11TH INTRA MOOT COURT COMPETITION

PC: 60 RESPONDENT

11th Intra Moot Court Competition

BEFORE THE ARBITRAL TRIBUNAL, TROMBAI

2017

MR. SONU KAPOOR

(CLAIMANT)

v.

Biranandani Realtors Pvt Limited

(RESPONDENT)

MEMORANDUM ON BEHALF OF THE RESPONDENTS

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TABLE OF CONTENTS

TABLE OF CONTENTS ..................................................................................................... 2

TABLE OF ABBREVIATIONS .......................................................................................... 4

INDEX OF AUTHORITIES ................................................................................................ 7

STATEMENT OF JURISDICTION ................................................................................ 11

STATEMENT OF FACTS ................................................................................................ 12

ISSUES RAISED ............................................................................................................... 14

SUMMARY OF ARGUMENTS........................................................................................ 15

ARGUMENTS ADVANCED .............................................................................................. 1

[1] WHETHER THE PRESENT DISPUTE BETWEEN MR. KAPOOR AND BRPL IS ARBITRABLE

PURSUANT TO THE RERA? ................................................................................................... 1

[1.1] RERA Is The Sole Authority For Real Estate Disputes, Aligning With The Legislative
Intent For Specialized Resolution. ...................................................................................... 1

[1.2] Opting For RERA Dispute Resolution Is A Commitment To Regulatory Adherence And
Fair Dealing With Consumers. ........................................................................................... 2

[1.3] The Real Estate (Regulation and Development) Act, 2016 (RERA) should take precedence
over The Arbitration Act, 1996, in the context of the dispute Between BRPL And Mr. Kapoor
4

[2] WHETHER MR. KAPOOR HAS MADE OUT A CASE FOR SEEKING INTERIM RELIEFS/MEASURES
AGAINST BRPL PURSUANT TO THE ARBITRATION AND CONCILIATION ACT, OF 1996? ........ 5

[2.1] Mr. Kapoor’s Case Does Not Qualify As A Force-majeure Situation And Hence
Invocation Of Clause 8 Of The Flat-Buyer Agreement Is Invalid. ...................................... 5

[2.2] Mr. Kapoor Has Not Satisfied The Court That BRPL Is Attempting To Remove Or
Dispose Of Its Assets To Defeat A Potential Decree, Justifying The Grant Of Such Interim
Relief. ................................................................................................................................ 8

[3] WHETHER IT WAS MANDATORY FOR THE PARTIES TO EXERCISE THE PRE-ARBITRAL DISPUTE
ESCALATION PROCESS CONTAINED IN THE DISPUTE RESOLUTION CLAUSE AS A PRECONDITION

TO THE ARBITRATION PROCESS? ........................................................................................... 9

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[3.1] Mr. Kapoor's Initiation Of Arbitral Proceedings Without Fulfilling The Pre-arbitral
Dispute Escalation Process, As Stipulated In The Dispute Resolution Clause, Is Not Valid.10

[3.2] The Pre-arbitration Procedures Outlined In Clauses 52.1-52.3 Are Mandatory. ........ 11

[4] WHETHER DUE TO IMPROPERLY STAMPED ARBITRATION AGREEMENT, THE FLAT BUYER
AGREEMENT CAN BE ENFORCEABLE IN THE PROVISIONS OF LAW? ................................. 12

[4.1] Due To Unduly Stamped Flat Buyer Agreement Arbitration Clause Is Not Enforceable.
12

[4.2] Non-Obstante Provision In Section 5 Of A&C Do Not Exclude Sections 33 And 35 Of

The Stamp Act. ................................................................................................................ 14

PRAYER ............................................................................................................................ 19

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TABLE OF ABBREVIATIONS

ABBREVIATIONS FULL FORM

& And

(CA) Court of Appeals

¶/¶¶ Paragraphs/Paragraphs

AC Appeal Cases

AIR All India Reporter

All Allahabad

All ER All England Reports

Anr. Another

Arb. Arbitration

Art. Article

AT Appellate Tribunal

Bom Bombay

Bull Bulletin

C.P. Company Petition

Ch D Chancery division

Cir. Circuit

Civ. Civil

Co. Company

Comm. Commercial Court

Corp’n Corporation

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Crl. Criminal

Ct. Court

Disp. Dispute

Dr. Doctor

Edn. Edition

i.e., That is

Intl. International

L. Rev. Law Review

L.J Law Journal

Lah Lahore

Ltd. Limited

M/S Messrs

Mr. Mister

Ms. Mistress

Nat’l National

No. Number

Ors. Others

p. Page

para. Paragraph

pt. Point No.

Rep. Report

Resol. Resolution

SC Supreme Court

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SCC Supreme Court Cases

SCCOnline Supreme Court Cases (India)

SCR Supreme Court Report

SEBI Securities & Exchange Board of India

Sec. Section

SIAC Singapore International Arbitration Centre

U.S. United States Reports

U/S Under Section

UK United Kingdom

UKSC United Kingdom Supreme Court

v. Versus

Vol. Volume

WP Writ Petition

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INDEX OF AUTHORITIES

CASES
A. Ayyasamy v. A. Paramasivam is (2016) 10 SCC 386. ........................................................... 2
A. Balachandran vs. T.C.Shanmugam 2013 (2) CTC 832. ........................................................ 16
Aftab Singh v. Emaar MGF Land Limited & Anr Civil Appeal Nos. 23512-23513 of 2017. ...... 4
Badri Narain v. Kamdeo Prasad, AIR 1961 Patna 41.................................................................. 6
Bharat Sanchar Nigam Ltd. & Ors. Versus Nortel Networks India Pvt. Ltd., (2021) 3 MLJ 131.
............................................................................................................................................ 13
Booz Allen Hamilton Inc. v. SBI Home Finance, (2011) 5 SCC 532. ......................................... 1
Central Warehousing Corporation Vs. Fortpoint Automotive Pvt. Ltd. Appeal No. : Writ Petition
No. 4614 of 2009. .................................................................................................................. 2
CTO v. Binani Cement Ltd., (2014) 8 SCC 319. ........................................................................ 3
Delhi Development Authority v. Kenneth Builders and Developers Private Limited and Ors.,
(2016) 13 SCC 561. ............................................................................................................... 6
Energy Watchdog v. Central Electricity Regulatory Commission is 2017 SCC Online SC 378 .. 7
Evergreen Land Mark Pvt. Ltd. v. John Tinson And Company Pvt. Ltd. And Anr. 2022 LiveLaw
(SC) 389. ............................................................................................................................. 10
Garware Wall Ropes Limited v. Coastal Marine Constructions & Engineering Limited, (2019) 9
SCC 209. ............................................................................................................................. 15
Gobind Sugar Mills vs State of Bihar and others, (1999)115 STC 358 (SC). .............................. 5
Gujrat Urja Vikas Nigam Ltd vs. Essar power Ltd (2008) 4 SCC 755. ....................................... 4
HDFC Bank Ltd. v. Satpal Singh Bakshi, 2012 SCC OnLine Del 4815 ...................................... 3
Herald Engineers v. Wonderpack Industries Pvt. Ltd. And Another., LAWS(BOM)-2013-4-85.
............................................................................................................................................ 10
Hindustan Lever Ltd. v. Ashok Vishnu Kate, (1995) 6 SCC 326. ............................................... 3
Industrial Finance Corporation of India Ltd. v. Cannanore Spinning and Weaving Mills Ltd.,
reported in (2002) 5 SCC 54. ................................................................................................. 7
International Research Corp PLC v. Lufthansa Systems, [2013] SGCA 55. ............................. 12
M.K. Shah Engineers & Contractors v. State of M.P., Appeal (civil) 5961 of 1983 .................. 12
M/S. N.N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/S. INDO UNIQUE FLAME
LTD. & ORS. 2023 SCC OnLine SC 495. ........................................................................... 18
Muhammed & Others v. Nani & Others 1970 KLJ35. .............................................................. 16
N. Pappammal v. L. Chidambaram, 1983 SCC OnLine Mad 151 ............................................... 9

