# M/s. Wise Industrial Park Ltd., Moradabad v. UPSIDC Ltd. & Anr

- **Citation:** (2020) 11 ILRA 269
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-10-22
- **Case number:** Civil Misc. Arbitration Application No. 143 of 2019
- **Bench:** Rohit Ranjan Agarwal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-wise-industrial-park-ltd-moradabad-v-upsidc-ltd-anr-45393
- **Pages:** 13

## Headnote

Sri
Anadi
Krishna
Narayana,
Swapnil
Kumar, Sri Sudhanshu Kumar

A.
Civil
Law
-
Securitisation
and
Enforcement
of
Financial
Assets
and
Enforcement of Security Interest Act,
2002-
Section
13(2)

Existence
of
Arbitration Agreement - - Arbitration and
Conciliation Act, 1996: Section 2(b), 7,
11(6A) - Clause 33 is an arbitration clause
270 INDIAN LAW REPORTS ALLAHABAD SERIES
providing for dispute to be settled through
arbitration, but the same cannot be read
in isolation and this arbitration agreement
has to be in existence as per Clause
11(6A) on the date when the said
arbitration clause is invoked and the
matter is referred to arbitration. The
petitioner
invoked
the
arbitration
agreement
after 14
years
after the
promoter's agreement came to an end.
Thus arbitration agreement was not in
existence at the time of making of the
application. (Para 53, 54, 56)

As Clause 34 of the Promoter's Agreement
categorically provides that the life of the
agreement which is 12 years which is subject to
renewal. But as it is evident from the pleadings
of the parties that the said agreement was
never extended beyond 12 years and the life of
the agreement came to an end on 18.07.2005.
Thus,
petitioner
cannot
reply
upon
the
provisions of the agreement which is not in
force between the parties as time was the
essence of the contract. Newly amended Section
11(6A)
categorically
provides
for
the
enforcement of arbitration proceedings only in
case of existence of arbitration agreement.
(Para 46)

Promoter's
Agreement
was
executed
on
19.07.1993 and a joint venture company was
formed for the development of Agro Industrial
Park. There were no dispute until the petitioner
company failed to carry out the obligation of
making payment for the third transfer in the
year 2001. In the year 2002, the lease deed of
the earlier first and second transfer was
cancelled due to the fact that work was not
completed. Petitioner company itself came to
know about the cancellation of the lease deed
during the proceedings initiated by the Bank
before the Debt Recovery Tribunal and it was
for the first time in the year 2017 after a lapse
of about 12 years they approached this Court.
Then subsequently after a lapse of two years on
14.10.2019 the petitioner gave notice for
invocation of arbitartion clause. (Para 36, 37,
40)

Application Rejected. (E-10)

List of Cases cited:-

## Text

_Characters 0–39,873 of 42,522. This is a partial read: ask again with offset=39873 for what follows._

11 All. M/s. Wise Industrial Park Ltd., Moradabad Vs. UPSIDC Ltd. & Anr.
269

28. In the present case, the applicants
have entered into agreements with the
Federation for purchase of the sugar
produced by the members of the Federation
which
are
themselves
Cooperative
societies. A dispute having arisen which is
clearly pertaining to the business of a
cooperative society where all the members
of the respondent would be affected by the
dispute raised by the applicant and
therefore the agreement was entered into by
the Federation, was clearly on behalf of all
its member Sugar Mills and therefore there
was a "public interest" element involved in
the
said
agreement
and
hence
the
Federation could not have intended to
waive
this
statutory
prescription
of
redressal of disputes by arbitration in
accordance with U.P. Cooperative Societies
Act, 1965.

29. It has also been contended by the
counsel
for
the
applicants
that
the
arbitration proceedings cannot proceed
under the Cooperative Societies Act,
inasmuch
as
the
Registrar
of
the
Cooperative Societies has sufficient interest
and
involvement
of
the
respondent
Federation, while an arbitrator has to be an
independent person. This argument of the
applicant also cannot be accepted in light of
the fact that the reference of dispute under
section 70 of the Cooperative Societies Act
has to be referred to the Registrar, who may
either arbitrate the matter himself or
appoint another arbitrator. In case the
applicants have any apprehension about the
independence of the arbitrator, the same
can be raised before the Registrar who is
competent to resolve such a controversy as
he is sufficiently empowered under the Act.

30. In light of the above discussions,
in the facts of the present case where there
exists a dispute between the Federation and
agents, then the same has to be referred to
the Registrar, Cooperative Societies, under
the provisions of Cooperative Societies
Act, 1965 and provisions of Arbitration and
Conciliation Act, 1996 would not be
attracted. The applications of the applicants
under the Arbitration and Conciliation Act,
1996 are, therefore, misconceived.

31. No other point was urged by the
applicants.

32. These applications moved by the
applicants under section 11(6) of the
Arbitration and Conciliation Act 1996 for
appointment of sole arbitrator are devoid of
merits and are hereby rejected.
----------
(2020)11ILR A269
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 22.10.2020

BEFORE
THE HON'BLE ROHIT RANJAN AGARWAL, J.

