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Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4926 OF 2011
[Arising out of SLP [C] No.3835 of 2010]
Khivraj Motors ... Appellant
Vs.
The Guanellian Society ... Respondent
J U D G M E N T
R.V.RAVEENDRAN, J.
Leave granted. Heard.
2. The 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
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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 said property.
3. 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.
4. The 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.
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(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.
5. A 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.
6. The 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.
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(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.
7. In 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
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favour of the appellant. The appellant does not dispute the correctness of the
said copies produced by the respondent society.
8. An 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:
"For The Gaunellian Society
[Sd/- Fr. A.John Bosco]
President"
The said 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
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the 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.
9. The 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
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papers. Be that as it may. We have referred to this aspect only to show the
absurdity of the contention raised by the appellant.
10. The 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.
11. The 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.
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12. We 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.
................................J.
(R V Raveendran)
New Delhi; ..............................J.
July 4, 2011. (A K Patnaik)
