Arbitration – Non-signatory purchaser of property
The dispute arose out of the agreement of sale dated 16.10.2020 by the respondent for purchase of immovable properties with the owners and its cancellation by the vendors on 3.2.2023. The agreement provided that it is binding also on assignees and successors of vendors. The respondent insisted on specific performance of the agreement.
On 17.5.2023, the appellant gave paper publication for its intention to purchase the said properties. The respondent filed Section 9 AA petition for interim measures against the vendors. However, the appellant is not a party to the said petition. On 2.11.2023, the respondent initiated section 21 AA proceedings against vendors.
On 28.11.2023, section 9 application was heard and reserved for orders. However, the appellant purchased the properties.
On 2.1.2024, the Court passed an interim order against the vendors from alienating the properties. Similarly, on 27.1.2024, the respondent filed another section 9 application against appellant (pendente lite purchaser) and on 15.4.2024, the Court restrained the appellant from alienating the properties.
HELD that if a non-signatory is claiming through or under the party to the arbitration agreement or derived right from such a party to the agreement, then such non-signatory is bound by the arbitration clause as per Section 8(1) of the Arbitration Act. Moreover, the appellant / purchaser & non-signatory has stepped into the shoes of the vendors of the agreement dated 16.10.2020 with all rights and obligations.
The transferee / non-signatory is not bound by the obligations of vendors – party to the arbitration agreement only if such obligations are waived.
Judgment dated 24.7.2024 of the Division Bench of the Karnataka High Court at Bengaluru in Misc. First Appeal No.2978 of 2024 (AA) of M/s. Devtree Corp LLP Vs. M/s. Bhumika North Gardenia
