A single person cannot be party to arbitration when the arbitration agreement mandates joint holders to be a party : Bombay HC
TITLE : Ketan Champaklal Divecha V DGS Township Pvt. Ltd. &
CORAM : Hon’ble Justice Manish Pitale
DATE : 2nd January 2024
CITATION : Arbitration Application No. 21860 of 2023
FACTS
Maintainability of the present petition was challenged under Section 9 and 11 of the Arbitration and Conciliation Act, 1996. According to the respondents, the arbitration clause, in the present case, is so worded and structured that the petitioner, being a member of Co-operative Housing Society, alone cannot seek resolution of disputes under the arbitration clause. In the current case, it was found that the actual area of the plot was less than the area on the basis of which the development agreement was executed.
LAWS INVOLVED
Section 2(1)(h) of the Arbitration and conciliation act states that :
(h) “party” means a party to an arbitration agreement
The arbitration agreement states that :
“35.1 All disputes, claims and questions whatsoever which may arise with respect to this Agreement between the Parties hereto touching or relating to or arising out of these presents or the construction or application thereof or any clauses or thing herein contained or in respect of the duties responsibilities and obligations of either party hereunder or as to any act of omission of any party or as to any other matter in anywise relating to these presents or the rights, duties. and liabilities of either party under these presents shall be referred to arbitration under Arbitration and Conciliation Act, 1996 or any statutory modification and/or re-enactment thereof in the following manner:
35.2 The Society and the Members as one Party and the Developer as the other Party may forward a panel of names to facilitate the task of selection of the Sole Arbitrator, and a Sole Arbitrator shall then be appointed jointly by the Society and the Developer;”
ISSUES
Whether individual members of the society being signatories of the development agreement entitled to invoke arbitration?
JUDGEMENT
The court analysed Section 2(1)(h) of the Act defines who a party is. Section 7 thereof defines an ‘arbitration agreement’, as an agreement by parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship. The arbitration clause in the present case has to be interpreted on the basis of the aforesaid definition of ‘party’ and ‘arbitration agreement’. The arbitration agreement states that ‘society and members’ as one party and the developer as the other party. The court held that with respect to the arbitration clause, an individual member does not have the capacity to invoke arbitration.
“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”
Written by- Sanjana Ravichandran