TaxTMI 
TaxTMI 
2021 (8) TMI 1449
X X X X Extracts X X X X
X X X X Extracts X X X X
....A Memorandum of Understanding (MoU) was executed between the petitioner and the respondent on 11th August, 2016, whereby the respondent agreed to purchase an apartment from the petitioner in Gurgaon, and which MoU contained an arbitration clause. A tripartite agreement was entered into between the respondent, HDFC and the petitioner on 15th October, 2016 whereby the respondent took a loan from HDFC to finance the apartment and to create a mortgage. Disputes arose between the parties, which led to filing of an application under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) on behalf of the respondent. Vide order dated 29th January, 2021, a Sole Arbitrator was appointed by this Court to adjudicate the disputes between the parties. The petitioner raised the issue of non-arbitrability of the disputes before the Sole Arbitrator, which was rejected by the Sole Arbitrator vide impugned order dated 23rd June, 2021. 5. The counsel for the petitioner has drawn my attention to Claim No. 3 of the Statement of Claim filed by the respondent before the Sole Arbitrator to contend that the relief claimed therein is towards foreclosure of the loan taken by the respondent with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ia in respect of proceedings arising under the A&C Act, has been elucidated in Bhaven Construction (supra). Relevant extracts from the aforesaid judgment are reproduced below: "10. Having heard both parties and perusing the material available on record, the question which needs to be answered is whether the arbitral process could be interfered under Article 226/227 of the Constitution, and under what circumstance? 11. We need to note that the Arbitration Act is a code in itself. This phrase is not merely perfunctory, but has definite legal consequences. One such consequence is spelled out under Section 5 of the Arbitration Act, which reads as under "Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part." The non-obstante clause is provided to uphold the intention of the legislature as provided in the Preamble to adopt UNCITRAL Model Law and Rules, to reduce excessive judicial interference which is not contemplated under the Arbitration Act. 12. The Arbitration Act itself gives various procedures and forums to challenge t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on. (emphasis supplied) 18. It is therefore, prudent for a Judge to not exercise discretion to allow judicial interference beyond the procedure established under the enactment. This power needs to be exercised in exceptional rarity, wherein one party is left remediless under the statute or a clear 'bad faith' shown by one of the parties. This high standard set by this Court is in terms of the legislative intention to make the arbitration fair and efficient. 22. If the Courts are allowed to interfere with the arbitral process beyond the ambit of the enactment, then the efficiency of the process will be diminished. 23. The High Court did not appreciate the limitations under Articles 226 and 227 of the Constitution and reasoned that the Appellant had undertaken to appoint an arbitrator unilaterally, thereby rendering the Respondent No. 1 remediless. However, a plain reading of the arbitration agreement points to the fact that the Appellant herein had actually acted in accordance with the procedure laid down without any mala fides. 27. It must be noted that Section 16 of the Arbitration Act, necessarily mandates that the issue of jurisdiction must....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by the award has the right to challenge the same under Section 34. Under the scheme of the A&C Act, there is no provision for a challenge to an order passed by the Sole Arbitrator rejecting the challenge to the jurisdiction of an Arbitral Tribunal. The aggrieved party will have to wait till the final award is passed and it is only at that stage that he may challenge the same under Section 34. Any attempt to expand the scope of interference by the High Court in exercise of its power under Articles 226 or 227 of the Constitution would defeat the purpose of A&C Act. 12. In the present case, the petitioner had taken the plea of non-arbitrability of disputes in the Section 11 proceedings. However, the said plea did not find favour with the Court and the Court proceeded to appoint the Sole Arbitrator, holding that the issue of non-arbitrability of a dispute is a contentious one and the same has to be decided by the Sole Arbitrator. It is an admitted position that the petitioner did not challenge the said order and thereafter submitted himself to the jurisdiction of the Sole Arbitrator. 13. The petitioner filed an application before the Sole Arbitrator questioning the jurisdictio....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... amount. Neither the bank has initiated any proceedings against any of the parties for foreclosure of the loan amount. Simply by using the word 'foreclosure' it does not become a non-arbitrable dispute. The Claimant has asked the Respondent to foreclose the bank loan as agreed between the parties under the Memorandum of Understanding. In the Tripartite Agreement itself in clause 3 para (ii), it was provided: ''3 . ..... ........... . The Borrower has informed HDFC of the scheme of arrangement between the Borrower and the Builder in terms whereof the Builder hereby assumes the liability of payments under the loan agreement as payable by the Borrower to HDFC till the period be referred to as the 'Liability Period' and 'the Liability be referred to as 'Assumed Liability'. It is however, agreed that during the liability period the repayment liability is joint and several by and between the Borrower and the Builder. The assumption of liability by the Builder in no manner whatsoever releases, relinquishes and/or reduces the liability of the Borrower and that same shall not be affected in any manner on account of any difference and/or ....