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Naihati Jute Mills Ltd. v. Khyaliram Jagannath, AIR 1968 SC 522 ............................................ 8
Naihati Jute Mills Ltd. v. Khyaliram Jagannath, AIR 1968 SC 522. ........................................... 8
Naina Thakkar Vs. Annapurna Builders, (2013) 14 SCC 354. .................................................. 17
Natraj Studios (P) Ltd. v. Navrang Studios, (1981) AIR 537 ...................................................... 3
Nirman Panchvati Developers Pvt. Ltd. and another v. Wellcity Real Estate Pvt. Ltd, 2020 (4)
ABR 539.............................................................................................................................. 18
Nirman Sindia v. Indal Electromelts Ltd, 1999 SCC OnLine Ker 149. ..................................... 12
Omprakash Gupta v. M/S. Jagannath Suraj Baksh & Ors, CIVIL WRIT PETITION NO.3/2014.
.............................................................................................................................................. 9
OMPRAKASH vs. LAXMINARAYAN & ORS. [2014(1) SCC 618. ...................................... 16
Oriental Insurance Company Limited vs. M/s Narbheram Power and Steel Pvt. Ltd. ((@ S.L.P.
(C) No. 33621 of 2017). ....................................................................................................... 12
Outlier Media Private Limited vs HT Media Limited. Citation: 2023 LiveLaw (Del) 638. ....... 15
Peak Chemicals Corporation Inc. v. National Aluminium Co. Ltd., 188 (2012) DLT 680 .......... 6
Pearl Hospitality & Events Pvt. Ltd. vs. OYO Hotels and Homes Pvt. Ltd, MANU/DE/1946/2020.
.............................................................................................................................................. 9
Premier Automobiles Ltd. v. Kamlekar Shantaram Wadke, (1976) 1 SCC. ................................ 4
Premraj Mundra v. Md. Maneck Gaz., 1951 SCC OnLine Cal 20, para 18: AIR 1951 Cal 156. .. 9
Raman Tech & Process Engineering Co. & Ors. vs. Solanki Traders (2008) 2 SCC 302 .......... 10
Religare Finvest Ltd. v. Asian Satellite Broadcast Pvt. Ltd., 2022 SCC OnLine Del 221. ......... 14
Rosedale Developers Pvt. Ltd. v. Aghore Bhattacharya (2018) 11 SCC 337. .............................. 2
S. Prakash And Another v. K.M Kurian And Others, (1999) 4 SCC 526 .................................... 4
Shri Anil Kumar Arya Vs SVS Buildcon Pvt. Ltd." in Complaint No.M-BPL-17-0036 dated
11.05.2017. ............................................................................................................................ 5
Simpark Infrastructure (P) Ltd. v. Jaipur Municipal Corporation 2012 SCC OnLine Raj 2738. 11
SMS Tea Estates Pvt. Ltd. v. Chandmari Tea Co. Pvt. Ltd., (2011) 14 SCC 66. ....................... 15
Smt. Sharda Mahajan v. Maple Leaf Trading International (P) Ltd., [2007] 78 SCL 367 (Delhi) 7
Southern Petrochemical industries Corpn. Ltd. v. Electricity Board, 2012 SCC Online Mad 2966.
.............................................................................................................................................. 8
Subramaniam v. Gunasundari & Ors. 2007 (2) L.W. 535. ........................................................ 16
Sushil Kumar Bhardwaj v. Union of India, 2009 SCC OnLine Del 4355. ................................. 11
Tulip Hotels (P) Ltd. v. Trade Wings Ltd, 2009 SCC OnLine Bom 1222. ................................ 11
United India Insurance Co. Limited v. Hyundai Engineering and Construction Co Ltd & Ors, Civil
Appeal No. 8146 of 2018. .................................................................................................... 12
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Vedanta Limited v. Global Energy Private Limited, 2017 SCC OnLine Bombay 9439 .............. 6
Vidya Drolia v. Durga Trading Corpn, (2021) 2 SCC 1............................................................ 17
Vimal Kishor Shah and Others v. Jayesh Dinesh Shah and Others is Civil Appeal No. 8164 of
2016 ...................................................................................................................................... 1
Workmen v. Indian Standards Institution, (1975) 2 SCC 847 ..................................................... 3

STATUTES AND CONVENTIONS

Arbitration and Conciliation Act, 1996, Sec 17 (ii)(B). .............................................................. 9

Arbitration and Conciliation Act, 1996, Sec. 11(6A). ............................................................... 17
Arbitration and Conciliation Act, 1996, Sec. 11. ...................................................................... 15
Arbitration and Conciliation Act, 1996, Sec. 16. ...................................................................... 15
Arbitration and Conciliation Act, 1996, Sec. 17. ........................................................................ 9
Arbitration and Conciliation Act, 1996, Sec. 34. ...................................................................... 15
Arbitration and Conciliation Act, 1996, Sec. 5. ........................................................................ 14
Arbitration and Conciliation Act, 1996, Sec. 7. ........................................................................ 18
Arbitration and Conciliation Act, 1996, Sec. 8. ........................................................................ 18
Arbitration and Conciliation Act, 1996, Sec. 9(1)(ii)(B). ............................................................ 9
Article 1148 of the French Civil Code........................................................................................ 8
Code of Civil Procedure, 1908, Order XXXVIII Rule 5. ............................................................ 9
Indian Contract Act, 1872, Sec. 2(h). ....................................................................................... 16
Indian Contract Act, 1872, Sec. 32............................................................................................. 7
Indian Contract Act, 1872, Sec. 56............................................................................................. 7
Indian Contract Act, 1872. Sec. 2(g). ....................................................................................... 19
Real Estate (Regulation and Development) Act, 2016, Sec. 89. .................................................. 5
THE INDIAN STAMP ACT, 1899, Sec. 17. ............................................................................ 18
THE INDIAN STAMP ACT, 1899, Sec. 33. ............................................................................ 14
THE INDIAN STAMP ACT, 1899, Sec. 35. ............................................................................ 14
THE INDIAN STAMP ACT, 1899, Sec. 36. ............................................................................ 15
THE INDIAN STAMP ACT, 1899, Sec. 61............................................................................. 15

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BOOKS & JOURNALS

 Alan redfern et al, redfern and hunter on international abitration (seventh edition).
 Bernard hanotiau, complex arbitrations: multiparty, multi contract, multi issue and class
actions (kluwer law int', 2005).
 Treitel: The Law of Contract 13th ed.
 Nadia Darwazen &Adren elen. Disclosure and Security for costs or how to address.
 Imbalances Created by Third-PatyFunding, 143 JOURNAL OF INT. ARB.
 Andrew Tweeddale & Kern Tweeddale, Arbitration of Commercial Disputes:
International & Commercial.
 English Law & Practice OXFORD UNIVERSITY PRESS, 350 (2007).

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STATEMENT OF JURISDICTION

The RESPONDENT humbly submits that this hon’ble arbitration tribunal has jurisdiction as per
the Arbitration Agreement which is part of Flat Buyer Agreement entered between Mr.
Kapoor and BRPL. The said jurisdiction is conferred by the virtue of section 16 (1) and
section 17 of Arbitration and Conciliation Act, 1996.

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STATEMENT OF FACTS

The Parties:
Mr. Sonu Kapoor: A prominent businessman in Indiana, known for his vast net worth and diverse
business empire spanning sectors like ports, energy, commodities, and international trade. Mr.
Kapoor is politically and socially influential in the state of Wanwark.
Biranandani Realtors Pvt Limited (BRPL): A renowned private limited real estate company
registered in Trombai, established in 1965 by Mr. Viraj Biranandani. BRPL is a diversified
institution with a strong presence in Engineering & Construction, Infrastructure, and Real Estate.
They are also involved in public infrastructure projects in Indiana.

The Background:
In January 2016, BRPL launched "Imperial Centrum," a sea-facing twin-tower residential
skyscraper complex in Trombai, proposed to be one of the tallest buildings in Indiana. Mr. Kapoor,
upon seeing an advertisement about "Imperial Centrum," expressed interest in purchasing six "5
BHK" property units in the project, each valued at around Rs. 10,00,00,000/-. UDFC Bank granted
a loan of Rs. 25,00,00,000/- for this purchase. On July 27, 2016, Mr. Kapoor paid an advance
amount of Rs. 12,00,00,000/- to BRPL, with Rs. 2,00,00,000/- paid in cash, and the remaining
amount deposited in BRPL's escrow account.

Ensuing Events:
The Flat Buyer Agreement, Tripartite Housing Loan Agreement, and other linked agreements
were executed on July 27, 2016, outlining the terms and conditions of the property purchase. In
March 2017, due to an Enforcement Directorate (ED) investigation related to money laundering
involving Mr. Kapoor's business partner and friend, Mr. Tony Jhan, Mr. Kapoor's properties and
offices were raided. This led to a significant drop in the value of Mr. Kapoor's companies.

