Umesh Moolchand Lulla vs MS. Tropical Homes and Others

S.C. Dharmadhikari, J.—This is an application u/s 11 of the Arbitration and Conciliation Act, 1996. The applicant prays that a sole arbitrator to adjudicate the claims as raised by the applicant on the respondents, be appointed. In support of this application, what has been stated is that the applicant entered into an agreement dated 27th January, 2007 with respondent No. 1 in which respondents No.2 and 3 are partners. Under this agreement, the applicant agreed to purchase Villa No.3, which was AAR 20-11 to be constructed by the respondents on the property, more particularly described in the application.

It is the case of the applicant that in pursuance of this agreement, out of the total consideration, Rs.63.60 lakhs he has paid, i.e. a sum of Rs.57,44,750/-and he was and is ready and willing to perform his part of the contract and pay the balance consideration as per the agreement. However, the respondents have failed to perform their obligation under the said agreement.

The correspondence between the parties is referred to and ultimately, what has been stated is that respondent No.3 informed the applicant that the partnership firm has been dissolved with effect from 12th February, 2010. As the respondents failed to deliver possession, the applicant stated that there is already an arbitrator appointed to adjudicate the disputes between the partners of respondent No.1. Since the said agreement contains arbitration clause, the applicant called upon the respondents to confirm their willingness to the appointment of the same arbitrator who is acting as a sole arbitrator to adjudicate the disputes between the partners of the partnership firm. However, there was no response to this communication and subsequently, the applicant received a letter dated 4th June, 2011, addressed by respondent No.3, expressing his no objection to handing over possession of the Villa to the applicant and concurred with the appointment of Justice G.D. Kamat (Retired) as the Sole Arbitrator.

Thereafter, the correspondence with respondent no.2 continued, but respondent No.2 has not responded to the letters and particularly with regard to the concurrence for appointment of the sole arbitrator.

It is in these circumstances that the applicant has approached this Court and sought the above mentioned reliefs.

He states that he has complied with all the requirements enabling this Court to exercise the powers under the said provision.

There is a reply filed by one Bryan Da Silva-respondent No.2 in which he denies all the contents of the application and in addition, states that the application is not maintainable, because the parties have not intended to resolve their disputes through arbitration. The mechanism that is devised by the parties is to approach the competent Civil Court at Panaji, Goa for redressal of their disputes. There was never any intent to have the disputes resolved only by arbitration.

It is in these circumstances that it is alleged that this application is not maintainable.

Other paragraphs in the affidavit are without prejudice to the above and touching the merits of the controversy with which I am not concerned at this stage.

In rejoinder affidavit, the applicant has relied upon clauses 12(g) and 12(h) and contended that if one of the partners has agreed to resolve the disputes by arbitration and through the sole arbitrator, then, it cannot be said that the firm takes contrary stand and particularly respondent No.2 would not be in a position to raise the objections, as raised in the affidavit in reply. For all these reasons, it is submitted that the application be allowed.

It is on the above material that I have heard Mr. Nadkarni on behalf of the applicant and Mr. Rao appearing on behalf of the respondent.

Mr. Nadkarni submits that there is no substance in both the contentions of the learned Counsel for the respondent. It is a clear case where the requirement stipulated by the law is duly complied with. The application for appointment of arbitrator must be decided on the basis of not only Arbitration Agreement, but upon the conduct of the parties and particularly when one of the respondents is agreeable for resolution of the disputes by arbitration and is not urging that there is no arbitration agreement between the parties. For all these reasons, he submits that the application be allowed and even otherwise, because the clause which is relied upon must be read together with the subsequent clause and so read, all that is clarified is that there is a mandate to resolve the disputes by arbitration, but the Courts competent to be approached, have also been agreed upon by the parties. For all these reasons, Mr. Nadkarni submits that there is no substance in the objections.

On the other hand, Mr. Rao, appearing on behalf of respondent No.2, who is the only contesting respondent, submits that such clauses would indicate that the intention is not to resolve the disputes only by arbitration. The words ''may'' and ''shall'' being used, cannot be of any consequence inasmuch as if what follows clause 12(g) is clause 12(h) and reading them together, one would conclude that the very disputes which are referred to in clause (g) have to be resolved by approaching the Civil Court in the City of Panaji, Goa. That would mean that the parties never intended to resolve the disputes by arbitration.

In support of his contentions, Mr. Rao relies upon the following decisions :

1) Datar Switchgears Ltd. Vs. Tata Finance Ltd. and Another, ;

2) Wellington Associates Ltd. Vs. Mr. Kirit Mehta,

3) Tulip Hotels Pvt. Ltd. and another vs. Trade Wings

Ltd. And ors. (Appl. for Appointment of Arbitrator No.4/2007) decided on 19th March, 2008 (unreported).

