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2013 DIGILAW 1510 (DEL)

Mohd. Akhtar v. Suman Jain

2013-08-08

RAJIV SAHAI ENDLAW

body2013
JUDGMENT Rajiv Sahai Endlaw, J. IA No.7836/2012 (of the defendants no.1&2 under Section 8 of the Arbitration and Conciliation Act, 1996). 1. The plaintiff has instituted the present suit inter alia pleading:- (i). that the plaintiff is the owner in possession of ancestral land situated in Village Gadaipur, Tehsil Mehrauli, New Delhi; (ii). however possession of the said land was taken over by Custodian of Evacuee Properties and an application for restoration of the said land unto the plaintiff was filed but which was dismissed; that a Revision Petition against the said order was preferred which was allowed and direction issued for determining the status of the land; however no steps in pursuance to the said order were taken though the plaintiff continued to represent and pursue the matter; (iii). that the plaintiff ultimately filed W.P.(C) No.17687-89/2006 in this Court for restoration of his land and in the alternative for compensation in lieu thereof; (iv). that the defendants no.1&2 (defendant no.2 Shri V.K. Jain is the husband of the defendant no.1) on coming to know of the claims of the plaintiff to the land and taking benefit of the fact that the plaintiff and his family members were/are totally illiterate, started making relations with the plaintiff with a mala fide intention to usurp the entire land of the plaintiff and represented to the plaintiff that they will use their contacts for restoration of the land unto the plaintiff; (v). that the plaintiff trusted the defendants no.1&2 and agreed to put thumb impression on certain documents as demanded by the defendants no.1&2 and also agreed, for a sale consideration of Rs.90 lacs, to transfer rights in certain land to the defendants no.1&2; (vi). that the defendants no.1&2 made the plaintiff put his thumb impression on various papers got prepared by them by representing to the plaintiff that the same were required to pursue the matter to re-claim certain other land; (vii). that no copies of the documents were given to the plaintiff; (viii). that though the agreement to sell for Rs.90 lacs was for transfer to the defendants no.1&2 of land which was not in possession of the plaintiff but the defendants no.1&2 played a fraud by inserting the Khasra numbers of the land of which the plaintiff was in possession and which was of much higher value; (ix). that though the agreement to sell for Rs.90 lacs was for transfer to the defendants no.1&2 of land which was not in possession of the plaintiff but the defendants no.1&2 played a fraud by inserting the Khasra numbers of the land of which the plaintiff was in possession and which was of much higher value; (ix). that the consent of the plaintiff to put thumb impression on all such documents was obtained by playing fraud; (x). that the amount of Rs.90 lacs also was not paid to the plaintiff in the manner agreed and was paid bit by bit; (xi). that vide order dated 9th September, 2010 in W.P.(C) No.17687-89/2006 supra, permanent injunction protecting the possession of the plaintiff of the land of which he was in possession was granted till adjudication of the claims of the plaintiff by the Assistant Custodian; (xii). that after the aforesaid order, the defendant no.2 acting as the attorney of the plaintiff moved a petition before the Assistant Settlement Commissioner without even informing the plaintiff and obtained an order dated 26th August, 2011; (xiii). that the defendants no.1&2 thereafter filed a petition under Separation of Interest (Evacuee) Act, 1950 again without informing the plaintiff though as attorney of the plaintiff, for mutation of the land in the name of the defendant no.1 and obtained a decree separating the interest of the plaintiff from the composite property; (xiv). that on the basis of the said order, the defendants no.1&2 obtained the mutation of the land in the name of the defendant no.1; (xv). that the plaintiff upon coming to know of all the fraud aforesaid committed by the defendants no.1&2 contacted the defendant no.2 and asked for all the documents but the defendant no.2 refused; and, (xvi). that the plaintiff thereafter obtained copies of all the documents and learnt the details of fraud played by the defendants no.1&2. 2. The plaintiff on the said pleas, has claimed the following reliefs in the suit:- (a). of declaration that the documents dated 13th May, 2010 being Agreement to Sell, Will, Receipts, No Objection Certificate and GPA alleged to have been executed by the plaintiff in favour of the defendants no.1&2 and registered Assignment Deeds, have been obtained and got executed by the defendants no.1&2 by playing a fraud on the plaintiff; (b). of declaration that the documents dated 13th May, 2010 being Agreement to Sell, Will, Receipts, No Objection Certificate and GPA alleged to have been executed by the plaintiff in favour of the defendants no.1&2 and registered Assignment Deeds, have been obtained and got executed by the defendants no.1&2 by playing a fraud on the plaintiff; (b). for declaration that the defendants no.1&2 do not have any right on the basis of the documents aforesaid in the land of the plaintiff; (c). for