Shree Satguru Developers vs Chandrashekhar Champalal Hingarh
- Court
- Bombay High Court
CNR No : HCBM020278202026
arbapl27816-2026-J.doc
AGK
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY CIVIL JURISDICTION
ARBITRATION APPLICATION (L) NO.27816 OF 2026
1. Shree Satguru Developers
2. Umesh Pravinchandra Bhatt
3. Mohd. Zahid Abdul Samad Mukhi
… Applicants
ATUL
GANESH
KULKARNI
Vs.
1. Chandrashekhar Champalal Hingarh
Digitally signed by
ATUL GANESH
KULKARNI
Date: 2026.09.07
12:00:02 +0530
2. Geeta Construction Company
3. Puranchandra Harendra Kanani
4. Geeta Kanani
5. Tenants Association of Mangla Bhuvan
6. Arvind Jayanti Ajugia
7. Jayanti G. Ajugia
… Respondents
Mr. Dinyar Madon, Senior Advocate with Mr. Aadil
Parsurampuria, Ms. Kejeshri Thakkar, and Mr. Aaman
Jhaveti i/by Mr. Prashant Parsurampuria for the
Applicants.
Mr. Aspi Chinoy, Senior Advocate with Ms. Sutapa Saha
for Respondent No.1.
Mr. Karl Tamboly i/by Mr. Ketan Dhavle for Respondent
Nos.3 and 4.
Mr. Yash Tiwari for Respondent No.5.
Ms. Pooja Yadav i/by Komal Punjabi for Respondent
Nos.8 and 9.
CORAM : AMIT BORKAR, J.
RESERVED ON : SEPTEMBER 2, 2026.
PRONOUNCED ON : SEPTEMBER 7, 2026
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JUDGMENT:
1. The present Application has been filed by the Applicants
seeking appointment of an Arbitrator under Section 11 of the
Arbitration and Conciliation Act, 1996. The Applicants seek to
refer the disputes which have arisen between the Applicants and
the Respondents to arbitration. These disputes arise out of the
registered Development Agreement dated 12 November 2007.
2. The facts and circumstances which have led to filing of the
present Application, as stated by the Applicants, are as follows.
The Applicants are the developers appointed by Respondent Nos.2
to 4, who are the owners of the land. Respondent No.1 is the
subsequent assignee and the fourth entrant in the matter.
According to the Applicants, the ownership rights in the land have
recently been assigned by Respondent Nos.2 to 4 in favour of
Respondent No.1. According to the Applicants, the earlier
developers appointed by the owners had failed to develop the
land. Therefore, an Assignment of Development Rights was
executed and registered on 12 November 2007. By this document,
Respondent No.2, with Respondent Nos.3 and 4 as confirming
parties, assigned the development rights in respect of the subject
land in favour of the Applicants. An Irrevocable Power of Attorney
was executed in favour of the Applicants. Under Clause 3(xiii), the
Applicants had agreed to provide an area of 1,286 square feet in
the new building to Respondent No.2 as consideration. Under
Clause 5, the consideration payable to the owners was fixed at
Rs.5.5 Crore. Out of this amount, Rs.2.25 Crore had already been
paid and the remaining amount was payable in stages. According
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to the Applicants, a total amount of Rs.5.21 Crore has been paid by
them to the owners. Clause 6 provided for execution of Permanent
Alternate Accommodation Agreements with the tenants.
Respondent No.2 was required, at his own cost, to assist and co-
operate with the Applicants for execution of such agreements.
