KHIVRAJ MOTORSversusTHE GUANELLIAN SOCIETY

                     [2011] 6 S.C.R. 1165


                     KHIVRAJ MOTORS                            A
                              v.
                THE GUANELLIAN SOCIETY
               (Civil Appeal No. 4926 of 2011)
                        JULY 04, 2011
                                                               B
       [R.V. RAVEENDRAN AND A.K. PATNAIK, JJ.]

       Arbitration and Conciliation Act, 1996 - s. 11 -
  Application under, for appointment of arbitrator - Joint
  Development Agreement (JOA) in respect of /and/property in C
  question between appellant (as developer) and President of
  respondent Society (as owner of the property) - Power of
  Attorney executed by the President of the Society in favour
  of the appellant - Resolution by respondent Society that
  President was not authorized to deal with property, thus, JDA D
  and Power of Attorney were null and void - Application filed
  by respondent Society uls. 11 for appointment of arbitrator to
  resolve the dispute - Allowed by High Court - Maintainability
  of the application filed by respondent society u/s. 11 - Held:
  The application was maintainable as the appellant and the E
  respondent in the application uls. 11 were parties to the JOA
  containing a provision for settlement of disputes arising out
  of the agreement by arbitration - Arbitration agreement was
  an independent agreement incorporated and rolled into JDA
  - President did not execute JOA or the power of attorney in F
. his individual capacity - The executant was the respondent
  Society represented by its President - Respondent Society
  is the first party under the JOA and not the President -
  Arbitrator entitled to examine the validity and binding nature
  of JOA.
                                                               G
     Appellant as developer of the property/land in
 question and 'AJ', President of respondent society as the
 owner thereof, allegedly entered into a Joint
 Development Agreement for development of the said
                           1165                               H
                                                                )
    1166      SUPREME COURT REPORTS           [2011] 6 S.C.R.


A land. Clause 18 of the agreement provided for settlement
  of disputes arising out of the said agreement by
  arbitration. 'AJ', President of the respondent Society
  executed a power· of Attorney in favour of the appellant
  in connection with the development of the property. The
B respondent Society passed a resolution that the
  Managing Committee of the Society did not authorize 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
C binding on the Society. The respondent Society filed an
  application under Section 11 of the Arbitration and
  Conciliation Act, 1996 for appointment of an arbitrator for
  resolution of the disputes between the Society and the
  appellant. The application was allowed holding that the
  Joint Development Agreement was executed between
D the respondent Society and the appellant and 'AJ' had
  signed the said agreement, only in his capacity as the
  President of the Society and not in his individual
  capacity. Therefore, the appellant filed the instant appeal.

E          Dismissing the appeal, the Court

       HELD: 1.1 'AJ' has neither executed the Joint
  Development Agreement nor the power of attorney in his
  individual capacity and the executant is the respondent
F Society represented by its President 'AJ'. Thus, the
  respondent Society is the first party under the Joint
  Development Agreement and not 'AJ'. If 'AJ' was
  executing the Joint Development Agreement in his
  personal capacity, there was no need for him to describe
G himself as the "President of the respondent Society" and
  sign the document for and on behalf of the respondent
  Society, as its President. Therefore, the application under
  Section 11 of the Arbitration and Conciliation Act, 1996
  filed by the Society was maintainable as the petitioner
  and the respondent in the application under Section 11
H were parties to the Joint Development Agreement
    KHIVRAJ MOTORS v. GUANELLIAN SOCIETY                1167


containing a provision (Clause 18) for settlement of            A
disputes arising out of the agreement by arbitration.
[Paras 8 and 9] (1171-B-H]
                                                '
     1.2 The respondent Society no doubt contended that
the contract was concluded with unconscionable and
                                                                8
unfair terms and that the Managing Committee of the
Society had not authorized its President 'AJ' to enter into
any such Joint Development Agreement. These
allegations no doubt relate to the validity of the Joint
Development Agreement, but would have no bearing on
the validity of the arbitration agreement (Clause 18 of the     C
agreement), which is an independent agreement
incorporated and rolled into the Joint Development
Agreement. The Arbitrator would examine'the validity and
binding nature of the Joint Development Agreement.
There is nothing in the claims and contentions of the           D
Society which excludes the operation of the arbitration
agreement or necessitates rejection of the request for
appointment of an arbitrator. Since arbitration has been
delayed for one and a half years on account of the
pendency of SLP, the Arbitrator is requested to proceed         E
with the matter expeditiously. [Paras 10 and 11] (1172-A-
E]

    CIVIL APPELALTE JURISDICTION : Civil Appeal No.
4926 of 2011.                                                   F

    From the Judgment & Order dated 26.10.2009 of the High
Court of Karantaka in Civil Miscellaneous Petition No. 55 of
2009.

    Dushyant Dave, Shweta Bharti, Ahanthem Henry, Amit,         G
Pawan, Suraj G. Raj, Vishnu Anand, Vineet Dwivedi for the
Appellant.

     Ajesh Kumar, Jaikriti S. Jadeja, Madhusmita Bora, Balaji
Srinivasan for the Respondent.
                                                                H
    1168     SUPREME COURT REPORTS                [2011] 6 S.C.R.


A       The Judgment of the Court was delivered by

        R.V.RAVEENDRAN, J. 1. Leave granted. Heard.

        2. The appellant alleges that a joint development
  agreement dated 18.2.2007 was entered into between "Father
B 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
C 20.2.2007, the said Father A. John Bosco, President, The
  Guanellian Society, executed a power 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
D 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
E 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
F 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
G 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;

H          (b)   Father A. John Bosco entered into the joint
    KHIVRAJ MOTORS v. GUANELLIAN SOCIETY                     1169
             [R.V. RAVEENDRAN, J.]

            development agreement in respect of the property         A
            in his individual capacity and not as the President
            of the Society.

      (c)   Though the joint development agreement contained
            a provision for arbitration, as the respondent society   B
            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       C·
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              D
capacity as the President of the Society and not in his individual
capacity and therefore the application under s_ection 11 of the
Act by the Society was maintainable.

     6. The said order is contested by the appellant, inter alia,
                                                                     E
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        F
    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.
                                                                     G
    (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           H
    1170     SUPREME COURT REPORTS                   [2011] 6 S.C.R.


A       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
8   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
c 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
D 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
E 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
F 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:
G                     "For The Gaunellian Society
                         [Sd/- Fr. A.John Bosco]
                                President"
  The said agreement is also signed by Mr. Pushpchand Chordia
H as the power of attorney holder of the partners of the appellant.
     KHIVRAJ MOTORS v. GUANELLIAN SOCIETY                   1171
              [R.V. RAVEENDRAN, J.]

There are only the said two signatories to the agreement, that      A
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      B
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 the
Gaunellian Society" and sign the document for and on behalf         c
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
                                                                    0
(Clause 18) for settlement of disputes arising out of the
agreement by arbitration.

      9. The appellant has raised 2 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      E
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        F
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          G
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 papers. Be
that as it may. We have referred to this aspect only to show
the absurdity of the contention raised by the appellant.            H
    1172    SUPREME COURT REPORTS                [2011] 6 S.C.R.


A       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
8 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
C 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.

D       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
E expeditiously.

          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
F   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.

    NJ.                                       Appeal dismissed.