TaxTMI 
TaxTMI 
2023 (4) TMI 1357
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....e commercial units: 3. The petitioner no.2 is a sole proprietorship firm of the petitioner no.1 which is stated to be in occupation of the aforesaid units as a lessee. 4. The respondent no.3 is the builder/developer (hereinafter referred to as the "developer") of the buildings known as NDM-1 situated at Plot No. B-2, 3, 4, Netaji Subhash Place, Delhi-110034 and NDM-2 situated at Plot No. B-1,2,3, Netaji Subhash Place, Delhi-110034. The respondent no. 1 has been appointed by the developer as the maintenance agency for the said buildings responsible, inter-alia, for (i) Operation & Maintenance of air-conditioning system and plants, Fire-Fighting systems, lifts, other electrical & mechanical equipment systems as installed by the promoter/developer of the said building, (ii) maintenance of commons areas including basement, common areas, terraces, refuge areas etc., (iii) operation and maintenance of electric sub-station, pumps, transformer, D.G. Sets, Water Tanks, (iv) maintenance of compound wall, facade, landscaping, electrification, water supply, sewerage, roads, paths and other services within the said building, (v) security services for the building, (vi) insurance of the common....
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....he petitioner no.1 by the predecessor in interest of the said units who in turn had purchased the said units from the developer/builder i.e. the respondent no.3 herein. 8. An agreement for services dated 30.06.2008 has been entered into between the developer (respondent no.3) and the respondent no.1, pursuant to which the respondent no.1 was appointed as maintenance agency. A copy of the said agreement has been submitted by learned senior counsel for respondent no.1 during the course of the hearing, and has also been appended along with the written submissions filed on behalf of respondent no.1. 9. The maintenance agreements have been executed for aforesaid units i.e. (a) maintenance agreement dated 01.11.2015 for Unit No. 1002 and Unit No. 1003 (NDM-1), between the respondent no.1, respondent no.2 and the petitioner no.1, and (b) maintenance agreement dated 03.12.2010 for Unit No. 506 (NDM-2) between the respondent no.1, respondent no.2 and predecessor in interest of the said unit, subsequently endorsed by the petitioner no.1. The arbitration agreement which is sought to be invoked by the petitioners is contained in Article 20 of the said maintenance agreements which provides as....
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....ver the activities of the maintenance agency in terms of their inter se agreement. It is further contended that the calculation of the super area in respect of which maintenance charges are payable necessarily requires the developer to be a party in proposed arbitration inasmuch, the developer has constructed the buildings in question and has earmarked/developed the common areas therein. 13. In support of its contentions regarding impleadment of respondent no.3 in the arbitration proceedings, learned senior counsel for the petitioners has relied upon the judgments of Supreme Court in the case of Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., (2013) 1 SCC 641and ONGC Ltd. v. Discovery Enterprises (P) Ltd., (2022) 8 SCC 42. 14. On the other hand, learned senior counsel for the respondent no.1 has contended that the disputes sought to be raised by the petitioners cannot be adjudicated in the absence of the respondent no.3. He has further contended that there is no arbitration agreement between the petitioners and the respondent no.3 (developer). It is also contended that the maintenance agency is an independent contractor and is neither a group company nor a....
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....hile exercising jurisdiction under Section 11 of the A&C Act, the referral court must not relegate this aspect of the matter to the arbitrator. Specific reliance has been placed on the following paragraphs of the said judgement: "25. Eye of the Needle: The above-referred precedents crystallize the position of law that the pre-referral jurisdiction of the courts under Section 11(6) of the Act is very narrow and inheres two inquiries. The primary inquiry is about the existence and the validity of an arbitration agreement, which also includes an inquiry as to the parties to the agreement and the applicant's privity to the said agreement. These are matters which require a thorough examination by the referral court. The secondary inquiry that may arise at the reference stage itself is with respect to the non-arbitrability of the dispute. xxx xxx &nb....
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....y party had agreed to arbitration. In this regard, the Supreme Court has held in Reckitt Benckiser (supra) that the burden to establish that a non-signatory party had consented to arbitration is on the applicant, in the following words: "12. In the backdrop of the averments in the application and the correspondence exchanged between the parties adverted to by the applicant, it is obvious that the thrust of the claim of the applicant is that Mr. Frederik Reynders was acting for and on behalf of Respondent 2, as a result of which Respondent 2 has assented to the arbitration agreement. This basis has been completely demolished by Respondent 2 by stating, on affidavit, that Mr. Frederik Reynders was in no way associated with Respondent 2 and was only an employee of Respondent 1, who acted in that capacity during the negotiations preceding the execution of agreement. Thus, Respondent 2 was neither the signatory to the arbitration agreement nor did have any causal connection with the process of negotiations preceding the agreement or the execution thereof, whatsoever. If the main plank of the applicant, that Mr. Frederik Reynders was acting for and on behalf of Respondent 2 and had the....
