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NISHESH RANJAN & ANR. vs INDIABULLS HOUSING FINANCE LTD & ANR.

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 31st January, 2024
+ ARB.P. 1241/2023
NISHESH RANJAN & ANR. ….. Petitioners
Through: Mr. Rajnish Ranjan with Mr. Shivansh Srivastava, Advs. (M. 9958160505)
versus
INDIABULLS HOUSING FINANCE
LTD & ANR. ….. Respondents
Through: Ms. Sondhi, Advocate for R-1.
Mr. Kapil Madan, Mr. Saurabh Gauba, Mr. Manu Garg, Advs. for D-2 (M. 8448939074)
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (Oral)

1. This hearing has been done through hybrid mode.
2. This is a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter, ‘1996 Act’) filed by the Petitioners-Nishesh Ranjan and Vandana Srivastava seeking appointment of an Arbitrator.
3. The present petition reveals a stark and a serious situation in which an ordinary flat buyer is faced with conflicting dispute resolution clauses, conflicting territorial jurisdiction clauses and conflicting arbitration clauses.
4. The Petitioners booked flat bearing no. 802, 8th Floor, Tower-A1, Godrej Nest Phase-1, Plot No. SC-02/H&I Sector 150, Noida, Uttar Pradesh-201301 (hereinafter, ‘subject flat’) on 26th March, 2018. The said project is stated to have been registered with Uttar Pradesh Real Estate Regulatory Authority (‘UP RERA’) vide registration number UPRERAAPRJ13521. The total cost of the subject flat was Rs.77,87,257.46/-. The payment was to be made as per construction linked payment plan. Vide communication dated 26th March, 2018, the Petitioners had paid a sum of Rs.7,68,832/- on their own, following which the Builder Buyer Agreement (hereinafter, ‘BBA’) dated 29th May, 2018 was executed with the Respondent No. 2- Brick Rise Developers Pvt. Ltd. (hereinafter, ‘the Developer’). The said BBA, consisted of a jurisdiction clause and an arbitration clause which reads as under:
32. GOVERNING LAW
35. DISPUTE RESOLUTION
That the rights and obligations of the parties under or arising out of this Agreement shall be construed and enforced in accordance with the laws of India for the time being in force and the Uttar Pradesh courts will have the jurisdiction for this Agreement. Further, all the terms & conditions, rights and obligations of the parties as contained hereunder shall be subject to the provisions of the Act and the Rules and the exercise of such rights and obligations shall be subject to the provisions of the Act and the Rules and Regulations made thereunder. Any change so prescribed by the Act shall be deemed to be automatically included in this Agreement and similarly any such provision which is inconsistent or contradictory to the Act shall not have any effect.
All or any disputes arising out or touching upon or in relation to the terms and conditions of this Agreement, including the interpretation’ and validity of the terms thereof and the respective rights and obligations of the Parties, shall be settled amicably by mutual discussion, failing which (i) the Parties shall in the first instance, if permitted under Relevant Laws, have the option to settle through arbitration in accordance to the procedure laid down under the Relevant Laws. Costs of arbitration shall be shared equally by the parties. The award of the Arbitrator shall be final and binding on the parties to the reference. The arbitration proceedings shall be conducted in English only and be held at an appropriate location in Mumbai, (ii) or if not permitted under the prevalent law to adjudicate the dispute through arbitration, the said dispute shall be settled through the adjudicating officer appointed under the Act. ”