The Dispute:
On April 27, 2017, facing severe financial difficulties due to the ED investigation and a 12% drop
in his company's share value, Mr. Kapoor decided to cancel the allotment of the six property units
and requested a refund of Rs. 12,00,00,000/- from BRPL, invoking Clause 8 of the Flat Buyer
Agreement. The BRPL failed to refund the advance amount as per Mr. Kapoor's request, and Mr.
Kapoor also did not settle the loan account with UDFC Bank.

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Initiation of Arbitration:
With disputes arising, Mr. Kapoor invoked the Arbitration Clause per Clause 52 of the Flat Buyer
Agreement, appointing a Sole Arbitrator. BRPL raised objections to the formation of the Arbitral
Tribunal on several grounds, including the arbitrability of RERA-related disputes and the lack of
compliance with the pre-arbitral dispute escalation process. Mr. Kapoor filed an application under
Section 17 of the Arbitration and Conciliation Act 1996, seeking interim reliefs including
depositing the refund amount in escrow, disclosing account details, and restraining further
construction on the premises.

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ISSUES RAISED

ISSUE – 1

Whether the present dispute between Mr. Kapoor and BRPL is arbitrable pursuant to the RERA?

ISSUE – 2

Whether Mr. Kapoor has made out a case for seeking interim reliefs/measures against BRPL
pursuant to the Arbitration and Conciliation Act, of 1996?

ISSUE – 3

Whether it was mandatory for the parties to exercise the pre-arbitral dispute escalation process
contained in the dispute resolution clause as a precondition to the arbitration process?

ISSUE – 4

Whether due to improperly stamped arbitration agreement, the Flat Buyer Agreement can be
enforceable in the provisions of Law?

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SUMMARY OF ARGUMENTS

[1] Whether the present dispute between Mr. Kapoor and BRPL is arbitrable pursuant to
the RERA?
The RESPONDENT submit that Real Estate (Regulation and Development) Act, 2016 (RERA) is
the exclusive authority for real estate disputes, rooted in the legislative intent for specialized
resolution. Firstly, BRPLrespondent invokes the non-arbitrability principle, asserting that disputes
under specific statutes fall within designated courts' exclusive jurisdiction. The argument
underscores the dispute's inherent connection with RERA, emphasizing its meticulous framework
tailored for real estate intricacies. RERA's aim to centralize real estate dispute resolution mirrors
precedents, making disputes within specialized bodies' jurisdiction non-arbitrable. Opting for
RERA dispute resolution, according to BRPLrespondent, demonstrates commitment to regulatory
adherence and consumer fairness. Furthermore, BRPLrespondent asserts that RERA should
prevail over the Arbitration Act, 1996, based on principles such as special laws overriding general
ones, specific remedies superseding others, and later laws taking precedence. In conclusion,
BRPLrespondent contends that RERA's specialized jurisdiction, aligned with legislative intent,
should exclusively govern real estate disputes, emphasizing the commitment to regulatory
adherence and the need for RERA to take precedence over general arbitration provisions.

[2] Whether Mr. Kapoor has made out a case for seeking interim reliefs/measures against
BRPL pursuant to the Arbitration and Conciliation Act, of 1996?
The RESPONDENT submits that Mr. Kapoor'sclaimaint's application for interim relief faces two
significant challenges. Firstly, his invocation of Clause 8 of the Flat-Buyer Agreement as a force
majeure event is not valid, as the raid on his business did not meet the essential criteria of being
unavoidable, unforeseeable, and directly causing non-performance. Secondly, Mr.
Kapoorclaimant has failed to provide sufficient grounds to demonstrate that BRPLrespondent is
attempting to dispose of its assets to evade a potential decree, which is a key requirement for
granting such interim relief under Section 17. Legal precedents emphasize the need for specificity
in affidavits and the necessity of a reasonable likelihood of success in the underlying lawsuit.
Therefore, considering these factors, Mr. Kapoor'sclaimant's application for a substantial
monetary deposit by BRPLrespondent appears premature and lacks the necessary legal basis.

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[3] Whether it was mandatory for the parties to exercise the pre-arbitral dispute escalation
process contained in the dispute resolution clause as a precondition to the arbitration
process?
The RESPONDENT submits that Mr. Kapoor'sclaimant's initiation of arbitration proceedings
without first completing the pre-arbitral dispute escalation process, as stipulated in the dispute
resolution clause, is invalid. Furthermore, BRPLrespondent asserts that the pre-arbitration
procedures outlined in Clauses 52.1-52.3 are mandatory, not merely directory. It employs the
"Tribunal v. Claims Test" to distinguish between steps affecting the formation of the arbitral
tribunal (jurisdiction) and those pertaining to the admissibility of claims (merits). Clauses 52.1-
52.3 focus on ensuring a strong foundation for the tribunal, aligning with foreign legal practices
and principles. Therefore, adhering to these pre-arbitration steps is crucial to ensuring the validity
and effectiveness of the arbitral tribunal. In essence, RESPONDENT argument highlights the
significance of fulfilling pre-arbitral procedures as both a legal requirement and a fundamental
aspect of arbitration's integrity.

[4] Whether due to improperly stamped arbitration agreement, the Flat Buyer Agreement
can be enforceable in the provisions of Law?
The RESPONDENT submit that an arbitration clause within an unduly stamped flat buyer agreement
is not enforceable due to insufficient stamp duty, citing legal precedents. Section 16 of the
Arbitration and Conciliation Act, 1996, is invoked to emphasize that while non-payment of stamp
duty doesn't invalidate agreements, it renders them inadmissible as evidence until properly
stamped. Furthermore, the non-obstante provision in Section 5 of the Arbitration Act is argued
not to exclude Sections 33 and 35 of the Stamp Act. The integral nature of the arbitration clause
within the agreement is stressed. If the agreement itself lacks proper stamping, the arbitration
clause cannot be enforced independently. In conclusion, this argument emphasizes that stamp duty
issues are jurisdictional, and non-compliance with stamping requirements can render arbitration
clauses inadmissible and unenforceable. Strict adherence to stamp duty regulations is crucial to
ensure the legal validity and enforceability of arbitration agreements within contracts.

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ARGUMENTS ADVANCED

[1] WHETHER THE PRESENT DISPUTE BETWEEN MR. KAPOOR AND BRPL IS
ARBITRABLE PURSUANT TO THE RERA?

¶ [1] It is humbly submitted, that the present dispute between claimant and respondent is not
arbitrable pursuant to the RER Act on the following grounds [1.1] RERA is the sole authority
for real estate disputes, aligning with the legislative intent for specialized resolution. [1.2]
Opting for RERA dispute resolution is a commitment to regulatory adherence and fair dealing
with consumers. [1.3] The Real Estate (Regulation and Development) Act, 2016 (RERA)
should take precedence over the Arbitration Act, 1996, in the context of the dispute between
BRPL and Mr. Kapoor.

[1.1] RERA IS THE SOLE AUTHORITY FOR REAL ESTATE DISPUTES, ALIGNING
WITH THE LEGISLATIVE INTENT FOR SPECIALIZED RESOLUTION.

¶ [2] It is humbly submitted that respondent firmly asserts that the dispute concerning the
annulment of allotment and subsequent refund is firmly entrenched within the jurisdiction of
the Real Estate (Regulation and Development) Act, 2016 (RERA).
¶ [3] As discussed in Booz Allen & Hamilton Inc.,1 the principle of non-arbitrability applies
exclusively to matters governed by specific statutes, necessitating statutory safeguards and
confined within the exclusive jurisdiction of designated courts.2
¶ [4] In Vimal Kishor Shah and Others v. Jayesh Dinesh Shah and Others,3 it was held that
disputes under specific statutes that create special adjudicatory bodies for statute-specific
disputes are non-arbitrable. A. Ayyasamy v. A. Paramasivam4 categorized non-arbitrable
disputes into those exclusive to special courts designated by specialized statutes and those
traditionally within the realm of public forums.

1
Booz Allen Hamilton Inc. v. SBI Home Finance, (2011) 5 SCC 532..
2
Ibid.
3
Vimal Kishor Shah and Others v. Jayesh Dinesh Shah and Others is Civil Appeal No. 8164 of 2016.8164 of
2016.
4
A. Ayyasamy v. A. Paramasivam is (2016) 10 SCC 386..

