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2004 DIGILAW 1187 (AP)

Intouch Technologies (India) Pvt. Ltd. v. Ashwarya Builders

2004-10-12

N.V.RAMANA

body2004
N. V. RAMANA, J. ( 1 ) M/s. In Touch Technologies (India) Pvt. Ltd. , represented by its Director, has filed this application under Section 11 of the arbitration and Conciliation Act, 1996 (for short the Act ) r/w the Scheme for appointment of Arbitrators, seeking appointment of an Arbitrator for resolution of the disputes between them and the respondent. ( 2 ) THE applicant claims to have entered into a lease agreement under Lease Deed dated 18-6-2001 with the respondent, namely M/s. Ashwarya Builders, for leasing out their premises on the III Floor of premises bearing No. 8-2-5-2/1/ag, Road no. 7, Banjara Hills, Hyderabad, to the applicant for housing their office, for a period upto 17-7-2004. At the time of entering into lease agreement, the applicant claims to have paid security deposit in an amount of rs. 8,79,300/- to the respondent, as per the terms and conditions of the Lease Deed, which was refundable at the time of vacating the premises by them. ( 3 ) WHILE the agreement was in force, the applicant by their letter dated 14-8-2003 appears to have terminated the lease invoking Clause 21 of the Lease Deed, on the ground that they no longer required the premises as they were downsizing their operations in India, and requested the respondent to refund the security deposit, after adjusting the amounts, if any, payable by them, as per Clause 2 of the Lease Deed. Thereafter, the applicant addressed another letter to the respondent on 7-11-2003 seeking their permission and informing them that they would vacate the premises on 31 -12-2003 instead of 13-11 -2003 and that the rent payable by them for the months from october, 2003 to December, 2003 be adjusted against the security deposit. ( 4 ) AFTER adjustment of the rents for the period from October to December, according to the applicant, the respondent was liable to refund them an amount of Rs. 5,97,351/ -. Thereafter, on 31-12-2003, the applicant under intimation to the respondent vacated the premises, leaving the fittings and fixtures, with an understanding that the respondent would find a suitable tenant, who would take on lease the premises along with the fittings and fixtures. 5,97,351/ -. Thereafter, on 31-12-2003, the applicant under intimation to the respondent vacated the premises, leaving the fittings and fixtures, with an understanding that the respondent would find a suitable tenant, who would take on lease the premises along with the fittings and fixtures. While so, it is the case of the applicant, that when one of their employees and consultant visited the premises in the second week of February, he was shocked to notice that the fittings and fixture were illegally removed by the respondent without knowledge of the applicant. By the removal of the fittings and fixtures by the respondent, according to the applicant, disputes arose between them, and therefore, the applicant demanded the respondent to refund of the security deposit, but in vain. Therefore, the applicant, having regard to the arbitration clause in Clause 29 of the Lease Deed, got issued notice dated 2-6-2004 to the respondent, nominating sri D. Surya, Judicial Member, Central administrative Tribunal, as their nominee arbitrator. The respondent having received the said notice, vide their letter dated 12-6-2004 denied the existence of any disputes, much less arbitrable disputes and failed to pay the security deposit. As the respondent neither refunded the security deposit nor nominated their Arbitrator, the applicant filed the present Arbitration application, seeking appointment of an arbitrator. ( 5 ) THE respondent filed counter stating that the Lease Deed dated 18-6-2001 basing on which the applicant is seeking appointment of Arbitrator is an unregistered document, and as such, it can neither be relied nor pressed into service. Inasmuch as the very Lease Deed is itself invalid and inadmissible in evidence, neither the contents thereof nor the arbitration clause contained therein, can be looked into nor acted upon, and therefore, the application for appointment of an Arbitrator is not maintainable, and more so when the respondent does not owe any amounts to the applicant. In support of his contention that an agreement, the value of which exceeds Rs. 100/- requires registration under the provisions of Section 17 of the registration Act, 1908, and non-registration thereof is inadmissible in evidence, placed reliance on the judgment of this Court in t. Venkatamma v. M. Aswathanarayanappa. ( 6 ) HEARD the learned counsel for the applicant and the learned counsel for the respondent. 