Clause 7 required negotiations with the tenants, and Respondent
Nos.2 to 4 were required to assist the Applicants in getting the
tenants to vacate the premises. Clause 39 contained the Arbitration
Agreement. On 11 April 2008, the Applicants submitted the
building plans and obtained the IOD. Since the tenants were not
willing to vacate their premises, Respondent No.4 addressed letters
to the MCGM on 25 March 2008. According to the Applicants, they
proceeded on their own and without receiving any assistance from
Respondent Nos.3 and 4. The Applicants entered into Permanent
Alternate Accommodation Agreements with Respondent Nos.3 and
4 in respect of their respective units. The Applicants entered into
such agreements with 10 tenants in respect of the new premises on
30 November 2010.
3. Between January 2012 and June 2014, fungible FSI was
introduced under the DCR 1991. On account of the availability of
larger areas, the tenants raised further demands and sought to re-
negotiate the terms of their rehabilitation. According to the
Applicants, this created difficulties in carrying out the
redevelopment of the Petition Property. Discussions and
negotiations continued up to 2014. The Applicants state that
during this period Respondent Nos.3 and 4 did not provide any
assistance. There were restrictions on the use of TDR on plots in
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the JVPD Scheme during these two years, which caused further
difficulties in the redevelopment. After negotiations with the
tenants, the Applicants submitted revised plans on 28 November
2014 and obtained a revised IOD from the MCGM. By January
2015, according to the Applicants, they had paid a total amount of
Rs.5,21,50,000/- to Respondent Nos.2 to 4. On 20 August 2015,
the Applicants came to know that Respondent Nos.3 and 4 had
entered into a "Memorandum of Agreed Terms" with M/s Converge
Realtors. Under the said arrangement, development rights in
respect of the subject land were proposed to be given to M/s
Converge Realtors. Clause 6.2 of the said arrangement provided
that the arrangement was subject to M/s Converge Realtors
settling the matter with the Applicants. M/s Converge Realtors
filed Suit No.1207 of 2016 before the City Civil Court at Dindoshi
against Respondent Nos.3 and 4 seeking performance of the MOAT.
4. Thereafter, the Applicants were served with a notice dated
18 December 2015 issued by Respondent Nos.3 and 4 terminating
the Assignment of Development Rights. According to the
Applicants, the termination was made only to enable Respondent
Nos.3 and 4 to proceed with their arrangement with M/s Converge
Realtors and to obtain further monetary benefit. The Applicants
replied to the termination notice on 16 January 2016. In the reply,
the Applicants stated that the alleged delay was not caused by
them. According to the Applicants, the delay was due to various
issues and restrictions, and it was Respondent Nos.3 and 4 who
had failed to perform their obligations. The Applicants tried to
resolve the dispute with Respondent Nos.3 and 4. On 8 March
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2017, the Applicants requested Respondent Nos.3 and 4 to recall
the termination notice. During the discussions and meetings which
followed, Respondent Nos.3 and 4 required the Applicants to pay
further money to show their bona fides. The Applicants agreed to
the same. Respondent Nos.3 and 4 accepted a payment of
Rs.10,00,000/- from Applicant No.1 by cheque. After the DCPR
2034 was notified in June 2018, Respondent Nos.3 and 4 again
sought to re-negotiate the commercial terms with the Applicants.
The Applicants did not agree to the proposed changes. Since the
old building was in a ruinous condition, Respondent No.6 was
proposing to demolish the building. For this purpose, Respondent
No.6 issued a notice dated 25 November 2019 under Section
353(B) of the MMC Act, 1888. In March 2020, the Covid-19
pandemic affected the country. Because of the lockdown imposed
during that period, the Applicants were prevented from carrying
out development activities, though according to them this was not
by their choice. Pursuant to the notice under Section 353B, the
Applicants, by their letter dated 28 June 2021, submitted the
report of their structural engineer, M/s Frames Consulting Civil
Structural Engineers, to Respondent Nos.8 and 9. According to
Applicant No.1, notices were sent on 23 July 2021 and 14 January
2022 to the MCGM informing it about the termination of the
Applicants' Development Agreement. Hearings were held before
the TAC of the MCGM on 30 November 2021. The hearing was
attended by the Applicants' structural engineer, who appeared on
behalf of the owners, and the structural engineer representing the
tenants. The TAC submitted its report on 13 December 2021. The
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building was classified in C-1 category and was directed to be
vacated immediately. The MCGM implemented the said decision in
January 2022. At the same time, the Applicants proceeded with
obtaining further permissions for the new building proposed by
them in accordance with the DCPR 2034. The following
permissions were obtained: (i) On 20 September 2021, NOC from
the Civil Aviation Department; (ii) On 30 September 2021, Chief
Fire NOC; (iii) On 31 December 2021, concessions from the MC;
(iv) On 27 January 2022, revised IOD; and (v) On 13 February
2023, AAI NOC.