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....nbsp; xxx xxx 23. In the opinion of this court, notwithstanding the above allegations, notice dated 27.08.2021 issued by the petitioner to respondent No. 2 does not raise any independent disputes with respondent No. 2; and does not call upon respondent No. 2 to refer any disputes to arbitration. The disputes sought to be raised by the petitioners and the claims made by it relate only to respondent No. 1; and there is nothing to show that respondent No. 2 was liable to pay the petitioner's dues if respondent No. 1 defaulted in doing so. The subject bank guarantees, in relation to which relief is sought by the petitioner, were admittedly issued by the petitioner only in favour of respondent No. 1; and the petitioner cannot therefore se....
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.... present petitions and contends that the disputes sought to be raised by the petitioners are not arbitrable for the reasons that they involve and affect third party interest and rights, who are the respective owners of different commercial units inside the buildings in question. Besides, it is contended that the respondent no. 3 is not a party to the relevant maintenance agreements containing the arbitration clause which has been sought to be invoked by the petitioners, and as such, the respondent no. 3 cannot be made a party to the proposed arbitration. 18. It is further contended that the respondent no.3 has appointed respondent no.1 on a principal to principal basis as the maintenance agency of the concerned buildings and as such, the respondent no.3 has nothing to do with maintenance of common areas of the said buildings. 19. It is further contended that the respondent no.3 is neither a sister concern nor the parent company of respondent Nos. 1 and 2. Hence, the present petitions qua respondent no. 3 are stated to be misconceived. Analysis and Findings 20. A perusal of the agreement dated 30.06.2008 between the respondent no.3 (developer) and the maintenance agency leaves n....
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....70% (Seventy Percent) of the monthly receipts towards signage to the Promoter and keep the remainder i.e. 30% (Thirty percent) of the receipts as part of the its remuneration for providing the services. Receipt from Parking areas The Promoter will identify an earmark parking areas in the Complex/building which the Maintenance agency can operate either through itself or through a nominated specialized agency/contractor on pay and park basis. The Maintenance agency shall pay 70% (Seventy Percent ) of the monthly receipts towards parking to the Promoter and keep the remainder i.e. 30 % (Third percent ) of the receipts as part of its remuneration for providing the services. ARTICLE 8 TERMINATION 8.1 Without prejudice to any right of Promoter and occupiers, the Promoter may with immediate effect, terminate this Agreement in the event the Maintenance Agency: (i) Is in breach of any of the terms and conditions of this Agreement, which, in the case of a breach capable of remedy, has not been remedied by the Maintenance agency within 4 (four) days from receipt of a notice given by the occupier and/or the Promoter specifying the breach and calling for its cure/rectification/remed....
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....ause of which has been invoked by the petitioners), expressly records as under: "AND WHEREAS the Company was engaged by M/s V3S Infratech Ltd. (herein after referred to as the Promoter or Developer) to provide maintenance and security related services by itself or through some other maintenance agency in the said Building located at the said plot either through itself or by engaging some reputed agency." 23. In Chloro Controls (supra) it has been held by the Supreme Court that a non signatory or a third party can be impleaded in arbitration in certain situations, especially when there is a direct relationship between the signatory parties and the non-signatory party and when there is "direct commonality of the subject matter and the agreement between the parties being a composite transaction". In this regard it was also observed that the court would also examine whether a composite reference of such parties would serve the ends of justice. Specific reference may be made to the following observation of the Supreme Court: "73. A non-signatory or third party could be subjected to arbitration without their prior consent, but this would only be in exceptional cases. The court will ....
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....es can bind its non-signatory affiliates, if the circumstances demonstrate that the mutual intention of the parties was to bind both the signatory as well as the non-signatory parties. ... 107. If one analyses the above cases and the authors' views, it becomes abundantly clear that reference of even non-signatory parties to an arbitration agreement can be made. It may be the result of implied or specific consent or judicial determination. Normally, the parties to the arbitration agreement calling for arbitral reference should be the same as those to the action. But this general concept is subject to exceptions which are that when a third party i.e. non-signatory party, is claiming or is sued as being directly affected through a party to the arbitration agreement and there are principal and subsidiary agreements, and such third party is signatory to a subsidiary agreement and not to the mother or principal agreement which contains the arbitration clause, then depending upon the facts and circumstances of the given case, it may be possible to say that even such third party can be referred to arbitration." [emphasis supplied] 26. In the present case, the impleadment of the r....
