Khivraj Motors Vs.
The Guanellian Society
J U D G M E N T
appellant alleges that a joint development agreement dated 18.2.2007 was
entered into between "Father A.John Bosco, President, The Gaunellian Society"
as the owner, and the appellant as the developer, in regard to three acres of land
and that clause 18 of the said agreement provided for settlement of disputes arising
out of the said agreement by arbitration. It is further alleged by the
appellant that on 20.2.2007, the said Father A. John Bosco, President, The
Guanellian Society, executed a power of Attorney in favour of the appellant in
connection with the development of the said property with power to enter into agreements
of sale and also to transfer and convey an extent of 70% undivided share in the
Gaunellian Society, (`Society' for short) the respondent herein, at its Extraordinary
Meeting held on 10.1.2008, passed a resolution that the Managing Committee of
the Society had not authorized its President to deal with the property and
therefore the joint development agreement and general power of attorney
executed by him were null and void and not binding on the Society. On 17.4.2009
the respondent Society filed an application under section 11 of the Arbitration
and Conciliation Act, 1996 (`Act' for short) for appointment of an arbitrator for
resolution of the disputes between the Society and the appellant.
appellant resisted the said petition alleging that the application by the
Society was not maintainable for the following reasons :
a. the lands was
purchased and owned by Father A.John Bosco, in his individual capacity and not
as the President of the Society;
b. Father A. John Bosco entered
into the joint development agreement in respect of the property in his
individual capacity and not as the President of the Society.
c. Though the joint
development agreement contained a provision for arbitration, as the respondent society
was not a party to the joint development agreement containing the arbitration agreement,
the petition under section 11 by the Society was not maintainable.
designate of the Chief Justice of the Karnataka High Court by order dated 26.10.2009
allowed the said application and appointed a retired District Judge as the sole
arbitrator. The High Court held that the joint development agreement was
executed between the Society and the appellant and that Father A.John Bosco had
signed the said agreement, only in his capacity as the President of the Society
and not in his individual capacity and therefore the application under section
11 of the Act by the Society was maintainable.
said order is contested by the appellant, inter alia, on the following grounds
:(i) The joint development agreement was entered into between Father A.John
Bosco, as the owner of the property and the appellant, as developer. As the
Society was not a party to the joint development agreement, there is no privity
of contract between the Society and the appellant. The arbitration clause in
the said agreement could not therefore be invoked by the Society for resolving
any dispute relating to the joint development agreement. (ii) Even if the
Society is a party to the joint development agreement, as the Society had alleged
that the appellant had adopted unfair means and exercised undue influence over Father
A.John Bosco to get the joint development agreement executed by him, it would
not be appropriate for an arbitral tribunal, a private forum, to adjudicate
upon such serious allegations. The civil court alone should decide such serious
allegations so that the appellant could vindicate itself.The appellant also attempted
to raise several other contentions relating to title and merits of the dispute,
which are wholly alien to the scope of the proceedings under Section 11 of the Act
and therefore need not be considered.
the special leave petition, the appellant specifically contended that the
Society was not a signatory or party to the joint development agreement. Though,
a typed copy of the joint development agreement is produced as an annexure to
the special leave petition, it did not show who signed the joint development agreement
as owner of the property. In view of the said averment in the special leave petition,
this Court directed notice on the petition on 15.2.2010. The respondent society
has produced alongwith its counter, a photocopy of the registered joint development
agreement dated 18.2.2007 and the registered power of attorney dated 28.2.2007
executed in favour of the appellant. The appellant does not dispute the
correctness of the said copies produced by the respondent society.
examination of the photocopy of the joint development agreement shows clearly that
it was not executed by Father A.John Bosco in his individual capacity. The document
describes `Father A.John Bosco, President, Gaunellian Society' as the first
party or the owner. The signature of the first party/ owner on each page of the
document is as under:
The Gaunellian Society
Fr. A.John Bosco]
agreement is also signed by Mr. Pushpchand Chordia as the power of attorney
holder of the partners of the appellant. There are only the said two signatories
to the agreement that is the Society represented by its President and the
appellant represented by its Attorney Holder. Fr. A.John Bosco has not executed
the joint development agreement in his personal capacity. The power of attorney
is also executed by the Society. Thus the respondent Society is the first party
under the joint development agreement and not Father A.John Bosco. We may also note
that if Father A. John Bosco was executing the joint development agreement in his
personal capacity, there was no need for him to describe himself as the
"President of 6the Gaunellian Society" and sign the document for and on
behalf of the Gaunellian Society, as its President. Therefore the application
under section 11 of the Act filed by the Society against the respondent was
maintainable as the petitioner and the respondent in the application under section
11 were parties to the joint development agreement containing a provision (Clause
18) for settlement of disputes arising out of the agreement by arbitration.
appellant has raised a contention that the owner of the property is not the
Society and that Father A.John Bosco in his personal capacity was the owner and
that he had entered into a joint development agreement and executed a power of attorney
in his personal capacity in favour of the appellant. But as noticed above,
Father A.John Bosco has neither executed the joint development agreement nor
the power of attorney in his individual capacity and the executant is "The
Gaunellian Society" represented by its President Father A.John Bosco. If
the contention of the appellant that the owner is Father A. John Bosco, and not
"The Gaunellian Society", is taken to its logical conclusion, the effect
would be that there is no joint development agreement or power of attorney by
the owner of the property in favour of the respondent and the joint development
agreement and the power of attorney signed by a party who is not by the owner
would be worthless papers. Be that as it may. We have referred to this aspect
only to show the absurdity of the contention raised by the appellant.
respondent Society has no doubt contended that the contract was concluded with unconscionable
and unfair terms and that the Managing Committee of the Society had not
authorized its President -- Father A.John, Bosco to enter into any such joint
development agreement. These allegations no doubt relate to the validity of the
joint development agreement, but will have no bearing on the validity of the
arbitration agreement (Clause 18 of the agreement), which is an independent
agreement incorporated and rolled into the joint development agreement. The Arbitrator
will examine the validity and binding nature of the joint development agreement.
There is nothing in the claims and contentions of the Society which excludes the
operation of the arbitration agreement or necessitates rejection of the request
for appointment of an arbitrator.
appeal is therefore dismissed with costs of Rs.25,000/- payable by the
appellant to the respondent. We find that the arbitration has been delayed for
nearly one and a half years on account of the pendency of this special leave
petition. We therefore request the Arbitrator to proceed with the matter expeditiously.
make it clear that what we have considered is the limited question as to who is
the executant of the agreement. We have not pronounced upon the question
whether Father A.John Bosco was authorized to execute such a joint development agreement.
Nor have we considered the contentions relating to the title to the property.
(R V Raveendran)
(A K Patnaik)