5. The tenants of the old building filed Commercial Suit (L)
No.29492 of 2023 before this Court on 14 September 2022. The
Applicants, Respondent Nos.3 and 4 and others were made parties
to the said proceedings. The tenants, amongst other reliefs, sought
performance of the Permanent Alternate Accommodation
Agreements executed with them in the year 2011. The dispute
with the tenants was settled, and consent terms were executed. On
13 August 2024, Respondent Nos.2 to 4 executed a Deed of
Assignment in favour of Respondent No.1. By the said Deed,
according to the Applicants, all rights in the Petition Property were
assigned to Respondent No.1. The Applicants further state that
from the Auto DCR website it appears that Respondent No.1
submitted a proposal for redevelopment of the Petition Property in
October 2025. However, the said proposal has not been approved
because of the subsisting rights claimed by the Applicants. The
Applicants issued a notice dated 30 April 2026 invoking arbitration
against the Respondents in respect of the disputes arising under
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Clause 39 of the Assignment Deed. Respondent No.1 replied to the
said notice on 7 May 2026. Respondent No.1, amongst other
things, denied that there was any Arbitration Agreement between
the Applicants and Respondent No.1. Respondent Nos.2 to 4
replied to the notice on 13 May 2026. They stated that their
appointment had already been terminated and that the Applicants'
claim was barred by limitation. In these circumstances, the
Applicants have filed the present Arbitration Application seeking
appointment of an Arbitrator.
6. Mr. Madon, learned Senior Advocate appearing for the
Applicants, relied upon the judgment of the Supreme Court in SBI
General Insurance Company Limited vs. Krish Spinning, (2024) 12
SCC 1. He submitted that the question of limitation can be
considered by the Arbitrator under Section 16 of the Arbitration
and Conciliation Act, 1996. He further submitted that Respondent
No.1, being the assignee of Respondent Nos.3 and 4, is covered by
the arbitration clause contained in the Development Agreement.
7. Mr. Chinoy, learned Senior Advocate appearing for
Respondent No.1, submitted that Respondent No.1 has no contract
with the Applicants and, in particular, has no Development
Agreement with them. According to him, the alleged Development
Agreement creates personal rights and obligations between the
persons who executed it. Those rights do not go with the land.
Therefore, according to Respondent No.1, the Applicants cannot
claim any rights under the Development Agreement against this
Respondent. He further submitted that the MOAT contemplated a
separate arbitration agreement between the parties, but the MOAT
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never became a concluded contract. He submitted that on 13
August 2024, Respondent No.1 acquired the leasehold rights from
Respondent Nos.3 and 4 by executing an Indenture of Assignment
of lease or leasehold rights in its favour. After the said assignment,
Respondent No.1 became the sole and exclusive holder of the
leasehold rights in the said property. According to Respondent
No.1, this was done with the full knowledge and consent of the
Applicants and/or Applicant No.2, who acted through its partner.
8. Mr. Chinoy further submitted that the Development
Agreement had already been terminated in 2016 and that the
Applicants did not challenge the termination within time.
According to him, the Applicants allowed the termination to
become final. Respondent Nos.3 and 4 have consistently asserted
that the Development Agreement stood terminated, including
before the Municipal Corporation. He submitted that any alleged
consent terms entered into between the tenants and the
Applicants, by which the Applicants were recognised as developers,
cannot bind Respondent No.1 or Respondent Nos.3 and 4.
According to him, after termination of the Applicants'
Development Agreement in March 2016, the Applicants lost all
rights to redevelop the property. He further submitted that
Respondent No.1 is the assignee only of the leasehold rights in the
land and is not the assignee of the Development Agreement. The
alleged Development Agreement, even if it is still said to exist,
creates personal rights and obligations between the parties to that
agreement and such rights do not pass with the land. Respondent
No.1 submitted that the Applicants have no rights under the
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Development Agreement against Respondent No.1.
REASONS AND FINDINGS:
9. I have considered the submissions made by Mr. Madon,
learned Senior Advocate for the Applicants, and Mr. Chinoy,
learned Senior Advocate for Respondent No.1. I have considered
the Assignment of Development Agreement dated 12 November
2007, particularly Clause 39 containing the arbitration clause.
10. The first question which arises for consideration is regarding
the extent of enquiry which this Court can make while considering
an application under Section 11 of the Arbitration and Conciliation
Act, 1996. At this stage, the Court is not required to conduct a full
trial or decide all the disputed questions as if the matter is being
finally tried. The Supreme Court, particularly after introduction of
Section 11(6-A), has explained the limited nature of the enquiry in
Ajay Madhusudan Patel v. Jyotrindra S. Patel , (2025) 2 SCC 147.
