Anant Raj Industries Limited vs Somesh Kumar Bishnoi

Anil Kumar, J.—This is a petition u/s 11 of the Arbitration & Conciliation Act, 1996 for appointment of a presiding Arbitrator for adjudicating the disputes and differences between the petitioner and the respondent.

The petitioner contended that it is a company duly incorporated and registered under the Companies Act, 1956. The petition has been filed by Mr. Pankaj Nakra, who is allegedly authorized to sign, verify and file the petition on behalf of the petitioner.

The petitioner is alleged to be engaged in real estate business in and around NCT of Delhi. It is contended that it used to purchase lands with an intention to develop the same into hotels/motels/residential/IT parks/group housing areas etc. and entered into an agreement dated 6th December, 2006 with respondent as he had represented to the petitioner that he had requisite experience, contacts and arrangements to manage the purchase of land measuring approximately 1500 acres at villages Fazalwas, Chandla, Dungervas, Gwalior, Binola, Bilaspur, Pathredi, etc. having sufficient and reasonable frontage of National Highway - 8. It is contended that the respondent had assured the petitioner that he would be able to manage to purchase the said land for the petitioner.

Pursuant to the representations made by the respondents, agreement to sell dated 6th December, 2006 was entered into between the parties and as per the agreement the petitioner was not to be concerned about the rates of the sale consideration paid to the occupiers of the said land. It is contended that at the time of execution of registration of sale deeds in favor of the petitioner or its subsidiaries or nominees, the sale consideration was to be paid directly to the land- owners/occupiers/villagers at the rates fixed by the respondent. However, the respondent was to be paid at the fixed rate of Rs. 50,00,000/- per acre and the sale consideration payable to the land-owners/occupiers/villagers was deductable from the said sale consideration agreed between the petitioner and the respondent.

The petitioner asserted that the respondent had agreed that he will perform the obligation under the said agreement within a period of 15 months from the date of its execution and on failure to perform the obligations, he will refund all the amounts paid by the petitioner or its subsidiaries or nominees to the respondent. The respondent is also alleged to have agreed to pay pre-determined liquidated damages of Rs. 5.00 crore per acre within a period of five days from the expiry of the period of 15 months agreed in the agreement dated 6th December, 2006 in case of failure of the respondent to purchase 1500 acres of land for the petitioner.

The petitioner has further contended that the agreement dated 6th December, 2006 also has an arbitration agreement that if any dispute or difference arose between the parties, the same would be referred to arbitration. Regarding the procedure for arbitration, it was agreed that one arbitrator was to be appointed by each of the parties and in case of differences between the said two arbitrators, the Presiding Arbitrator shall be appointed by the two Arbitrators whose decision shall be final and binding.

The petitioner asserted that he and his subsidiaries had paid a total amount of Rs. 25,03,78,200/- for the purchase of 45.25 acres of land and the respondent has failed to perform his part of obligation to get the title documents of 1500 acres of land transferred in the name of the petitioner within a period of 15 months. The respondent is also alleged to have issued cheques in discharge of his liabilities in the name of subsidiaries of the petitioner. However, when the cheques were presented, it transpired that the account had been closed. When the respondent was contacted about it, he represented to the petitioner not to initiate proceedings u/s 138 of Negotiable Instruments Act and consequently believing the representations made by the respondent, the petitioner did not initiate proceedings u/s 138 of Negotiable Instruments Act in respect of the cheques which were dishonored.

The respondent is alleged to have issued further cheques in May 2008, however, the said cheques were also returned dishonored on account of insufficient funds in the accounts of the respondent. Thus disputes have arisen between the petitioner and the respondent.

In the facts and circumstances, the petitioner issued a legal notice dated 5th July, 2008 calling the respondent to pay a total outstanding amount of Rs. 1,00,03,78,200/-. By the legal notice dated 5th July, 2008, the petitioner also proposed to appoint Mr. Justice S.N. Sapra (retd.), resident of B-64, Sector-14, Noida, U.P. as petitioner''s Arbitrator. The respondent sent a reply dated 2nd August, 2008 to the legal notice dated 5th July, 2008 and proposed appointment of Mr. M.K. Bansal, Retired District and Sessions Judge, resident of 175, Hope Apartment, Sector-15, Part-11, Gurgaon as his nominee Arbitrator.

It is contended that after the appointment of Mr. Justice S.N. Sapra (Retd.) as the Arbitrator of the petitioner and Mr. M.K. Bansal, Retried District and Sessions Judge as the Arbitrator of the respondent, the Arbitrators appointed by the parties have not been able to appoint a Presiding Arbitrator. In the circumstances, the petitioner filed the present petition on 6th November, 2008.

After notice was served on the respondent, Mr. Ajay Mehrotra Advocate appeared on behalf of the respondent and sought time to file the reply. Despite the time given to the respondent, reply has not been filed. No sufficient reason has been disclosed for granting more time to the respondent to file the reply. The right of the respondent to file the reply is therefore, closed.

This is not disputed that the arbitrator''s appointed by the petitioner and the respondent have not been able to agree on the name of the presiding arbitrator. The learned Counsel for the petitioner has contended that the petitioners had given about eight names of retired High Court judges. However, the respondent has not consented to the appointment of any one of them as the presiding arbitrator. The learned Counsel for the respondent has refuted this and contended that on behalf of the respondent the names for the presiding arbitrator were given, however, the petitioner did not agree to any one of them.

Learned Counsel for the parties were therefore, given another opportunity to agree on a presiding arbitrator by consensus. The learned Counsel for the parties were however unable to agree on the name of any retired High Court judge for appointment as the presiding arbitrator. In the circumstances, it was proposed to appoint a retired Supreme Court judge as the presiding arbitrator. The learned Counsel for the parties, however, have not agreed for appointment of a retired Supreme Court judge as the presiding arbitrator. In the circumstances the learned Counsel for the parties, therefore, asked for appointment of any retired High Court judge deemed appropriate as the presiding arbitrator.

In the facts and circumstances and considering the request made by the counsel for the parties, Mr. Justice Vijender Jain (Retd.), resident of House No. 136, Sector 15, NOIDA UP ( Phone Nos. 0120-2511535 ; 9711009541) is appointed as the presiding Arbitrator. The arbitration panel comprising of presiding arbitrator, appointed by this Court, and the petitioner''s arbitrator and the respondent''s arbitrator shall decide all the disputes between the parties and shall devise its procedure. With these directions the petition is disposed of and the parties are left to bear their own costs.