M/S SHREE RAM MILLS LTD. versus M/S UTILITY PREMISES (P) LTD .

Citation: [2007] 4 S.C.R. 279 · Decided: 21-03-2007 · Supreme Court of India · Bench: H.K. SEMA · Disposal: Dismissed

Cited by 5 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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M/S SHREE RAM MILLS LTD. 
A 
v. 
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MIS UTILITY PREMISES (P) LTD . 
MARCH 21, 2007 
[H.K. SEMA AND V.S. SIRPURKAR, JJ.] 
B 
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Arbitration and conciliation Act, 1996-Section 11(6)-Agreement of 
providing an area of land for development entered into between the parties-
Another agreement came to be entered into when only a part of the agreed c 
area was made available-Memorandum of Understanding (MoV) entered 
into to settle the dispute by payment of compensation-Aggrieved party 
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repudiated the MoU and invoked Arbitration Clause under the Agreement-
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Petition before High Court for appointment of an Arbitrator was allowed-
Correctness of-Held, High Court under the Act only records a prima facie 
finding about the existence of live issue between the parties before initiating D 
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Arbitration proceeding-Arbitration Tribunal can go into the question of 
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live issue and limitation while deciding the dispute. 
Appellant-company entered into an agreement with respondent-company 
for providing an area for development of land owned by the appellant Later, a 
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second agreement came to be executed between the parties since the appellant 
could make available only a part of the agreed area to the respondent. A 
Memorundum ofUnde"'Standing (MoU) was entered into by the Parties to settle 
the disputes for a compensation amount. The respondent received a part 
payment of the compensation amount. Thereafter, the respondent cancelled 
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the MoU and returned the amount received. The respondent invoked the F 
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Arbiti;-ation Clause under the two agreement by a notice to the appellant on 
the g_~ound that the appellant failed to transfer the full extent of agreed FSI 
as per the first agreement. When the appellant denied its liability, an 
Arbitration Petition was failed by the respondent before High Court under 
section 11(6) of the Arbitration and Conciliation Act, 1996 for appointing an 
Arbitrator. A Designated Judge of the High Court allowed the petition. 
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In appeal to this Court, the appellant contended that there was no live 
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issue in existence in between the parties since the respondent entered into a 
MoU giving up part of its claim under the first agreement; that the respondent 
279 
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280 
SUPREME COURT REPORTS 
[2007] 4 S.C.R. 
A cannot unilaterally cancel the MoU and invoke the Arbitration Clause under 
the agreements; that the claim of the respondent, if any, had become barred 
by limitation; that the High Court, in the Arbitration Petition, has already 
givJ!n findings regarding the existence of live claim and limitation and hence, 
it is for this Court to test the correctness of the findings. 
B 
The respondent contended that since the liabilities under the first 
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agreement were constantly being negotiated and renegotiated in so many 
proceedings and hence, it cannot be said that the issue between the parties 
was dead and barred by time; that the issues, as to whether there was any live 
issue or not and the issue of limitation, could be decided by the Arbitral 
C Tribunal under sectio~ 16 of the Act since the High Court has not finally 
decided such issues. 
Dismissing the appeal, the C!>urt 
HELD: 1.1. A Chief Justice or his Designate of the High Court, under 
D section 11 (6) of the Arbitration and Conciliation Act, 1996, has to examine 
as to whether the claim is a dead one or whether the i;arties have already 
concluded the transaction and have recorded satisfaction of their mutual 
rights and obligations or whether the parties concerned have recorded their 
satisfaction regarding the financial claims. In examining_this, ifthe parties 
have recorded thelr satisfaction rega'rding finanCiaI claims, there will be no 
E question of any .is-sue remaining. It is in this sense that the High Court has 
to examine as to ~vhether 'there remains anything to b~ decided be~ween the 
parties'in respect of the agreement and ,whether the parties are still at issue 
on a~y such mattir. If the Chief Justice. does not, decide the issue, in that 
event it is for him to locate such is~ue ~nd record the satisfaction that.such 
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issue exists between the pa"rties. It is only in that sense that the findings on 
F a 'tive' issue is given. It is only for the purpos~ of finding out whether the 
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a~pitral procedure has to be started that the .. Chief Justice has to record 
satisfaction that there remains a live issue in between the parties. (Para 27) 
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1.2. The 

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