ANSAL HOUSING CONSTRUCTION LTD v. M/S POWER HOUSE HEALTH CLUB INDIA AND ORS

Delhi High Court · 11 Oct 2018 · 2018:DHC:6669

Manmohan

CS(OS) 2574/2013

2018:DHC:6669

civil appeal_dismissed Significant

AI Summary

The Delhi High Court dismissed the defendants' applications to refer the dispute to arbitration due to the arbitration clause being contained in an unstamped and unregistered lease agreement and non-production of the original arbitration agreement as required under Section 8(2) of the Arbitration Act.

Full Text

CS(OS) 2574/2013
HIGH COURT OF DELHI
CS(OS) 2574/2013
ANSAL HOUSING CONSTRUCTION LTD ..... Plaintiff
Through Mr.Attin Shankar Rastogi with Ms.Neha Rajpal, Advocates.

VERSUS

M/S POWER HOUSE HEALTH CLUB INDIA AND ORS ..... Defendants
Through Mr.Jai Gupta with Mr.Anubhav Chabbra, Advocates for D-1 & 2.
Mr.Uttam Kumar, Advocate for D-3.
Date of Decision: 11th October, 2018

CORAM:

HON'BLE MR. JUSTICE MANMOHAN

JUDGMENT

MANMOHAN, J: (ORAL)
I.A.Nos.12954/2014 & 22230/2014

1. Present applications have been filed by defendant no.2 and defendant no.3 under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act 1996’) for referring the parties to arbitration.

2. Learned counsel for defendant nos.[2] and 3 state that the Lease Agreement dated 08th April, 2007 contains an arbitration clause which reads as under:-

“32. That in the event of any dispute and/or difference arising out of this Indenture of Lease or in any way touching or arising out of these presents or otherwise in relation to properties then every such dispute, difference, doubts or questions shall be referred to and adjudicated by the

2018:DHC:6669 Arbitration and Conciliation Act 1996. The Arbitral Tribunal shall be comprised of a three arbitrators, one each appointed by the two duly appointed arbitrators. The Arbitration venue of the arbitration shall be at New Delhi and the arbitration and Reconciliation Act, 1996. This Arbitration clause is subject to the exclusive jurisdiction of New Delhi only.”

3. They further submit that the ingredients of Section 8 of the Act 1996 are satisfied in the present instance and, therefore, the parties need to be referred to arbitration.

4. However, learned counsel for the plaintiff submits that the present applications are not maintainable as the Lease Agreement dated 08th April, 2007 is an unstamped and unregistered document. In support of his submission, he relies upon the judgment of the Supreme Court in SMS Tea Estates Private Limited vs. Chandmari Tea Company Private Limited; (2011) 14 SCC 66, wherein it has been held as under:-

“22. We may therefore sum up the procedure to be adopted where the arbitration clause is contained in a document which is not registered (but compulsorily registrable) and which is not duly stamped : 22.1 The court should, before admitting any document into evidence or acting upon such document, examine whether the instrument/document is duly stamped and whether it is an instrument which is compulsorily registrable. 22.2 If the document is found to be not duly stamped, Section 35 of Stamp Act bars the said document being acted upon. Consequently, even the arbitration clause therein cannot be acted upon. The court should then proceed to impound the document under section 33 of the Stamp Act and follow the procedure under section 35 and 38 of the Stamp Act.

22.[3] If the document is found to be duly stamped, or if the deficit stamp duty and penalty is paid, either before the Court or before the Collector (as contemplated in section 35 or 40 of the Stamp Act), and the defect with reference to deficit stamp is cured, the court may treat the document as duly stamped. 22.[4] Once the document is found to be duly stamped, the court shall proceed to consider whether the document is compulsorily registrable. If the document is found to be not compulsorily registrable, the court can act upon the arbitration agreement, without any impediment. 22.[5] If the document is not registered, but is compulsorily registrable, having regard to section 16(1)(a)of the Act, the court can de-link the arbitration agreement from the main document, as an agreement independent of the other terms of the document, even if the document itself cannot in any way affect the property or cannot be received as evidence of any transaction affecting such property. The only exception is where the respondent in the application demonstrates that the arbitration agreement is also void and unenforceable, as pointed out in para 8 above. If the respondent raises any objection that the arbitration agreement was invalid, the court will consider the said objection before proceeding to appoint an arbitrator. 22.[6] Where the document is compulsorily registrable, but is not registered, but the arbitration agreement is valid and separable, what is required to be borne in mind is that the Arbitrator appointed in such a matter cannot rely upon the unregistered instrument except for two purposes, that is (a) as evidence of contract in a claim for specific performance and (b) as evidence of any collateral transaction which does not require registration.”

5. He also points out that the original lease agreement which contains the arbitration clause has not been produced by the defendants.

6. Learned counsel for the plaintiff further clarifies that the plaintiff is not relying on the Lease Agreement dated 08th April, 2007 in support of his case.

7. Having heard learned counsel for the parties and having perused the paper book, this Court finds that as the Lease Agreement dated 08th April, 2007 is unstamped and unregistered document, the arbitration clause contained in the said agreement cannot be acted upon as held by the Supreme Court in SMS Tea Estates Private Limited (supra).

8. This Court further finds that neither the original lease deed nor its duly certified copy containing the arbitration clause has been placed on record. Section 8(2) of the Act 1996 specifically mandates that no application under Section 8(1) of the Act 1996 shall be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. In N.Radhakrishnan Vs. Maestro Engineers & Ors.; (2010) 1 SCC 72, the Supreme Court has held as under:- “…….Accordingly, even if we accept the factum of a dispute relating to the retirement of the appellant under the original deed dated 7-4-2003, still the Court would not be empowered to refer the matter to an arbitrator due to the non-compliance with the provisions mentioned under Section 8(2) of the Act.”

9. Consequently, this Court is of the view that the present applications cannot be allowed. Accordingly, the present applications are dismissed. CS(OS) No.2574/2013 Registry is directed to re-number the present suit as Commercial Suit. The defendants are permitted to file their written statement as well as documents and admission/denial affidavit within a period of four weeks. Replications, if any, be filed before the next date of hearing. List the matter before the Joint Registrar on 19th December, 2018. MANMOHAN, J OCTOBER 11, 2018 KA

ANSAL HOUSING CONSTRUCTION LTD v. M/S POWER HOUSE HEALTH CLUB INDIA AND ORS

AI Summary

Full Text

JUDGMENT

Contact Us for a Free Consultation