THE STATE GOVERNMENT OF TAMIL NADU & ORS. versus M/S. SAMARTH BUILDERS & DEVELOPERS & ANR.

THE STATE GOVERNMENT OF TAMIL NADU & ORS. versus M/S. SAMARTH BUILDERS & DEVELOPERS & ANR.

Clause 18 of the Development Agreement is a valid arbitration clause because it luminously discloses the parties' intention and obligation to refer disputes to arbitration (it prescribes arbitration, method of appointment, and governing law); omission of express words such as "final and binding" is not fatal where the clause and surrounding terms show clear intent to arbitrate, and the High Court erred in dismissing the Section 11 application; the Court therefore set aside the High Court order and appointed a sole arbitrator.

Parties
Appellant: BABANRAO RAJARAM PUND; Respondent: M/S. SAMARTH BUILDERS & DEVELOPERS & ANR.
Jurisdiction
India
Judgment Date
07 September 2022
Procedural Posture
Civil Appeal / Appeal From Judgment and Order Dated 07.07.2021 of the High Court of Judicature at Bombay, Bench at Aurangabad in Arbitration Application No. 10 of 2018
Outcome
Appeal allowed; impugned High Court judgment and order dated 07.07.2021 set aside; Clause 18 held to be a valid arbitration clause; appointment of sole arbitrator
Legal Topics
Validity of Arbitration Clause, Section 11 Application, Appointment of Arbitrator, Party Autonomy in Arbitration, Development Agreement Disputes
Arbitration and Conciliation Act, 1996 Maharashtra Apartment Ownership Act, 1970 Contract Law UNCITRAL Model Law on International Commercial Arbitration, 1985 Validity of Arbitration Clause Section 11 Application Appointment of Arbitrator Party Autonomy in Arbitration +1 more

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Parties

BABANRAO RAJARAM PUND

Appellant

M/S. SAMARTH BUILDERS & DEVELOPERS & ANR.

Respondent

Procedural Posture

Civil Appeal / Appeal From Judgment and Order Dated 07.07.2021 of the High Court of Judicature at Bombay, Bench at Aurangabad in Arbitration Application No. 10 of 2018

Legal Issues

  1. 1 Whether Clause 18 of the Development Agreement constitutes a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996 enabling a Section 11 application
  2. 2 Whether omission of express words such as "final and binding" or other attributes is fatal to the validity of an arbitration clause
  3. 3 Whether the court should supply missing terms and appoint an arbitrator to give effect to parties' intention to arbitrate

Ratio Decidendi

Clause 18 of the Development Agreement is a valid arbitration clause because it luminously discloses the parties' intention and obligation to refer disputes to arbitration (it prescribes arbitration, method of appointment, and governing law); omission of express words such as "final and binding" is not fatal where the clause and surrounding terms show clear intent to arbitrate, and the High Court erred in dismissing the Section 11 application; the Court therefore set aside the High Court order and appointed a sole arbitrator.

Court Disposition

Appeal allowed; impugned High Court judgment and order dated 07.07.2021 set aside; Clause 18 held to be a valid arbitration clause; appointment of sole arbitrator

Orders

  • Impugned judgment and order dated 07.07.2021 of the High Court is set aside
  • Clause 18 of the Development Agreement is held to be a valid arbitration clause