MEMORANDUM ON BEHALF OF THE RESPONDENTS

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¶ [5] Rosedale Developers Pvt. Ltd. v. Aghore Bhattacharya 5 emphasized that disputes falling
solely under specialized bodies' jurisdiction are non-arbitrable. Central Warehousing
Corporation v. Fortpoint Automotive Pvt. Ltd.6 highlighted that Section 52(3) of the Arbitration
and Conciliation Act, 19967 respects the boundary of specialized statutes.
¶ [6] The dispute concerning allotment annulment and refund is intrinsically linked to RERA.
RERA is a meticulously crafted framework tailored to address real estate intricacies. This
aligns with the non-arbitrability principle set by Vimal Kishor Shah, 8 asserting that disputes
within specialized statutory frameworks fall beyond arbitration.
¶ [7] RERA's architecture aims to centralize and streamline real estate dispute resolution,
mirroring the categorization in A. Ayyasamy v. A. Paramasivam. 9 Disputes exclusively within
the realm of specialized bodies, such as RERA, are non-arbitrable, as supported by Rosedale
Developers Pvt. Ltd.10
¶ [8] Central Warehousing Corporation v. Fortpoint Automotive Pvt. Ltd. 11 emphasizes that
Section 5 respects specialized statutes like RERA. RERA's design complements this principle,
reinforcing that disputes like allotment annulment and refund should be resolved within its
specialized framework.
¶ [9] In conclusion, the dispute's nature, legislative intent, and legal precedent collectively
affirm BRPL's contention that the dispute falls within RERA's exclusive jurisdiction.
Therefore, it should be resolved through the specialized avenue provided by RERA, rather than
through arbitration.

[1.2] OPTING FOR RERA DISPUTE RESOLUTION IS A COMMITMENT TO REGULATORY

ADHERENCE AND FAIR DEALING WITH CONSUMERS.

¶ [10] It is humbly submitted that in Natraj Studios (P) Ltd. v. Navrang Studios, 12the Supreme
Court established the test of social objective and public policy. This test suggests that disputes

5
Rosedale Developers Pvt. Ltd. v. Aghore Bhattacharya (2018) 11 SCC 337..
6
Ibid. Central Warehousing Corporation Vs. Fortpoint Automotive Pvt. Ltd. Appeal No. : Writ Petition No.
4614 of 2009.
7
Arbitration and Conciliation Act, 1996, Sec. 2(3).
8
Vimal Kishor Shah and Others vs. Jayesh D. Shah and Others reported as (2016) 8 SCC. Supra Note 3.
9
Supra Note 3.
10
Rosedale Developers Pvt. Ltd. v. Aghore Bhattacharya (2018) 11 SCC 337.
11
Central Warehousing Corporation Vs. Fortpoint Automotive Pvt. Ltd. Appeal No. : Writ Petition No. 4614 of
2009.Supra Note 6.
12
Natraj Studios (P) Ltd. v. Navrang Studios, (1981) AIR 537..

MEMORANDUM ON BEHALF OF THE RESPONDENTS

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within the purview of a statute designed to address specific social objectives should not be
subject to arbitration. Parties should not bypass the legislative mandate established for public
interest through arbitration.13
¶ [11] The RERA was enacted to address issues of delay, ensure transparency, and protect
consumers in real estate transactions. Disputes falling within the scope of RERA align with
specific social objectives, prioritizing the protection of homebuyers and the real estate market's
overall health. Public policy dictates that parties cannot contract out of a statute or legislative
mandate established in the public interest,14 especially when exclusive jurisdiction is conferred
by law.
¶ [12] HDFC Bank Ltd. v. Satpal Singh Bakshi15 emphasized the importance of a specialized
forum. Even with an arbitration clause, parties may choose a forum aligned with the dispute's
nature and objectives.
¶ [13] The existence of RERA, a specialized forum, supports the argument against arbitration.
RERA's jurisdiction includes adjudicating real estate disputes, project delays, plan deviations,
and REA's violations. 16 RERA's specialized expertise and mandate correspond with REA's
objectives, indicating the legislature's intent to create a dedicated body for real estate disputes.
The dispute between claimant and respondent is not arbitrable under the Arbitration Act.
Applying the test of social objective and public policy and considering the existence of a
specialized forum like RERA, it is evident that parties should not circumvent RERA's statutory
framework.
¶ [14] Bringing the dispute before RERA aligns with the legislative intent to protect
homebuyers, maintain transparency, and uphold the real estate sector's integrity.
¶ [15] Aftab Singh v. Emaar MGF Land Limited & Anr. 17 has confirmed that disputes subject
to specific statutory enactments for public purposes are not arbitrable. Therefore, the present
dispute must be exclusively adjudicated by RERA, ensuring justice and adherence to public
policy.

13
Hindustan Lever Ltd. v. Ashok Vishnu Kate, (1995) 6 SCC 326. Hindustan Lever Ltd. v. Ashok Vishnu Kate,
(1995) 6 SCC 326.
14
Workmen v. Indian Standards Institution, (1975) 2 SCC 847..
15
HDFC Bank Ltd. v. Satpal Singh Bakshi, 2012 SCC OnLine Del 4815..
16
CTO v. Binani Cement Ltd., (2014) 8 SCC 319..
17
Aftab Singh v. Emaar MGF Land Limited & Anr Civil Appeal Nos. 23512-23513 of 2017..

MEMORANDUM ON BEHALF OF THE RESPONDENTS

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[1.3] THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 (RERA) SHOULD

TAKE PRECEDENCE OVER THE ARBITRATION ACT, 1996, IN THE CONTEXT OF THE DISPUTE
BETWEEN BRPL AND MR. KAPOOR

¶ [16] It is humbly submitted that the legal maxim "generalia specialibus non derogant" states
that specific laws prevail over general ones. 18 RERA is a specialized law enacted exclusively
for the resolution and adjudication of real estate disputes, while the Arbitration Act is a general
law applicable to various contractual disputes.
¶ [17] In Gujarat Urja Vikas Nigam Ltd vs. Essar Power Ltd,19 the Supreme Court held that
special laws override general ones, applying the same principle. Special laws eclipse the realm
of general statutes.
¶ [18] When a statute provides a specific remedy, it deprives the person seeking relief of any
other remedy not stipulated in the statute. This principle is well-established in law and was
applied in Premier Automobiles Ltd. v. Kamlekar Shantaram Wadke. 20
¶ [19] In the context of respondent and claimant’s case, RERA is a specialized law meticulously
tailored for real estate disputes, akin to the special law in the aforementioned case. Thus,
RERA’s specific framework should override general provisions like those under the Arbitration
Act, reinforcing respondent’s stance as the legitimate authority for resolving real estate
disputes.
¶ [20 The legal maxim “lex posterior derogate legi priori” states that the later law overrides the
previous one. 21 In the present case, RERA Act is younger than the Arbitration and Conciliation
Act, 1996.
¶ [21] RERA establishes an exclusive adjudication mechanism for disputes in the real estate
sector, particularly between real estate consumers and promoters.
¶ [22] In Anil Kumar Arya v. SVS Buildcon Private Limited, 22 the Madhya Pradesh Real Estate
Regulatory Authority (MP RERA) held that its jurisdiction prevails over the Arbitration Act,
applying the principle that a special law prevails over a general one and that the later law
overrides the previous law.

18
S. Prakash And Another v. K.M Kurian And Others, (1999) 4 SCC 526..
19
Gujrat Urja Vikas Nigam Ltd vs. Essar power Ltd (2008) 4 SCC 755.
20
Premier Automobiles Ltd. v. Kamlekar Shantaram Wadke, (1976) 1 SCC.
21
Supra Note 15.
22
Shri Anil Kumar Arya Vs SVS Buildcon Pvt. Ltd." in Complaint No.M-BPL-17-0036 dated 11.05.2017..

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¶ [23] The Supreme Court in Gobind Sugar Mills Ltd. v. State of Bihar 23 highlighted that
whether a statute is general or special should be determined by focusing on the principal
subject-matter and the legislative intent.
¶ [24] In Natraj Studios,24 the Supreme Court emphasized that when exclusive jurisdiction is
conferred on the RERA and its Adjudicating Officer (AO), the jurisdiction of the Tribunal
should be excluded as a matter of public policy.
¶ [25] Section 89 of the RERA25 clearly provides that the RERA overrides other legislations,
and thus, the Arbitration Act can only apply if it is not inconsistent with the RERA. Considering
the principles of lex specialis, specific remedy, lex posterior, and exclusivity of jurisdiction, it
is clear that the RERA should take precedence over the Arbitration Act in resolving real estate
disputes.
¶ [26] The RERA was enacted specifically to regulate the real estate sector and provide speedy
dispute redressal, making arbitration clauses invalid in such cases.

[2] Whether Mr. Kapoor has made out a case for seeking interim reliefs/measures
against BRPL pursuant to the Arbitration and Conciliation Act, of 1996?

