WOODBURN DEVELOPERS,BUILDERS Vs. KIRAN MOHANTY

JUDGEMENT

(1.) The petitioners have filed this petition under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter called 'the Act' in short) seeking for appointment of an arbitrator to adjudicate the claims and resolve the dispute between the parties urging various facts and legal contentions. Relevant facts are stated for the purpose of examining and considering the claim of the petitioners herein. The case of the petitioners in brief is that on 5.7.1997, petitioner-company entered into an agreement under Annexure-1 with one Satya Prakash Mohanty (since dead) husband of opposite party No. 1 and father of opposite party Nos. 2 to 4, for constructing a multistoried building on his lands under Schedule-'A' consisting of independent flats capable of being enjoyed as independent apartment with common service core, common parking spaces and other facilities and selling the same to prospective buyers. As per the terms and conditions of the agreement the petitioner-company was appointed as sole and exclusive builder and it is mentioned in the agreement that the land owner shall be allotted 25% of the total built up area free of all costs and charges and the petitioners were given the right to deal with the rest 75% of the build up area in the manner they like. Accordingly, a sum of Rs. 50,000/- was deposited with the owner as interest free caution money. The building was required to be completed within 48 months from the date of sanction of the building plan by the competent authority, however, there was also stipulation for extension of one year time. It was also stipulated under Clause 18 of the agreement that the caution money will be forfeited in case of non-completion of the building within the stipulated time and the work can be assigned to any other person, Further, the owner shall not deal with the 'A' schedule property with anybody during the subsistence of work. Clause 18(f) of the agreement provides for an Arbitration Clause which reads thus:

(2.) Pursuant to the said agreement, the owner executed an irrevocable power of attorney in favour of petitioner No. 2 on 5.7.1997/6.8.1997 and immediately thereafter the petitioners took necessary steps for soil exploration work. On 26.09.1997 petitioners submitted the building plan to Cuttack Development Authority (CDA) for approval. Pending approval of the said building plan, petitioners started construction spending huge money for piling works, laying the plinth and columns upto 2.5 meters of proposed building. On 26.6.1998 petitioners also issued an advertisement in the Oriya daily "The Samaj" inviting prospective buyers for sale of flats. On 15.10.1998 the owner of the land in question Mr. Satya Prasad Mohanty died while the work was on full swing. However, the petitioners proceeded with the work without any objection from any of the opposite parties. But, on 18.10.2001 petitioners received a letter from opposite party Nos. 1 to 4 that they have rescinded the contract and forfeited the caution/security money on the ground that the time was the essence of contract and no development was made in spite of reminders after death of Satya Prasad Mohanty. It was further stated in the said letter that they were taking possession of land. Thereafter, petitioners requested the opposite parties for settlement, but as the opposite parties did not come forward for a settlement, on 10.04.2002 petitioners sent a reply copy by registered post. However, the opposite party Nos. 1 to 4 in utter disregard to the reply and without coming forward for settlement, proceeded to entrust the construction work to a third party advertising the same in 'the Samaj' dated 02.01.2003 under Annexure-9. After few days when the petitioner No. 2 visited the spot, he found the work in progress. Thereafter on 13.02.2003 petitioner issued notice to opposite parties invoking the arbitration clause in the agreement. It is stated by the petitioners that the same was refused by the opposite parties. Thereafter petitioner filed Misc. Case No. 17 of 2003 under Section 9 of the Arbitration and Conciliation Act, 1996 in the Court of District Judge, Cuttack against opposite parties, wherein the learned District Judge vide order dated 10.04.2003 restrained the opposite parties from proceeding with the construction of building. Against the said order opposite parties filed appeal under Sec. 37 of the Act before this Court being ARBA No. 19 of 2003. This Court set aside the order of the District Judge holding that the petitioners herein can be compensated their loss and damage in terms of money.

(3.) Learned counsel for the petitioners placing reliance upon the judgments of the Supreme Court in the case of Prem Power Construction Pvt. Ltd. v. Hydroelectric Power Corporation,2008 Supp2 ArbLR 370 (Del); Inder Singh v. Delhi Development Authority, 1988 AIR(SC) 1007 and Harishankar Singhania v. Gourishankar Singhania, 2006 4 SCC 658, submits that in respect of limitation, provisions of Article 137 of the Limitation Act, 1963 apply to an application for appointment of Arbitrator under Sec. 11(6) of the Arbitration and Conciliation Act, 1996 and a period of 3 years prescribed under Article 137 starts running from the date when right to apply for arbitration accrued or parties chose to decide the matter by dialogue and continued correspondence regarding settlement or from the date of dispute and wherein last correspondence was made. In the instant case the contract was terminated on 18.10.2001 and the demand for appointment of arbitrator was made on 10.4.2002 and further on 13.02.2003, therefore, the present petition is not barred by limitation.