ELIZABETH MATHEW Vs. S K NARAYANA

JUDGEMENT

(1.) RELYING upon the Arbitration Clause in the Construction Agreement (Annexure-D), admittedly executed between the Petitioner and Respondent No. 2, a prayer has been made for reference of the dispute between the parties to an independent Arbitrator for adjudication in accordance with law.

(2.) ). No one has appeared for Respondent No. 2, but the claim of the Petitioner has vehemently been resisted by Respondent No. 1, mainly on the ground that as he was not a party to the Construction Agreement-Annexure-D, no reference could be made to the Arbitrator with respect to the disputes allegedly existing between the Petitioner and the aforesaid Respondent. It is contended that in the absence of an Arbitration Clause between the Petitioner and Respondent No. 1, the application filed being misconceived is liable to be dismissed.

(3.) SOME of the facts necessarily required to be noticed for adjudication of the rival claims of the parties are that :the second Respondent is the Proprietor of a Construction Company by name Shivashakthi Construction. An agreement was executed between the Respondents on 10th of September, 1992, whereby Respondent No. 1 had agreed to sell the property to an extent of 3,531 sq. feet to Respondent No. 2 for the purposes of developing and constructing six apartments on terms and conditions mutually agreed upon, which were interpreted in the written agreement, copy of which has been produced along with the Application as Annexure-B. Respondent No. 1 also executed a general power of attorney in favour of Respondent No. 2 enabling and empowering him to do the construction and conduct negotiation. All persons interested in the purchase of the apartment were allegedly given to understand that the construction of the apartments was a joint venture of the Respondents. As per the development agreement entered into on 10th of September, 1992 between the Respondents, the apartment construction had to be completed and 50% of the apartments were to be handed over to the first Respondent, for occupation within 18 months from the date of the demolition of the existing structure. Petitioner and Respondent No. 2 entered into an agreement on 17-12-1993, by which it was agreed that the second Respondent would construct an apartment of the required specification and deliver the same to the Petitioner for a consideration fixed at Rs. 8,45,172/ -. The consideration amount was further increased on mutually agreed terms, in consequence of which the Petitioner agreed to pay a total amount of Rs. 11,50,000/- in instalments as and when demanded by the second Respondent towards the construction and delivery of the apartment. According to the Petitioner a total sum of Rs. 14,91,976/- has so far been paid by her to the Respondents for land and apartment together including the telephone facility. It is further contended that in order to facilitate the construction, a tripartite agreement was entered into amongst the Respondents and the Petitioner. Initially, the construction of the building started in full swing, but later it was abandoned. The Petitioner has further submitted that she is presently residing in the United States of America with her husband and has been regularly making enquiries about the progress of the project. She claims to have been shocked and surprised to see an announcement in the newspaper that the first Respondent has cancelled the power of attorney executed in favour of the second Respondent. Both the Respondents are alleged to have committed breach of contract and are therefore liable to compensate the Petitioner. She has claimed a total amount of Rs. 33,59,160/- as damages along with interest at 24% per annum on account of breach of contract. Notice for payment of the amount of compensation was served upon the first Respondent, which was not replied by him. The first Respondent belatedly sent a reply on 15-10-1997 disputing the claim of the Petitioner. It is submitted that as there exists disputes covered by the Arbitration Clause, they are liable to be referred to the Arbitrator for adjudication. The Petitioner has mentioned the names of number of persons including retired Chief Justice and Judges of the High Court for being appointed as Arbitrators in accordance with the provisions of Section 11 (5) of the Arbitration and Conciliation Act, 1996 (hereinafter called the Act ).