11. In paragraph 76.2, the Supreme Court has stated:
“76.2. The insertion of Section 11(6-A) through the 2015
Amendment to the 1996 Act stipulated that the courts under
Section 11 shall confine their examination to the “existence”
of an arbitration agreement. It legislatively overruled the
decisions in SBP & Co. [SBP & Co. v. Patel Engg. Ltd., (2005)
8 SCC 618 : (2005) 128 Comp Cas 465] and Boghara
Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P)
Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] by virtue
of its non obstante clause.”
12. The Supreme Court stated in paragraph 76.3:
“76.3. Duro Felguera [Duro Felguera, S.A. v. Gangavaram
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Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764] , in
terms, clarified the effect of the change brought in by Section
11(6-A) and stated that all that the courts need to see is
whether an arbitration agreement exists — nothing more,
nothing less.”
13. Thus, where there is no serious doubt that an arbitration
agreement exists between the parties, the Court need not examine
the entire dispute at the stage of Section 11. However, a different
question arises where a person who did not sign the agreement is
sought to be treated as a party to the arbitration agreement. In the
present case, Clause 39 is admittedly contained in the Assignment
of Development Agreement dated 12 November 2007. The
Applicants are described in the said document as the Developers.
Respondent Nos.2 to 4 are described as the Owners/Confirming
Party. Respondent No.1 was not a party to the said document.
14. Clause 39 reads as follows:
“39. It is agreed that all the disputes between the parties
hereto shall be referred to the three members committee
comprising of one member each from the Assignors, the
Developers and the Owners/Confirming Party’s side. The
Convenor of the said committee shall be the member
nominated by the Developers, who shall have a casting vote
in case of tie and the decision taken by majority members
from the said committee shall be final and binding upon the
parties. It is hereby agreed that if the said disputes could not
be resolved by the said committee, then, in that event, the
committee shall refer the said dispute/s to the arbitration of
one single arbitrator to be nominated jointly by the parties
hereto and the decision taken by such arbitrator so
nominated shall be final and binding upon the the parties to
the dispute. The Arbitration will be conducted as per the
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provisions of the Arbitration & Conciliation Act, 1996.”
15. The wording of Clause 39 starts by referring to disputes
“between the parties hereto”. It provides for a three member
committee consisting of one member from the Assignors, one from
the Developers and one from the Owners/Confirming Party. If the
dispute is not resolved by that committee, it is to be referred to
one single Arbitrator “to be nominated jointly by the parties
hereto”. On a plain reading of this clause, the arbitration
agreement is between the parties who entered into the Assignment
of Development Agreement. The clause does not say that any
person who obtains any right or interest in the property will
become a party to the arbitration agreement. Therefore, the
arbitration clause cannot merely because it forms part of the
Development Agreement be treated as an agreement with every
subsequent lessee in the property. There must be some material to
show that such person became a party to the agreement or
accepted and adopted the arbitration clause.
16. This brings me to the principal submission of Mr. Madon. His
submission is that Respondent No.1 is an assignee of Respondent
Nos.3 and 4 and, therefore, Respondent No.1 is covered by Clause
39. This submission has some force, but only in a particular
situation. If a person is given the rights and obligations of a party
by way of assignment, such person may, depending upon the terms
of the assignment, become bound by the arbitration agreement
forming part of that contract. But the mere fact that a person has
acquired some interest in the property which was the subject
matter of the Development Agreement does not make that person
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an assignee of the Development Agreement. In my opinion, a
person does not become an “assignee” merely because the title of
the Development Agreement contains the word “assignees” or
because the agreement refers to certain categories of persons who
may be bound by it. The question is whether the lessee has
acquired the rights and obligations of a party by assignment,
express incorporation or by conduct. The arbitration agreement
would form part of such rights and obligations. A lease or sub-
lease gives a person a right to occupy or use the property. It does
not transfer the Development Agreement or the arbitration clause
contained in it.
17. While considering an application under Section 11 of the
Arbitration and Conciliation Act, 1996, the Court is required to see
whether an arbitration agreement exists and whether the
Applicant has connection with that agreement. Therefore, if a
lessee seeks to rely upon the arbitration clause, the lessee would
have to show privity, a valid assignment or written consent by
which the lessee accepted the arbitration clause.
18. The Arbitration and Conciliation Act, 1996 does not define
the word “assignee” for this purpose. Therefore, the meaning has
to be understood from the Development Agreement, the document
under which the lessee claims rights and the other documents
forming part of the same transaction. A lessee may be treated as an
assignee if the transaction transfers the relevant rights and
obligations to the lessee. The position may be different where the
lessee accepts the arbitration clause, or where the documents
taken together show that there was a novation and the lessee was
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intended to step into the position of the contracting party.
