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2012 DIGILAW 992 (CAL)

Romola Bhattacharjee v. Twilight Properties

2012-11-20

PRASENJIT MANDAL

body2012
Judgment :- Prasenjit Mandal, J. This application is directed against the Order dated February 21, 2012 passed by the learned Civil Judge (Senior Division), 2nd Court, Alipore in Title Suit No.10216 of 2011 thereby dismissing the application of the defendants under Section 8 of the Arbitration and Conciliation Act, 1996. The plaintiffs/opposite party No.s 1 and 2 herein instituted a suit being Title Suit No.10216 of 2011 for cancellation of deed, declaration and permanent injunction against the defendant No.1/petitioner herein and other opposite parties. In that suit, the plaintiffs have contended that the defendant No.1 had violated the terms of the agreement dated October 19, 1994 for development of a specific immovable property and that in utter violation of the negative covenant, the defendant No.1 had conveyed the property in question in favour of the defendant No.s 3 to 8. The defendant No.2 is a practising solicitor and is engaged in the business of development of real estate and according to the terms, the defendant No.1 negotiated for the sale of the property in question and she represented the plaintiff that she and the defendant No.2 would take necessary steps to evict the tenants residing in the property in question and that they would float a private limited company for development of the said property and that subsequently, the defendant No.2 would join the said company on a 50:50 basis. Anyway, the agreement could not be fulfilled and the plaintiffs came to know that on May 27, 2011, that the defendant No.1 had conveyed the property in question by a deed of conveyance to the defendant No.s 3 to 8. Thereafter, the plaintiffs filed the said suit for the reliefs already stated. The defendant No.1 entered appearance in the said suit and before filing a written statement, she filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 denying the material allegations contained in the plaint. She has contended that the subject-matter of the suit is subject to the arbitration clause and as such, the suit is not maintainable and in consequence, the learned Trial Judge has no jurisdiction to entertain, try and determine the suit. So, the application was filed for the purpose already stated. She has contended that the subject-matter of the suit is subject to the arbitration clause and as such, the suit is not maintainable and in consequence, the learned Trial Judge has no jurisdiction to entertain, try and determine the suit. So, the application was filed for the purpose already stated. The plaintiff filed a written objection to that application and upon consideration of the entire matter, the learned Trial Judge rejected the application under Section 8 of the Arbitration and Conciliation Act on contests. Being aggrieved, the defendant No.1 has filed this application. Now, the question is whether the impugned order should be sustained. Having heard the learned Advocates of both the sides and on perusal of the materials-on-record, I find that the execution of the agreement between the plaintiffs and the defendant No.1 on October 19, 1994 is not in dispute. In order to appreciate the contention of the defendant as raised in their application under Section 8 of the 1996 Act, it would be better to consider the reliefs as prayed for in the plaint. In order to appreciate the contention of the defendant as raised in their application under Section 8 of the 1996 Act, it would be better to consider the reliefs as prayed for in the plaint. For convenience, the reliefs are quoted below:- The plaintiff claims: a) Leave under Order 2 Rule 2 of the Code of Civil Procedure; b) The purported deed of conveyance dated 27th May, 2011 be adjudged null and void and be delivered up and cancelled; c) A declaration that the plaintiffs has the sole, exclusive and absolute right to cause construction and carry on the project by constructing a multistoried building at the suit premises as per the agreement dated 19th October, 1994; d) A decree of perpetual injunction restraining the defendants and/or their men, servants, agents and/or assigns from taking any step and/or any further step in terms of the purported deed of conveyance dated 27th May, 2011; e) A decree or perpetual injunction restraining the defendants and/or their men, servants, agents and/or assigns from interfering in any way with the plaintiffs’ right to develop the property situate at 3/1, Sunny Park, Kolkata and from allowing the said property at 3/1, Sunny Park to be developed by any other person; f) A decree or perpetual injunction restraining the defendants and/or their men, servants, agents and/or assigns from taking any step or any further step towards dealing with or disposing of or encumbering the said premises in terms of the purported deed of conveyance dated 27th May, 2011 or at all; g) A decree or perpetual mandatory injunction commanding the defendants to handover possession of the suit property to the plaintiffs for the purpose of its development in terms of agreement dated 19th Oct., 1994 and permit the plaintiffs to develop the property without any interference or obstruction; h) A decree for mandatory injunction commanding the defendants and/or their men, servants, agents and/or assigns to allow the plaintiffs to develop the property as per the agreement; i) Receiver; j) Temporary injunction; k) Cost of the suit; l) Such other relief or reliefs as the plaintiffs are entitled both in law and in equity. In view of the above facts and the prayer made in the plaint, I find that the main prayer in the suit is the relief No.