Reportable IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4926 OF 2011 [Arising out of SLP [C] No.3835 of 2010]

Khivraj Motors … Appellant

Vs.

The Guanellian Society … Respondent

J U D G M E N T

R.V.RAVEENDRAN, J.

Leave granted. Heard.

2. The  appellant  alleges  that  a  joint  development  agreement  dated  

18.2.2007 was entered into between “Father A.John Bosco, President, The  

Gaunellian  Society” as the owner,  and the appellant  as  the developer,  in  

regard  to  three  acres  of  land  and  that  clause  18  of  the  said  agreement  

provided for  settlement  of  disputes  arising  out  of  the  said  agreement  by  

arbitration. It is further alleged by the appellant that on 20.2.2007, the said  

Father A. John Bosco, President, The Guanellian Society, executed a power  

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of Attorney in favour of the appellant in connection with the development of  

the said property with power to enter into agreements of sale and also to  

transfer and convey an extent of 70% undivided share in the said property.   

3. The Gaunellian Society, (‘Society’ for short) the respondent herein, at  

its  Extraordinary Meeting held on 10.1.2008, passed a resolution that the  

Managing Committee of the Society had not authorized its President to deal  

with the property and therefore the joint development agreement and general  

power of attorney executed by him were null and void and not binding on  

the Society. On 17.4.2009 the respondent Society filed an application under  

section 11 of the Arbitration and Conciliation Act, 1996 (‘Act’ for short) for  

appointment  of  an  arbitrator  for  resolution  of  the  disputes  between  the  

Society and the appellant.  

4. The appellant resisted the said petition alleging that the application by  

the Society was not maintainable for the following reasons :  

(a) the lands was purchased and owned by Father A.John Bosco, in his  individual capacity and not as the President of the Society;

(b) Father  A.  John  Bosco  entered  into  the  joint  development  agreement in respect of the property in his individual capacity and  not as the President of the Society.  

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(c) Though the joint development agreement contained a provision for  arbitration, as the respondent society was not a party to the joint  development agreement containing the arbitration agreement, the  petition under section 11 by the Society was not maintainable.

5. A designate of the Chief Justice of the Karnataka High Court by order  

dated  26.10.2009  allowed  the  said  application  and  appointed  a  retired  

District  Judge  as  the  sole  arbitrator.  The  High  Court  held  that  the  joint  

development agreement was executed between the Society and the appellant  

and that Father A.John Bosco had signed the said agreement,  only in his  

capacity as the President of the Society and not in his individual capacity  

and therefore the application under section 11 of the Act by the Society was  

maintainable.  

6. The  said  order  is  contested  by  the  appellant,  inter  alia,  on  the  

following grounds :

(i) The joint  development  agreement  was  entered into  between Father  

A.John Bosco, as the owner of the property and the appellant, as developer.  

As the Society was not a party to the joint development agreement, there is  

no privity of contract between the Society and the appellant. The arbitration  

clause in the said agreement could not therefore be invoked by the Society  

for resolving any dispute relating to the joint development agreement.

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(ii) Even if the Society is a party to the joint development agreement, as  

the  Society had alleged that  the  appellant  had adopted unfair  means  and  

exercised  undue  influence  over  Father  A.John  Bosco  to  get  the  joint  

development agreement executed by him, it would not be appropriate for an  

arbitral tribunal, a private forum, to adjudicate upon such serious allegations.  

The  civil  court  alone  should  decide  such  serious  allegations  so  that  the  

appellant could vindicate itself.

The appellant also attempted to raise several other contentions relating to  

title and merits of the dispute, which are wholly alien to the scope of the  

proceedings  under  Section  11  of  the  Act  and  therefore  need  not  be  

considered.  

7. In the special leave petition, the appellant specifically contended that  

the Society was not a signatory or party to the joint development agreement.  

Though, a typed copy of the joint development agreement is produced as an  

annexure to the special leave petition, it did not show who signed the joint  

development  agreement  as  owner  of  the  property.  In  view  of  the  said  

averment  in  the  special  leave  petition,  this  Court  directed  notice  on  the  

petition on 15.2.2010. The respondent society has produced alongwith its  

counter, a photocopy of the registered joint development agreement dated  

18.2.2007 and the registered power of attorney dated 28.2.2007 executed in  

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favour of the appellant. The appellant does not dispute the correctness of the  

said copies produced by the respondent society.