However, merely having a lease, licence, possession arrangement
or sub-lease does not have that effect. The word “assignee” has to
be understood by reading the entire agreement. The Court has to
consider the operative clauses, definitions, restrictions on
assignment, provisions relating to lease and the other terms of the
Development Agreement. If the word “assignee” is found only in
the title or in a recital, and the operative provisions do not extend
the rights and obligations to lessees, such reference would not be.
A person claiming to be an assignee would have to show
something more than possession of the property or some right
derived from the property. The material may include an
Assignment Deed, consent of the contracting parties, acceptance of
the obligations, or conduct which shows that the person became
bound by the Development Agreement.
19. In my opinion, a lessee cannot be treated as an “assignee”
merely by implication. A lease creates or transfers an interest in
the property. An assignment transfers rights and obligations. In a
particular transaction both may be found together, but the two
expressions do not have the same meaning. The position may be
different where the Development Agreement provides that
permitted lessees, transferees, successors, or persons claiming
through a party would be bound by the arbitration clause. It may
be different where the lease incorporates the Development
Agreement and the lessee accepts the obligations arising under it.
In such circumstances, the lessee may have standing to invoke the
arbitration clause and seek appointment of an Arbitrator. If the
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reference to “assignees” is only in the title or heading of the
agreement and there is no definition which includes lessees within
that expression, such reference would not be enough to hold that
the lessee is an assignee for the purpose of Section 11. Therefore, a
lessee does not become an assignee under a Development
Agreement. The words “assignee” and “lessee” describe different
relationships. They can have the same effect only where the
contract or the transaction shows such intention. A reference to
assignees in the title of the agreement, without any definition
including lessees, would not be sufficient. The case of a lessee
becomes stronger where the lease or a subsequent agreement
incorporates the Development Agreement and its arbitration
clause. The lessee would have to show an assignment, acceptance
of the obligations, or and unequivocal conduct adopting the
Development Agreement and its arbitration clause.
20. The distinction between assignment of property rights and
assignment of rights is important in the present case. Respondent
No.1's own case is that it acquired leasehold rights from
Respondent Nos.3 and 4 under the Indenture of Assignment dated
13 August 2024. There is no material shown before me by which
Respondent No.1 took an assignment of the Development
Agreement dated 12 November 2007. There is no document shown
by the Applicants by which Respondent No.1 agreed to take upon
the obligations of the Developer or the Owners under that
agreement. The Applicants rely upon the fact that Respondent
No.1 acquired rights in the Petition Property. This fact is not
sufficient. Acquisition of an interest in the property and acquisition
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of rights under the Development Agreement are separate matters.
21. The Applicants have relied upon the subsequent conduct of
Respondent No.1 in relation to redevelopment of the property.
Even if Respondent No.1 intended to redevelop the property, that
fact does not show that Respondent No.1 accepted the
Development Agreement dated 12 November 2007 or Clause 39
contained therein. The decision of the Supreme Court in Cox &
Kings Ltd. requires consideration. The Supreme Court has held
that the question whether a non-signatory has become a party to
an arbitration agreement may involve factual and legal questions.
In Ajay Madhusudan Patel , this position has been summarised in
paragraph 76.7 as follows:
“76.7. Cox & Kings [Cox & Kings Ltd. v. SAP India (P) Ltd.*,
(2024) 4 SCC 1 : (2024) 2 SCC (Civ) 1 : (2024) 251 Comp
Cas 680] specifically dealt with the scope of inquiry under
Section 11 when it comes to impleading the non-signatories
in the arbitration proceedings. While saying that the referral
court would be required to prima facie rule on the existence
of the arbitration agreement and whether the non-signatory
party is a veritable party to the arbitration agreement, it said
that in view of the complexity in such a determination, the
Arbitral Tribunal would be the proper forum. It was further
stated that the issue of determining parties to an arbitration
agreement goes to the very root of the jurisdictional
competence of the Arbitral Tribunal and can be decided
under its jurisdiction under Section 16.”
22. Thus, every non-signatory cannot be excluded at the Section
11 stage merely because such person has not signed the
agreement. The Court has to see whether there is at least a prima
facie basis to hold that the non-signatory has become a party to the
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arbitration agreement. If such basis is available and the question
requires evidence or detailed examination, the matter may be left
to the Arbitral Tribunal.
