TaxTMI 
TaxTMI 
2023 (4) TMI 1357
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..... 1324/2022 2. The petitioner no.1 herein is the owner of following three 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....
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....r Unit No. 1002 and Unit No. 1003 (NDM-1) and (b) sale deed dated 13.12.2010 for Unit No. 506 (NDM-2), in favour of the 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 i....
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.... 12. It is contended that the maintenance agency derives its authority to act as such from the developer. The developer is stated to exercise direct and complete control over 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 ....
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....NTPC Ltd vs. M/S SPML Infra Ltd., Civil Appeal No. 4778/2022 to contend that it is incumbent on this court to examine as to whether the respondent no.3 (developer) can be impleaded in the proposed arbitration and that while 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 &n....
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...., when a signatory party invokes arbitration against a non-signatory party, since the non-signatory party has never consented to the remedy of arbitration itself, there is a heavy burden on the signatory party to establish that the non-signatory 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 agreemen....
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....ns between the petitioner and respondent No. 1. xxx 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....
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.... No. 1. 29. As a sequitur to the above, the present petition cannot be allowed against respondent No. 2, much less only for the reason that respondent No. 1 is presently under moratorium." (emphasis supplied in original) 17. Learned counsel for the respondent no.3 also opposes the 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 neit....
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....ENANCE AGENCY AND OTHER DETAILS Leasing out of designated facade signage The Promoter will identify and earmark signages on the facade of the complex/building, which will be allotted to the Maintenance agency. The Maintenance agency shall rent them to any third party for monthly consideration. Such consideration shall be acceptable to the Promoter. The Maintenance agency shall pay 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 o....
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....tely untenable for the respondent no.3 (developer) to disassociate itself from the maintenance activities being carried out by the maintenance agency. It is also evident that the aforesaid agreement dated 30.06.2008 between the respondent no.3 (developer) and the maintenance agency is inextricably connected with the maintenance agreements between the maintenance agency and the petitioner no.1. In fact, the maintenance agreements between the petitioner no.1 and the maintenance agency(the arbitration clause 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 whe....
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...., on good faith principle. They apply to private as well as public legal entities. 103.2. The second theory includes the legal doctrines of agent-principal relations, apparent authority, piercing of veil (also called "the alter ego"), joint venture relations, succession and estoppel. They do not rely on the parties' intention but rather on the force of the applicable law. ... 105. We have already discussed that under the group of companies doctrine, an arbitration agreement entered into by a company within a group of companies 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....
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.... on the contract when it works to its advantage and ignor[ing] it when it works to its disadvantage." Tepper Realty Co. v. Mosaic Tile Co. [Tepper Realty Co. v. Mosaic Tile Co., 259 F Supp 688 (SDNY 1966)]. The direct benefits doctrine reflects that core principle by preventing a party from claiming rights under a contract but, at the same time, disavowing the obligation to arbitrate in the same contract. * * * By contrast, the intertwined estoppel theory looks ....
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....Act. 49. An arbitration agreement may be binding on parties, whether signatories or non-signatories, provided there is sufficient legal basis to bind them. Most legal bases for binding non-signatories to an arbitration agreement are of contractual origin, like agency, etc. Jurisprudence has shown that arbitration being a creature of contract, does not sit very well in binding non-signatories. Expounding on the same, Professor William Park, in one of his key works, captures the dilemma while attaching a non-signatory to the arbitral process [ William W. Park, Non-Signatories and International Contracts : An 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 ... T....
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....enance charges being charged by the maintenance agency are excessive or not, cannot be decided in the absence of the developer. 31. The reliance sought to be placed by learned senior counsel for respondent no.1 on the judgment of the Supreme Court in the case of NTPC Ltd vs. M/S SPML Infra Ltd. (supra) and of this court in Umesh Cimechel Consortium vs. IIC Limited & Ors. (supra) is also misconceived. 32. In NTPC Ltd vs. M/S SPML Infra Ltd. (supra), it has been reaffirmed by the Supreme Court that the Arbitral Tribunal is a preferred first authority to determine and decide all questions of non-arbitrability. In this regard reference may be 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 ....
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....o arbitration. On the other hand, even if there is a slightest doubt, the rule is to refer the dispute to arbitration. In this regard, reference may be made to the following observations: "27. The standard of scrutiny to examine the non-arbitrability of a claim is only prima facie. Referral courts must not undertake a full review of the contested facts' they must only be confined to a primary first review and let facts speak for themselves. This also requires the courts to examine whether the assertion on arbitrability is bona fide or not. The prima facie scrutiny of the facts must lead to a clear conclusion that there is not even a vestige of doubt that the claim 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 derog....
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....f the learned counsel for the petitioner. The relevant recitals in the Maintenance Agreement is reproduced hereinbelow:- "AND WHEREAS the Company was engaged by M/s V3S lnfratech 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." 7. The respondent no.1 is, therefore, acting at the behest of the respondent no.3 and at least, prima facie, the respondent no.3 would also be a party to the Arbitration Agreement. This issue may require a further detailed examination by the Arbitral 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 ....