(b) that the purported deed of conveyance be adjudged null and void. In view of the above facts and the prayer made in the plaint, I find that the main prayer in the suit is the relief No.(b) that the purported deed of conveyance be adjudged null and void. If this relief is granted, the other reliefs will naturally follow as consequential reliefs. So, the main question is whether the plaintiff is entitled to get the relief as prayed for in Item No.(b). The contention of the defendant is that the subject matter of the suit is subject to the arbitration clause and as such, the said suit is not maintainable. In order to appreciate this, the relevant clause No.15 of the Memo of Understanding appearing at Page No.48 is quoted below:- 15. In case any matter/s connected with this agreement remains unresolved between the Owner and the Developer, then the same shall be resolved by them through arbitration. It is not in dispute that there is no such clause in the agreement for sale of immovable property in the said MoU. Therefore, the clause No.15, in my view, is very much explicit that in case of any dispute connected with the agreement between the owner and the developer, the same shall be resolved by them through arbitration. The suit having been filed, it is indicated that there is a dispute between the parties to the agreement and as such, according to Section 8 of the Arbitration and Conciliation Act, 1996, any party to the agreement is at liberty to apply for referring the dispute to the arbitration at the earliest opportunity. The learned Trial Judge rejected the application under Section 8 of the Arbitration Act on the ground that the defendant No.s 3 to 8 became interested in the properties and they were not the parties to the MoU which includes the arbitration clause and that the cause of action cannot be bifurcated. According to the decision of Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya & anr. reported in AIR 2003 Supreme Court 2252 – bifurcation cause of action cannot be allowed leaving the matter for decision by two forums and so, the application was rejected. According to the decision of Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya & anr. reported in AIR 2003 Supreme Court 2252 – bifurcation cause of action cannot be allowed leaving the matter for decision by two forums and so, the application was rejected. Another ground on behalf of the defendant No.2/opposite party herein is that he was not a party to the MoU or a subsequent transferee and as such, the arbitrator will not be in a position to resolve the dispute between the parties and as such, the application has been rightly rejected. Mr. Saptangshu Basu, learned Senior Advocate appearing for the petitioner, has contended that in fact, the plaintiff did not seek any relief against the defendant No.2 who is a practicing Counsel and the defendant No.s 3 to 8 are the subsequent transferees and the relief is against the defendant No.1, i.e., the owner of the land and the subsequent transferees. The learned Trial Judge should have allowed the application under Section 8 of the 1996 Act in view of Clause 15 of the MoU. Mr. Basu has also contended that the plaint has been drafted in such a fashion that the arbitration clause could well be avoided and so, couching of the plaint in such a fashion to avoid a particular provision of 1996 Act cannot be accepted. If it is accepted, it would be nothing but ignoring the specific provision of arbitration clause as recorded in the MoU. Therefore, the learned Trial Judge is totally wrong in rejecting the application under Section 8 of the 1996 Act. On the contrary, Mr. Bhaskar Sen & Mr. A. Banerjee, learned Advocates appearing for the opposite party No.s 1 and 2, have vehemently raised objection against the submission of Mr. Basu contending, inter alia, that the suit has been filed claiming reliefs against all the defendants as indicated above. The defendant No.s 2 to 8 are not at all parties to the MoU and as such, since there is no scope of splitting the cause of action for providing two suits for the two forums, according to the decision of Sukanya Holdings Pvt. Ltd.