Court Upholds Arbitration Clause Despite Specific Performance Clause in the Agreement
In a recent decision dated April 6, 2026, the Punjab and Haryana High Court has appointed Hon'ble Ms. Justice Sneh Prashar (retired) as the sole arbitrator to adjudicate a dispute between M/S VCA Estate Private Limited and Baldev Raj along with other respondents. The case, heard by Justice Jasgurpreet Singh Puri, revolved around the invocation of the arbitration clause in a property sale agreement, which was contested by the respondents on several grounds.
The petitioner, VCA Estate, sought the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, due to unresolved disputes arising from an agreement to sell land. The agreement contained an arbitration clause, which the petitioner attempted to activate, but faced resistance from the respondents who raised multiple objections. The respondents argued that the agreement's terms were agreed under undue influence and coercion, and that the petitioner should have filed for specific performance instead.
Justice Puri dismissed the objections, referencing the Supreme Court's precedents in cases such as "SBI General Insurance Company Limited v. Krish Spinning" and "Interplay between Arbitration Agreements under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899." The court emphasized that its role at this stage was limited to confirming the existence of an arbitration agreement and its invocation, rather than conducting a detailed examination of the agreement's validity or the merits of the dispute.
The judgment clarified that the presence of a specific performance clause did not nullify the arbitration clause, which remained clear and operative. As a result, the court allowed the petition, appointing Justice Prashar to oversee the arbitration proceedings. The parties were directed to comply with the statutory provisions, including Section 12 and Section 29-A of the Arbitration Act, ensuring a timely resolution.
This decision reinforces the judiciary's stance on respecting arbitration agreements and limiting judicial intervention at the stage of appointing arbitrators, aiming to uphold the efficiency and autonomy of the arbitration process.
Bottom Line:
Arbitration and Conciliation Act, 1996 - Court's role limited to prima facie examination of existence of arbitration agreement at the stage of appointment of arbitrator.
Statutory provision(s): Arbitration and Conciliation Act, 1996 (Sections 11, 12, 29A)
M/S VCA Estate Private Limited v. Baldev Raj, (Punjab And Haryana) : Law Finder Doc id # 2887751