Civil Misc. Arbitration Application No. 143 of
2019

M/s. Wise Industrial Park Ltd., Moradabad
 ...Petitioner
Versus
UPSIDC Ltd. & Anr. ...Respondents

Counsel for the Petitioner:
Sri Anurag Khanna, Ms. Gunjan Jadwani

Counsel for the Respondents:
Sri
Anadi
Krishna
Narayana,
Swapnil
Kumar, Sri Sudhanshu Kumar

A.
Civil
Law
-
Securitisation
and
Enforcement
of
Financial
Assets
and
Enforcement of Security Interest Act,
2002-
Section
13(2)

Existence
of
Arbitration Agreement - - Arbitration and
Conciliation Act, 1996: Section 2(b), 7,
11(6A) - Clause 33 is an arbitration clause
270 INDIAN LAW REPORTS ALLAHABAD SERIES
providing for dispute to be settled through
arbitration, but the same cannot be read
in isolation and this arbitration agreement
has to be in existence as per Clause
11(6A) on the date when the said
arbitration clause is invoked and the
matter is referred to arbitration. The
petitioner
invoked
the
arbitration
agreement
after 14
years
after the
promoter's agreement came to an end.
Thus arbitration agreement was not in
existence at the time of making of the
application. (Para 53, 54, 56)

As Clause 34 of the Promoter's Agreement
categorically provides that the life of the
agreement which is 12 years which is subject to
renewal. But as it is evident from the pleadings
of the parties that the said agreement was
never extended beyond 12 years and the life of
the agreement came to an end on 18.07.2005.
Thus,
petitioner
cannot
reply
upon
the
provisions of the agreement which is not in
force between the parties as time was the
essence of the contract. Newly amended Section
11(6A)
categorically
provides
for
the
enforcement of arbitration proceedings only in
case of existence of arbitration agreement.
(Para 46)

Promoter's
Agreement
was
executed
on
19.07.1993 and a joint venture company was
formed for the development of Agro Industrial
Park. There were no dispute until the petitioner
company failed to carry out the obligation of
making payment for the third transfer in the
year 2001. In the year 2002, the lease deed of
the earlier first and second transfer was
cancelled due to the fact that work was not
completed. Petitioner company itself came to
know about the cancellation of the lease deed
during the proceedings initiated by the Bank
before the Debt Recovery Tribunal and it was
for the first time in the year 2017 after a lapse
of about 12 years they approached this Court.
Then subsequently after a lapse of two years on
14.10.2019 the petitioner gave notice for
invocation of arbitartion clause. (Para 36, 37,
40)

Application Rejected. (E-10)

List of Cases cited:-
1. Olympus Superstructures Pvt. Ltd. Vs Meena
Vijay Khetan & ors. (1999) 5 SCC 651

2. Ameet Lalchand Shah & ors. Vs Rishabh
Enterprises
&
anr.
(2018) 15
SCC
678
(distinguished)

3. M/s Uttarakhand Purv Sainik Kalyan Nigam
Ltd. Vs Northern Coal Field Ltd. Special Leave
Petition (C) No. 11476 of 2018. (distinguished)

4. Duro Felguera, S.A. Vs Gangavaram Port Ltd.
(2017) 9 SCC 729 (distinguished)

5. M/s Mayavati Trading Pvt. Ltd. Vs Pradyut
Deb Burman Civil Appeal No. 7023 of 2019
(distinguished)

6. P. Manohar Reddy & Bros. Vs Maharashtra
Krishna Valley Development Corporation & ors.
(2009) 2 SCC 494 (followed)

7. Hema Khattar & anr. Vs Shiv Khera (2017) 7
SCC 716 (followed)

(Delivered by Hon'ble Rohit Ranjan Agarwal, J.)

1. Heard Sri Anurag Khanna, learned
Senior Counsel, assisted by Ms. Gunjan
Jadwani, learned counsel for the applicant
and Sri Swapnil Kumar, Advocate along
with
Sri
Sudhanshu
Kumar,
learned
counsel for the respondents.

2. This application under Section
11(6) of the Arbitration and Conciliation
Act,
1996
has
been
filed
for
the
appointment of arbitrator invoking the
arbitration clause, as provided in the
Promoter's Agreement dated 19.07.1993.

3. Facts in brief, of the case which is
admitted to both the parties are, that State
of Uttar Pradesh acquired 800 acres of land
at
Masuri
Gulaoti
Industrial
Area
comprising of Village Dehra, Amapur,
Lodha,
Raoli,
Shekhupura,
Khichra,
Pargana Dasna, Tehsil Hapur, District
11 All. M/s. Wise Industrial Park Ltd., Moradabad Vs. UPSIDC Ltd. & Anr.
271
Ghaziabad. The land so acquired was
conveyed to Uttar Pradesh State Industrial
Development Corporation Limited (for
short "UPSIDC") for the purpose of
industrial development.

4. UPSIDC decided to set up and
develop an "Agro Industrial Park" in
financial collaboration with the company
associated with the said sector on 400 acres
of land out of total acquired land.