¶ [27] It is respectfully submitted, that Mr. Kapoor has not properly made out a case for seeking
interim relief/measures against BRPL pursuant to the Arbitration and Conciliation, 1996 on the
following ground [2.1] Mr. Kapoor’s case does not qualify as a force-majeure situation and
hence invocation of Clause 8 of the Flat-Buyer Agreement is invalid, [2.2] MR. Kapoor has
not satisfied that BRPL is attempting to remove or dispose of its assets to defeat a potential
decree, justifying the grant of such interim relief.

[2.1] MR. KAPOOR’S CASE DOES NOT QUALIFY AS A FORCE-MAJEURE SITUATION AND
HENCE INVOCATION OF CLAUSE 8 OF THE FLAT-BUYER AGREEMENT IS INVALID.

¶ [28] It is humbly submitted that in the event shall render the contract impossible to perform,

23
Gobind Sugar Mills vs State of Bihar and others, (1999)115 STC 358 (SC).).
24
Supra Note 11.
25
Real Estate (Regulation and Development) Act, 2016, Sec. 89.

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destroying the basis of the agreement. It is necessary to assess whether the altered situation has
completely undermined the foundation of the agreement, leaving no room for its execution.
When there is a significant and unforeseen shift in circumstances, rendering the contract
unworkable becomes evident.26
¶ [29] The event shall be unavoidable and not mere economic hardship. 27 The event must be
beyond the control of the party and truly unforeseeable. 28 even an extremely unusual increase
or decrease in prices, a sudden devaluation of currency, or minor obstacles to execution, among
other factors, cannot on their own impact the agreement reached between the parties. To clarify,
in order to apply the doctrine of frustration, the key factor is not the level of difficulty but rather
the impossibility of fulfilling the contract.29
¶ [30] The event must be the direct cause of non-performance. The event must be impossible
to foresee or predict through reasonable diligence. It's reasonable to assume that someone
acting unlawfully always carries some expectation of being apprehended. 30 claimant's actions,
involving the investment of unaccounted funds and subsequent government raids, could have
been reasonably anticipated. In the Energy Watchdog v. Central Electricity Regulatory
Commission case, 31 the Supreme Court ruled that when a force majeure event occurs outside
the contract, it falls under section 56 of the Indian Contract Act.32 Therefore, a prerequisite for
invoking section 56 in a contract is that the parties involved in the contract should not have any
belief or expectation regarding the occurrence of such a supervening event at the time of
entering into the contract. In the present case, the possibility of a raid was foreseeable.
¶ [31] Conditions precedent must be fulfilled, including notifying the other party. Prior to
activating the Force Majeure clause, a party unable to fulfill their obligations under the contract
must notify the other party. 33 These requirements serve as prerequisites for invoking the clause,
and if they are not met, a party might not be eligible to claim the protection of Force Majeure.
In the current situation, claimant did not provide any advance notice and abruptly invoked the
clause, rendering such an invocation invalid.

26
Delhi Development Authority v. Kenneth Builders and Developers Private Limited and Ors., (2016) 13 SCC
561..
27
Peak Chemicals Corporation Inc. v. National Aluminium Co. Ltd., 188 (2012) DLT 680.Ltd., 188 (2012)
DLT 680.
28
Badri Narain v. Kamdeo Prasad, AIR 1961 Patna 41..
29
Vedanta Limited v. Global Energy Private Limited, 2017 SCC OnLine Bombay 9439..
30
Industrial Finance Corporation of India Ltd. v. Cannanore Spinning and Weaving Mills Ltd., reported in
(2002) 5 SCC 54..
31
Energy Watchdog v. Central Electricity Regulatory Commission is 2017 SCC Online SC 378..
32
Indian Contract Act, 1872, Sec. 56.
33
Smt. Sharda Mahajan v. Maple Leaf Trading International (P) Ltd., [2007] 78 SCL 367 (Delhi).).

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¶ [32] Duty to mitigate the loss caused due to non-performance. A party invoking the Force
Majeure clause is obligated to take all essential steps to minimize the losses resulting from their
inability to perform. 34 The preliminary examination by the ED indicates that investments
totaling Rs 2,00,00,000/- fall under the category of unaccounted funds. Therefore, due to his
own neglect and inability to reduce potential future losses, it can be argued that the current case
does not meet the criteria set out in sections 3235 and 56.36
¶ [33] The Ministry of Finance's Office Memorandum on 'Force Majeure Clause' defines it as
extraordinary events or circumstances beyond human control, including acts of God, war,
strikes, and crimes, but excluding negligence or wrong-doing.
¶ [34] In Southern Petrochemical Industries Corpn. Ltd. v. Electricity Board,37 force majeure
is generally intended to cover risks beyond the reasonable control of a party, incurred not as a
result of the party's negligence or malfeasance.
¶ [35] French Law's38 interpretation of force majeure requires the event to pass three tests:
Externality (no connection to the party), Unpredictability (not foreseeable), and Irresistibility39
(unpreventable).
¶ [36] The raid on claimant's business did not render the contract impossible to perform;
economic hardship alone does not qualify as force majeure. Economic hardship due to
decreased profits and sales does not qualify; force majeure should be unavoidable and truly
beyond control.
¶ [37] Claimant's investment in unaccounted money and the subsequent raid could have been
anticipated, so it doesn't meet the unforeseeability criterion. Claimant's non-performance was
not directly due to the raid but his own negligence, so it doesn't satisfy the causal test. 40
¶ [38] Claimant failed to provide notice as required, rendering the invocation of the force
majeure clause void. Claimant did not take necessary measures to mitigate the loss due to his
non-performance; it was a result of his negligence.
¶ [39] The invocation of Clause 8 as a force majeure event is not valid in claimant's case. The
raid on Claimant's business doesn't meet the essential criteria for force majeure, as it wasn't
unavoidable, unforeseeable, and didn't directly cause the non-performance.

34
Treitel on Frustration and Force Majeure, 3rd Edn.
35
Indian Contract Act, 1872, Sec. 32.
36
Supra Note 32.
37
Southern Petrochemical industries Corpn. Ltd. v. Electricity Board, 2012 SCC Online Mad 2966..
38
Article 1148 of the French Civil Code.
39
Halsbury's Laws of England, Fourth Edition, Volume 9, paragraph 455.
40
Naihati Jute Mills Ltd. v. Khyaliram Jagannath, AIR 1968 SC 522..

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[2.2] MR. KAPOOR HAS NOT SATISFIED THE COURT THAT BRPL IS ATTEMPTING TO
REMOVE OR DISPOSE OF ITS ASSETS TO DEFEAT A POTENTIAL DECREE, JUSTIFYING THE
GRANT OF SUCH INTERIM RELIEF.

¶ [40] It is humbly submitted that in the present case, claimant’s application under Section 1741
seeks multiple interim reliefs, including the deposit of a substantial sum of money by BRPL in
the Arbitral Tribunal. However, Mr. Kapoor has failed to provide any grounds for belief that
the subject matter is in danger due to BRPL's actions.
¶ [41] The High Court of Delhi in the case of Pearl Hospitality & Events Pvt. Ltd. vs. OYO
Hotels and Homes Pvt. Ltd.42 observed that the general principles outlined in Order XXXVIII
Rule 543 would typically apply when considering a request for providing security, whether
under Section 9(1)(ii)(b)44 or Section 17(1)(ii)(b).45 Meanwhile, the High Court of Calcutta, in
Premraj Mundra v. Md. Maneck Gazi, 46 issued a cautionary note regarding affidavits
supporting the applicant's contentions. It emphasized that such affidavits should not be vague
and must undergo proper verification. Specifically, when an affidavit affirms something to be
true based on knowledge, information, or belief, it should specify which part is based on
knowledge, disclose the information's source, and provide the grounds for the belief.
Furthermore, the Hon’ble Madras High Court, in N. Pappammal v. L. Chidambaram, 47 went
on to clarify that mere vague and general allegations, lacking any foundational truth, suggesting
that the defendant intends to dispose of the property or move it out of the court's jurisdiction,
without supporting particulars, should not be entertained.
¶ [42] In the case of Omprakash Gupta v. M/S. Jagannath Suraj Baksh & Ors, 48 the court
emphasized that the authority granted by Order 38 Rule 5 of the CPC 49 should only be exercised
when there exists a reasonable likelihood of a favorable judgment being issued in the lawsuit
against the defendant. This holds true for the present situation involving Mr. Kapoor.
¶ [43] The guiding principle, as articulated by the Supreme Court of India in the case of Raman

41
Arbitration and Conciliation Act, 1996, Sec. 17.
42
Pearl Hospitality & Events Pvt. Ltd. vs. OYO Hotels and Homes Pvt. Ltd, MANU/DE/1946/2020..
43
Code of Civil Procedure, 1908, Order XXXVIII Rule 5.
44
Arbitration and Conciliation Act, 1996, Sec. 9(1)(ii)(B).
45
Arbitration and Conciliation Act, 1996, Sec 17 (ii)(B).
46
Premraj Mundra v. Md. Maneck Gaz., 1951 SCC OnLine Cal 20, para 18: AIR 1951 Cal 156..
47
N. Pappammal v. L. Chidambaram, 1983 SCC OnLine Mad 151..
48
Omprakash Gupta v. M/S. Jagannath Suraj Baksh & Ors, CIVIL WRIT PETITION NO.3/2014..
49
Supra Note 43.