declaration that the order obtained by the defendants no.1&2 under the Separation of Interest (Evacuee) Act, 1950 is null and void as the Court of the Sr. Civil Judge, Delhi has transgressed his limit and gone beyond the order of the Competent Authority in favour of the plaintiff; (d). for declaration that the plaintiff is the owner of the land; (e). for permanent injunction restraining the defendants from dealing with the suit land or dispossessing the plaintiff; (f). for mandatory injunction directing not only the defendants no.1&2 but also defendant no.5 Tehsildar Hauz Khas, Mehrauli to correct the revenue records; (g). for possession of land of which the defendants no.1&2 have taken possession, against refund by the plaintiff of the entire amount of Rs.90 lacs; and, (h). for damages for unauthorized use and occupation of the land. 3. The defendants no.1&2 though have not filed the written statement, have filed this application for reference to Arbitration pleading:- (I). that the reliefs claimed in the plaint are in substance and primarily against the defendants no.1&2 who are the beneficiary of the documents executed by the plaintiff from time to time and the impleadment of the other defendants in the suit is not material; (II). that there is a arbitration clause in the Agreement to Sell dated 13th May, 2010 executed by the plaintiff; (III). that the reliefs of declaration and cancellation of documents are in relation to Agreement to Sell, General Power of Attorney, Will, Assignment Deeds and other documents; (IV). that though the Assignment Deeds do not have any arbitration clause but is in pursuance to Agreement to Sell which contains an arbitration clause; (V). that the Agreement to Sell containing the arbitration clause is the basic and main document and all other documents including the Assignment Deeds are consequential and subsequent thereto; (VI). that though the Assignment Deeds do not have any arbitration clause but is in pursuance to Agreement to Sell which contains an arbitration clause; (V). that the Agreement to Sell containing the arbitration clause is the basic and main document and all other documents including the Assignment Deeds are consequential and subsequent thereto; (VI). that rather the Assignment Deed expressly records the same to be in pursuance to the Agreement to Sell; (VII). that all the documents qua which relief is claimed by the plaintiff relate to the land which is subject matter of Agreement to Sell containing an arbitration clause; (VIII).that there is an element of continuity of transaction starting from the Agreement to Sell, going up to the execution of the Assignment Deeds; and, (IX). that the reliefs sought in the suit are within the scope of the Arbitration Agreement and have to be adjudicated by the Arbitral Tribunal to be constituted in terms of the arbitration clause. 4. The application is accompanied with the copy of the Agreement to Sell dated 13th May, 2010 by the plaintiff in favour of the defendant no.1 and containing a clause as under:- “That the present deed would be fully honoured by both the parties and in no manner either of the parties can be permitted to deviate from the terms and conditions of the present agreement and in case either of the parties fails to perform the terms and conditions of the present document or any dispute arises between the parties, the same would be resolved by way of Arbitration & Conciliation Act, 1996. The second party would have right to appoint the Arbitrator which would be acceptable to the first party and the said arbitrator would adjudicate the dispute if any between the parties in accordance with the law.” (emphasis added) 5. The plaintiff has contested the application by filing a reply pleading:- (a). that the case of the plaintiff being that a fraud has been played by the defendants no.1&2 on him in the matter of execution of the documents, the matter cannot be referred to arbitration; (b). that the entire subject matter of the suit is not the subject matter of the Arbitration Agreement. Reference in this regard is made to Sukanya Holdings Pvt. Ltd. Vs. Jayesh H. Pandya AIR 2003 SC 2252 ; (c). that the entire subject matter of the suit is not the subject matter of the Arbitration Agreement. Reference in this regard is made to Sukanya Holdings Pvt. Ltd. Vs. Jayesh H. Pandya AIR 2003 SC 2252 ; (c). that the disputes subject matter of the suit are beyond the competence of the Arbitrator. Reference is made to Haryana Telecom Ltd. Vs. Sterlite Industries (India) Ltd. AIR 1999 SC 2354 ; (d). that the case of the plaintiff is not only of fraud by the defendants no.1&2, in the matter of obtaining thumb impression of the plaintiff but also in obtaining orders from the Court of competent officer under the Separation of Interest (Evacuee) Act and which aspects cannot be adjudicated by Arbitrator; (e). that all the parties to the suit are not parties to the arbitration agreement and the cause of action cannot be split up; (f). that the reliefs are claimed not only against the defendants no.1&2 but against the other defendants also and the other defendants are necessary and proper parties to the adjudication of the said disputes; (g). reference is made to Alankar Global Pvt. Ltd. Vs. Dinesh Kumar Mathur 137 (2007) DLT 164 and Celebi Delhi Cargo Terminal Management India Pvt. Ltd. Vs. Aryan Cargo Express Pvt. Ltd. 187 (2002) DLT 54; and, (h). that the document containing the arbitration clause being forged, creates no rights in favour of the applicants/ defendants no.1&2. Reference is made to Yogi Agarwal Vs. Inspiration Clothes & U AIR 2009 SC 1098 , Sukanya Holdings Pvt. Ltd. supra and also to India Household and Healthcare Ltd. Vs. LG Household and Healthcare Ltd. (2007) 5 SCC 510 . 