5. On 19.07.1993, respondent no. 1,
UPSIDC
entered
into
a
Promoter's
Agreement with one M/s. Western India
Industrial Technologies Limited (for short
"WIITL"). According to the agreement,
400 acres of land was to be developed by
engaging in financial collaboration with the
co-promoter WIITL. As per the agreement,
UPSIDC and WIITL agreed to form a
public limited company within three
months of the signing of the agreement. On
30.08.1993, a joint venture company in the
name of Western India Industrial Park
Limited (for short "WIIPL") was formed.
The equity participation of WIITL and
UPSIDC was in the ratio of 89% and 11%,
respectively.

6. Thereafter, on 15.05.1995 WIITL
executed a deed of assignment, assigning
all its rights over 89% of equity held by it
in WIIPL in favour of one M/s. Western
India Services and Estate Limited (for short
"WISEL"). A supplementary agreement
was executed on 24.01.1996 between
UPSIDC and WISEL, replacing the name
of WIITL with WISEL as co-promoter,
while all the terms and conditions of the
Promoter's Agreement remained the same
and equity participation of WISEL and
UPSIDC
stood
as
89%
and
11%,
respectively. While these, change of name
of co-promoter was going on, the Regional
Manager of the UPSIDC entered into a
license agreement with the joint venture
company WIIPL for setting up Agro
Industrial Park on 400 acres of land. This
agreement
was
followed
by
a
supplementary license agreement executed
on 09.02.1998 between UPSIDC and the
joint venture company WIIPL to modify
certain
terms
in
the
original
lease
agreement. On 15.04.1998, name of the
joint venture company WIIPL was changed
to Wise Infrastructure Limited. This name
was again changed on 25.06.1998 and was
renamed as "Wise Industrial Park Limited"
(for short "WIPL").

7. Certificate of incorporation was
issued by Registrar of Companies, Kanpur on
30.06.1998. In the meantime, in pursuance of
Promoter's Agreement as well as license
agreement
and
supplementary
license
agreement, a registered lease deed was
executed between UPSIDC and petitioner
company on 11.03.1998 for 133.33 acres of
land. Secondly, lease deed for the same area
i.e. 133.33 acres of land was executed
between UPSIDC and the petitioner company
on 30.03.1999, thus, a total of 266.66 acres of
land was leased out in favour of petitioner
company by UPSIDC through two lease
deeds of 1998 and 1999, out of the total area
of 400 acres, and the vacant possession was
delivered to the joint venture company on
26.03.1998 and 06.03.2000.

8. After the transfer of first and
second phase of land, petitioner company
was required to make payment for transfer
of third phase of 133.33 acres of land on or
before 30.03.2000, as the petitioner could
not make payment the allotment of third
phase was cancelled on 23.03.2001.

9. It appears that there was some
outstanding demand pending against the
272 INDIAN LAW REPORTS ALLAHABAD SERIES
petitioner company which was raised by
UPSIDC but was not paid.

10. Petitioner company subleased its
developed land measuring about 40 acres to
M/s. Hindustan Coca Cola Bottling Ltd., 1
acre to Meeta Deep Fridge and 5 acres to
Mode Attire. As the petitioner company
was in need of money, it availed loan from
one Global Trust Bank (now amalgamated
with Oriental Bank of Commerce) and
mortgaged 133 acres of land which was
transferred in the first phase. However, 46
acres of land was discharged from
mortgage when it was subleased. Another
100 acres out of second phase of transfer of
133.33 acres of land, was mortgaged to
Global Trust Bank, thus a total of 188.33
acres of land remained with the Global
Trust Bank out of allotted 266.66 acres of
land for the development of Agro Industrial
Park.

11. As there was default in repayment
of loan to the Bank, a notice under Section
13(2) of the Securitisation and Enforcement
of Financial Assets and Enforcement of
Security Interest Act, 2002 was issued.
Thereafter, possession of the land was
taken over by Global Trust Bank in
November, 2002.

12. The Bank initiated recovery
proceedings and filed Original Application
No. 37/2004, Global Trust Bank Ltd. vs.
Wise Infrastructure Ltd. and Original
Application No. 38 of 2004, Global Trust
Bank Ltd. vs. Wise Infrastructure Park Ltd.
and others, before the Debts Recovery
Tribunal- II, Delhi, in which UPSIDC was
impleaded as one of the defendants.

13. In the meantime, as the company
had
not
commenced/
completed
the
development work on 266.66 acres of land,
UPSIDC cancelled the lease deed of the
first and second transfer and intimated the
same to the petitioner company on
11.11.2002.

14. However, according to petitioners,
the notice as well as the intimation
regarding cancellation of the lease deed
was never received by them and it was for
the first time they came to know from the
written statement filed by UPSIDC i.e.
respondent no. 1 before Debts Recovery
Tribunal at Delhi in recovery proceedings
initiated by Global Trust Bank.

