DEUTSCHE POST BANK HOME FINANCE LTD. versus TADURI SRIDHAR AND ANR.

Citation: [2011] 5 S.C.R. 674 · Decided: 29-03-2011 · Supreme Court of India · Bench: R.V. RAVEENDRAN · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
[2011] 5 S.C.R. 674 
DEUTSCHE POST BANK HOME FINANCE l TD. 
v. 
TADURI SRIDHAR AND ANR. 
(Civil Appeal No. 2691 of 2011) 
MARCH 29, 2011 
[R.V. RAVEENDRAN AND A.K. PATNAIK, JJ.] 
Arbitration and Conciliation Act, 1996 - s.11 - Petition 
under - lmpleadment of a non-party to arbitration agreement 
C - Development agreement between second respondent-
developer and owners of lands for constructing multi-storied 
apartments -
First respondent wanted to purchase an 
apartment and for such purpose took housing loan from 
appellant - Land-owners and the deve/Oper executed a 
D registered sale deed in favour of first respondent in respect 
of an unfinished apartment - First respondent entrusted 
construction of the unfinished apartment to the developer 
under a construction agreement dated 21-2-2008 containing 
an arbitration clause - Dispute between first respondent and 
E developer -
First respondent invoked arbitration clause 
contained in the construction agreement dated 21-2-2008 and 
later filed petition u/s. 11 - In the said petition, the appellant 
was also impleaded as a respondent along with the developer 
- Designate of the Chief Justice of High Court allowed the 
F application u/s.11 and appointed a sole arbitrator - Whether 
the appellant, a non-party to the construction agreement dated 
21-2-2008 containing the arbitration clause, could be roped 
in, as a party to such arbitration - Held, No - If a person who 
is not a party to the arbitration agreement is impleaded as a 
G party to the petition u/s. 11, the court should either delete such 
party from the array of parties, or when appointing an Arbitrator 
make it clear that the Arbitrator is appointed only to decide 
the disputes between the parties to the arbitration agreement 
- In the instant case, the existence of an arbitration agreement 
H 
674 
DEUTSCHE POST BANK HOME FINANCE LTD. v. 
675 
TADURI SRIDHAR AND ANR. 
in a contract between appellant and first respondent did not A 
enable the first respondent to implead the appellant as a party 
to an arbitration m regard to his disputes with the developer -
Petition uls. 11 against the appellant was misconceived as it 
was not a party to the construction agreement dated 21-2-2008 
- Order of the designate of the Chief Justice of High Court B 
set aside m part, insofar as the appellant is concerned. 
The second respondent-developer entered into a 
development agreement with owners of lands for 
constructing independent houses and multi-storied C 
apartments. The first respondent wanted to buy an 
apartment. The appellant sanctioned housing loan to first 
respondent for purchase of the apartment in terms:.of a 
loan agreement. The land-owners and the developer 
executed a registered sale deed in favour of the first 
respondent in respect of an unfinished apartment. The D 
first respondent entrusted the construction of the 
unfinished apartment to the developer under a 
construction agreement dated 21·2·2008 containing an 
arbitration clause. 
In view of alleged delay in construction and delivery 
of the apartment, the first respondent made demand for 
damages against the developer. As the developer refused 
E 
to comply, first respondent invoked the arbitration clause 
contained in the construction agreement dated 21·2·2008 F 
and later filed petition u/s. 11 for appointment of Arbitrator. 
In the said petition, the appellant was also impleaded as 
a respondent along with the developer. The designate of 
the Chief Justice of High Court allowed the application 
u/s.11 and appointed a sole arbitrator. 
G 
In the instant appeal, the question which arose. for 
consideration was whether the appellant, a non-party to 
.· 
the construction agreement dated 21 ·2·2008 containing · ·-
H 
676 
SUPREME COURT REPORTS 
[2011] 5 S.C.R. 
A the arbitration clause, could be roped in, as a party to 
such arbitration. 
Allowing the appeal, the Court · 
. 
. 
HELD:1.1. If 'X' enters into two contracts, one with 
B 'M' and another with '0', each containing an arbitration 
clause providing for settlement of disputes arising under 
the respective contract, in a claim for arbitration by 'X' 
against 'M' in regard to the contract with 'M', 'X' cannot 
implead 'D' as. a party on the ground that there is an 
C .arbitration clause in the agreement between 'X' and 'D'. 
[Para 12) [687 -G-H; 688-A] 
\· . 
' 
. 
1.2. The existence of an arbitration agreement 
between the parties to the petition under section 11 of the 
0 
Arbitration 

Excerpt shown. Read the full judgment & AI analysis in Lexace.