5. Subsequently, the Petitioners availed themselves of a loan from Respondent No.1-Indiabulls Housing Finance Ltd. (hereinafter, ‘IHFL’) in terms of the Loan Agreement dated 12th July, 2018. The said Loan Agreement, for the purchase of the flat, was also linked to the construction of the flat and included both a dispute resolution clause and an arbitration clause, in the following terms:
ARTICLE 11:
GOVERNING LAW AND JURISDICTION
ARTICLE 12: ARBITRATION
11.1 This Agreement, including all matters relating to its validity, construction. performance and enforcement, shall be governed by and construed in accordance with Indian law. The courts of New Delhi will have exclusive jurisdiction in relation to any matter arising under or In connection with this Agreement or any agreement entered into pursuant to this Agreement. However, the Parties hereby agree, confirm and undertake that IHFL has a right to file its claim in relation to Outstanding Amount or any other connected matter(s) as mentioned in this Agreement in any other competent Court in India at its sole discretion.
12.1 This Loan Documents is/shall be governed by Indian laws and the courts at New Delhi shall have exclusive jurisdiction relating to any matter/issue under or pursuant to the Loan Documents. Notwithstanding anything to the contrary, if any dispute/ disagreement/ difference (“Dispute”) arise between the Parties (including any Borrower(s)) during the subsistence or the Loan Documents and/or thereafter, in connection with, inter alia, the validity, interpretation, implementation and/or alleged breach of any provision of the Loan Documents, jurisdiction or existence/appointment of the arbitrator or of any nature whatsoever. Then, the Dispute shall be referred to a sole arbitrator who shall be appointed by IHFL only. In any circumstance, the appointment of the sole arbitrator by IHFL shall be and shall always be deemed to be the sole means for securing the appointment/nomination of the sole arbitrator without recourse to any other alternative mode of appointment of the sole arbitrator. The place of the arbitration shall be New Delhi or such other place as may be notified by IHFL and the arbitration proceedings shall be governed by the Arbitration & Conciliation Act, 1996 (or any statutory reenactment thereof, for the time being in force) and shall be in the English language. The award shall be binding on the Parties subject to the applicable laws in force and the award shall be enforceable in any competent court of law;”

6. After the loan was approved, a Tripartite Agreement was executed on 30th July, 2018 between three parties i.e., the Petitioners, the Developer and IHFL. The said agreement had another jurisdiction clause which reads as under:
“18. Any or all disputes arising out of or in connection with this Tripartite Agreement shall be subject to exclusive jurisdiction of the Courts at New Delhi.”

7. The ld. Counsel for the Petitioners submits that the Loan Agreement contains an arbitration clause specifying the jurisdiction of Delhi Courts. Accordingly, he prays for the appointment of an Arbitrator. He contends that the terms of both the BBA and the Loan Agreement are incorporated by reference into the Tripartite Agreement. The said submission is based on Clause 1 of the Tripartite Agreement, which states as follows:
“1. The foregoing recitals as mentioned above are incorporated herein by this reference and constitute an integral part of this Agreement.”

8. On behalf of IHFL, the ld. Counsel submits that the only relevant agreement in this matter is the Tripartite Agreement, which does not contain an arbitration clause, thereby rendering the petition non-maintainable. Similarly, the ld. Counsel for the Developer argues that the only relevant agreement is the most recent Tripartite Agreement, dated 30th July, 2018, which also does not contain an arbitration clause.
9. Heard. The Court has perused all the three agreements viz. the BBA, Loan Agreement and the Tripartite Agreement. A perusal of the said agreements reveals that there are conflicting clauses in all the three agreements, relating to the same subject flat allotment, loan transaction and payment terms. In such cases, the flat allottee hardly has any room for negotiation, as these agreements are standard form agreements used by banks, builders, etc. While there is an existing BBA dated 29th May, 2018, however the clauses of the BBA do not align with those in the Tripartite Agreement. Similarly, the IHFL’s Loan Agreement dated 12th July, 2018, contains clauses that do not match those in the Tripartite Agreement. Each of these agreements specifies different jurisdictions, namely Uttar Pradesh, Delhi, and Mumbai. Furthermore, the final Tripartite Agreement, despite incorporating the earlier agreements, does not contain an arbitration clause.
10. Thus, the Petitioners and similarly situated persons find themselves in a state of complete confusion when a dispute arises, and they are uncertain as to which Court’s jurisdiction is to be invoked, whether arbitration is to be invoked or whether civil proceedings are to be instituted. Such a state of confusion cannot be allowed to be perpetuated by the Respondents.
11. The Court notes that clearly at the time of execution of the Tripartite Agreement, both the BBA and the Loan Agreement were within the knowledge of all the three parties. Further, both the BBA and the Loan Agreement are also mentioned in the recitals and have been incorporated by reference in clause 1 of the Tripartite Agreement.
12. Under such circumstances, this Court is inclined to appoint a Sole Arbitrator to adjudicate the disputes between the parties. At this stage, both Ms. Sondhi and Mr. Kapil Madan, ld. Counsels seek time to take instructions in the matter.
13. List on 5th February, 2024.

PRATHIBA M. SINGH
JUDGE
JANUARY 31, 2024
Rahul/dn

ARB.P. 1241/2023 Page 2 of 2