15. As per petitioner company, they
had tried to negotiate and settle the matter
with respondent no. 1 but the same failed
and they were compelled to file a writ
petition before this Court bearing Writ
Petition No. 4411 of 2017 with the
following prayer:-

"(a)
Issue
a
writ,
order
direction in the nature of mandamus,
directing the UPSIC to function within
terms and conditions of the promoter's
agreement dated 19.07.1993 and not to
interfere in any manner, with the lease
property of the Petitioner and to restore
the lease deeds dated 31.03.1998 and
11.03.1999 executed in favour of the
Petitioner;.

(b) Issue a writ, order or
direction in the nature of mandamus
directing the UPSIDC to decide the
representation of the Petitioner and till
then no third-party rights may be created
over the property in dispute."

16. This writ petition has been filed
for the restoration of the lease deed
executed in the year 1998 and 1999,
meaning thereby that cancellation order of
the lease deed be set aside.
11 All. M/s. Wise Industrial Park Ltd., Moradabad Vs. UPSIDC Ltd. & Anr.
273

17. The Division Bench of this Court
on 31.01.2017 dismissed the writ petition
and granted liberty to petitioner to avail any
of the remedies available in law. The order
of
the Division Bench
is
extracted
hereasunder:-

"Heard Sri Anurag Khanna,
learned Senior Counsel for the petitioner
and Sri Arvind Srivastava, learned counsel
for UPSIDC.

This
writ
petition
prays
for
mandamus directing the UPSIDC to proceed
in terms of agreement dated 19th July, 1993
and to take such steps so as to restore the
lease deeds dated 31st March, 1998 and 11th
March, 1999. The second relief claimed is for
deciding the representation which is in the
shape of an offer for negotiation in order to
settle any rights that the petitioner may
claiming as against the lease rights earlier
offered by the UPSIDC.

We are not inclined to entertain
this cause of action as the nature of the relief
prayed for is in the shape of a specific
performance which is being raised on the
ground as if there is some obligation cast on
the UPSIDC to accept the request of the
petitioner. If such a request has to be made or
there is any dispute arising therefrom, then
the remedy is by way of an arbitration or by
an internal negotiation with the UPSIDC
itself for which the petitioner appears to have
moved a representation.

The writ petition is, accordingly,
dismissed with liberty to the petitioner to
avail of any of the aforesaid remedies, in
accordance with law."

18. After the dismissal of writ
petition, petitioner company on 14.10.2019
sent a notice invoking the arbitration clause
pursuant to the Promoter's Agreement dated
19.07.1993.

19. Sri Anurag Khanna, learned
Senior Advocate submitted that all the four
agreements i.e. Promoter's Agreement
dated 19.07.1993, licence agreement dated
24.05.1995, lease deed dated 11.03.1998
and second lease deed dated 30.03.1999
were entered to achieve the object of
setting up Agro Industrial Park and all the
agreements
contained
reference
of
Promoter's Agreement which is the main
agreement.

20. He invited the attention of the
Court
to
Clause
33
of
Promoter's
Agreement
wherein
provision
for
arbitration is provided. It was further
contended that the dispute between the
parties is covered within the ambit and
extent of arbitration clause no. 33 of the
Promoter's
Agreement.
Reliance
was
placed upon decision of Apex Court in case
of Olympus Superstructures Pvt. Ltd. vs.
Meena Vijay Khetan and others, 1999 (5)
SCC 651.

21. The second limb of argument was
that while dismissing the Writ Petition No.
4411 of 2017, this Court on 31.01.2017 had
observed that remedy available to petitioner
was either by the way of arbitration or by
internal negotiation with UPSIDC itself and
the Court had given liberty to avail the
remedies in accordance with law.

22. Sri Khanna submitted that the
Court itself accepted the existence of
dispute and it was for respondent no. 1 to
have either actually resolved the dispute or
should have appointed the arbitrator once
the
arbitration
clause
was
invoked.
Reliance was placed upon decision of
Supreme Court in case of Ameet Lalchand
Shah and others vs. Rishabh Enterprises
and another, 2018 (15) SCC 678.
274 INDIAN LAW REPORTS ALLAHABAD SERIES

23. The third point canvassed by Senior
Counsel was that petition under Section 11 of
the Act is not affected by the provisions of
Limitation Act. Reliance was placed upon
decision of Apex Court rendered on 27.11.2019
in Special Leave Petition (C) No. 11476 of
2018, M/s. Uttarakhand Purv Sainik Kalyan
Nigam Ltd. vs. Northern Coal Field Ltd.,
wherein the Apex Court had considered that
after 2015 amendment and incorporation of
Section 11(6A), the only scope of examination
is now confined to existence of arbitration
agreement at Section 11 stage and nothing
more. He further submitted that all the issues
regarding limitation would be decided by
arbitrator in view of provisions of Section 16
and the same cannot be decided at the prereference stage.

24. Lastly, it was contended that notice
invoking arbitration dated 14.10.2019 is
sufficient for the appointment of arbitrator in
accordance with arbitration agreement dated
19.07.1993.

