2008 (10) TMI 359 - HC - Companies Law

Court dismisses appeal and arbitration application, upholding Single Judge's order. Appellants failed to prove valid arbitration agreement.

Rajesh Construction Co. Ltd. Versus Ravilal Nanji Dedhia

Rajesh Construction Co. Ltd. Versus Ravilal Nanji Dedhia - [2010] 3 Comp. LJ 572 (BOM.) Issues Involved:1. Dismissal of the arbitration petition under Section 9 of the Arbitration and Conciliation Act, 1996.2. Appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.3. Existence and validity of the Memorandum of Understanding (MoU) dated 8 November 2004.4. Allegations of misrepresentation and discrepancies in the MoU.5. Legal precedents and statutory interpretation regarding arbitration agreements.Detailed Analysis:1. Dismissal of the Arbitration Petition under Section 9 of the Arbitration and Conciliation Act, 1996:The appeal arises from the judgment dated 27 August 2007, where the learned Single Judge dismissed the arbitration petition filed under Section 9 of the Arbitration and Conciliation Act, 1996. The petition sought an injunction pending arbitration. The learned Single Judge found serious disputes regarding the existence of the MoU and expressed doubts about any right, title, and interest in the property being created in favor of the Rajesh Builders group. Consequently, the petition was dismissed.2. Appointment of an Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996:The arbitration application No. 43 of 2008 was filed for the appointment of an arbitrator as per Section 11 of the Act. The court examined whether a valid arbitration agreement existed between the parties to justify the appointment of an arbitrator. The court found that the appellants failed to establish the existence of a valid arbitration agreement and thus dismissed the application.3. Existence and Validity of the Memorandum of Understanding (MoU) dated 8 November 2004:The controversy centered around a purported MoU between the Ravilal Nanji Dedhia group and Rajesh Builders group. The appellants claimed that the MoU was executed on 8 November 2004, and included an arbitration clause appointing Shantilal Vershi Haria as the sole arbitrator. However, the respondents denied the existence of such an MoU. The court noted discrepancies in the MoU presented and the lack of clear evidence, such as signed copies or specific details about the execution of the MoU.4. Allegations of Misrepresentation and Discrepancies in the MoU:The respondents highlighted significant discrepancies in the MoU documents annexed to different petitions. The court found that the appellants could not produce a signed original MoU or any corroborating evidence of its execution. Additionally, the court noted the return of Rs. 1.5 crores to the appellants without any protest, which further weakened the appellants' claim of a joint venture agreement.5. Legal Precedents and Statutory Interpretation Regarding Arbitration Agreements:The court referred to several judgments to interpret the statutory requirements for a valid arbitration agreement under Section 7 of the Act. It emphasized that an arbitration agreement must be in writing and signed by the parties. The court cited judgments such as Charu Trading Company (P) Ltd. v. Saimangai Investrade Ltd., Pramod Chimanbai Patel v. Lalit Constructions, and Atul Singh v. Sunil Kumar Singh, which reinforced the necessity of a clear, written, and signed arbitration agreement. The court concluded that the appellants failed to meet these statutory requirements.Conclusion:The court dismissed both the appeal and the arbitration application, finding no error or illegality in the learned Single Judge's order. The appellants failed to establish the existence of a valid arbitration agreement, and thus, relief under Sections 9 and 11(6) of the Act was not warranted. The court also denied the appellants' request for a stay of the order, citing the absence of any ad-interim relief granted previously and potential prejudice to the respondents.