complete the construction within 21 months or in any case within a grace period of 3 months, i.e. by 23.10.2014. However, respondents were unable to complete the project on time and sought for further extension of time and the same was extended by 5 months, and in this way, the construction was to be completed by 31.03.2015. But even after extension of time, the construction was not completed. According to petitioners, various communications were made to respondents through email and respondents kept on assuring petitioners that the construction will be completed at the earliest. But after causing substantial delay, the respondents abandoned the work on site and refused to engage with the petitioners and in such circumstances, petitioners were constrained to send legal notice dated 15.03.2021 through their counsel to the respondents seeking appointment of Sole Arbitrator. However, respondent through its counsel, sent a reply dated 27.03.2021 declining appointment of the proposed Arbitrator mentioned in the aforesaid notice dated 15.03.2021.  Counsel for petitioners submitted that respondents have abandoned the work of petitioners and various disputes have arisen between them and these disputes can be resolved in terms of Clause-38 of Development Agreement-cum-GPA dated 14.05.2012. Further submitted that petitioners have claim of Rs.2,32,09,336/- against the respondents. The respondents disputed the submission of the petitioners, however they didn’t dispute the existence of Development Agreementcum-GPA dated 14.05.2012.