6. The applicants/ defendants no.1&2 have filed a voluminous rejoinder, also referring to Branch Manager Mega Leasing & Finance Ltd. Vs. Potluri Madhvi Lata (2009) 10 SCC 103 and Booz Allen and Hamilton Inc. Vs. SBI Home Finance Limited (2011) 5 SCC 532 and containing averments on the merits of the disputes but which cannot be the subject matter of adjudication here. 7. The counsels for the parties were heard and granted liberty to cite judgments on the following two aspect:- “(i) Whether the dispute as to challenge to a document containing a Arbitration Clause is arbitrable especially when the challenge is inter alia on the ground of fraud. 7. The counsels for the parties were heard and granted liberty to cite judgments on the following two aspect:- “(i) Whether the dispute as to challenge to a document containing a Arbitration Clause is arbitrable especially when the challenge is inter alia on the ground of fraud. (ii) Whether the dispute as to the setting aside of an Assignment Deed executed in pursuance to an Agreement to Sell containing a Arbitration Clause is arbitrable. 8. Written synopsis along with copies of judgments have been filed by both the counsels, relying on the following judgments:- A. Judgments cited by the counsel for the plaintiff:- * M.R. Engineers & Contractors Private Ltd. Vs. Som Datt Builders Ltd.2009 (3) RAJ 448 (SC) - laying down that a general reference to another contract would not have the effect of incorporating the arbitration clause from the referred document into the contract between the parties and arbitration clause from another contract can be incorporated into the contract only by a specific reference to arbitration clause. * N. Radhakrishnan Vs. M/s Maestro Engineers(2009) 4 RAJ 690 SC – laying down that allegations of fraud and serious malpractice on the part of the respondents can only be settled in Court and cannot properly be gone into by the Arbitrator. * Virender Singal Vs. Delhi Express Travels Pvt. Ltd. 2012 (3) RAJ 590 (Del) – laying down that the power to adjudicate the validity of the transaction and the allegations of fraud have not been vested in the Arbitrator. B. Judgments cited by the defendants no.1&2:- * P. Anand Gajapathi Raju Vs. P.V.G. Raju (2000) 4 SCC 539 ; * Rashtriya Ispat Nigam Ltd. Vs. Verma Transport Co. (2006) 7 SCC 275 ; * M/s. Agri Gold Exims Ltd. Vs. M/s. Sri Lakshmi Knits & Wovens JT 2007 (2) SC 602; and, * Branch Manager, Magma Leasing and Finance Ltd. Vs. Potluri Madhavilata (2009) 10 SCC 103 . All on the scope and effect of Section 8 of the Arbitration Act, 1996. * Kotak Mahindra Bank Ltd. Vs. Sundram Brake Linings Ltd. 2008 (Suppl.1) Arbitration Law Reporter 132 (Madras); * Bombay Gas Co. Ltd. Vs. Parmeshwar Mittal AIR 1998 Bombay 118; * Abdul Kadir Shamsuddin Vs. Madhav Prabhakar Oak AIR 1962 SC 406 ; * Oval Investment P. Ltd. Vs. India Bulls Financial Services Ltd. 165 (2009) DLT 230 (DB); * Navin Kumar Vs. Sundram Brake Linings Ltd. 2008 (Suppl.1) Arbitration Law Reporter 132 (Madras); * Bombay Gas Co. Ltd. Vs. Parmeshwar Mittal AIR 1998 Bombay 118; * Abdul Kadir Shamsuddin Vs. Madhav Prabhakar Oak AIR 1962 SC 406 ; * Oval Investment P. Ltd. Vs. India Bulls Financial Services Ltd. 165 (2009) DLT 230 (DB); * Navin Kumar Vs. Standard Restaurant 103 (2003) DLT 209; * Prem Sagar Khanna Vs. Ravi Khanna AIR 2002 Delhi 98; * Shukaran Devi Vs. Om Prakash Jain 133 (2006) DLT 297; and, * Rajbaboo Nishchal Vs. Ajay Kumar Verma154 (2008) DLT 568. All in support of the contention that objections containing allegations of fraud against the documents containing arbitration clause do not make the disputes arising from the said documents non-arbitrable. * A.K. Raju Vs. Avni Kumar104 (2003) DLT 904 - in support of the contention that Assignment Deeds executed pursuant to and in continuation of the Agreement to Sell containing an arbitration clause would be covered and governed by the arbitration clause in the Agreement to Sell. * Kotak Mahindra Bank Ltd. Vs. Sunadram Brake Linings Ltd.2008 (Suppl.1) Arbitration Law Reporter 132 (Madras) – also to contend that mere impleadment of some parties in the suit and who are not parties to the Arbitration Agreement does not take the matter beyond arbitration. 9. Though detailed case law as aforesaid has been relied on but in my view, the matter is in a narrow compass. 