23. In the present case the difficulty for the Applicants is that
there is no such prima facie material in respect of Respondent
No.1. The document relied upon by Respondent No.1 is an
assignment of lease or leasehold rights. The Applicants have not
shown any corresponding assignment of the Development
Agreement in favour of Respondent No.1. There is no subsequent
agreement executed by Respondent No.1 accepting Clause 39. The
fact that Respondent No.1 acquired leasehold rights or submitted a
proposal for redevelopment cannot amount to an agreement by
Respondent No.1 to arbitrate with the Applicants.
24. I have considered the consent terms between the Applicants
and the tenants. Those consent terms cannot by themselves create
an arbitration agreement between the Applicants and Respondent
No.1. Respondent No.1 was not a party to those consent terms.
The fact that the tenants recognised the Applicants as developers
cannot create privity between the Applicants and Respondent No.1
where such privity does not otherwise exist.
25. The submission that Respondent No.1 had knowledge of the
Applicants' development rights does not change the position.
Knowledge of the Applicants' claim is different from consent to
arbitration. An arbitration agreement is based upon agreement
between the parties. A person cannot be made subject to an
arbitration clause merely because such person knew about the
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clause or knew that another person was claiming rights under the
contract. The wording of Clause 39 supports this conclusion. It
does not state that every future lessee or transferee of the property
would be bound by the arbitration clause. It specifically refers to
disputes “between the parties hereto”. It further provides that the
Arbitrator is to be nominated jointly by “the parties hereto”.
Respondent No.1 was not one of those parties when the
Development Agreement was executed.
26. The Applicants have relied upon the fact that the
redevelopment proposal submitted by Respondent No.1 was not
approved because of the rights claimed by the Applicants. This
may show that there is a dispute regarding redevelopment of the
property. But existence of a dispute does not create an arbitration
agreement between the parties. The submission of Respondent
No.1 that it was not a party to the Development Agreement
deserves acceptance to this extent. Respondent No.1 did not
become a party to the arbitration agreement merely because it
acquired leasehold rights in the Petition Property.
27. I now come to the objection of limitation raised by
Respondent Nos.2 to 4. Mr. Madon relied upon Krish Spg. and
submitted that the question of limitation should be left to the
Arbitrator under Section 16 of the Act. In my view, there is
substance in this submission. At the stage of Section 11, the Court
is not required to go into the evidence in detail and finally decide
whether every claim made by the Applicants is barred by
limitation.
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28. The Supreme Court held in Krish Spg. :
“136. Thus, we clarify that while determining the issue of
limitation in exercise of the powers under Section 11(6) of
the 1996 Act, the Referral Court should limit its enquiry to
examining whether Section 11(6) application has been filed
within the period of limitation of three years or not. The date
of commencement of limitation period for this purpose shall
have to be construed as per the decision in Arif Azim [ Arif
Azim Co. Ltd. v. Aptech Ltd. , (2024) 5 SCC 313 : (2024) 3
SCC (Civ) 358 : 2024 INSC 155] . As a natural corollary, it is
further clarified that the Referral Courts, at the stage of
deciding an application for appointment of arbitrator, must
not conduct an intricate evidentiary enquiry into the
question whether the claims raised by the applicant are time-
barred and should leave that question for determination by
the arbitrator. Such an approach gives true meaning to the
legislative intention underlying Section 11(6-A) of the Act,
and to the view taken in Interplay Between Arbitration
Agreements under the Arbitration Act, 1996 & the Stamp
Act, 1899, In re [ Interplay Between Arbitration Agreements
under the Arbitration Act, 1996 & the Stamp Act, 1899, In
re , (2024) 6 SCC 1 : 2023 INSC 1066] .”
29. Therefore, at this stage, I would not examine each claim and
give a finding whether the same is barred by limitation. The
enquiry of this Court has to remain within the limited scope of
Section 11. Whether the claims of the Applicants are within
limitation and what effect is to be given to the subsequent
correspondence, payment and other events relied upon by the
Applicants can be considered by the Arbitral Tribunal. In the
present case, the Development Agreement was terminated by
Respondent Nos.3 and 4 by notice dated 18 December 2015. The
Applicants replied to the said notice on 16 January 2016. Thus, the
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Applicants were aware at that time that Respondent Nos.3 and 4
were treating the Development Agreement as terminated. The
Applicants state that they tried to resolve the matter with
Respondent Nos.3 and 4. According to the Applicants, discussions
took place on 8 March 2017. The Applicants further state that
Respondent Nos.3 and 4 asked them to make a further payment of
Rs.10,00,000/- to show their bona fides and that the said amount
was accepted. The Applicants rely upon this circumstance to
submit that the matter was being discussed and had not ended in
2016. Whether the payment of Rs.10,00,000/- and the conduct of
the parties had any effect upon the rights or limitation will depend
upon the documents and the circumstances of the case. In my
view, it is not necessary to decide this question at this stage. The
same can be considered by the Arbitral Tribunal.
