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Vijayashanthi Builders Limited, Rep. by its Managing Director, Chennai & Another v/s Amient Hotels Resorts and Estates Private Limited, Rep. by its Authorised Signatory, Chennai & Others

    C.M.A. No. 980 of 2022 & C.M.P. No. 7268 of 2022
    Decided On, 18 July 2022
    At, High Court of Judicature at Madras
    By, THE HONOURABLE MS. JUSTICE P.T. ASHA
    For the Appellants: R. Parthasarathy, Advocate. For the Respondents: R1, Maimoona Badsha, Advocate, R3, No Appearance.


Judgment Text
(Prayer: Civil Miscellaneous Appeal is filed under Section 37 of the Arbitration and Conciliation Act, 1996 as amended, against the Award and Decree dated 18.01.2022 in I.A.No.1 of 2021 in O.P.No.934 of 2019 passed by the learned Arbitral Tribunal comprising of the Hon'ble Ms.Justice C.T. Selvam (Retd.), Hon'ble Ms.Justice R.Mala (Retd.) and Hon'ble Mr.Justice G.M.Akbar Ali (Retd.).)

1. The proposed parties who have been impleaded by orders of the Arbitral Tribunal in I.A.No.1 of 2021 are the appellants before this Court. The parties are referred to in the same rank and array as before the Arbitral Tribunal.

2. The facts in brief which have given rise to the filing of the above appeal is hereinbelow narrated.

The claimant had entered into a Joint Development Agreement dated 30.11.2010 with the respondents 1 and 2 in respect of the property comprised in S.Nos.126/2C, 126/2D and 126/2E of Thiruvidanthai Village, Chenagalpattu Taluk, measuring a total area of 273.75 cents. The 1st respondent was originally called M/s. Influence Life Style Stores Private Limited which has been subsequently changed its name and now known by its present name. The 1st respondent was represented by its Director, the 2nd respondent herein. In the month of November 2010, they had approached the claimant showing interest in developing the lands. The parties after negotiation had entered into a Joint Development Agreement for construction and promotion of 22 luxury villas (“the Project”) of which 11 villas were to be given to the claimant, however, contrary to the assurance, the 1st respondent had not proceeded to fulfill its obligation under the Joint Development Agreement. The Earnest Money Deposit of Rs.1 crore was paid in full and only a sum of Rs.75 lakhs was paid by a Cheque which got dishonoured. Thereafter, several reminders were sent to the 1st respondent and ultimately, a sum of Rs.74,24,096/- to compensate the dishonoured cheque was paid. The remaining amounts due to the security deposit remained unpaid.

3. It appears that the 3rd and 4th respondents who are none else than the sisters concern of the 1st respondent in which the 2nd respondent is also a Director had agreed to step in and ensure the completion of the Project. In fact, the respondents 3 and 4 published advertisements where they have advertised the sale of villas and homes in three real estate projects with full descriptions of the locations and one such location was the subject Project. Thereafter, the parties had also negotiated and a draft Joint Development Agreement had been forwarded to the 3rd and 4th respondents and the parties had agreed in principle to the terms therein and the 3rd and 4th respondents also started the work on the project. Since there was no progress a Legal Notice was issued by the claimant on 03.11.2017 to which there was no response from the respondents.

4. In the meanwhile, one of the allottees had approached the Tamilnadu Real Estate Authority, Chennai and ultimately, the claimant had invoked the arbitration clause and demanded the 1st respondent to appoint an Arbitrator to settle the dispute by its first Legal Notice dated 03.11.2017 and 2nd notice dated 24.07.2019. Since the respondents refused to proceed to appoint the Arbitrator the claimants had approached this Court seeking appointment of an Arbitrator and the same was also ordered on 06.01.2021. The Arbitrator has entered reference. Since the proposed respondents were necessary parties to the proceedings the claimant had taken out an application in I.A.No.1 of 2021 to implead the respondents 3 and 4 as parties to the Original Petition. The claimant had relied upon the observation made by the TNRERA that the advertisement issued by the respondents 3 and 5 would show that there was an nexus between the 1st and 2nd respondents and the proposed respondents 3 and 4. The 2nd respondent is the Managing Director of the 1st respondent and the brother of the Managing Director of the proposed 3rd defendant. The 2nd respondent who is the Managing director of the 1st respondent is also the brother of the Managing Director of the proposed 3rd respondent. They had approached the prospective buyers for the sale of villas and they had also stated that the 1st and 2nd respondents are the sisters concern of the proposed 3rd respondent. The 3rd respondent had provided financial assistance to the 1st respondent in order to ensure the completion of the project. Therefore, it is the contention of the claimant that the respondents 1 and 2 and the proposed respondents are members of the same family and therefore, they must be impleaded.

5. The said application was resisted by the respondents/proposed parties by contending that the application was totally misconceived and a clear abuse of process of law, particularly when there is no privity of contract between the respondents 3 and 4 and the claimant. They would also submit that the 3rd respondent Company is an independent entity. The sum and substance of the counter is that since there is no privity of contract between the respondents 1 and 2 and the respondents 3 and 4 and the claimant, the proposed respondents were unnecessary parties to the proceedings. The Arbitral Tribunal by its order dated 18.01.2002 allowed the application and impleaded the proposed respondents. Aggrieved by the same, the proposed respondents are before this court.

