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

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 & Another v Ms Gear Up Builders Pvt. Ltd. & 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 & Conciliation Act 1996.

Justice Suresh Kumar Kait came to the conclusion that “In the aforesaid view of the matter, the present petition is allowed. Accordingly, Justice H.R.Malhotra (Retd.) is appointed Sole Arbitrator to adjudicate the dispute between the parties. The fee of the learned Arbitrator shall be governed by the Fourth Schedule of the Arbitration and Conciliation Act, 1996. The learned Arbitrator shall ensure compliance of Section 12 of Arbitration and Conciliation Act, 1996 before commencing the arbitration. Needless to say, all issues are left open for agitation by the parties and consideration by the learned Arbitrator.”

Click here for the judgement

Leave a Reply

Your email address will not be published. Required fields are marked *