2018 (11) TMI 1688 - HC - Indian Laws

Court dismisses arbitration applications between society and owners, ruling clause does not cover disputes.

The court upheld the lower court's decision to dismiss interlocutory applications seeking arbitration between a society and owners, as Clause-19 of the ... Arbitration clause - construction of arbitration agreement - scope of arbitration between owners and co-developer - party specific arbitration mechanism - Arbitration agreement under the Arbitration and Conciliation Act, 1996Construction of arbitration agreement - scope of arbitration between owners and co-developer - party specific arbitration mechanism - Whether Clause 19 of the Addendum encompasses disputes between an 'owner' and a 'co developer'/society so as to require reference to arbitration. - HELD THAT: - Clause 19 contains two limbs: the first records that 'owners' agree that disputes among them shall be construed under Indian law; the second incorporates subclauses (a)-(g) to apply 'in the event of any dispute or difference arising among the Parties out of, in connection with or relating to the Agreement.' The descriptive scope of which parties fall within the term 'owners' in the first limb is distinct from parties described elsewhere (including the appellant described as 'co developer'). Sub clause (e) - relied upon by the appellants - expressly deals with disputes 'which involves two or more Owners of the space in the same building' and prescribes a sole arbitrator constituted from office bearers of the respective Societies. That sub clause is therefore confined to disputes inter se among owners of spaces in the same building. The appellants (as co developer) fall under a different descriptive part of the agreement and are not within the class of 'owners' contemplated by sub clause (e) or any other sub clause of Clause 19. Consequently, the scheme and language of Clause 19 do not extend to disputes between an owner and a co developer/society and do not mandate reference of such disputes to arbitration under the Addendum.Clause 19 does not encompass disputes between the respondent (an owner) and the appellant (a co developer/society); the interlocutory applications for appointment of an arbitrator were rightly declined.Final Conclusion: The High Court dismissed the appeals, holding that the Addendum's Clause 19 does not require arbitration of disputes between an owner and the co developer/society; the lower court's refusal to refer the dispute to arbitration is upheld and interim orders are vacated. Issues:Interpretation of Clause-19 of the Addendum to the Supplemental Development Agreement for resolving disputes through arbitration between a society and owners.Analysis:The appeals arose from identical interlocutory applications filed under the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator to resolve disputes between a society and owners. The core issue revolved around whether Clause-19 of the Addendum to the Agreement covered disputes between the society and owners. The main contention was the interpretation of the clause to determine the scope of disputes subject to arbitration.The main limb of Clause-19 did not explicitly mention arbitration, while the second limb outlined the procedure for resolving disputes among the parties. The court analyzed sub-clauses (a) to (g) to ascertain the nature of disputes and the parties involved in arbitration. Sub-clause-(e) specifically referred to disputes between owners of the same building, excluding the society described as a co-developer. The court concluded that the disputes between the owner and co-developer were not covered by any sub-clause of Clause-19 for arbitration.The court upheld the decision of the lower court to dismiss the interlocutory applications, emphasizing that the disputes between the owner and co-developer were not within the purview of the arbitration clause. Additionally, the court noted that the interpretation of Clause-19 was consistent with the reasoning provided by the lower court. The dismissal of the appeals led to the vacating of interim orders and the dismissal of pending miscellaneous petitions.In conclusion, the court found no merit in the Civil Miscellaneous Appeals, affirming the lower court's decision to decline arbitration for the dispute raised by the owner. The judgment highlighted the importance of interpreting contractual clauses accurately to determine the scope of disputes subject to arbitration, ensuring clarity in resolving legal conflicts between parties involved in agreements.