25. Per contra, Sri Swapnil Kumar,
learned counsel appearing for respondents
submitted that as per Promoter's Agreement
breach of terms and conditions is governed
by Clause 29.3 and not Clause 33 which is
an arbitration clause. Thus, dispute, if any,
regarding breach of terms and conditions
by any party has to be resolved in terms of
Clause 29.3.

26. Sri Swapnil Kumar invited the
attention of the Court to Clause 34 of the
Promoter's Agreement which categorically
states and specifies the period during which
the said agreement shall remain in force.
According to Clause 34 the agreement was
to remain in force for 12 years from the
date of signing and was renewable for
further period by mutual consent as the
agreement was signed on 19.07.1993, it
came to an end on 18.07.2005 as it was
only for a period of 12 years and was never
extended beyond the said date.

27. It was also contended that lease
deed was cancelled in the year 2002, and
if for the sake of argument it is accepted
that petitioner came to know about the
said fact through written statements then
too more than 15 years have elapsed and
the Promoter's Agreement is not in
existence.

28. According to Sri Kumar
petitioner is aware of the fact that the
agreement was for only 12 years and no
effort was made to renew the same nor
any notice or intimation was given by
petitioner to extend the same. The present
petition for arbitration is nothing but an
attempt to give life to a dead claim.
Reliance has been placed upon a decision
of Apex Court in the case of Duro
Felguera, S.A. vs. Gangavaram Port
Ltd., 2017 (9) SCC 729.

29. Heard learned counsel for the
parties and perused the material on record.

30. Before adverting to decide the
controversy, it would be relevant to have a
glance of Section 2(b) and Section 7 of the
Act.

31. Section 2(b) provides for
"arbitration agreement", which means an
agreement referred to in Section 7.

Section 7

"7. Arbitration agreement.- (1) In this
Part, "arbitration agreement" means an
agreement by the parties to submit to
arbitration all or certain disputes which
have arisen or which may arise between
11 All. M/s. Wise Industrial Park Ltd., Moradabad Vs. UPSIDC Ltd. & Anr.
275
them in respect of a defined legal
relationship, whether contractual or not.

(2) An arbitration agreement may
be in the form of an arbitration clause in a
contract or in the form of a separate
agreement.

(3) An arbitration agreement
shall be in writing.

(4) An arbitration agreement is in
writing if it is contained in

(a) a document signed by the
parties;

(b) an exchange of letters, telex,
telegrams
or
other
means
of
telecommunication1[including
communication through electronic means]
which provide a record of the agreement;
or

(c) an exchange of statements of
claim and defence in which the existence of
the agreement is alleged by one party and
not denied by the other.

(5) The reference in a contract to
a document containing an arbitration
clause constitutes an arbitration agreement
if the contract is in writing and the
reference is such as to make that
arbitration clause part of the contract."

32. From the conjoint reading of
above provision, it culls out that arbitration
agreement means an agreement by which
parties submit to arbitration all or certain
disputes which have arisen or which may
arise between them in respect of their
relationship whether contractual or not.

33. In the present dispute admittedly a
Promoter's
Agreement
was
executed
between the parties on 19.07.1993. Three
clauses of the said Promoter's Agreement
are relevant in deciding the present
controversy which are Clause 29.3, Clause
33 and Clause 34, and are extracted
hereasunder:-

"29.3 In case the parties commit
breach of any of the terms and conditions
and stipulations herein contained to be
observed and performed by them, the
aggrieved party shall be at liberty to give
notice in writing to the other party to set
right or rectify the breach or omission
complained of within 30 days of receipt of
notice failing which the aggrieved party
may seek the relief of specific performance
from the competent court of law.

33. All differences of disputes
with the parties hereto on any clause or
matter herein contained or their respective
rights, claims, or liabilities hereunder or
otherwise, whatsoever in relation to or
rising out this agreement shall be referred
to arbitration by two arbitrators (one to be
appointed by each party) who shall before
proceeding with the reference appoint an
umpire by mutual consent and each
arbitrator shall be governed by the Indian
Arbitration Act, 1940 or in modification or
re-enactment thereof for the time being in
force. The venue of the arbitration shall be
Kanpur or New Delhi if agreed to in
writing between the parties hereto.

34. This agreement shall be in
force for a period of 12 years from the date
of its signing and shall be renewable for a
further period by mutual consent."

34. Clause 29.3 is in relation to
breach of terms and conditions of the
agreement by either of the parties and the
aggrieved party having an option to give
notice to the other side for rectifying such
breach or omission and if the same is not
carried out within 30 days, the party may
seek a relief of specific performance from
the competent court.

35. Likewise, Clause 33 provides that
in case of dispute between the parties the
same shall be referred to the arbitration.
276 INDIAN LAW REPORTS ALLAHABAD SERIES
Lastly, clause 34 provides period of
existence of the agreement which is 12
years from the time of signing of the same
and if it is not extended or renewed, the
same coming to an end on 18.07.2005 by
efflux of time.