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Tech & Process Engineering Co. & Ors. vs. Solanki Traders,50 is that, before a petitioner can
seek relief in the form of providing security for the disputed amount in arbitration, they must
demonstrate to the court that the respondent is making efforts to dispose of or transfer its assets
with the intention of thwarting any potential decree that might be issued. This principle has
generally been considered a fundamental criterion in such cases. 51
¶ [44] In the case of Evergreen Land Mark Pvt. Ltd. v. John Tinson And Company Pvt. Ltd.
And Anr.,52 the court ruled that it was not permissible for the Tribunal to issue any orders as
an interim measure based on applications filed under Section 17 of the Arbitration Act 53 in
situations where there exists a significant dispute concerning the liability that has not yet been
determined or deliberated upon by the Arbitral Tribunal. Consequently, the Tribunal was not
authorized to issue any interim orders for the deposit of funds in accordance with Section 17
of the Arbitration Act in such cases.
¶ [45] In light of the legal principles and precedents cited, it is evident that claimant's
application for interim relief, particularly the demand for a significant monetary deposit by
respondent, lacks merit. claimant has not demonstrated any imminent threat to the subject
matter, nor has he satisfied the court that respondent is attempting to defeat a potential decree
through asset disposal. Therefore, granting such an order would be premature and unjustified
in the absence of clear and convincing evidence supporting the need for such an interim
measure.

[3] WHETHER IT WAS MANDATORY FOR THE PARTIES TO EXERCISE THE PRE-ARBITRAL
DISPUTE ESCALATION PROCESS CONTAINED IN THE DISPUTE RESOLUTION CLAUSE AS A

PRECONDITION TO THE ARBITRATION PROCESS?

¶ [46] It is humbly submitted, that it was mandatory to exercise the pre-arbitral dispute
escalation process contained in the dispute resolution clause as a precondition to the arbitration
process on the following grounds [3.1] Mr. Kapoor's initiation of arbitral proceedings without
fulfilling the pre-arbitral dispute escalation process, as stipulated in the dispute resolution
clause, is not valid. [3.2] The pre-arbitration procedures outlined in Clauses 52.1-52.3 are
mandatory or directory.

50
Raman Tech & Process Engineering Co. & Ors. vs. Solanki Traders (2008) 2 SCC 302..
51
Herald Engineers v. Wonderpack Industries Pvt. Ltd. And Another., LAWS(BOM)-2013-4-85..
52
Evergreen Land Mark Pvt. Ltd. v. John Tinson And Company Pvt. Ltd. And Anr. 2022 LiveLaw (SC) 389..
53
Supra Note 41.

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[3.1] MR. KAPOOR'S INITIATION OF ARBITRAL PROCEEDINGS WITHOUT FULFILLING THE

PRE-ARBITRAL DISPUTE ESCALATION PROCESS, AS STIPULATED IN THE DISPUTE
RESOLUTION CLAUSE, IS NOT VALID.

¶ [47] It is humbly submitted that in Sushil Kumar Bhardwaj v. Union of India, 54 the Delhi
High Court held that pre-arbitration procedures are mandatory, not directory. Parties must
exhaust the agreed or legally prescribed procedure before approaching the court.
¶ [48] In Simpark Infrastructure (P) Ltd. v. Jaipur Municipal Corporation, 55 the Rajasthan High
Court ruled that parties agreeing to a specific dispute resolution procedure and conditions
precedent must adhere to those conditions.56 Failure to do so deems any arbitration application
premature.
¶ [49] M.K. Shah Engineers & Contractors v. State of M.P.57 established that conditions
precedent in arbitration clauses are "essential" and must be observed unless waived or
precluded by the party attempting to establish them. Non-compliance with mandatory pre-
arbitration procedural requirements can be a jurisdictional defect, as seen in Lufthansa
Systems.58 An arbitral tribunal lacks jurisdiction until the conditions precedent are strictly met.
¶ [50] United India Insurance Co. Limited v. Hyundai Engineering and Construction Co Ltd
& Ors, 59 emphasized that pre-conditions, like admitting the amount under an insurance policy,
must be met before arbitration can be invoked. Nirman Sindia v. Indal Electromelts Ltd. 60 held
that parties must comply with the special mode for dispute resolution agreed upon in a contract
before proceeding to arbitration. 61
¶ [51] Sushil Kumar Bhardwaj v. Union of India 62 reaffirmed the mandatory nature of pre-
arbitral procedures, emphasizing that parties must exhaust the agreed-upon procedure before
approaching the court. The cases cited illustrate that fulfilling pre-arbitral steps is mandatory
before invoking arbitration. Parties are obligated to make a bona fide attempt to complete these

54
Sushil Kumar Bhardwaj v. Union of India, 2009 SCC OnLine Del 4355..
55
Simpark Infrastructure (P) Ltd. v. Jaipur Municipal Corporation 2012 SCC OnLine Raj 2738..
56
Tulip Hotels (P) Ltd. v. Trade Wings Ltd, 2009 SCC OnLine Bom 1222. .
57
M.K. Shah Engineers & Contractors v. State of M.P., Appeal (civil) 5961 of 1983..
58
International Research Corp PLC v. Lufthansa Systems, [2013] SGCA 55..
59
United India Insurance Co. Limited v. Hyundai Engineering and Construction Co Ltd & Ors, Civil Appeal
No. 8146 of 2018..
60
Nirman Sindia v. Indal Electromelts Ltd, 1999 SCC OnLine Ker 149..
61
Oriental Insurance Company Limited vs. M/s Narbheram Power and Steel Pvt. Ltd. ((@ S.L.P. (C) No. 33621
of 2017).).
62
Supra Note 36.

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steps.
¶ [52] Based on the jurisprudence outlined above, it is evident that claimant was required to
follow the pre-arbitral dispute escalation process as a mandatory prerequisite to arbitration.
Skipping these steps without valid cause is not in accordance with established legal principles.

[3.2] THE PRE-ARBITRATION PROCEDURES OUTLINED IN CLAUSES 52.1-52.3 ARE

MANDATORY.

¶ [53] It is humbly submitted that the "Tribunal v. Claims Test" is a legal framework designed
to distinguish between pre-arbitration steps that impact the formation of the arbitral tribunal
(jurisdiction) and those that pertain to the admissibility of claims (merits). This test is
instrumental in determining whether pre-conditions are mandatory or merely directory.
¶ [54] Pre-arbitration procedures such as negotiation, pre-mediation, and mediation are
intended to precede arbitration, indicating a clear intention to regulate the establishment of the
arbitral tribunal. Failure to adhere to these steps can raise doubts about the legitimacy of the
tribunal’s formation.
¶ [55] The purpose of Clauses 52.1-52.3 is to facilitate the effective establishment of the
arbitral tribunal by exploring alternative dispute resolution methods and ensuring a robust
foundation for the tribunal. The "Tribunal v. Claims Test" draws a distinction between issues
related to the formation of the tribunal (jurisdiction) and matters concerning the merits of the
claims (admissibility). In the case of Clauses 52.1-52.3, their impact is on the formation of the
tribunal itself.
¶ [56] Many foreign jurisdictions, including the United Kingdom, share a similar approach to
pre-arbitration conditions, underscoring the significance of a solid foundation for the arbitral
tribunal. Practical applications of the "Tribunal v. Claims Test" can be observed in cases like
BSNL v. Nortel, 63 where it is utilized to ascertain the effect of pre-conditions on tribunal
formation or the admissibility of claims.
¶ [57] Regarding the objection to tribunal formation, the pre-arbitration procedures have a
direct influence on the establishment of the arbitral tribunal, aligning seamlessly with the
principles of the “Tribunal v. Claims Test.”
¶ [58] Clauses 52.1-52.3 are designed to ensure a proper groundwork for the arbitral tribunal

63
Bharat Sanchar Nigam Ltd. & Ors. Versus Nortel Networks India Pvt. Ltd., (2021) 3 MLJ 131.

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by emphasizing alternative dispute resolution mechanisms, which corresponds with the essence
of the "Tribunal v. Claims Test." These clauses primarily address the issue of tribunal formation
(jurisdiction) rather than delving into the merits of the claims (admissibility), in harmony with
the "Tribunal v. Claims Test."
¶ [59] The approach of focusing on procedures that have a direct impact on the formation of
the tribunal is consistent with practices in foreign jurisdictions. The practical application of the
“Tribunal v. Claims Test” reinforces the integral nature of Clauses 52.1-52.3 in establishing
the arbitral tribunal.
¶ [60] In conclusion, applying the "Tribunal v. Claims Test" to Clauses 52.1-52.3 substantiates
that these procedures are intended to be mandatory. Their primary emphasis on the formation
of the tribunal, their sequential hierarchy, and alignment with foreign legal practices underscore
their mandatory nature. Therefore, adhering to these pre-arbitration steps is crucial to ensure
the validity and effectiveness of the arbitral tribunal. This approach finds support in various
case laws, including BSNL v. Nortel, 64 where the courts have upheld the mandatory nature of
such pre-arbitration procedures.

