Issue Of Full And Final Settlement Of Dispute Is A Question Of Fact Which Has To Be Decided By The Arbitrator: Delhi High Court

The bench of Justice Navin Chawla held that the Court while exercising powers under Section 11 of the A&C Act cannot determine a disputed question of fact as its jurisdiction is confined to a prima facie conclusion of the existence of the arbitration agreement.

Facts

The parties executed an allotment letter dated 05.01.2018 wherein the subject premises were leased out to the petitioner. Clause 47 of the agreement provided for arbitration for any dispute arising out of the agreement.

A dispute arose between the parties regarding the delay in handing over the possession of the subject premises to the petitioner and the consequent liability of the respondent to compensate the petitioner. Parties further executed a handing/taking over document of which clause ‘e’ provided that the execution of this agreement shall be full and final settlement of dispute between the parties. Further, the parties entered into a sale deed for the subject property, clause 45 of which also record that no dispute survives between the parties.

The petitioner issued several letters to the respondent to pay the due amount, however, on failure of respondent to pay the amount, the petitioner finally invoked the arbitration clause and approached the Court for the appointment of the arbitrator.

Contention of the Parties

The respondent objected to the appointment of the arbitrator on the following grounds:

• The parties have reached accord and satisfaction qua the dispute in question as evident from clause ‘e’ and clause 45 of the sale deed.
• The claims if any between the parties regarding the compensation for the delay in the possession stands waived/settled in view of the two subsequent documents between the parties qua the subject property.

The petitioner countered the above arguments by raising the following points:

• The mere execution of the two agreements would not preclude the petitioner from claiming the compensation.
• The agreements were executed on the representation by the respondent that the due amount would be paid on the same date, the contemporaneous communication would also show that the petitioner issued a demand letter of the same date followed by several other demand letters. However, the respondent did not act on its representations and failed to pay the petitioner.

Analysis by the Court

The Court observed that the High Court while exercising jurisdiction under Section 11 of the A&C Act is bound to keep its scrutiny limited to prima facie examination of the existence of the arbitration agreement and cannot extend to ascertaining disputed questions of facts.

The Court held that the respondents have not denied the existence of the arbitration agreement but argued for the rejection of the application on the ground that the dispute between the parties stood discharged/waived in view of the subsequent agreements between the parties and the parties have reached full and final settlement qua the dispute raised by the petitioner in the petition.

The Court observed that though the parties have in the two subsequent agreements provided that any dispute between them stood discharged, however, the argument of the petitioner, that the agreements were executed by the parties on the representation that the payment qua the delay in possession would be made simultaneously with the execution of the agreements, however, it did not act on its representations, remains unchallenged.

The Court held that issue regarding the full and final settlement of the dispute between the parties is a dispute question of fact that falls within the purview of the arbitrator.

Accordingly, the Court allowed the application and appointed the arbitrator.

Case Title: Radnik Exports v. Supertech Realtors Pvt Ltd

Citation: 2023 LiveLaw (Del) 405

Date: 09.05.2023

Counsel for the Petitioner: Mr. Aditya Bakshi

Counsel for the Respondent: Ms. Aditi Sharma

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