6. Mr.R.Parthasarathy, learned counsel appearing for the proposed parties has relied upon the Judgment of this Court in M. Mythrai and another v. T.Ramesh and others {[2021] 1 CTC 696 : (2021) I LW 784)} in support of his contention that the Arbitral Tribunal has erred in impleading non parties to an Arbitration Agreement as parties in the Arbitral Proceedings.

7. The learned counsel appearing for the proposed respondents 3 and 4 would submit that in the above referred Judgment, the learned Judge in a very great detail had discussed the provisions of Arbitration Act and the various Judgments relating to the impleadment and ultimately held that there is no power granted under the Arbitration Act to implead the parties. He would also rely upon the Judgment of the Hon'ble Supreme Court in (2020) 12 SCC 767 (Mahanagar Telephone Nigam Limited v. Canara Bank and others) in which the Hon'ble Supreme Court had stated the joinder of the respondent No.2 CANFINA as a party to the arbitration proceedings was not objected by CANFINA but by Canara Bank and therefore, there was a tacit consent by CANFINA. The Hon'ble Supreme Court had observed that a non-signatory can be bound by an arbitration Agreement on the basis of the Group of Companies doctrine, where the conduct of the parties evidences a clear intention of the parties to bind both the signatory as well as the non-signatory parties.

8. Per contra, Ms.Maimoona Badsha, learned counsel for the 1st respondent would submit that after the agreement between the 1st and 2nd respondents and the appellant had run into rough weather, negotiations had been initiated by the 3rd and 4th respondents who are the sister concern of the respondents 1 and 2 and the negotiations between the two had reached the stage of finalisation. The 3rd and 4th respondents have also tacitly agreed to the contract entered into between the claimants and the respondents 1 and 2. She would also rely upon the Judgment reported in ONGC v. Discovery Enterprises Private Limited and another [AIR 2022 SC 2080] in which the question involved was whether a person who is not a party to the arbitration agreement should be deleted from the array of the parties. The Hon'ble Supreme Court had remitted the matter to the Arbitral Tribunal for fresh consideration and all the rights and contentions in that regard were kept open to be decided by the Arbitral Tribunal. The learned Judges have given liberty to the ONGC to pursue its application for discovery and inspection and to seek further orders from the Tribunal. She would submit that since the respondents are sisters concern and the negotiations had been held between the two, their impleadment would not prejudice to the respondents. Therefore, the order of the Arbitral Tribunal is in order.

9. Heard the learned counsels appearing on either side and perused the papers.

10. The issue before this Court lies on a very narrow compass namely whether the proposed parties can be impleaded as a party though they are not signatories to the Joint Development Agreement entered into between the claimant and the respondents 1 and 2?. In this regard, the following provisions are necessary to arrive at a decision. Section 7 of the Arbitration and Conciliation Act, 1996, defines Arbitration Agreement as follows:

“7. Arbitration agreement. —

(1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in—

(a) a document signed by the parties;

(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or

(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.”

A perusal of Section 7(4)(b) would indicate that the Arbitation Agreement can also be in the form of an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement.

11. In the instant case, if the records are perused it is seen that negotiations had been carried on between the claimant and all the respondents. A paper publication has been issued in which the property, subject matter of the arbitral proceedings, has been shown to be a project of the 3rd respondent along with two other properties.

12. It further appears that the parties had negotiated and prepared a draft Agreement for Joint Development to be entered into between the claimant, the 1st respondent and the 3rd respondent. A series of WhatsApp messages have been annexed in the Additional Typedset of papers. A reading of which would indicate that the Joint Development Agreement had been forwarded by the claimants to the 3rd respondent who has gone through the documents suggested addition and deletions. Thereafter, the Agreements have been going back and forth through WhatsApp messages on 06.08.2019. One such message from the 3r

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d respondent would indicate that the parties had agreed to the terms of the Agreement and they had proposed to sign the said Agreement on the next day. The proposed Agreement also contains an arbitral clause. In a WhatsApp dated 31.10.2017, the 3rd respondent had made the following statement: “Good morning Tariq yesterday we have started the work full swing will be done by next weeks. But we have not received the plan duly signed. Request u to do the needful immediately.” 13. All of these would clearly indicate that by exchange of communication, the 3rd and 4th respondents had undertaken to be a part of the proceedings. Therefore, an arbitration agreement has come into existence between the parties in exchange of messages through the electronic mails. Therefore, the impleadment of the proposed respondents by the Arbitral Tribunal appears to be in order and I see no reason to interfere with this order. Accordingly, this Civil Miscellaneous Appeal is dismissed. Both the parties shall make a joint application to the Arbitral Tribunal for extending the period of Arbitral Tribunal for a further period of six months from today. No costs. Consequently, connected Miscellaneous Petition is closed.
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