36. From the pleading of parties as
well as their oral and written submissions,
it transpires that both parties are adverting
to the Promoter's Agreement executed on
19.07.1993, but no averment in the
pleading or in oral submission was made as
to whether the agreement was ever
extended or renewed at the instance of
either of the parties. It is not in dispute that
originally
Promoter's
Agreement
was
executed on 19.07.1993 and a joint venture
company was formed for the development
of Agro Industrial Park. Out of 400 acres of
land, 266.66 acres of land was allotted to
petitioner company and possession was
handed over in the year 1998 through first
transfer, and in the year 1999 through
second transfer. Uptil this point of time
there was no dispute and it was only when
the petitioner company failed to repay the
amount and was not able to carry out the
obligation of making payment for the third
transfer that firstly in the year 2001, the
allotment of the third phase of transfer of
133.33 acres of land was cancelled and,
thereafter, in the year 2002, the lease deed
of the earlier first and second transfer was
cancelled due to the fact that work was not
completed.

37. During this period, petitioner
company who had taken loan from Global
Trust Bank had been litigating with the
Bank and the possession of the land was
taken over by the Bank some times in
November, 2002.

38. According to petitioner company
itself they came to know about the
cancellation of the lease deed during the
proceedings initiated by the Bank before
the Debts Recovery Tribunal, but they did
not challenge the said cancellation of lease
deed and it was for the first time in the year
2017 after a lapse of about 12 years, they
approached
this
Court
through
Writ
Petition No. 4411 of 2017, which was
dismissed on 31.10.2017, leaving it open to
petitioner to pursue the remedy so available
under law.

39. The argument of learned Senior
Counsel, Sri Khanna to the extent that the
Court had cast obligation upon UPSIDC to
decide the representation which they have
failed to do so and thus an arbitrator should
be appointed by the Court, cannot be
accepted, as the said writ petition was filed
with a prayer for restoring the lease deed
dated 31.01.1998 and 11.03.1999, meaning
thereby that the said lease deed was
cancelled and the Court had refused to
interfere and had dismissed the writ
petition.

40. The petitioner company again
after lapse of two years on 14.10.2019 gave
notice
to
respondents
invoking
the
arbitration clause 33 as per Promoter's
Agreement dated 19.07.1993. The question
which crops up for consideration is as to
whether an agreement which is executed
between the parties for stipulated period (as
time being essence of the contract) with a
provision for renewal at the instance of
parties came to an end on the expiry of
such period, and renewal not being sought
or initiated at the instance of either of the
parties, can be the basis for invoking the
arbitration agreement.
11 All. M/s. Wise Industrial Park Ltd., Moradabad Vs. UPSIDC Ltd. & Anr.
277

41. After the amendment in the year
2015 Sub-section (6A) to Section 11 was
inserted w.e.f. 23.10.2015, which reads as
under:-

"(6A) The Supreme Court or, as
the case may be, the High Court, while
considering any application under subsection (4) or sub-section (5) or sub-section
(6), shall, notwithstanding any judgment,
decree or order of any Court, confine to the
examination
of
the
existence
of
an
arbitration agreement."

42. The said provision provides for
the existence of an arbitration agreement
and the intention of legislature is clear that
the Court should and need only look into
one aspect and that is existence of an
arbitration agreement. The Apex Court in
case of Duro Felguera, S.A. (supra) held
as under:-

"48. Section 11(6-A)added by the
2015 Amendment, reads as follows:

"11. (6-A) The Supreme Court or,
as the case may be, the High Court, while
considering any application under subsection (4) or sub-section (5) or sub-section
(6), shall, notwithstanding any judgment,
decree or order of any Court, confine to the
examination
of
the
existence
of
an
arbitration agreement."(emphasis supplied)

From a reading ofSection 11(6A), the intention of the legislature is crystal
clear i.e. the Court should and need only
look into one aspect- the existence of an
arbitration agreement. What are the factors
for deciding as to whether there is an
arbitration agreement is the next question.
The resolution to that is simple - it needs to
be seen if the agreement contains a clause
which provides for arbitration pertaining to
the disputes which have arisen between the
parties to the agreement.

59. The scope of the power
underSection 11(6) of the 1996 Act was
considerably wide in view of the decisions
in SBP and Co. v. Patel Enggg. Ltd.
(2005) 8 SCC 618 and National Insurance
Co. Ltd. v. Boghara Polyfab (P) Ltd.,
(2009) 1 SCC 267. This position continued
till the amendment brought about in 2015.
After the amendment, all that the courts
need to see is whether an arbitration
agreement exists - nothing more, nothing
less. The legislative policy and purpose is
essentially
to
minimize
the
Court's
intervention at the stage of appointing the
arbitrator
and
this
intention
as
incorporated inSection 11(6-A) ought to be
respected."