8. An examination of the photocopy of the joint development agreement  

shows  clearly  that  it  was  not  executed  by  Father  A.John  Bosco  in  his  

individual  capacity.  The  document  describes  ‘Father  A.John  Bosco,  

President, Gaunellian Society’ as the first party or the owner. The signature  

of the first party/ owner on each page of the document is as under:  

“For The Gaunellian Society [Sd/- Fr. A.John Bosco] President”

The said agreement is also signed by Mr. Pushpchand Chordia as the power  

of attorney holder of the partners of the appellant. There are only the said  

two  signatories  to  the  agreement,  that  is  the  Society  represented  by  its  

President and the appellant represented by its Attorney Holder.  Fr. A.John  

Bosco has not  executed  the joint  development agreement  in his  personal  

capacity. The power of attorney is also executed by the Society. Thus the  

respondent Society is the first party under the joint development agreement  

and not  Father  A.John Bosco.  We may  also  note  that  if  Father  A.  John  

Bosco  was  executing  the  joint  development  agreement  in  his  personal  

capacity, there was no need for him to describe himself as the “President of  

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the  Gaunellian  Society” and sign the  document for  and on behalf  of  the  

Gaunellian Society, as its President. Therefore the application under section  

11 of the Act filed by the Society against the respondent was maintainable as  

the petitioner and the respondent in the application under section 11 were  

parties to the joint development agreement containing a provision (Clause  

18) for settlement of disputes arising out of the agreement by arbitration.

9. The appellant has raised a contention that the owner of the property is  

not the Society and that Father A.John Bosco in his personal capacity was  

the owner and that he had entered into a joint development agreement and  

executed  a  power  of  attorney  in  his  personal  capacity  in  favour  of  the  

appellant. But as noticed above, Father A.John Bosco has neither executed  

the joint development agreement nor the power of attorney in his individual  

capacity and the executant is “The Gaunellian Society” represented by its  

President Father A.John Bosco.  If the contention of the appellant that the  

owner is Father A. John Bosco, and not “The Gaunellian Society”, is taken  

to  its  logical  conclusion,  the  effect  would  be  that  there  is  no  joint  

development agreement or power of attorney by the owner of the property in  

favour of the respondent and the joint development agreement and the power  

of attorney signed by a party who is not by the owner would be worthless  

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papers. Be that as it may. We have referred to this aspect only to show the  

absurdity of the contention raised by the appellant.

10. The respondent Society has no doubt contended that the contract was  

concluded  with  unconscionable  and  unfair  terms  and  that  the  Managing  

Committee of the Society had not authorized its President -- Father A.John,  

Bosco to enter into any such joint development agreement. These allegations  

no doubt relate to the validity of the joint development agreement, but will  

have no bearing on the validity of the arbitration agreement (Clause 18 of  

the agreement), which is an independent agreement incorporated and rolled  

into  the  joint  development  agreement.  The  Arbitrator  will  examine  the  

validity  and binding nature of the joint  development  agreement.  There is  

nothing in the  claims and contentions  of  the Society  which excludes  the  

operation of the arbitration agreement or necessitates rejection of the request  

for appointment of an arbitrator.  

11. The appeal is therefore dismissed with costs of Rs.25,000/- payable by  

the appellant to the respondent. We find that the arbitration has been delayed  

for nearly one and a half years on account of the pendency of this special  

leave petition. We therefore request the Arbitrator to proceed with the matter  

expeditiously.

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12. We make it clear that what we have considered is the limited question  

as to who is the executant of the agreement. We have not pronounced upon  

the question whether Father A.John Bosco was authorized to execute such a  

joint  development  agreement.  Nor  have  we  considered  the  contentions  

relating to the title to the property.

…………………………..J. (R V Raveendran)

New Delhi; …………………………J. July 4, 2011. (A K Patnaik)

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