30. It is true that there was a considerable period during which
no arbitration proceeding was commenced and no notice invoking
Clause 39 was issued. The notice invoking arbitration was issued
only on 30 April 2026. However, whether the said delay makes the
claims barred by limitation is the objection of Respondent Nos.2 to
4 and the same can be raised before the Arbitral Tribunal and
decided in accordance with law. Thus, so far as Respondent Nos.2
to 4 are concerned, the Applicants were aware of the termination
and the dispute regarding their rights for several years before the
present proceedings. The Applicants rely upon the payment made
in 2017 and the discussions as circumstances which, according to
them, had an effect upon the relationship between the parties.
Whether these circumstances have any legal effect on limitation is
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not required to be decided by this Court at this stage. The question
whether the claims raised by the Applicants are time-barred can be
decided by the Arbitral Tribunal in exercise of its jurisdiction under
Section 16 of the Act.
31. In the present case, the dates regarding the termination,
reply, subsequent discussions, payment and invocation of
arbitration are on record. However, merely because there is a long
gap between the termination and the invocation of arbitration, it
would not be proper for this Court to finally decide the limitation
issue when the Applicants rely upon subsequent events and
conduct of the parties in support of their case. These matters can
be considered by the Arbitral Tribunal along with the other
contentions of the parties. I have considered the Deed of
Assignment dated 13 August 2024 and whether the same has any
bearing upon the rights claimed by the Applicants or upon the
question of limitation.
32. In my opinion, whether the said Deed of Assignment and the
subsequent conduct of the parties have any effect upon the rights
of the Applicants or upon limitation can be considered by the
Arbitral Tribunal. At this stage, it is not necessary for this Court to
give a final finding as to what effect the said transaction has. The
Applicants have relied upon their continued efforts for
redevelopment. They have relied upon the permissions obtained
from the Municipal Corporation and other authorities, their
dealings with the tenants and the consent terms entered into with
them. These facts are relied upon by the Applicants to show that
they continued to assert their rights under the Development
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Agreement. Whether these circumstances have any legal effect
upon the subsistence of the Applicants' rights or upon limitation
can be considered by the Arbitral Tribunal after considering the
material placed before it.
33. Similarly, the notices issued by the Applicants to the MCGM,
the TAC proceedings, the C-1 classification of the building, the
revised IOD and the other permissions obtained by the Applicants
are relied upon by the Applicants in support of their continuing
rights. I do not propose to decide at this stage whether these
circumstances have any effect upon limitation. The same can be
considered by the Arbitral Tribunal in accordance with law. The
Applicants have relied upon the subsequent conduct of Respondent
Nos.3 and 4 and their dealings with other developers. Such
material may have relevance to the allegations made by the
Applicants that Respondent Nos.3 and 4 acted contrary to their
rights. What effect such conduct has, if any, upon the rights of the
Applicants and upon limitation can be examined by the Arbitral
Tribunal.
34. So far as Respondent Nos.2 to 4 are concerned, Clause 39
contains an arbitration agreement between the parties. The
Applicants have invoked the said arbitration agreement by notice
dated 30 April 2026. Respondent Nos.2 to 4 have raised an
objection that the claims are barred by limitation. This objection
can be raised before the Arbitral Tribunal and considered by the
Tribunal in accordance with law.
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35. The Applicants have made out a case for appointment of an
Arbitrator so far as Respondent Nos.2 to 4 are concerned, since the
existence of the arbitration agreement contained in Clause 39 is
not in dispute. The objection of limitation raised by Respondent
Nos.2 to 4 shall remain open and shall be considered by the
Arbitral Tribunal in accordance with law. I have not overlooked the
case of the Applicants that they spent substantial amounts on the
property, paid Rs.5.21 Crore to the owners, obtained permissions,
dealt with the tenants and continued to take steps for
redevelopment. These circumstances are relied upon by the
Applicants in support of their continuing rights. Whether these
circumstances have any effect upon the substantive claims or upon
limitation is not being finally decided by this Court and is left to
the Arbitral Tribunal.