(supra), the learned Trial Judge is perfectly justified in rejecting the application under Section 8 of the 1996 Act. Mr. Saptangshu Basu, learned Advocate for the petitioner, has referred to the decision of DHV BV v. Tahal Consulting Engineers Ltd. (Israel) & anr. Mr. Saptangshu Basu, learned Advocate for the petitioner, has referred to the decision of DHV BV v. Tahal Consulting Engineers Ltd. (Israel) & anr. reported in (2007)8 Supreme Court Cases 321 and thus, he has submitted that the concerned Chief Justice or His Designate is competent to deal with the matter under Section 11 of the 1996 Act to come to a conclusion whether an arbitrator shall be appointed or not in view of the MoU executed between the plaintiffs and the defendant No.1. In support of his submission, Mr. Basu has also referred to the decisions of Kamini Kumar Deb v. Durga Charan Nag & ors. reported in 37 CLJ 122 and Sanatan Mohapatra & ors. v. Hakim Mohammad Kazim Mohmmad & ors. reported in AIR 1977 Ori 194 and thus, he has submitted that in view of the reliefs sought for, there being an arbitration clause and the transaction by the defendant No.1 in favour of the defendant No.s 3 to 8 having been totally denied as fictitious and there being no remedy sought for against the defendant No.2, the learned Trial Judge should have allowed the application under Section 8 of the 1996 Act but he has dealt with the matter in a different way. The decision of Sanatan Mohapatra & ors. (supra) relates to amendment when to be allowed. I think the decision or the principle stated therein will not be applicable at all in the instant case. Per contra, Mr. Bhaskar Sen and Mr. A. Banerjee, learned Advocates appearing for the opposite parties, have stressed much on the decision of Sukanya Holdings Pvt. Ltd. (supra) and submitted that in order to avoid conflicting decisions by the two forums and there being an allegation of fraud, the learned Trial Judge is competent to decide all the issues to be framed in the suit. The arbitral Tribunal will not be in a position to deal with such matters. In support of his contention, Mr. Banerjee, appearing for the opposite party No.s 1 & 2, has also relied on the decision of N. Radhakrishnan v. Maestro Engineers & ors. The arbitral Tribunal will not be in a position to deal with such matters. In support of his contention, Mr. Banerjee, appearing for the opposite party No.s 1 & 2, has also relied on the decision of N. Radhakrishnan v. Maestro Engineers & ors. reported in (2010)1 Supreme Court Cases 72 and thus, he has drawn my attention to the finding of the said decision that when serious allegations as to fraud and malpractices committed in account books and manipulation of finances of partnership firm made – the case does not warrant matter to be tried and decided by arbitrator – For furtherance of justice, it should be tried in a court of law which would be more competent and have the means to decide such a complicated mater. Similarly, he has relied upon the decision of Booz Allen & Hamilton Inc. v. SBI Home Finance Limited & ors. reported in (2011)5 Supreme Court Cases 532 particularly the Paragraph No.s 19, 37 & 38 and thus, he has submitted that fraud cannot be determined by an arbitrator and the reliefs as sought for in the plaint will be outside the scope to be determined by the arbitrator and so, the learned Trial Judge is perfectly justified in rejecting the application under Section 8 of the 1996 Act. Having gone through the entire materials-on-record, I find that the MoU singed between the plaintiffs and the defendant No.1 clearly indicates the manner of solving the dispute and it should be duly honoured if it is permissible. The decisions referred to by Mr. Banerjee will be applicable when the matter is of very complicated nature and question of fraud may not be decided by an arbitrator in a proper way. In the instant case, as held above, the relief sought for in prayer (b) of the plaint is the main relief and the other reliefs are nothing, but, consequential reliefs. So, if the main relief is granted, the other reliefs will naturally follow in a natural way and so, other reliefs will automatically be granted in favour of the plaintiffs. In the instant case, as held above, the relief sought for in prayer (b) of the plaint is the main relief and the other reliefs are nothing, but, consequential reliefs. So, if the main relief is granted, the other reliefs will naturally follow in a natural way and so, other reliefs will automatically be granted in favour of the plaintiffs. The main relief as sought for in the plaint remains to be solved by the arbitrator as per MoU and as such, in whatever way, the plaint may be couched, the provisions of Clause 15 of the MoU cannot be wriggled out by drafting the plaint in an intelligent way to avoid the arbitration clause. I am of the view that the decision cited on behalf of the opposite parties will not be helpful in order to address the issue. The matter can well be decided by the arbitrator if the parties desire to do so. The Court is to promote the sanctity of the contract which is not opposed to public policy and not barred by any law. The rights of the parties with regard to contract need not be considered now within the ambit of Section 8 of the 1996 Act. Accordingly, I am of the view that the observations of the learned Trial Judge that according to the decision of Sukanya Holdings Pvt. Ltd. (supra)-bifurcation cause of action cannot be done, cannot be supported. Without any bifurcation, the arbitrator to be appointed can well decide the dispute involved in the matter. Accordingly, I am of the view that the learned Trial Judge has, therefore, failed to address the issue properly. The impugned order cannot be supported. Accordingly, this application is allowed. The impugned order is hereby set aside. The application under Section 8 of the Arbitration and Conciliation Act stands allowed. The learned Trial Judge is, therefore, directed to do the needful for referring the parties to arbitration, in accordance with law. Considering the circumstances, there will be no order as to costs.