Madhya Pradesh High Court: Exclusion Of Certain Aspects Of The Dispute Cannot Be Done In The Proceedings U/S. 11 Arbitration & Conciliation Act
The Madhya Pradesh High Court appointed a Sole Arbitrator for the adjudication of the dispute between the parties.
The Madhya Pradesh High Court remarked that the exclusion of certain aspects of the dispute cannot be done in the proceedings under Section 11 of the Arbitration and Conciliation Act.
The Court appointed a Sole Arbitrator for adjudication of the dispute between the parties, in an application filed under Section 11 of the Arbitration and Conciliation Act, 1996 (the Act) for the appointment of an Arbitrator in terms of an agreement. The Court held that consent for the appointment of an Arbitrator is preempted by a condition that the arbitration has to be done for the refund of money paid by the non-applicant.
A Single Bench of Justice Pavan Kumar Dwivedi remarked, “From a bare perusal of the above quoted clauses it is crystal clear that there is undisputable existence of arbitration agreement. Further, in terms of clause 6.3 of the MOU the award of the Arbitrator shall be final and binding on the parties. The non-applicant in para 14 of his reply has consented for appointment of Mr. Vinod Kumar Jain as sole Arbitrator (which is also agreed in the MOU itself), but this consent has been preempted by a condition that arbitration has to be done for the refund of money paid by the non-applicant, interest thereof and compensation holding the non-applicant idle and his capital kept reserved for the project and breaches of terms and conditions of MOU. In para 15 it has also been set out by the non-applicant as a pre-condition for arbitration that non-applicant shows his readiness for limited point of amount of compensation after fulfilling pre-requisites or selling outright at the cost agreed with third party without any adverse effect on ongoing process of criminal action.”
Senior Advocate Vishal Baheti appeared for the Applicants, while Advocate K.K. Chaturvedi represented the Non-Applicant.
Brief Facts
The applicants had entered into a Memorandum of Understanding (MOU) with the non-applicant for the development of a residential building. As per the MOU, the non-applicant was entitled to 38% portion of the developed area, while the applicants would receive the remaining 62%.
Court’s Reasoning
The High Court explained, “This Court while considering an application under Section 11 of the Arbitration & Conciliation Act, 1996 has to confine itself to examination of the existence of an arbitration agreement. In the instant case as quoted above the arbitration agreement is not only present, but unambiguous in its intent. It not only provides arbitration and suggests agreed names of Arbitrators, but it also holds in clause 6.3 that award passed by the Arbitrator shall be final and binding on the parties. As such existence of arbitration agreement is very much there.”
The Bench stated, “As to the procedure, which a party failed to adhere it is seen from the pleadings of respective parties that the applicants have proposed appointment of Arbitrator by sending notice dated 8.3.2025 (Annexure P/6), which was replied by the non-applicant vide its reply dated 15.3.2025 (Annexure P/7), whereby denying consent for appointment of Arbitrator. As such it is clear that parties have failed to appoint Arbitrator through consent. Thus, this application under Section 11 has come before this Court.”
“Now, in reply to application, the non-applicant has agreed vide para 14 of its reply that he has no objection for appointment of Mr. Vinod Kumar Jain as sole Arbitrator in terms of MOU. As such, this Court is of the considered view that he can be appointed as Arbitrator for arbitration of dispute between the applicants and non-applicant,” the Court stated.
"As regards exclusion of certain aspects of dispute the same cannot be done in the proceedings under Section 11 of the Arbitration & Conciliation Act by this Court. Thus, the same is left for the discretion of the proposed Arbitrator to adjudicate upon the arbitraribility of the different aspects of the disputes between the parties," the Bench explained.
Consequently, the Court ordered, “In view of the competing submissions made by the parties it is crystal clear that it is not possible to resolve dispute between the parties through mutual discussion. Thus, this Court hereby proposes the name of Mr. Vinod Kumar Jain for appointment as Sole Arbitrator for adjudication of the dispute between the parties subject to his consent.”
Cause Title: Veena Taparia & Ors. v. Sudhir Kumar Upadhya (AC No. 38 of 2025)
Appearance:
Applicants: Senior Advocate Vishal Baheti; Advocate Nipun Soni
Non-Applicant: Advocate K.K. Chaturvedi