Madras High Court : the election dispute raised by the Petitioner in terms of by-laws can be adjudicated only through public fora (Courts) & not through Arbitration, which is confidential in nature.

 Madras Sporting Youngsters Football Club vs. Tamil Nadu Football Association and Ors. (Madras High Court, decided on 31.01.2022), 

was a Petition under Section 11 of the #arbitration & conciliation Act, 1996 for appointment of and #arbitrator, where this question was raised.

Here Madras Sporting Youngsters Football Club (MSYFC) was challenging the appointment of the 4th Respondent (R4), as the secretary of the TN Football Association, and was relying on the arbitration clause contained in the by-laws of the TN Football Association.

The court observed as follows:

1. The dispute raised by MSYFC is an election dispute TN Football Association, in which R4 was elected as Secretary. R4 is not a member of the TN Football association as only Football clubs can be its members.

2. Therefore R4 is not a party to the by-laws of the TN Football association, which contain the arbitration clause. He has neither signed the by-laws nor agreed to the terms and conditions contained therein. 

3. By-laws of a society are internal regulations of the said society applicable only to its members, and is a public document. It is not a person-centric or private documents. 

4. Therefore, several parties may be interested in the by-laws such as players, stage, members, etc. In view of the same, the election dispute raised by the Petitioner in terms of by-laws can be adjudicated only through public fora (Courts) & not through Arbitration, which is confidential in nature. 

5. Matters such as actions for enforcement of in-rem rights can only be adjudicated by public fora, and stand excluded from purview of private fora by necessary implication such disputes are incapable of being resolved in arbitration. (Reliance placed on Booz Allen & Hamilton Inc. V. SBI Home Finance Ltd., 2011 5 SCC 532)

6. If the subject matter of a dispute affects third party rights, it is not arbitrable. (Reliance placed on Vidya Drolia V. Durga Trading Corporation 2021 (2) SCC 1)

7. Disputes involving public interest or interests of numbers persons not parties before Court and disputes relating to election to public offices are non-arbitrable. (Reliance placed on Afcons Infrastructure Ltd. V. Cherian Varkey 2010 (8) SCC 24)

In view of the above observations, the Court dismissed the Petition under Section 11 for appointment of arbitrator. 

Delhi High Court : only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded.

Bhopal Dal Udyog v. Food Corporation Of India (Delhi High Court, Division Bench, decided on 04.01.2022), 

The Arbitrator had awarded Liquidated Damages (LD) in favour of the Respondent, relying on clause of the Agreement between the parties, in addition to the actual loss suffered by the Respondent (which was proved), as a result of the breach of Contract by the Appellant. 

The Court observed as follows:-

1. Section 74 of the Indian Contract Act, 1872 provides that when a sum has been named in a contract, as the amount to be paid on breach, the party complaining of breach is entitled, whether or not actual damage or loss is proved to have been caused, to receive from the party in breach, reasonable compensation not exceeding the amount so named. (Commonly called LD)

2. Such a sum named in the contract, is payable only if it is a genuine pre-estimate of damages, fixed by both parties, and found to be such by Court/arbitrator.

3. The expression "whether or not actual damage or loss is proved to have been caused thereby" means that where it is possible to prove actual damage or loss, such proof is not dispensed with. It is only in cases where damage or loss is difficult or impossible to prove that the liquidated amount named in the contract, if a genuine pre-estimate of damage or loss, can be awarded.

4. In the Present case as the actual damages suffered by the respondent were proven and accepted by the #Arbitrator, LD over and above such actual damages could not have been awarded.

(Reliance placed on Kailash Nath Associates v. DDA & Anr., (2015) 4 SCC 136)

On the basis of above, the Arbitral Award was set aside to the limited extent of the Liquidated Damages being awarded over and above the actual damages.

Supreme Court - Consumer disputes are non-arbitrable, in the presence of Special act like the Consumer Protection Act.

 In the Matter of M/S Emaar Mgf Land Limited vs Aftab Singh Complaint no. (2019) 12 SCC 751 decided on 10.12.2018 before Supreme Court of India

The appeals were filed challenging the order of National Consumer Disputes Redressal Commission (NCDRC) in Aftab Singh v. Emaar MGF Ltd., 2017 SCC OnLine NCDRC 1614 holding consumer disputes to be non-arbitrable.The respondent entered into a buyer’s agreement with the petitioner company for the purchase of a villa in the township to be developed by them. Dispute arose regarding the same. The respondent filed a complaint with NCDRC under Consumer Protection Act, 1986 for certain reliefs in the matter. The company relied on the arbitration clause provided in the agreement and filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 for referring the matter to arbitration. This application was rejected by NCDRC. The company filed appeals against NCDRC order which was dismissed by the Delhi High Court as well as the Supreme Court.

The Hon'ble Supreme Court considered the provisions of Consumer Protection Act, 1986 & Once the public Statute is in place, Arbitration & Conciliation act 1996 can not be resorted to.It was observed that , “….complaint under Consumer Protection Act being a special remedy, despite there being an arbitration agreement the proceedings before Consumer Forum have to go on….”  Thus, it was held that the Consumer Protection Act being special legislation, NCDRC was right in rejecting the company's application under Section 8 of Arbitration Act. Therefore, the review petition was dismissed.

The Authority has Jurisdiction to decide the matters between the Allottee and promoter , though their agreement has an arbitration clause in it.

