M. Venugopal v. The Deputy salt Commissioner Salt Department, Government of India, Shastri Bhawan
2011-12-15
R.BANUMATHI, R.MALA
body2011
DigiLaw.ai
Judgment :- R.BANUMATHI,J. 1. This appeal arises out of the order dated 8.9.2009 made in Application No.711 of 2008 in C.S.No.16 of 2008 allowing the application filed under Section 8 of the Arbitration and Conciliation Act and referring the parties to arbitration. Plaintiff is the appellant. 2. Brief facts are that the appellant/plaintiff is the holder of Lease No.62 of Athipattu South Salt Factory lands covering an extent of 77.7950 acres leased to him in various survey numbers for the purpose of salt manufacture for the period of 20 years from 1.1.1988 to 31.12.2007. Subsequently, after transfer of certain portion of lands to North Madras Thermal Power Project and M/s.Venkatesh Coke Power Limited, the total area of land in Lease No.62 has been reduced to 73.6374 Acres. The lease expired on 31.12.2007. 3. Case of plaintiff is that even within the prescribed time of lease, on 31.5.2007, he applied for renewal of existing lease period through the Factory Officer of Athipattu South Salt Factory in the prescribed form along with necessary undertaking. Further case of plaintiff is that he had spent considerable amount of money in developing the salt lands to make it fit for salt manufacture by providing all infrastructural facilities out of his own money as contemplated in the Lease Deed. According to the appellant/plaintiff, the respondents/defendants have got power to renew the lease for similar period of twenty years in favour of the plaintiff. Since there was no response, the appellant/plaintiff issued statutory notice under Section 80(1) of C.P.C. before proceeding to file the suit. In the meanwhile the 1st respondent had sent the rejection order in C.No.40(46)/P/87/27092/95 dated 20.12.2007 in respect of Lease and Licence No.L.62, which was received by the appellant/plaintiff on 29.12.2007.
Since there was no response, the appellant/plaintiff issued statutory notice under Section 80(1) of C.P.C. before proceeding to file the suit. In the meanwhile the 1st respondent had sent the rejection order in C.No.40(46)/P/87/27092/95 dated 20.12.2007 in respect of Lease and Licence No.L.62, which was received by the appellant/plaintiff on 29.12.2007. Alleging that the rejection of renewal of lease is arbitrary, plaintiff has filed the suit: (i) for a declaration that the rejection order issued by the 1st respondent in the proceedings C.No.40(46) P/87/27092-95 dated 20.12.2007 is arbitrary, null and void; (ii) directing the respondents to pay the appellant a sum of Rs.73,00,000/-as compensation together with allotting alternative salt pan lands to the appellant to continue the salt manufacturing activity for the licensed lands covered in L.No.62; or in the alternative, (iii) for a mandatory injunction directing the respondents to renew the lease in favour of the appellant in respect of the Salt Pan lands covered in Licence No.62 and Lease Deed dated 27.4.1988 for a further period of twenty years beyond 31.12.2007; (iv) for permanent injunction restraining the respondents from encumbering salt pan lands covered in L.No.62. 4. The respondents entered appearance and filed Application in A.No.711 of 2008 under Section 8 of the Arbitration Act. The respondents alleged that in view of the specific clause No.23 of the Lease agreement dated 27.4.1988 entered between the parties, which contain the arbitration clause, the civil suit is not maintainable and prayed for referring the matter to arbitration. The respondents further alleged that the payment of dues is a must from the lessees of the Government lands and it will not entail the lessees for automatic renewal of lease in the absence of any specific provision to that effect in the lease deed. The respondents further averred that after expiry of lease period i.e., on 31.12.2007, the Salt Factory Officer In-charge of Athipattu Salt Factory has taken over physical possession of the lands on 1.1.2008 and the appellant is not in possession of the leased land. The respondents prayed that in view of the arbitration clause under Clause 23, the dispute has to be referred to the Salt Commissioner, who is the sole arbitrator. 5.