10. As the bare perusal of the arbitration clause supra on the basis whereof the application is filed would show, the arbitration agreed to thereunder is in a situation if either of the parties fails to perform the terms and conditions of the Agreement to Sell or any dispute arises between the parties. The Arbitration Agreement between the parties is not all pervasive as is often the case, but is limited to arbitration of disputes arising from failure of either party to perform the terms and conditions of the Agreement to Sell. The Arbitration Agreement between the parties is not all pervasive as is often the case, but is limited to arbitration of disputes arising from failure of either party to perform the terms and conditions of the Agreement to Sell. Though the arbitration clause is also with respect to “any dispute arising between the parties” but the said dispute would draw colour from failure to perform the terms and conditions of the Agreement to Sell and thus the dispute referred to therein can only be a dispute relating to failure of either party to perform the terms and conditions of the agreement and would not include a dispute as to the very nature, character or interpretation of the transaction between the parties. 11. The dispute raised in the suit is not relating to failure of either of the parties in performance of the terms and conditions of the Agreement to Sell but to the very foundation of the transaction between the parties. 12. When the parties have limited adjudication by arbitration to disputes arising from failure of performance of the terms and conditions of the Agreement to Sell, it is not for this Court to expand the scope thereof, to also cover a challenge to the very transaction between the parties. 13. The Supreme Court in Gaya Electric Supply Co. Ltd. Vs. The State of Bihar, AIR 1953 SC 182 has held that if the arbitration agreement is broad and comprehensive and embraces any dispute between the parties “in respect of” the agreement or “in respect of anything arising out of the agreement” and one of the parties seeks to avoid the contract, the dispute is referable to arbitration if the avoidance of the contract arises out of the terms of the contract itself; where however the party seeks to avoid the contract for reasons de hors it, the arbitration clause cannot be resorted to as it goes along with other terms of the contract. It was further held that an arbitration clause is a written submission agreed to by the parties in a contract and like every written submission, must be considered according to its language and in the light of circumstances in which it was made. It was further held that an arbitration clause is a written submission agreed to by the parties in a contract and like every written submission, must be considered according to its language and in the light of circumstances in which it was made. In the facts of that case, it was held that where the clause conferred jurisdiction on arbitrator on the question of valuation, questions relating to breach of contract or its rescission were outside the reach of the clause and the arbitrator had not been conferred power to pronounce thereon and the Court could not be on the basis of such a clause be deprived of jurisdiction to decide thereon. 14. Not only so, as far as performance of the agreement containing the arbitration clause is concerned, the same stands concluded by execution of assignment deeds in performance thereof. The said assignment deed does not contain any arbitration clause. The same also fortifies the conclusion that the arbitration agreed to and intended by the parties, was qua disputes if any arising qua performance of respective obligations under the agreement to sell only and once the agreement to sell fructified into the assignment deed and thus exhausted itself, the parties did not feel the need to provide for arbitration as the parties had not agreed to arbitration of “all disputes in relation to or concerning the transaction”. 15. Moreover, the relief claimed in the suit, of declaration of the order in the proceedings under the also Separation of Interest (Evacuee) Act, 1950 as null and void cannot be granted by the Arbitrator and the said relief is so intertwined to the other reliefs claimed in the suit that the segregation thereof is not possible. 16. There is also considerable merit in the plea of the plaintiff that serious allegations of fraud as have been made in the matter of execution of documents containing the arbitration clause cannot be subject matter of arbitration. 17. The application therefore fails and is dismissed. CS(OS) No.836/2012. 18. The defendants no.1&2 have not filed their written statement as yet. Rather it is the plea of the plaintiff that the defence of the defendants no.1&2 is liable to be struck off and the application under Section 8 of the Arbitration and Conciliation Act which has been dismissed today was filed merely to avoid closure of the right to file the written statement. 19. Rather it is the plea of the plaintiff that the defence of the defendants no.1&2 is liable to be struck off and the application under Section 8 of the Arbitration and Conciliation Act which has been dismissed today was filed merely to avoid closure of the right to file the written statement. 19. Be that as it may, since the application under Section 8 has remained pending for a considerably long time, it is deemed expedient to grant one last opportunity of four weeks to the defendants no.1&2 to file the written statement. 20. In light of the above, CM No.17783/2012 of the plaintiff under Order 8 Rule 10 CPC is infructuous and is disposed of. 21. List before the Roster Bench on 16th September, 2013.