[4] WHETHER DUE TO IMPROPERLY STAMPED ARBITRATION AGREEMENT, THE FLAT

BUYER AGREEMENT CAN BE ENFORCEABLE IN THE PROVISIONS OF LAW?

¶ [61] It is respectfully submitted, that due to an unduly stamped flat buyer agreement, the
arbitration clause is not valid and can’t be enforceable on the following ground [4.1] Due To
Unduly Stamped Flat Buyer Agreement Arbitration Clause Is Not Enforceable. [4.2] Non-
Obstante Provision In Section 5 Of A&C 65 Do Not Exclude Sections 33 66 And 3567 Of The
Stamp Act.

[4.1] DUE TO UNDULY STAMPED FLAT BUYER AGREEMENT ARBITRATION CLAUSE IS NOT
ENFORCEABLE.

¶ [62] It is humbly submitted that it is imperative to address the matter of insufficient stamp

64
Ibid.
65
Arbitration and Conciliation Act, 1996, Sec. 5.
66
THE INDIAN STAMP ACT, 1899, Sec. 33.
67
THE INDIAN STAMP ACT, 1899, Sec. 35.

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duty as a jurisdictional concern, warranting the arbitrator's consideration as a preliminary issue.

Notably, the Delhi High Court, in the case of Religare Finvest Ltd. v. Asian Satellite Broadcast
(P) Ltd.,68 asserted that the "doctrine of severability" does not imply that insufficient stamp
duty should be disregarded during arbitration proceedings. The court emphasized the
jurisdictional aspect of stamping issues and commended the arbitrator for addressing it as a
preliminary matter.
¶ [63] Under Section 16 of the Arbitration and Conciliation Act, 1996 (A&C Act), 69 non-
payment or deficiency in stamp duty doesn't invalidate loan agreements; however, it renders
these documents inadmissible as evidence until the requisite stamp duty is settled.
¶ [64] The Delhi High Court's ruling in ARG Outlier Media Private Limited v. HT Media
Limited70 clarified that if an agreement with insufficient stamping is admitted as evidence and
forms the basis for an arbitral award, it cannot be challenged under Section 34 of the Arbitration
Act.71 The court cited Section 36 of the Stamp Act,72 which prohibits questioning the
admissibility of a document once accepted as evidence, unless under Section 61 of the Stamp
Act.73 The court further specified that it lacks the authority granted by Section 61 of the Stamp
Act74 and, if applicable, would only have the power to impound the document and refer it to
the Collector of Stamps to ascertain proper stamp duty and penalty.
¶ [65] According to Section 35 of the Stamp Act, 75 if the required stamp duty and penalty for
a document are unpaid, the court cannot enforce the document, including any arbitration
agreement contained within it. In SMS Tea Estates Pvt. Ltd. v. Chandmari Tea Co. Pvt. Ltd.,76
the Supreme Court held that an arbitration clause within an unstamped agreement necessitates
the judge handling the Section 11 77 application to impound the agreement and ensure payment
of the requisite stamp duty and penalty before proceeding with the application.
¶ [66] Furthermore, the enforceability of an arbitration clause is contingent upon the proper
stamping of the sub-contract. In the case of Garware Wall Ropes Limited v. Coastal Marine

68
Religare Finvest Ltd. v. Asian Satellite Broadcast Pvt. Ltd., 2022 SCC OnLine Del 221..
69
Arbitration and Conciliation Act, 1996, Sec. 16.
70
Outlier Media Private Limited vs HT Media Limited. Citation: 2023 LiveLaw (Del) 638..
71
Arbitration and Conciliation Act, 1996, Sec. 34.
72
THE INDIAN STAMP ACT, 1899, Sec. 36.
73
THE INDIAN STAMP ACT, 1899, Sec. 61.
74
Ibid.
75
Supra Note 67.
76
SMS Tea Estates Pvt. Ltd. v. Chandmari Tea Co. Pvt. Ltd., (2011) 14 SCC 66..
77
Arbitration and Conciliation Act, 1996, Sec. 11.

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Constructions & Engineering Limited, 78 the Court ruled that an unstamped agreement is
unenforceable under section 2(h) of the Indian Contract Act, 1872.79 The Arbitration Clause
within the sub-contract is considered nonexistent as a matter of law until the sub-contract is
appropriately stamped. 80 They reiterated the principle that enlarging the scope of Section 3581
would render instruments falling within its purview invalid, contravening established legal
interpretation principles.82
¶ [67] The enforceability of an arbitration clause within an improperly stamped Flat Buyer
Agreement hinges on compliance with stamp duty requirements, which are regarded as
jurisdictional in nature. Recent legal precedents emphasize that the doctrine of severability
does not exempt arbitration agreements from stamping issues. Instead, they assert that proper
stamping is pivotal for the admission of such agreements as evidence. 83 Additionally, the
validity of an arbitration clause depends on the overall stamping of the agreement and the sub-
contract containing it.
¶ [68] In light of the prevailing legal principles and enactments, it is evident that arbitration
clauses within improperly stamped agreements face significant challenges in terms of
enforceability. Stamp duty issues are viewed as jurisdictional, and non-compliance with
stamping requirements can render arbitration clauses inadmissible and unenforceable. 84
Compliance with stamp duty regulations is paramount to ensure the effectiveness of arbitration
agreements within these contracts.

[4.2] NON-OBSTANTE PROVISION IN SECTION 5 OF A&C DO NOT EXCLUDE SECTIONS 33

AND 35 OF THE STAMP ACT.

¶ [69] It is humbly submitted that it is crucial to recognize that the non-obstante provision in
Section 585 does not operate to exclude the operation of Sections 33 86 and 3587 of the Stamp

78
Garware Wall Ropes Limited v. Coastal Marine Constructions & Engineering Limited, (2019) 9 SCC 209..
79
Indian Contract Act, 1872, Sec. 2(h).
80
Subramaniam v. Gunasundari & Ors. 2007 (2) L.W. 535.
81
Supra Note 67.
82
OMPRAKASH vs. LAXMINARAYAN & ORS. [2014(1) SCC 618..
83
A. Balachandran vs. T.C.Shanmugam 2013 (2) CTC 832..
84
Muhammed & Others v. Nani & Others 1970 KLJ35.
85
Supra Note 65.
86
Supra Note 66.
87
Supra Note 67.

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Act. In proceedings under Section 11 of the Arbitration Act, 88 when Sections 3389 and 3590 are
invoked to ensure proper stamping, it does not constitute judicial interference contrary to
Section 5.91
¶ [70] The arbitration clause is an integral part of the underlying agreement. If the agreement
itself lacks proper stamping, the arbitration clause cannot be enforced separately. This principle
was affirmed in the case of Garware Wall Ropes Limited v. Coastal Marine Constructions and
Engineering Limited, 92 where the Supreme Court clarified that the Stamp Act applies
comprehensively to the entire agreement. Thus, enforcing the arbitration clause independently
becomes impossible if the agreement is not duly stamped.
¶ [71] An unstamped legal document holds no evidentiary value. In SMS Tea Estates (P) Ltd.
v. Chandmari Tea Co. (P) Ltd.,93 the Supreme Court held that an unstamped arbitration clause
within an agreement subject to compulsory registration or stamp duty cannot be the basis for
appointing an arbitrator. This is because such an agreement cannot be used as evidence under
the Stamp Act.
¶ [72] The judgments in Garware Wall Ropes Ltd. v. Coastal Marine Constructions and Engg.
Ltd.94 and Vidya Drolia v. Durga Trading Corpn. 95 affirmed the principle laid down in SMS
Tea Estates,96 emphasizing that the insertion of Section 11(6-A)97 did not alter the established
legal position. These decisions, pronounced by Benches of two Judges and three Judges,
respectively, further solidified the necessity of proper stamping for arbitration clauses.
¶ [73] The case of Naina Thakkar v. Annapurna Builders 98 clarified that while the
consequences of insufficient stamp duty must follow per the Stamp Act, this may not apply to
proceedings under Section 8 of the Arbitration and Conciliation Act.99 In such cases, the party
making the Section 8 100 application must express readiness and willingness to pay the deficit
stamp duty and the penalty.