36. In view of the above, I am of the view that the present
Application makes out a case for appointment of an Arbitrator
between the Applicants and Respondent Nos.2 to 4. The issue of
limitation, including whether any or all of the claims made by the
Applicants are barred by limitation, is kept open for determination
by the Arbitral Tribunal under Section 16 of the Arbitration and
Conciliation Act, 1996. However, no case is made out for
appointment of an Arbitrator against Respondent No.1, as
Respondent No.1 has not been shown to be a party to the
arbitration agreement contained in Clause 39 of the Assignment of
Development Agreement dated 12 November 2007.
37. In view of the foregoing discussion, and upon overall
assessment of the material record, the following order is passed:
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i) The Commercial Arbitration Application (L) No.11740
of 2026 is partly allowed;
ii) The disputes between the Applicants and Respondent
Nos.2 to 4 arising out of the Assignment of Development
Agreement dated 12 November 2007 are referred to
arbitration in terms of Clause 39 thereof;
iii) The objection raised by Respondent Nos.2 to 4
regarding limitation is kept open. All questions relating to
limitation, including whether any or all of the claims made
by the Applicants are barred by limitation, shall be decided
by the learned Arbitral Tribunal in accordance with law and
in exercise of its jurisdiction under Section 16 of the
Arbitration and Conciliation Act, 1996;
iv) Mr. Amrut Joshi, Advocate of this Court, is appointed
as the Sole Arbitrator to adjudicate upon the disputes
between the Applicants and Respondent Nos.2 to 4 arising
out of the Assignment of Development Agreement dated 12
November 2007, subject to the learned Arbitrator making the
necessary disclosure under Section 12 of the Arbitration and
Conciliation Act, 1996 and there being no circumstances
giving rise to justifiable doubts as to his independence or
impartiality;
v) The learned Sole Arbitrator shall decide all issues
arising between the Applicants and Respondent Nos.2 to 4,
including the issue of limitation, in accordance with law;
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vi) It is clarified that this Court has not expressed any final
opinion on the merits of the claims of the Applicants or on
the objection of limitation raised by Respondent Nos.2 to 4;
vii) The Application insofar as it seeks appointment of an
Arbitrator against Respondent No.1 is rejected. Respondent
No.1 is not shown to be a party to the arbitration agreement
contained in Clause 39 of the Assignment of Development
Agreement dated 12 November 2007;
viii) The learned Arbitrator shall be at liberty to determine
the claims, counterclaims, if any, and all questions of
jurisdiction, limitation, and merits in accordance with law;
ix) A copy of this Order will be communicated to the
Learned Sole Arbitrator by the Advocates for the Applicant
within a period of one week from today. The Applicant shall
provide the contact and communication particulars of the
parties to the Arbitral Tribunal along with a copy of this
Order;
x) The Learned Sole Arbitrator is requested to forward the
statutory Statement of Disclosure under Section 11(8) read
with Section 12(1) of the Act to the Advocates for the
Applicant so as to enable them to file the same in the
Registry of this Court. The Registry of this Court shall retain
the said Statement on the file of this Applicant and a copy of
the same shall be furnished by the Advocates for the
Applicant to the Advocates for the Respondent;
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xi) The Learned Sole Arbitrator is requested to forward the
statutory Statement of Disclosure under Section 11(8) read
with Section 12(1) of the Act to the parties within a period
of two weeks from receipt of a copy of this Order;
xii) The parties shall appear before the Learned Sole
Arbitrator on such date and at such place as indicated, to
obtain appropriate directions with regard to conduct of the
arbitration including fixing a schedule for pleadings,
examination of witnesses, if any, schedule of hearings etc. At
such meeting, the parties shall provide a valid and functional
email address along with mobile and landline numbers of the
respective Advocates of the parties to the Arbitral Tribunal.
Communications to such email addresses shall constitute
valid service of correspondence in connection with the
arbitration;
xiii) All arbitral costs and fees of the Arbitral Tribunal shall
be borne by the parties equally in the first instance, and shall
be subject to any final Award that may be passed by the
Tribunal in relation to costs;
xiv) The Commercial Arbitration Application is disposed of
in the above terms.
xv) There shall be no order as to costs.
(AMIT BORKAR, J.)
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