A dispute between parties must be referred to an arbitrator if the development agreement between them calls for it: High Court of Delhi

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: A development agreement is a legally binding contract drafted between parties for the purpose of developing a property. In cases where an arbitration clause has been included in the agreement between the parties, any dispute between them must be referred to an arbitrator. This was held in the case of Raj Sujan &amp; Another v Ms Gear Up Builders Pvt. Ltd. &amp; Others [ARB.P. 588/2021] by a bench of the High Court of Delhi consisting of Justice Suresh Kumar Sait on the 26th of July 2021. The petitioner, Raj Sujan is the owner of Plot No. 21 situated at Huda Enclave in Hyderabad. The respondent, Ms Gear Up Builders Pvt ltd. is a company with whom the petitioner entered into a registered Development Agreement-cum-GPA on the 14th of May 2012 for the development of the mentioned property. As per the terms of the agreement, the respondents were required to complete the construction within a period of 21 months or in any case within a grace period of 3 months, i.e. by 23rd October 2014. However the respondents were unable to finish the construction within the grace period and requested a further extension of another 5 months, meaning the project would take till 31st March 2015 to be completed. However work remained pending even after the extension period got over. Eventually after s substantial delay, the respondents abandoned the work on site and refused to engage with the petitioners. The petitioners sent a legal notice to the respondents seeking the appointment of a Sole Arbitrator, in consonance with Clause 38 of the Development Agreement-cum-GPA which states that “In the event of any dispute arising between the parties herein touching these presents, such dispute shall be 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 provisions of the Arbitration and Conciliation Act, 1996 shall apply.” As the respondents refused to allow the appointment of the Arbitrator, the petitioners filed the present petition under Section 11(5) and 11(6) of the Arbitration &amp; Conciliation Act 1996.