Pallab Gosh and anr Vs Simplex Infrastucture

ORDER

The Hon'ble Court has considered the petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 ("the 1996 Act"), seeking the appointment of an arbitrator due to the non-appointment of an arbitrator by the respondents, as required under the arbitration clause between the parties.

FACTUAL MATRIX

The petitioners in this case entered into an agreement with the respondent for the sale of an apartment on 24.01.2017. According to the terms of the agreement, the respondent was obligated to deliver possession of the apartment by 20.12.2020. The petitioners paid 95% of the total consideration for the apartment as agreed upon, with the remaining 5% to be paid at the time of handing over possession. However, the respondent failed to deliver possession on the agreed date, resulting in the petitioners claiming interest on the amount already paid from 21.12.2020 until the date of possession, based on Section 18 of the Real Estate (Regulation and Development) Act, 2016 (RERA Act) and Clause 11.3 of the Agreement.

As per the arbitration clause included in the agreement, the dispute was to be referred to an Arbitral Tribunal consisting of three arbitrators, with each party appointing one arbitrator. The petitioners duly appointed their arbitrator and issued a notice to the respondents. However, despite receiving the notice, the respondents failed to appoint their arbitrator.

The petitioners then filed the present application under Section 11(6) of the 1996 Act, requesting the Court to appoint an arbitrator to resolve the dispute.

COURT FINDINGS

The petitioners’ counsel, Mr. S. Mitra, referred to several judgments to support the case for arbitration. He cited the judgment of the Delhi High Court in Priyanka Taksh Sood & Ors. v. Sunworld Residency Pvt. Ltd. (2022 SCC OnLine Del. 4717), where the Court held that the existence of a concurrent remedy under the RERA Act does not bar the arbitration process. In that case, the Court ruled that adjudicating a dispute through an arbitration process is not precluded merely because a parallel remedy exists under a statute like RERA.

Further, Mr. Mitra referred to the Supreme Court’s judgment in Smt. M. Hemalatha Devi & Ors. v. B. Udayasri (2023 SCC OnLine SC 1686), where the Court stated that a party may choose to pursue a dispute in arbitration even if a specific remedy is available under another statute, as long as the party opts not to avail of the special remedy. He also cited the case of Imperia Structures Ltd. v. Anil Patni & Anr. (2020) 10 SCC 783, where the Court held that the entitlement of allottees to file a claim is not dependent on the builder’s registration under RERA but is governed by the terms of the agreement.

On the other hand, the respondents’ counsel, Mr. R.J. Das, referred to the Supreme Court’s judgment in Vidya Drolia & Ors. v. Durga Trading Corporation (2021) 2 SCC 1, where it was held that arbitration could be enforced only when the law allows arbitration as an alternative remedy and when parties have mutually agreed to arbitration. Mr. Das argued that RERA is a special statute with a comprehensive mechanism for dispute resolution, and thus, the arbitration clause in the agreement should not be invoked when specific remedies are provided under the RERA Act. The respondents further relied on the Supreme Court's judgment in NTPC Ltd. v. SPML Infra Ltd. (2023) 9 SCC 385, in which the Court emphasized that the first inquiry under Section 11(6) of the 1996 Act is whether the arbitration agreement exists and is valid, followed by an examination of whether the dispute is arbitrable.

The respondents contended that since the dispute in this case pertains to the non-completion of the apartment under the RERA Act, it is not arbitrable, as RERA provides specific remedies for such disputes.

The Court, after considering the submissions of both parties, observed that while the RERA Act does provide a dispute resolution mechanism, the petitioners' choice to pursue arbitration is valid, as there is an existing arbitration agreement between the parties. The Court noted that as per the judgments cited by the petitioners, the mere existence of a parallel remedy under RERA does not preclude arbitration, especially when the parties have agreed to arbitration in the agreement. The Court further reiterated that the election of forum is a matter of choice for the aggrieved party, and if arbitration is invoked, it must be respected.

ORDER

In light of the submissions and the legal precedents cited, the Court directed that the matter be adjourned and scheduled a further hearing for 19.03.2024. The Court also noted that in the interim, the respondents should appoint their arbitrator in compliance with the terms of the arbitration agreement. If the respondents fail to do so, the Court may proceed with appointing an arbitrator on their behalf, as per the procedure outlined under Section 11 of the Arbitration and Conciliation Act, 1996.