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....sp; * * By contrast, the intertwined estoppel theory looks not to whether any benefit was received by the non-signatory, but rather at the nature of the dispute between the signatory and the non-signatory, and, in particular whether "the issues the non-signatory is seeking to resolve in arbitration are intertwined with the agreement that the estoppel [signatory party] has signed....the intertwined estoppel theory has as its central aim the perseveration of the efficacy of the arbitration process is clear when one looks at the typical fact pattern of an intertwined estoppel case." [John Fellas, "Compelling Signatories to Arbitrate with Non-Signatories", Ne....
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.... Arbitrator's Dilemma, in Multiple Parties in International Arbitration (Oxford University Press) (2009).] as under: "For arbitrators, motions to join non-signatories create a tension between two principles : maintaining arbitration's consensual nature, and maximizing an award's practical effectiveness by binding related persons. Pushed to the limit of their logic, each goal points in an opposite direction. Resolving the tension usually implicates the two doctrines discussed below : implied consent and disregard of corporate personality ... The term "non-signatory" remains useful for what might be called "less-than-obvious" parties to an arbitration clause : individuals and entities that never put pen to paper, but still should be part of the arbitration under the circumstances of the relevant business relationship. The label does little harm if invoked merely for ease of expression, to designate someone whose right or obligation to arbitrate may be real but not self-evident ... Most significantly, the fact that a "non-signatory" might be bound to arbitrate does not dispense with the need for an arbitration agreement. Rather, it means only that the agreement takes....
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....e made to the following observations in the said judgment: "24. Following the general rule and the principle laid down in Vidya Drolia (supra), this Court has consistently been holding that the arbitral tribunal is the preferred first authority to determine and decide all questions of non-arbitrability. In Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engg. Pvt. Ltd., Sanjiv Prakash v. Seema Kukreja and Ors., and Indian Oil Corporation Ltd. v. NCC Ltd., the parties were referred to arbitration, as the prima facie review in each of these cases on the objection of non-arbitrability was found to be inconclusive. Following the exception to the general principle that the court may not refer parties to arbitration when it is clear that the case is manifestly and ex facie non-arbitrable, in BSNL and Anr. v. Nortel Networks India (P) Ltd. and Secunderabad Cantonment Board vs. B. Ramachandraiah & Sons, arbitration was refused as the claims of the parties were demonstrably time-barred. xxx &....
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....im is non-arbitrable. On the other hand, even if there is the slightest doubt, the rule is refer the dispute to arbitration." 34. In NTPC Ltd vs. M/S SPML Infra Ltd. (supra), the Supreme Court proceeded to conduct a "primary first review" in the context of allegations made by the petitioner therein that the settlement agreement executed between the parties was a product of coercion and economic duress and therefore, did not preclude the petitioner from seeking reference of the disputes to arbitration in derogation of the settlement agreement entered into between the parties. It was in this background that the Supreme Court held that the claims sought to be submitted to arbitration were raised as an after-thought and that the allegation of the petitioner therein regarding the settlement agreement being vitiated on account of coercion and economic duress, was not bona fide. There is no parallel with the facts of the said case with the facts of the instant case. 35. Likewise, the reliance placed by learned senior counsel for the respondent no.1 on the judgment of this Court in the case of Umesh Cimechel Consortium vs. IIC Limited & Ors. (supra) is also misconceived. In that case, th....
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....ral Tribunal, which for the purposes of the present should not be undertaken in view of the judgment of the Supreme Court in Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1. 8. The learned counsel for the respondent no.1 submits that he is not ready with the arguments today. 9. I have perused the reply filed by the respondent no.1 and find that in the reply the only objection to the appointment of the Arbitrator is on the merits of the disputes raised by the petitioner. In any case, any objection on the jurisdiction of the Arbitrator can be raised by the respondent no.1 before the Arbitrator himself. 10. In view of the above, as the existence of the Arbitration Agreement and due invocation thereof is not denied by the respondent no. 1, and for respondent no. 3, I prima facie find the respondent no. 3 to be also bound by the Arbitration Agreement, I see no impediment in appointing a Sole Arbitrator." 39. Needless to say, impleadment of the respondent no.3 in the arbitration proceedings would be subject to a further detailed examination by the Arbitral Tribunal based on submissions of the parties and the material placed before the Arbitral Tribunal. As held by the Supreme....