For properly appreciating the contentions, reference will have to be made to Clause 12 of the agreement. As far as Clauses 12(a) to 12(f) are concerned, those stipulate as to how villa has to be transferred and handed over and the terms thereof that are agreed between the parties. Then come clause 12(g) and 12(h) which read

thus :

12(h) All disputes which may be arising between the parties to this agreement, whether in relation to the interpretation of the clauses and conditions of this agreement, and, about the performance of these presents or concerning any act or omission of the other parties in disputes, or, in relation to any matter whatsoever concerning this agreement shall be referred to a sole arbitrator appointed by the OWNER in accordance with the provisions of The Arbitration & Conciliation Act 1996.

(h) All disputes which may be arising between the parties to this agreement, whether in relation to the interpretation of the clauses and conditions of this agreement, and, about the performance of these presents or concerning any act or omission of the other parties in disputes, or, in relation to any matter whatsoever concerning this agreement shall be within the jurisdiction of Courts in the City of Panaji, Goa only.

A bare perusal of the same would indicate that all disputes which may be arising between the parties to this agreement, whether in relation to the interpretation of the clauses and conditions of this agreement, and, about the performance of or concerning any act or omission of the other parties in disputes, or, in relation to any matter whatsoever concerning this agreement, shall be referred to a sole arbitrator appointed by the Owner, which term is defined to mean respondent No.1 M/s. Tropical Homes and through its Managing Partner Mr. Bryan Da Silva. Thus, there is a clear intention that the resolution of the disputes shall be by arbitration and the authority to appoint the arbitrator being given to the Owner. It is not possible to construe this clause as suggested by Shri Rao. Firstly, the clear intention is to resolve the dispute by arbitration and even the appointment of the arbitrator is an aspect which is agreed by the parties. Further, they state that this arbitration shall be in accordance with The Arbitration & Conciliation Act, 1996. His contention is that if this interpretation placed on Clause 12(g), then, it would render clause 12(h) superfluous and useless. It is not possible to accept this contention either. It may be that the wording of clause 12(h) is on identical lines as Clause 12(g), but, what is agreed by these sub-clauses by the parties is that they confer jurisdiction on the Courts in the City of Panaji, Goa only. The parties have while further agreeing to resolve the disputes only through arbitration, additionally provided that in case any Court of law has to be approached, whether during the course of arbitration or otherwise, same shall be located in City of Panaji, Goa only. By this, it does not mean that clause 12(h) is given go-by and, therefore, is not intended to be acted upon. On the other hand, if the argument of Shri Rao is accepted in this case, it would render Clause 12(g) completely nugatory and meaningless. Therefore, I am in agreement with Mr. Nadkarni that both the clauses will have to be read together and so read, first stipulates the resolution of disputes only by arbitration and the other clarifies that after the said decision is taken, if any Court of law has to be approached or a Civil Court, that would be located in the City of Panaji, in the State of Goa only.

Once such is the conclusion reached, then, the decision which has been relied upon by Shri Rao is distinguishable on facts. His Lordship of the Supreme Court in the decision reported in the Wellington Associates Ltd. Vs. Mr. Kirit Mehta, , was dealing with a situation where the parties had executed an agreement which contained the clause, but in reverse manner. Clause (h) in the instant case was preceding the Arbitration Clause in the Supreme Court matter. There the agreement between the parties was to have the disputes resolved by arbitration. Further the wording of the clause 5 in that case and the clause (h) in the instant case is not identical. There the words "may be referred to arbitration in pursuance of the Arbitration Act, 1940 by each party appointing one arbitrator and the arbitrators so appointed selecting an umpire", along with the name of venue, was the stipulation. Therefore, the intention was that if it is possible to resolve the disputes by arbitration, then, that attempt would be made. Further, there is no element of compulsion therein. In the instant case before me, not only the word ''shall'' is used, but right is given to the owner to appoint an arbitrator. This depicts clearly an intention to resolve the disputes by arbitration and not through proceedings before a Civil Court. By clarifying as to which Civil Court would have jurisdiction in the event the parties have to approach it, does not mean that there is no agreement to resolve the disputes by arbitration. Therefore, the meaning attached to the word ''shall'' in the present case would have to be a mandate and not an option as before the Supreme Court. Once this distinction between the two matters is noted, the law laid down in the case of Wellington Associates Ltd., (supra) would have no application to the instant case.

Having found that respondent No.3 has concurred in the arbitration by a sole arbitrator Hon''ble Shri Justice G.D. Kamat, respondent No.2 failing to respondent to appoint an arbitrator, despite given the right to do so, would enable this Court to proceed to appoint a sole arbitrator. This is also because the other conditions stipulated by Section 11 of the Arbitration and Conciliation Act, 1996 are satisfied.

The application is, therefore, made absolute in terms of prayer clause (a), with no order as to costs. Since it is stated that Hon''ble Shri Justice G.D. Kamat does not accept any new assignments, by consent of the parties, Advocate Shri G.U. Bhobe, Retired Member of Goa Public Men''s Corruption Commission, is appointed as the sole arbitrator, who shall adjudicate upon the disputes between the parties, in accordance with law and make his award. Needless to clarify that this Court has not expressed any opinion on the rival contentions so far as merits of the applicant''s claim or defence of the respondent is concerned and each one of them are kept open.