88
Supra Note 77.
89
Supra Note 66.
90
Supra Note 66.
91
Supra Note 65.
92
Supra Note 48.
93
Supra Note 47.
94
Supra Note 48.
95
Vidya Drolia v. Durga Trading Corpn, (2021) 2 SCC 1..
96
Supra Note 47.
97
Arbitration and Conciliation Act, 1996, Sec. 11(6A).
98
Naina Thakkar Vs. Annapurna Builders, (2013) 14 SCC 354..
99
Arbitration and Conciliation Act, 1996, Sec. 8.
100
Ibid.

MEMORANDUM ON BEHALF OF THE RESPONDENTS

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¶ [74] Nirman Panchvati Developers Pvt. Ltd. and another v. Wellcity Real Estate Pvt. Ltd.101
emphasized that an unstamped agreement with a stamped arbitration clause should not be
permitted, as it would essentially allow the instrument to establish a collateral transaction.
Section 11(6A)102 pertains to contracts, not mere agreements, and even a literal interpretation
of the Maharashtra Stamp Act implies that stamp duty in Maharashtra cannot be exempted if
paid in another state.

¶ [75] The Stamp Act's mandate does not contradict the legislative directive in Section
11(6A)103 to examine the existence of an Arbitration Agreement. The contract containing the
arbitration clause must satisfy the requirements of Section 7 of the Arbitration Act 104 and
adhere to Contract Act requirements.
¶ [76] In NN Global, 105 certified copies of agreements presented under Section 11 106 must
demonstrate proper stamping of the original. If a certified copy of an insufficiently stamped
original agreement is provided, the Court cannot rely on it under Section 35 107 of the Stamp
Act. Section 17 of the Stamp Act 108 necessitates stamping of instruments before or at the time
of execution, while Section 33 109 obligates recipients of evidence to impound inadequately
stamped instruments. Finally, under Section 35,110 unstamped or inadequately stamped
instruments cannot be admitted as evidence, even for secondary purposes.
¶ [77] Section 33111 and 42 of the Stamp Act indicate that an unstamped instrument is subject
to mandatory impoundment under Section 33. After the instrument undergoes the stamping
procedure and pays the necessary duty and penalty, it receives endorsement under Section
42(2), making it enforceable, and subject to use by the tribunal or court.
¶ [78] Section 2(h) of the Contract Act 112 defines an enforceable agreement as a contract, while
Section 2(g)113 defines an agreement not enforceable in law as void. When considered in

101
Nirman Panchvati Developers Pvt. Ltd. and another v. Wellcity Real Estate Pvt. Ltd, 2020 (4) ABR 539. .
102
Supra Note 97.
103
Supra Note 97.
104
Arbitration and Conciliation Act, 1996, Sec. 7.
105
M/S. N.N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/S. INDO UNIQUE FLAME LTD. & ORS.
2023 SCC OnLine SC 495..
106
Supra Note 77.
107
Supra Note 67.
108
THE INDIAN STAMP ACT, 1899, Sec. 17.
109
Supra Note 66.
110
Supra Note 67.
111
Supra Note 66.
112
Supra Note 79.
113
Indian Contract Act, 1872. Sec. 2(g).

MEMORANDUM ON BEHALF OF THE RESPONDENTS

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 11TH INTRA MOOT COURT COMPETITION

conjunction with Sections 33114 and 35115 of the Stamp Act, these provisions lead to the
conclusion that an unstamped agreement, being unenforceable in law and inadmissible as
evidence, is void and non-existent in legal terms.
¶ [79] The non-obstante provision in Section 5 116 does not preclude the application of Sections
33117 and 35118 of the Stamp Act. In Section 11 proceedings under the Arbitration Act, 119
invoking Sections 33120 and 35121 to ensure proper stamping is not considered judicial
interference contrary to Section 5. 122
¶ [80] Furthermore, it’s vital to understand that the arbitration clause cannot be enforced in
isolation if the underlying agreement lacks proper stamping. The legal principle established by
Garware Wall Ropes Limited v. Coastal Marine Constructions and Engineering Limited 123
clearly extends the applicability of the Stamp Act to the entire agreement, rendering the
enforcement of the arbitration clause impossible without proper stamping.
¶ [81] The precedents of SMS Tea Estates (P) Ltd. V. Chandmari Tea Co. (P) Ltd.,124 Garware
Wall Ropes Ltd. V. Coastal Marine Constructions and Engg. Ltd.,125 and Vidya Drolia v. Durga
Trading Corpn.126 Reinforce the need for proper stamping in arbitration agreements. They
emphasize that Section 11(6-A) did not alter the established legal position, making it
imperative to meet stamp duty requirements.
¶ [82] Naina Thakkar v. Annapurna Builders127 demonstrates that the consequences of
insufficient stamp duty may not apply to proceedings under Section 8 of the Arbitration and
Conciliation Act if the party expresses readiness to pay the deficit stamp duty and penalty.
¶ [83] Nirman Panchvati Developers Pvt. Ltd. And another v. Wellcity Real Estate Pvt. Ltd.128
Underscores that unstamped agreements with stamped arbitration clauses should not be
allowed, even if stamp duty is paid in another state.

114
Supra Note 66.
115
Supra Note 67.
116
Supra Note 65.
117
Supra Note 66.
118
Supra Note 67.
119
Supra Note 77.
120
Supra Note 66.
121
Supra Note 67.
122
Supra Note 65.
123
Supra Note 48.
124
Supra Note 47.
125
Supra Note 48.
126
Supra Note 56.
127
Supra Note 57.
128
Supra Note 58.

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¶ [84] The relationship between the Stamp Act and Section 11(6A) 129 should be harmonious.
In NN Global, 130 certified copies must confirm proper stamping of the original agreement.
Failure to adhere to stamping requirements under Sections 17, 131 33,132 and 35133 of the Stamp
Act renders instruments inadmissible.
¶ [85] Lastly, Section 2(h) of the Contract Act,134 in conjunction with Sections 33 and 35 of
the Stamp Act, establishes that an unstamped agreement, being unenforceable in law and
inadmissible as evidence, is void and legally non-existent.
¶ [86] Proper stamping is an imperative prerequisite for the enforceability of arbitration clauses
within agreements. The non-obstante provision in Section 5 135 does not exclude the
applicability of Sections 33 136 and 35137 of the Stamp Act. Legal precedents consistently uphold
the requirement of adequate stamping for arbitration clauses to be enforceable. Failure to meet
stamp duty obligations renders agreements, including arbitration clauses, legally void and non-
existent. Therefore, strict compliance with stamp duty regulations is essential to ensure the
legal validity and enforceability of arbitration agreements within contracts. Therefore, unduly
stamped arbitration clause is invalid. It is respectfully submitted claimant’s reliance on
arbitration clause is invalid.

129
Supra Note 97.
130
Supra Note 60.
131
Supra Note 108.
132
Supra Note 66.
133
Supra Note 67.
134
Supra Note 79.
135
Supra Note 65.
136
Supra Note 66.
137
Supra Note 67.

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PRAYER

In light of the facts stated, issues raised, authorities cited, and arguments advanced, the Counsel
for the RESPONDENT respectfully requests the tribunal to DECLARE that,

1. The Tribunal does not have the jurisdiction to decide this dispute.
2. A case for seeking interim reliefs/measures against the RESPONDENT pursuant to the
A&C Act, 1996 has not been made out.
3. It was mandatory for the parties to exercise pre-arbitral dispute escalation process
contained in the dispute resolution clause as a pre-condition to arbitration The
arbitration agreement, contained in improperly stamped flat buyer agreement, is
unenforceable and invalid in the provisions of Law

All of which is humbly prayed.

Place: Trombai Sd/-

Dated: 02/07/2017 Counsel for RESPONDENT

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