Reported By: Amruta Pawar

The court in the matter of GMT builders and promoters Pvt ltd v/s Sneh development Pvt ltd, dismissed the petition of the petitioner and held that the section 11[6] invoked by the petitioner for the dispute is not an arbitrable dispute arising from an arbitration agreement and is just a dispute arising from a compliance order of national consumer dispute redressal Commission and therefore does not require indulgence of this court.

Background of the matter

The petitioner is a construction company that was carrying out a project to build a housing society for which the petitioner company engaged the respondent which is also a construction company to complete the project. The homebuyers however filed a complaint before the national consumer dispute redressal Commission complaining of the delay of the project and handing over the possession of the flats by the petitioner. The NCDRC held that there was no delay on the part of the petitioner. Aggrieved by this the homebuyers preferred an appeal before the national consumer dispute redressal Commission. The NCDRC held the petitioner liable for delay and ordered them to pay compensation to the home buyers.

The aftermath of this is that the petitioner sent a notice dated 27th December 2022 to the respondent claiming compensation for the harm and seeking a response from the respondent within 15 days. after receiving no response from the respondent within the said period the petitioner invoked section 11[ 6] of the arbitration & conciliation act and filed a petition before the court to appoint a sole arbitrator to adjudicate the dispute.

Contentions of the petitioner

1. The petitioner contended that by virtue of the indemnity bond and undertaking the respondent is liable to pay compensation to the petitioner for any harm caused during the project as a result of any act or omission on the part of the respondent and therefore the national consumer disputes redressal Commission had erroneously held the petitioner liable to pay the compensation. 
2. The petitioner contended that the cause of action that arose to file the petition from the date of the order of the national consumer dispute redressal Commission to pay the compensation to the home buyers was caused due to the delays and breaches of the respondent.
3. The petitioner contended that the dispute is arbitral arising from the arbitration agreement dated 10th March 2005 between the petitioner and the respondent which had mentioned settling any dispute arising from the agreement amicably and therefore the present dispute needs to be adjudicated by way of arbitration. 

The observations of the court

1. The court observed that the petitioner relied upon clause 16 of the agreement dated 10th March 2005 and upon observation of the said clause the important condition is the dispute must arise out of the said agreement. 
2. The court observed that the agreement relates to the construction of the GTM residency tower a group housing society whereas the petitioner is seeking a reference of the dispute to an arbitral tribunal which is neither related to the completion of the project nor has arisen from the said agreement. 
3. The court further observed that there is no undertaking to show that any kind of loss suffered by the petitioner would be covered under the said undertaking and observed that the loss suffered by the petitioner is the result of the penalty imposed by the national consumer dispute redressal Commission on the ground of delay in handing over the possession to the homebuyers.
4. The court, therefore, observed that the dispute for which the petitioner is seeking to appoint an arbitrator hasn’t arisen out of the agreement dated 10th March 2005 or the undertakings signed and executed thereafter.
5.  The court concluded that the petitioner is seeking recovery of the loss from the respondent in the guise of reference to an arbitrator which is neither a matter arising out of the agreement nor is covered in the undertakings furnished. 

Thus in light of the above observations the court held

1. The court held that the dispute did not arise from an agreement dated 10th March 2005 and the dispute is not arbitrable.
2. And accordingly dismissed the petition.

Sec 11[6] of the arbitration and conciliation act,1996-

The parties including an institution can approach the Chief Justice or any person designated by him for the appointment procedure in case the party fails to act as agreed upon by the parties or the parties or two appointed arbitrators fail to reach an agreement as expected in the agreed procedure.