The respondents prayed that in view of the arbitration clause under Clause 23, the dispute has to be referred to the Salt Commissioner, who is the sole arbitrator. 5. Appellant resisted the application contending that the original lease deed or the certified copy of the lease deed dated 27.4.1988 has not been filed and in view of noncompliance of mandatory provisions of Section 8(2) of the Arbitration and Conciliation Act, the dispute cannot be referred to arbitration. Reliance was placed upon a decision of the Supreme Court in the case of ATUL SINGH VS. SUNIL KUMAR SINGH, ( (2008) 2 SCC 602 ). The appellant further alleged that the lease expired on 31.12.2007 and since the lease agreement is not in force, it is not open to the respondents to invoke Clause 23 of the lease Agreement. According to the appellant, he is independently claiming compensation as a licensee, who has carried out the salt manufacture for several decades and since the lease period had already expired, the arbitration clause under clause 23 of the defunct lease agreement cannot be invoked. 6. Even though the learned single judge referred to the decision of the Supreme Court in ATUL SINGH VS. SUNIL KUMAR SINGH, ( (2008) 2 SCC 602 ), the learned Judge negatived the appellants plea of non-compliance of Section 8(2) of Arbitration and Conciliation act. Observing that "in the light of existence of an arbitration clause in Clause 23 of the lease deed, the learned Judge held that only option to the appellant is to move the Salt Commissioner regarding the issues raised in the suit and further held that the invalidity or illegality of clause 23 of the agreement cannot be gone into. On those findings, the learned single judge allowed Application in A.No.711 of 2008 and referred the parties to arbitration. 7. Challenging the impugned order, learned counsel for appellant contended that in view of the categorical decision of the Supreme Court in ATUL SINGH VS. SUNIL KUMAR SINGH, ( (2008) 2 SCC 602 ), filing of original lease deed or a duly certified copy is a mandatory requirement under Section 8(2) of the Arbitration and Conciliation Act and the learned Judge ought to have followed the said decision of the Supreme Court.
SUNIL KUMAR SINGH, ( (2008) 2 SCC 602 ), filing of original lease deed or a duly certified copy is a mandatory requirement under Section 8(2) of the Arbitration and Conciliation Act and the learned Judge ought to have followed the said decision of the Supreme Court. It was further submitted that the observation of the learned judge that the respondents have filed a photocopy of the registered lease deed is factually incorrect. It was further argued that the lease had expired as early as on 31.12.2007 and the lease deed is no longer in force and suit had been filed by the appellant on 2.1.2008 after issuing statutory notice under Section 80 C.P.C. to the respondents and the learned judge failed to consider that the lease in question is no longer in force and while so the learned Judge ought not to have referred the parties to arbitration and prays for allowing of the appeal. 8. Learned counsel for the appellant has also contended that the appellant has been discriminated and drawn our attention to the leasehold salt lands of one S.Vedarathnam. The learned counsel has drawn our attention to the order passed by the single Judge in W.P.No.3348 of 2009 (dated 16.09.2009), wherein the learned single Judge referred to the earlier proceedings initiated by the said Vedarathnam and observed that the writ petitioner (Vedarathnam) has to approach only the Civil Court for claiming appropriate damages. Contention of appellant is that when a similarly placed person has been directed to file civil suit, the respondents are not justified in praying for referring the matter to arbitration in the suit filed by the appellant claiming damages. 9. On behalf of the respondents, the learned Additional Solicitor General Mr.M.Ravindran appearing along with Ms.Maheswari submitted that Section 8(2) of the Arbitration and Conciliation Act is only directory and such procedural requirement cannot overpower the substantive relief. 10. Admittedly, there is an arbitration clause in the Lease Deed for referring the dispute to arbitration by Salt Commissioner. The language of Section 8(1) of the Arbitration and Conciliation Act ".... if a party so applies ....." and the language of Section 8(2) ".... application referred to in sub-section (1)...." clearly indicate that the application to refer the parties to arbitration must be in writing.
