Arbitrator to be appointed even after respondent’s explicit refusal of the proposed arbitrator : Delhi High Court
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 & ANR V. MS GEAR UP BUILDERS PVT LTD & 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.
After hearing both the parties The hon’ble Delhi High court allowed the petition and accordingly appointed Justice H.R.Malhotra (Retd.) as arbitrator to arbitrate on the disputes between the parties under Section 11 (5) and 11 (6) of the Arbitration & Conciliation Act, 1996 The court also held that the Arbitrator shall ensure compliance of Section 12 of Arbitration and Conciliation Act, 1996 before commencing the arbitration and the fee of the learned Arbitrator shall be governed by the Fourth Schedule of the Arbitration and Conciliation Act, 1996. It further added that “Needless to say, all issues are left open for agitation by the parties and consideration by the learned Arbitrator.”