43. In case of M/S Mayavti Trading
Pvt. Ltd. vs. Pradyut Deb Burman, Civil
Appeal No. 7023 of 2019, decided on
05.09.2019, relying upon decision of Duro
Felguera, S.A. (supra), the Apex Court
held as under:-

"10. This being the position, it is
clear that the law prior to the 2015
Amendment that has been laid down by this
Court, which would have included going
into whether accord and satisfaction has
taken place, has now been legislatively
overruled. This being the position, it is
difficult to agree with the reasoning
containing in the aforesaid judgment as
Section
11(6A)
is
confined
to
the
examination of the existence of and
arbitration agreement and is to be
understood in the narrow sense as has been
laid down in the judgment Duro Felguera,
S.A. (supra)- see paras 48 and 59."

44. The legislative intent has been
clearly dealt in the decision of the Apex
Court referred above and by insertion of
Section 11(6A) examination is confined
278 INDIAN LAW REPORTS ALLAHABAD SERIES
only to the existence of arbitration
agreement and nothing more has to be seen
by the Court in proceedings under Section
11(6) for the appointment of arbitrator.

45. In the present case, the moot
question which arises is whether the
arbitration agreement i.e. arbitration clause
provided in the Promoter's Agreement is in
existence or not. The word "existence" has
been defined in the Advanced Law
Lexicon, III Vol. 2005, which is as under:-

"Existence. Created life; living
beings in general (as) "fellow-feeling with
all forms of existence" (Carlyle) Being; the
fact or state of existing."

46. Existence means, which has life or
which exists. In the present context, existence
of arbitration agreement means existence of
an agreement which is capable of execution.
As from the reading of Clause 34, it emerges
that the promoter's agreement was executed
between the parties for a period of 12 years
from the date of signing, meaning thereby
that its life came to an end on 18.07.2005. It
is also not in dispute that this agreement was
ever extended or renewed by either of the
parties. Thus, in view of amended provisions
of Section 11(6A) as well as the decision of
the Apex Court the Promoter's Agreement in
question has outlived its life and was not in
existence after 18.07.2005. The petitioner
company though had remedy under various
provisions of law in getting the lease deed
restored, while one such attempt having
failed in Writ Petition No. 4411 of 2017, the
invoking of arbitration clause 33 of the
Promoter's Agreement is in respect of an
agreement which is not in existence as per
Section 11(6A) of the Act.

47. The argument made by learned
counsel for petitioner to the extent that there
exists dispute between the parties which can
only be resolved through arbitration clause 33
of the Promoter's Agreement and petition
under Section 11 of the Act is not affected by
provisions of Limitation Act, cannot be
accepted in the facts and circumstances of the
present case, as Clause 34 of the Promoter's
Agreement itself categorically provides the
life of the agreement which is 12 years,
unless and until extended or renewed. As it is
evident from the pleading as well as the
argument that the said agreement was never
extended beyond 12 years and the life of the
agreement came to an end on 18.07.2005.
Thus, petitioner cannot rely upon the
provisions of the agreement which is not in
force between the parties as time was the
essence of contract. The amended provision
categorically provided for the enforcement of
arbitration proceedings only in case of
existence of arbitration agreement.

48. The Apex Court while dealing
with 2015 Amendment, is of the constant
view that the Court should and need only
look into one aspect and that is the
existence
of
arbitration
agreement.
Reliance placed by learned counsel for
petitioner on the decision of the Apex
Court in case of Ameet Lalchand Shah
and others (supra) is not applicable in the
present case as the arbitration agreement
had come to an end 14 years prior to the
invocation of the same.

49. Likewise, reliance placed upon
decision in case of M/s. Uttarakhand Purv
Sainik Kalyan Nigam Ltd. (supra) also
does not come to rescue of the petitioner
and the Apex Court in Para 9.9 has held as
under:-

"9.9.
The
doctrine
of
"Kompetenz-Kompetenz", also referred to
as
"Compétence-Compétence",
or
11 All. M/s. Wise Industrial Park Ltd., Moradabad Vs. UPSIDC Ltd. & Anr.
279
"Compétence de la recognized", implies
that the arbitral tribunal is empowered and
has the competence to rule on its own
jurisdiction, including determining all
jurisdictional issues, and the existence or
validity of the arbitration agreement. This
doctrine is intended to minimize judicial
intervention, so that the arbitral process is
not thwarted at the threshold, when a
preliminary objection is raised by one of
the parties.

The
doctrine
of
kompetenzkompetenz is, however, subject to the
exception
i.e.
when
the
arbitration
agreement itself is impeached as being
procured by fraud or deception. This
exception would also apply to cases where
the parties in the process of negotiation,
may have entered into a draft agreement as
an antecedent step prior to executing the
final contract. The draft agreement would
be a mere proposal to arbitrate, and not an
unequivocal acceptance of the terms of the
agreement.Section 7of the Contract Act,
1872 requires the acceptance of a contract
to be absolute and unqualified. If an
arbitration agreement is not valid or nonexistent, the arbitral tribunal cannot
assume jurisdiction to adjudicate upon the
disputes. Appointment of an arbitrator may
be refused if the arbitration agreement is
not in writing, or the disputes are beyond
the scope of the arbitration agreement.