The language of Section 8(1) of the Arbitration and Conciliation Act ".... if a party so applies ....." and the language of Section 8(2) ".... application referred to in sub-section (1)...." clearly indicate that the application to refer the parties to arbitration must be in writing. Section 8(2) clearly stipulates that "The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof." Thus, Section 8(2) clearly mandates that the application under sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or duly certified copy thereof. 11. Learned Senior Counsel for the respondents has submitted that the requirement under Section 8(2) is only directory and such procedural requirement cannot overpower the substantive rights and substantial justice. In this regard, reliance was placed upon a decision of the Supreme Court in SHAIKH SALIM HAJI ABDUL KHAYUMSAB VS. KUMAR AND OTHERS ( (2006) 1 SCC 46 ), wherein the Honourable Supreme Court considered whether the observance of time schedule contemplated by Order 8 Rule 1 C.P.C and the proviso thereon is mandatory or directory. Observing that the negative language implying mandatory character in proviso to Order 8 Rule 1 C.P.C. is not conclusive of its mandatory character, in the said decision, the Supreme Court held as under: "12. The processual law so dominates in certain systems as to overpower substantive rights and substantial justice. The humanist rule that procedure should be the handmaid, not the mistress, of legal justice compels consideration of vesting a residuary power in Judges to act ex debito justitiae where the tragic sequel otherwise would be wholly inequitable. Justice is the goal of jurisprudence, processual, as much as substantive. (See Sushil Kumar Sen v. State of Bihar (1975) 1 SCC 774 ). .... 15. It is also to be noted that though the power of the court under the proviso appended to Rule 1 of Order 8 is circumscribed by the words ‘shall not be later than ninety days’ but the consequences flowing from non-extension of time are not specifically provided for though they may be read by necessary implication. Merely, because a provision of law is couched in a negative language implying mandatory character, the same is not without exceptions.
Merely, because a provision of law is couched in a negative language implying mandatory character, the same is not without exceptions. The courts, when called upon to interpret the nature of the provision, may, keeping in view the entire context in which the provision came to be enacted, hold the same to be directory though worded in the negative form." The above observations made in the context of proviso to Order 8 Rule 1 C.P.C. cannot be applied to the case on hand. Considering the scope Section 8 and holding that Section 8(2) is mandatory, in ATUL SINGH VS. SUNIL KUMAR SINGH, ( (2008) 2 SCC 602 ), para No.(19) the Supreme Court held as under: "19. There is no whisper in the petition dated 28-2-2005 that the original arbitration agreement or a duly certified copy thereof is being filed along with the application. Therefore, there was a clear non-compliance with sub-section (2) of Section 8 of the 1996 Act which is a mandatory provision and the dispute could not have been referred to arbitration. Learned counsel for the respondent has submitted that a copy of the partnership deed was on the record of the case. However, in order to satisfy the requirement of sub-section (2) of Section 8 of the Act, Defendant 3 should have filed the original arbitration agreement or a duly certified copy thereof along with the petition filed by him on 28-2-2005, which he did not do. Therefore, no order for referring the dispute to arbitration could have been passed in the suit." The ratio of the above decision squarely applies to the case on hand. 12. In the instant case, the lease deed dated 27.4.1988 contains the arbitration clause, which was already filed as a plaint document. While filing the application under Section 8 in compliance with the mandatory requirement of Section 8(2), the respondents have neither produced the original lease deed dated 27.4.1988 nor the duly certified copy thereon. The learned single Judge observed that the respondents had also produced photocopy of the registered lease deed. That observation is factually incorrect. The learned counsel for the appellant contended that the respondents had not produced the lease agreement and the observation of the learned judge was incorrect. We have also verified the trial Court records.
The learned single Judge observed that the respondents had also produced photocopy of the registered lease deed. That observation is factually incorrect. The learned counsel for the appellant contended that the respondents had not produced the lease agreement and the observation of the learned judge was incorrect. We have also verified the trial Court records. On the verification of the records, we found that neither the original lease agreement nor a certified copy of the lease agreement had been produced into the Court. In view of the non-compliance of the mandatory requirement of Section 8(2) of the Arbitration and Conciliation Act, even though the lease deed dated 27.4.1988 has been filed as a plaint document to comply with the mandatory requirement of sub-section 2 of Section 8, the respondents should have filed the original lease deed or the duly certified copy. There was non-compliance of the mandatory requirement of Section 8(2). Following the decision of the Supreme Court in ATUL SINGH VS. SUNIL KUMAR SINGH, ( (2008) 2 SCC 602 ), the learned single Judge ought not to have referred the parties to arbitration and the impugned order of the learned single judge cannot be sustained. 13. Learned Additional Solicitor General Mr.Ravindran has contended that the lease period already expired and the appellant cannot compel the Department to renew the lease deed and the prayer sought for in the plaint is preposterous and the suit is a vexatious suit. This point has to be agitated only in the suit. 14. In the result, the order dated 8.9.2009 made in Application No.711 of 2008 in C.S.No.16 of 2008 is set aside and this appeal is allowed. However, there is no order as to costs. 15. It was stated that the respondents/defendants are yet to file their written statement. When the respondents/defendants file the written statement along with application to condone the delay in filing the written statement, the time spent in this appeal shall be taken into account while considering the application for condonation of delay in filing the written statement.