TaxTMI 
TaxTMI 
2025 (8) TMI 651
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....iation Act, 1996. The arbitration shall be held at Kolkata and shall be in English language. 2. Mr. Rudraman Bhattacharya, learned senior Advocate for the petitioner submitted that the respondent no. 1 was a Company. The respondent no. 2 was the Director of the respondent no. 1. The respondents entered into a development agreement with the petitioner. A sum of Rs. 1 crore was the total consideration payable for two flats on the third floor of the proposed building along with two car parking spaces, as described in the Schedule of the said agreement. Although, the payment was made on April 13, 2012, no formal agreement was executed on the date of payment. The development agreement was executed on April 13, 2012. According to the agreement, the respondents were required to deliver the aforesaid flats and the parking spaces to the petitioner, within December 2013. The time for performance of the agreement was extended from time to time, as the respondents were unable to obtain the sanction plan from the concerned Municipal Corporation. The petitioner allegedly called upon the respondents on various occasions to either execute a deed of sale and deliver the possession of the two fla....
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....a sum of Rs. 1.25 crores along with interest at the rate of 24% per annum from December 2020. An application under section 9 of the Arbitration and Conciliation Act, 1996 was filed before the learned District Judge, South 24 Parganas, at Alipore, inter alia, for interim protection of the property in dispute. By an order dated July 13, 2023, the learned District Judge was pleased to direct the respondents not to encumber the property in question, to the extent of the value of Rs. 1.25 crores, till August 10, 2023. The said interim order had been extended from time to time and was still subsisting. 4. Mr. Bhattacharya contended that there were live disputes and differences between the parties, arising out of the agreement dated April 13, 2023. The agreement contained an arbitration clause. The disputes were covered by the arbitration clause. By a notice dated August 7, 2023, the arbitration clause was invoked. The notice was received by the respondents on August 9, 2023. The respondents replied through their learned Advocate's letter dated August 28, 2023 and denied that there was a valid arbitration agreement between the parties. The respondents refused to accede to the request f....
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....ed by the learned Advocate for the petitioner, specific performance of the agreement was demanded. The learned Advocate for the petitioner asked for refund of the amount of Rs. 1 crore along with the interest at the rate of 33% per annum. The petitioner issued a demand notice under section 8 of the Insolvency and Bankruptcy Code, 2016 (in short 'IBC') on January 30, 2018 alleging that there had been default in payment of the dues of the petitioner with effect from January 1, 2014. According to the petitioner, the debt became due to the petitioner on January 1, 2014. The money claim of Rs. 1.25 crores along with interest was thus ex facie time barred and 'dead wood', as three years had expired from the date when the money became payable. Between July, 2016 and November 2020, no steps were taken by the petitioner. Even though it was alleged that, there had been breach on the part of the respondents to either construct and deliver the flats and / or refund the amount advanced by the petitioner, the letter dated December 15, 2020, was issued by the respondents, beyond the period of three years from the date when the debt became due and/or when specific performance of the agreement w....
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....f events and the averments made by the petitioner in different proceedings before different forum, would clearly indicate that the petitioner's case was that, the cause of action arose on and from January, 2014. Only because the petitioner was successful in obtaining an ex-parte interim order against the respondents in the application under section 9 of the said Act, the same would not be an adequate reason for this Court to refer an ex facie time barred dispute to arbitration. The definition of default under IBC, 2016 was non-payment of debt when whole or any part or instalment of the amount of the debt had become due and payable and was not repaid by the debtor or the corporate debtor, as the case may be. The petitioner disclosed a ledger in Form 3 showing that it was entitled to an aggregate sum of Rs. 3,24,51,916/- along with interest calculated at 33% per annum. In such ledger, the petitioner levied interest on and from January 1, 2024, as the default and/or breach of the respondents occurred from January 1, 2024. The petitioner had mentioned the aforesaid date as the date of default. 8. On the issue of the claim being ex facie barred, reference was made to the decision of ....
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....e with provisions of the Arbitration and Conciliation Act, 1996, as modified from time to time. The Arbitration shall be held at Kolkata and shall be in English, Language." 10. The above clause is a binding arbitration agreement. The disputes arose due to failure on the part of the respondents to construct and handover possession of the flats and car parking spaces which were agreed to be sold to the petitioner under the agreement dated April 13, 2012. Thereafter, the respondents undertook to refund the money advanced by the petitioner upon sale of the land upon acknowledging that the contract could not be performed. The description of the unit proposed to be sold is quoted below :- "ALL THAT two flats, (the aggregate super built-up area whereof shall not be less than 3000 square feet) on the third floor of the proposed building at the said premises No. 9A Gobindo Addy Road, Kolkata fully described in the FIRST SCHEDULE hereinabove written Together with two covered car parking spaces on the ground floor of the new building at the said premises TOGETHER WITH proportionate undivided share in the land comprised in the said premises attributable to the said Units and propor....
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....cumstances. The respondents decided to sell the land and return 1.25 crores to the petitioner. The petitioner was requested to cancel the agreement after receipt of the money, and be a confirming party for the sale of land. The very fact that the respondents requested the petitioner to cancel the agreement upon receipt of the money, indicates that the agreement was alive. At least, the parties considered the same to be alive. Moreover, the petitioner submits that specific performance of the contract can be claimed from accrual of the cause of action, i.e., the letter dated December 15, 2020, as the time for performance had been extended and the first refusal came with the said letter. Further, the amount as promised under the letter dated December 15, 2020, along with interest, had not been paid. This may also give rise to a fresh cause of action. Whether the petitioner shall be entitled to specific performance or refund of the money as promised in the letter dated December 15, 2020, are matters to be decided by the learned Arbitrator. It has been often held that in case of construction contracts, time is never of the essence. Even if the petitioner's cause of action for specific p....
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....er section 11(6) of the 1996 Act was barred by limitation and secondly, whether the claims sought to be arbitrated were ex facie dead claims. This court, at this stage, cannot reject the application and the learned Arbitrator will be the appropriate forum to decide the issue of limitation and also whether the cause of action in this case accrued on and from December 15, 2020 or not. In Aslam Khan Deshmukh (Supra), the Apex Court held that in order to balance the limited scope of judicial interference under section 11(6) of the said Act and the interest of the parties who might be constrained to participate in the arbitration proceedings, the Arbitral Tribunal may direct that costs of the arbitration shall be borne by the party found by Tribunal to have abused the process of law and caused unnecessary harassment to the other party in the arbitration. Here, the existence of the arbitration clause is not in dispute. The fact that there is a dispute between the parties since long, is available. Under such circumstances, when the learned arbitrator has the authority to decide on the arbitrability and admissibility of the dispute, including whether the claim is time barred or not, even a....