100/- requires registration under the provisions of Section 17 of the registration Act, 1908, and non-registration thereof is inadmissible in evidence, placed reliance on the judgment of this Court in t. Venkatamma v. M. Aswathanarayanappa. ( 6 ) HEARD the learned counsel for the applicant and the learned counsel for the respondent. ( 7 ) THE learned counsel for the applicant submitted that the applicant while vacating the premises and delivering vacant possession thereof, left the fittings and fixtures, namely electrical and electronic gadgets with an understanding that the respondent would find a suitable tenant, who would take the premises along with the fittings and fixtures, but the respondent without the knowledge of the applicant, removed the fittings and fixtures, and thereby disputes arose between the applicant and the respondent, and as such, the applicant demanded the respondent to refund the security deposit, and thereafter, got issued legal notice dated 2-6-2004, nominating their Arbitrator and requesting the respondent to nominate their Arbitrator, and as the respondent having received the said notice, vide their letter dated 12-6-2004, failed to name/nominate their Arbitrator, the applicant filed the present Arbitration application, invoking the jurisdiction of this court under Section 11 of the Act, seeking appointment of an Arbitrator, which is required to be allowed. ( 8 ) PER contra, the learned counsel for the respondent contended that Lease Deed dated 18-6-2001, basing on which the applicant is seeking to invoke the arbitration clause, is not a registered one, and the same being an invalid document and inadmissible in evidence, cannot be acted upon. He further contended that under the provisions of the Act, for an arbitration agreement to be enforceable, the agreement basing on which the arbitration clause is sought to be invoked, should be a valid one, and inasmuch as the very Lease Deed itself is invalid, the contents thereof, much less the arbitration clause in Clause 21, through which the applicant is seeking appointment of an Arbitrator, can neither be read or looked into nor acted upon, for maintaining the present Arbitration Application. ( 9 ) THERE can be no dispute on the proposition of law that an unregistered document is inadmissible in evidence and that it can be pressed into only for collateral purposes, and the judgment relied upon by the learned counsel for the respondent on the judgment of this Court in T. Venkatamma v. M. Aswathanarayanappa (1 supra), in support of such a proposition, but in the instant case, though the Lease Deed dated 18-6-2001, entered into by the applicant and the respondent, whereunder the respondent agreed to let out their premises to the applicant on certain terms and conditions mentioned therein, is an unregistered one, the fact remains that the parties thereto, namely the applicant and the respondent, have admittedly acted upon, for in terms of the said Lease Deed, the applicant deposited the security deposit with the respondent and the respondent handed over the possession to the applicant, which was retained by them till they vacated the premises on 31 -12-2003. Be that as it is, the lease deed admittedly contains an arbitration clause in Clause 29, which reads thus: this deed will be governed by Indian law. Any dispute between the parties with regard to this agreement or the subject-matter thereof, including existence and validity of the deed will be settled by Arbitrators under the provisions of the Indian Arbitration and conciliation Act. 1996. The Arbitration will be conducted in the city of hyderabad and each party will be entitled to nominate one Arbitrator each. The two Arbitrators will choose an umpire for the arbitration proceedings. The proceedings shall be conducted in English. The arbitration award is final and binding on both the parties. ( 10 ) THOUGH the respondent contended that the lease deed being an unregistered document, inadmissible in evidence, is invalid and unenforceable, and as such, the contents thereof, including the arbitration clause, cannot be looked into or acted upon, but as observed above, the applicant and the respondent after entering into the agreement, have acted upon it, and as such, it would not be proper for the respondent to contend that the lease deed being an unregistered one, the contents thereof cannot be looked into. Be that as it may, a reading of the contents of Clause 29 of the lease Deed, would lucidly disclose that the deed is to be governed by Indian Law and any dispute between the parties arising from the agreement or the subject-matter thereof, including the existence and validity of the deed, will be settled by the Arbitrators under the provisions of the Act. Inasmuch as