Article V(1)(a) of the New York
Convention states that recognition and
enforcement of an award may be refused if
the arbitration agreement ''is not valid
under the law to which the parties have
subjected it or, failing any indication
thereon, under the law of the country where
the award was made'."

50. In the case of P. Manohar Reddy
and Bros. vs. Maharashtra Krishna Valley
Development Corporation and others,
(2009) 2 SCC 494, while dealing with a
situation where arbitration clause although
part of contract, need not in all situation
perish with coming to an end of the
contract. The Court evolved the state of
separability of arbitration clause. Relevant
paras 27 and 28 are extracted hereasunder:

"27. An arbitration clause, as is
well known, is a part of the contract. It
being a collateral term need not, in all
situations, perish with coming to anend of
the contract. It may survive. This concept of
separability of the arbitration clause is now
widely accepted. In line with this thinking,
the
UNCITRAL
Model
Law
on
International
Commercial
Arbitration
incorporates the doctrine of separability
inArticle 16(1).The Indian law - The
Arbitration andConciliation Act, 1996,
which is based on the UNCITRAL Model
Law, also explicitly adopts this approach
inArticle 16 (1)(b), which reads as under:-

"16. Competence of Arbitral
Tribunal to rule on its jurisdiction. - (1)
The Arbitral Tribunal may rule on its own
jurisdiction, including ruling on any
objections with respect to the existence or
validity of the arbitration agreement, and
for that purpose,
-

(a) An arbitration clause which
forms part of a contract shall be treated as
an agreement independent of the other
terms of the contract; and

(b) A decision by the arbitral
tribunal that the contract is null and void
shall not entail ipso jure the invalidity of
the arbitration clause."
 (Emphasis supplied).

Modern
laws
on
arbitration
confirm the concept.

28. The United States Supreme
Court in the recent judgment in Buckeye
Check Cashing, Inc. v. Cardegna, 546 US
280 INDIAN LAW REPORTS ALLAHABAD SERIES
460
(2005)
acknowledged
that
the
separability rule permits a court "to
enforce an arbitration agreement in a
contract that the arbitrator later finds to be
void." The Court, referring to its earlier
judgments in Prima Paint Corp. v. Flood &
Conklin Mfg. Co., 388 U.S. 395 (1966), and
Southland Corp. v. Keating, 465 U.S. 1
(1984), inter alia, held :-

"Prima Paint and Southland
answer the question presented here by
establishing three propositions. First, as
a
matter
of
substantive
federal
arbitration law, an arbitration provision
is severable from the remainder of the
contract."

But this must be distinguished
from the situation where the claim itself
was to be raised during the subsistence of
a contract so as to invoke the arbitration
agreement would not apply."

51. In Hema Khattar and another
vs. Shiv Khera, (2017) 7 SCC 716, the
Apex Court dealing with a situation
where the arbitration clause contained in
agreement was waived by mutual consent
of the parties the Court held that
arbitration clause would continue to be
operative. Relevant para 35 is extracted
hereasunder:-

"35. In P. Anand Gajapathi
Raju & Others vs. P.V.G. Raju (2000) 4
SCC 539, it was held as under:(SCC p.
542, para 5)-

"5. The conditions which are
required to be satisfied under sub-

sections (1) and (2) ofSection
8before the court can exercise its powers
are:

(1) there is an arbitration
agreement;

(2) a party to the agreement
brings an action in the court against the
other party;

(3) subject-matter of the action
is the same as the subject-matter of the
arbitration agreement;

(4) the other party moves the
court
for
referring
the
parties
to
arbitration before it submits his first
statement on the substance of the
dispute."

In view of the above, where an
agreement is terminated by one party on
account of the breach committed by the
other, particularly, in a case where the
clause is framed in wide and general terms,
merely because agreement has come to an
end by its termination by mutual consent,
the arbitration clause does not get perished
nor is rendered inoperative. This Court, in
the case of P. Anand Gajapathi Raju
(supra), has held that the language
ofSection
8is
peremptory
in
nature.
Therefore, in cases where there is an
arbitration clause in the agreement, it is
obligatory for the court to refer the parties
to arbitration in terms of their arbitration
agreement and nothing remains to be
decided in the original action after such an
application is made except to refer the
dispute to an arbitrator. Therefore, it is
clear that in an agreement between the
parties before the civil court, if there is a
clause for arbitration, it is mandatory for
the civil court to refer the dispute to an
arbitrator.

52. Thus, the above decisions referred
clearly distinguishes the situation, that
claim must be raised during subsistence of
contract, and further if the agreement exists
it cannot be waived by mutual consent.
Thus, both the decisions lead to the concept
of existence of agreement.
11 All. Rajesh Kumar Vs. State of U.P. & Anr.
281

53. After the 2015 Amendment of the
Act, the only thing left with the Court to
see was existence of arbitration agreement
for referring the dispute to arbitrator. This
amendment got approval of the Court in
case of Duro Felguera, S.A. (supra), M/S
Mayavti Trading Pvt. Ltd. (supra) and M/s.
Uttarakhand Purv Sainik Kalyan Nigam
Ltd.