Application for Arbitrator’s Appointment Cannot Be Filed When Agreement is Not is Existence:ALL HC

Allahabad High Court has held that If an agreement is not in force, provisions of the agreement cannot be invoked for appointment of Arbitrator.

An application under Section 11(6) of the Arbitration and Conciliation Act, 1996 was filed

for the appointment of an arbitrator by invoking the arbitration clause that was mentioned in the Promoter’s Agreement.

But the Court held that an arbitrator could not be appointed as the Promoter’s Agreement was not in force at the time.

Leasing of the Land

A piece of land measuring 800 Acres was acquired by the State of Uttar Pradesh in Masuri. 

This piece of land was conveyed to Uttar Pradesh State Industrial Development Corporation Limited (UPSIDC).

After that, UPSIDC entered into a Promoter’s Agreement with Western India Industrial Technologies Limited (WIITL).

During this period, the land was transferred to the company and its subsidiaries in a phased manner

and the petitioner company was directed to transfer payment on or before 30.03.2000.

But, the petitioner company was not able to pay for the third phase, and the allotment was cancelled.

Meanwhile, recovery proceedings were initiated by the Global Trust Bank against the petitioner company.

As the petitioner company was not able to commence development work, the lease deed was cancelled by UPSIDC.

The company filed a writ petition for restoration of the lease deed which was dismissed by the Allahabad High Court.

After that, a notice was sent by the petitioner company invoking the arbitration clause in the Promoter’s Agreement.

Reasons for invoking the arbitration clause:-

Counsel for the petitioner company stated that

all the lease deeds that were executed had a reference to the Promoter’s Agreement which was the main agreement.

As per Clause 33 of the Promoter’s Agreement, there was a clause for arbitration.

A reference was also made to the judgement of the Division Bench

where the Court had given the liberty to the petitioner to either go for arbitration or solve the case internally with UPSIDC.

Contention of the Respondents

Counsel for the respondent stated that the agreement was supposed to be in force for 12 years,

which ended on 18.07.2005 and was not extended by either of the parties.

It was also contended that the petitioner was aware that the agreement was valid for only 12 years

and did not make any attempt to extend the agreement.

Allahabad High Court opines that the agreement was not in force:-

Allahabad High Court held that as clause 33 of the promoter’s agreement for the appointment of an arbitrator was invoked after 14 years

from the date when the agreement ended, therefore relief cannot be granted.

Court held

Once the agreement is not in force (existence), none of its provisions can be invoked as the entire agreement has come to an end by efflux of time. 

Accordingly, the petition was dismissed.

Case Details:

Title: M/s Wise Industrial Park Ltd vs UPSIDC

Case No. 143 of 2019 ARBA

Coram: Hon’ble Justice Rohit Ranjan Agarwal

Date of Judgment: 22.10.2020

Counsel for Applicant : Gunjan Jadwani

Counsel for Opposite Party : Anadi Krishna Narayana,Swapnil Kumar

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