the arbitration clause itself states that even the question of existence and validity or otherwise of the deed, would be settled by the Arbitrators under the provisions of the act, the respondent having acted upon the lease agreement, now cannot be allowed to contend that the very lease deed itself being invalid for want of registration, the contents thereof, including the arbitration clause cannot be looked into or acted upon. ( 11 ) DISPUTED questions, it is settled law, cannot be gone into by this Court. The Apex court in Konkan Railway Corpn. Ltd. v. Rani construction Pvt. Ltd. held that Section 11 does not contemplate a decision by the chief Justice or his designate on any controversy that the other party may raise and that the word "decision" does not contemplate adjudicatory decision by this court on disputed questions. ( 12 ) IN Surender Singh Bajaj v. Smt. Harmeet Singh Seth, a contention was raised by the respondent therein stating that the arbitration clause in an invalid and void agreement, cannot be looked into or acted upon. ( 12 ) IN Surender Singh Bajaj v. Smt. Harmeet Singh Seth, a contention was raised by the respondent therein stating that the arbitration clause in an invalid and void agreement, cannot be looked into or acted upon. This Court observed that the said contention being a contentious issue, cannot be gone into in a proceeding under section 11 of the Act, and inter alia observed as follows:the questions involved in this application, namely whether in fact, the applicant had purchased the plots in the names of the respondents benami, and whether in fact, there is at all an agreement entered into between the parties in respect of the said transaction, and whether having regard to the provisions of Section 3 of the benami Transactions (Prohibition) Act, 1988, the alleged purchase of plots in the names of respondents benami, constitutes a criminal and punishable offence, and it is only the competent criminal Court which is entitled to go into the genuineness or veracity of the agreement relied upon by the applicant to invoke arbitration proceedings, are all issues, contentions in nature, and cannot be gone into by this Court in an application filed under Section 11 of the arbitration and Conciliation Act. ( 13 ) IN the instant case, the questions namely, whether or not the lease deed is valid or not or whether it is inadmissible in evidence or not for want of registration, and whether there exist any disputes between the applicant and the respondent or not, being disputed questions, cannot be gone into by this Court. ( 14 ) A reading of the contents of the arbitration clause in the lease agreement shows that the parties have agreed to the procedure contemplated under sub-sec. (3) of Section 11 of the Act. In that, in the event of any dispute arising between them, as mentioned therein, each would nominate their Arbitrator, who in turn would appoint an umpire. Admittedly, in the instant case, on the alleged removal of fixtures by the respondent and when the respondent failed to refund the security deposit on the demand made by the applicant, the applicant vide legal notice dated 2-6-2004 while nominating their Arbitrator called upon the respondent to nominate their Arbitrator. The respondent having received the said notice, vide their reply notice dated 12-6-2004, denied existence of any arbitrable disputes, and failed to nominate their Arbitrator, within thirty days. The respondent having received the said notice, vide their reply notice dated 12-6-2004, denied existence of any arbitrable disputes, and failed to nominate their Arbitrator, within thirty days. It is required to notice that if the procedure under sub-section (3) of Sec. 11 of the Act applies, the provisions of clause (a) of sub-section (4) of Section 11 of the Act, come into play, and as per which, if a party fails to appoint an arbitrator within thirty days from the receipt of a request to do so from the other party, the appointment shall be made, upon request of a party, by the Chief Justice or any person or institution designated by him. Inasmuch as the respondent having received the notice failed to nominate their Arbitrator within thirty days, and on the other hand, in their reply notice denied existence of any arbitrable disputes, it becomes incumbent for this Court to appoint an Arbitrator. ( 15 ) IN the above view of the matter, the arbitrator Application deserves to be allowed, and is accordingly allowed. Sri Justice P. L. N. Sarma, a former Judge of this Court, is appointed as Arbitrator for resolution of the disputes between the parties. The parties are directed to approach the Arbitrator and raise all contentious issues before him. The Arbitrator is at liberty to fix his fee. No costs.