Lalit Vazirani vs Chetna Global — Arbitration | Bombay HC (2025)

Lalit Vazirani vs Chetna Global — Arbitration | Bombay HC (2025)

What the court decided

AI extract

Outcome

Dismissed

Issue for consideration

Whether the exchange of correspondence dated 31st December 2024 (Applicant's invocation notice) and 1st February 2025 (Respondent No.1's reply) between the Applicant and Respondent No.1 constitutes an arbitration agreement satisfying Section 2(1)(b) read with Section 7 of the Arbitration and Conciliation Act, 1996, warranting appointment of an arbitrator under Section 11. +1 more

Court's answer

The correspondence exchanged on 31st December 2024 and 1st February 2025 does not satisfy the requirements of Section 7 of the Act; accordingly no arbitration agreement was brought into existence through that correspondence.

Ratio / Principle

Respondent No.1 has not agreed to arbitrate the disputes with the Applicant and has expressly denied the Applicant's contention that an arbitration agreement exists between the dissenting members and Respondent No.1; the parties are not ad idem in the correspondence on the existence of an arbitration agreement, and there is no other signed contract referring to any arbitration agreement between the parties.

Key takeaways

The arbitration agreement between the Society and Respondent No.1 does not extend to and is not for the benefit of individual members; the correspondence of 31st December 2024 and 1st February 2025 cannot be construed as an extension of that agreement so as to create a fresh arbitration agreement between the Applicant and Respondent No.1.ratio¶42
Clause 29 of the Consent Terms safeguards the rights of dissenting members, including the Applicant, by keeping their claims against Respondent No.1 open, but Clause 29 cannot be construed as an arbitration agreement between the dissenting members and Respondent No.1; the arbitration agreement exists solely between the Society and Respondent No.1.ratio¶43

Detailed headnote1 paragraphs

Arbitration and Conciliation Act, 1996 — S.11 — Appointment of arbitrator — Dissenting member of co-operative housing society undergoing redevelopment — Applicant sought appointment of an arbitrator claiming that an arbitration agreement arose between him and Respondent No.1 (Developer) by correspondence dated 31st December 2024 and 1st February 2025, as an extension of the arbitration agreement formed between the Society and Respondent No.1 through correspondence of 21st February 2024 and 1st March 2024. Held, dismissing the application: (i) the said correspondence does not satisfy the requirements of S.7 (with S.2(1)(b)); Respondent No.1 never agreed to arbitrate with the Applicant and expressly denied the existence of any such agreement; the parties are not ad idem and there is no other signed contract containing or referring to an arbitration agreement; (ii) the Society's arbitration agreement does not extend to and is not for the benefit of individual members; (iii) Clause 29 of the Consent Terms dated 9th May 2024 (by which the rights and contentions of members who did not sign were kept open) is not an arbitration agreement; the arbitration agreement exists solely between the Society and Respondent No.1. Reliance placed on Drushti Realtors and Shankar Vithoba Desai (both Bombay HC). Clarified that the majority decision binds the minority, but the order does not preclude the Society from invoking arbitration for unpaid rent, corpus or other dues of dissenting members, to be decided on merits.

Procedural history

How this case reached the court

AI extract

Prior proceeding
Development Agreements dated 9th November 2012 and 10th June 2014 were executed between the Society (Bhalla Co-operative Housing Society Limited, in whose redevelopment the Applicant is a dissenting member) and Respondent No.1 (Developer); Respondent Nos. 2 to 5 are partners of Respondent No.1.¶13
Prior proceeding
An undated Supplementary Agreement was also executed in 2019; admittedly, none of the aforesaid Agreements contains an arbitration clause.¶17
Prior proceeding
Certain disputes arose between the Society, its members and Respondent No.1 in the course of redevelopment; by legal notice dated 1st January 2024 the Society called upon Respondent No.1 to address alleged breaches under the said agreements; Respondent No.1 replied on 24th January 2024; in rejoinder, on 21st February 2024, the Society proposed reference of all disputes to arbitration.¶18
Prior proceeding
Respondent No.1 accepted the proposal by its letter dated 1st March 2024; through this exchange of correspondence an arbitration agreement came into existence between the Society and Respondent No.1.¶18
Prior proceeding
At the pre-arbitration stage the Society filed Commercial Arbitration Petition (L) No.12152 of 2024 under Section 9 of the Act seeking interim reliefs against Respondent No.1.¶19
Prior proceeding
Consent Terms were executed between the Society and Respondent No.1, signed by 23 out of 27 members of the Society; the Applicant did not sign; the Consent Terms were taken on record and the Section 9 Petition was disposed of by the Court on 9th May 2024.¶23
Prior proceeding
Paragraph 2 of the order dated 9th May 2024 records that the Respondents agreed and affirmed their liability to pay Rs.7,89,67,656/- towards rent, brokerage and corpus for 01/09/2021 to 29/02/2024, with the project to be completed as per approved plans and time as essence of the contract.¶24
Prior proceeding
Clause 29 of the Consent Terms dated 9th May 2024 recorded that members of the Petitioner No.1 (Society) not party to the Arbitration Petition and Consent Terms have their rights and contentions against the Respondents kept open.¶26
Prior proceeding
The Applicant invoked arbitration by his Advocate's notice dated 31st December 2024, referring to the Development Agreements and the prior arbitration agreement between the Society and Respondent No.1.¶32
Prior proceeding
Respondent No.1, through its Advocate's letter dated 1st February 2025, did not deny the existence of the arbitration agreement but stated that, in view of the Consent Terms executed with the Society, there was no question of entertaining arbitration with individual members of the Society.¶32