In the Matter of Sarita Bhairu Chandekar & oth Vs Prashant Bhandari Complaint number CC005000000022925 decided on 11.11.2019  before  Maharashtra Real Estate Regulatory Authority

The Authority Relied on the Judgment by Supreme Court in the matter of HDFC Bank Ltd-v/s-Satpal Singh Baxi (MANU/DE/5308/2012) in which the Supreme Court also held that if particular enactment creates special rights and obligations and gives special power to the Tribunal which are not in Civil Court such as tribunal constituted under Rent Control Act and the Industrial Disputes Act, the dispute arising under the said enactments cannot be arbitral otherwise other disputes are arbitral.

In Hemangi Enterprise-v/ s-Kamaljeet Singh Ahluwalia 2017 STPL 13227 SC, the Supreme Court found that the dispute between the parties was that of the tenant and landlord relating to leave and license agreement and therefore exciusive jurisdiction to deal with such dispute is conferred upon the Court of Small Causes and therefore, though there wasthe Arbitral Clause in the agreement, the Court held that the dispute was not arbitral. 

As per the Court

• Section 20 of RERA has special powers

• under Section 31 of it to adjudicate the dispute between the aggrieved person on one hand and the promoter, allottee, real estate agent on the other for violation or contravention of the provisions of RERA, Rules and Regulations made thereunder.

• Section 32,34,35 are the special provisions.

• Section 79 of RERA bars the jurisdiction of Civil Court from entertaining any matter which the Authority is empowered under the Act to determine.

• Section 59 lo 69 relates to the offences and penalties.

• A Special Forum of Adjudicating Officers whose qualification is that of District Judge has been set up by Section 71 of RERA to decide the matters arising out of Section 1.2, 74, 78 & 19.This case arises out of Section 18 of the Act for which a separate special forum has been provided by RERA and hence, the jurisdiction lies with the Authority and it cannot be delegated to the Arbitrator despite the provisions of the Arbitration and Conciliation Act and the Arbitration Clause of the agreement. Hence, Court did not find any force in the respondents' submission that this Authority has no jurisdiction. The Court finds that the Authority has jurisdiction to entertain this complaint.

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The Complaint to the Authority can be filed by any of the Co Purchasers, when there is no conflict of interest between the co-purchasers and Even after having an arbitration clause in agreement the authority has power to entertain the plea when no request is made for arbitration by the parties.

 in the Matter of Ganesh Lonkar V/s D.S. Kulkarni Developers Ltd. Complaint number CC005000000000317 Decided on 26/12/2017

There are 2 important legal issues involved in this complaint filed under section 18 of Real Estate(regulation and Development) Act 2016.

• Whether the Arbitration Agreement will oust the jurisdiction of Maha RERA and

• Whether the complaint filed by a co-purchaser is maintainable?, 

The complainant contends that he and his wife Mrs. Sharmila booked a flat no. 4-602 in DSK Mayurban, situated at Pune and the respondents promised to give its possession on or before 30th June 2017. The respondents have failed to deliver the possession of the flat on the agreed date. The complainant wants to continue in the project. According to him, as per the registered agreement for sale, the respondents are supposed to make payment of pre-EMIs of housing loan taken from Tata Capital Housing Finance Ltd. (TCHFL ) till the possession of the flat is handed over. TCHFL has issued notices to the complainant for payment of EMIs after 30th June 2017. Therefore, the complainant prays that the respondents be directed to hand over the possession of their flat at the earliest and to pay EMIs from December 2016 onwards. Complaint also claims interest on the amount paid by him to the respondents. 

The respondents have pleaded not guilty and they have filed their explanation to contend that co-purchaser Mrs. Sharmila Ganesh Loankar has not been added as a party to this complaint. The respondents have further contended that as per clause 49 in the agreement for sale, this dispute is to be referred to the Arbitrator and therefore, this authority has no jurisdiction to adjudicate upon the present dispute.

Maha RERA observed that 

• there is no substance in the objection on non-joinder because there is no conflict of interest between the co-purchasers. 

• Here in this case though there is a clause to refer the dispute to the Arbitrator, neither the complainant nor respondents have submitted any application before this authority to refer their matter to the Arbitrator, hence RERA have jurisdiction to the case.

If the Redevelopment project involves the Sale of flats to outside parties, then the builder becomes promoter under the act and the project is to be registered

 In the Matter of Indira Nagar Kaveri Apartments Owners Welfare Association v/s Navin Housing & Properties Pvt. Ltd. Complaint number 433/2019 ,

The Hon’ble Tamil Nadu  Real Estate Regulatory Authority observed that 

• an Agreement between existing flat owners and Builder intending to do redevelopment of the Society where the sale of flat to outside parties are also involved., “Very much constitute the standard joint development agreement for redevelopment  which is entered into between the existing flat owners and the promoter builder for demolition of the existing flats and construction of new flats in the said property. Therefore the day existing flat owners sign the deed of agreement with the promoter builder, the existing flat owners become an allottee and the respondent builder becomes the promoter under this act.”

• The Hon’ble Tribunal further added that it is the responsibility of the promoter to get the consent from the remaining flat owners to take up the redevelopment project.

• The Hon’ble Tribunal further declined to transfer the matter for arbitration adding that  “after the commencement of the Real Estate (Regulation and Development) act, 2016 the real estate disputes and complaints will have to be adjudicated by the authority constituted under the act.”