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2013 DIGILAW 3003 (MAD)

Chaitanya Builders & Leasing (P) Ltd. , Kakani Towers, Chennai v. Tulsi Ram

2013-08-21

M.JAICHANDREN, M.M.SUNDRESH

body2013
Judgment : M.M. Sundresh, J. 1. The appellant, who is the plaintiff in C.S.No.46 of 2011, has filed the above Original Side Appeal challenging the order dated 15.06.2012 passed in Application No.5822 of 2011 in C.S.No.46 of 2011, by which, the learned single Judge was pleased to refer the dispute to the learned Arbitrator in terms of Clause 23 of Development Agreement dated 27.03.2006 entered into between the parties. 2. Facts in Brief: 2.1. The respondent herein is the owner of the property. A Development Agreement was entered into between the appellant and the respondent on 27.03.2006. As per the said Development Agreement, it was agreed between the parties that the respondent would get certain quantified plots after completion. Clause 17 of the agreement speaks about a remedy for breach of agreement. As per the said clause, in the event of one of the parties committing breach of any of the terms of the agreement, the other shall be entitled to specific performance apart from losses and damages. Clause 23 of the said agreement deals with the arbitration, according to which all disputes arising between the parties from or out of the terms of the agreement shall be resolved by the arbitration. The said Clause once again reiterates the fact that the aggrieved party entitled to claim specific performance, liquidated damages, injunctions and the like. 2.2. As there was a dispute between the parties in the interpretation of their respective allotments of plots/villas, OSR area, extent of site, etc., a Supplemental Agreement was entered into between them on 17.02.2009. It is to be noted that even in the original agreement, it was agreed between the parties that the villas ear-marked for them will be identified and finalised by entering into a subsequent Supplemental Agreement. Clause 11 of a Supplemental Agreement states that all other terms and conditions and specifications of the earlier agreement dated 27.03.2006 shall remain in force and the subsequent deed shall not affect the legality or enforceability thereof. 2.3. Since a dispute has arisen between the parties, the appellant filed a suit in C.S.No.46 of 2011 seeking specific performance against the respondents. During the pendency of the suit, the respondent filed an application in Application No.5822 of 2011 in C.S.No.46 of 2011 to refer the dispute along with the suit to the learned Arbitrator as per the Clause 23 contained in the Development Agreement dated 27.03.2006. During the pendency of the suit, the respondent filed an application in Application No.5822 of 2011 in C.S.No.46 of 2011 to refer the dispute along with the suit to the learned Arbitrator as per the Clause 23 contained in the Development Agreement dated 27.03.2006. The learned single judge was pleased to allow the application filed by the respondent. The learned single Judge, after making reliance upon the decision of the Honourable Apex Court, was pleased to hold that a conjoint reading of Clause 23 of the Development Agreement dated 27.03.2006 and Clause 11 of Supplemental Agreement dated 17.02.2009 would lead to the irresistible conclusion that the arbitration clause subsists between the parties and therefore, they have to resolve their dispute only through the said mechanism. Challenging the same, the present Original Side Appeal has been filed. 3. Submissions of the appellant: The learned Senior counsel appearing for the appellant would submit that the relief for specific performance cannot be granted by the learned Arbitrator. There is no arbitration clause in the Supplemental Agreement. In the absence of any specific clause for arbitration in the Supplemental Agreement, the suit is maintainable in law. Even though the document has been mentioned as a Supplemental Agreement, it is only a settlement entered into between the parties through the conciliation. The learned Senior Counsel further submits that the appeal is maintainable as this Court can exercise the very same powers as of the first instance. Therefore, the appeal will have to be allowed. In support of his contention, the learned Senior counsel has made reliance upon the following Judgements. (i) BEEBROS PROPERTY DEVELOPMENT PVT. LTD., VANISRI AND ANOTHER (2008) 4 CTC 275 ; (ii) MD.ARMY WELFARE HOUSING ORGANISATION V. SUMANGAL SERVICES (P) LTD., (2004) 9 Supreme Court Cases 619; and (iii) BADDULA LAKSHMAIAH & OTHERS V. SRI ANJANEYA SWAMI TEMPLE & OTHERS (1996) 2 LAW WEEKLY 8. 4. Submissions of the Respondent: Per contra, learned Senior counsel appearing for the respondent would submit that it is highly doubtful as to whether the appeal is maintainable in view of the expressed bar contained in Section 37 of the Arbitration and Conciliation Act,1996. Even on merits, the appellant does not have a case. 4. Submissions of the Respondent: Per contra, learned Senior counsel appearing for the respondent would submit that it is highly doubtful as to whether the appeal is maintainable in view of the expressed bar contained in Section 37 of the Arbitration and Conciliation Act,1996. Even on merits, the appellant does not have a case. The subsequent agreement is only a Supplemental Agreement and the said agreement was entered into between the parties to resolve the dispute regarding the interpretation of respective allotments of plots/villas, OSR area, site etc. Therefore, there is no dispute regarding the arbitration clause contained in the earlier agreement. The learned single Judge has rightly construed Clause 11 of the Supplemental Agreement in consonance with the agreement dated 27.03.2006 which contains the arbitration clause. It is not correct to state that the learned arbitrator does not have the power to grant the relief sought for. When the principal agreement contains the arbitration clause, the same would be made applicable to the Supplemental Agreement also. Therefore, the appeal will have to be dismissed as devoid of merits. In support of his contention, the learned Senior Counsel has made reliance upon the following Judgements. (i) KOTAK MAHINDRA INVESTMENT LTD. V. KITPLY INDUSTRIES LIMITED AND ANOTHER (AIR 2012 CALCUTTA 24); and (ii) M/S MARUTI CLEAN COAL & POWER LIMITED V. KOLAHAI INFOTECH PVT. LTD. AND OTHERS dated 06.05.2010 (Delhi High Court). (iii) CHLORO CONTROLS (I) P. LIMITED V. SEVERN TRENT WATER PURIFICATION INC. AND OTHERS (2013) 1 CTC 418(SC) 5. DISCUSSION:- 5.1. Even though the learned Senior counsel appearing for the first respondent raised the question of maintainability of the appeal before us by placing reliance upon Section 37 of the Arbitration and Conciliation Act, 1996, we do not propose to go into the same as we are of the view that the appeal deserves to be dismissed even on merits. In so far as the contention of the learned Senior counsel appearing for the appellant that the agreement dated 17.02.2009 is a Supplemental Agreement and therefore, it is executable, the same deserves to be rejected as devoid of merits. The Supplemental Agreement dated 17.02.2009 clearly states the reasons for which it has been executed between the parties. A conciliation would come under Part 3 of the Arbitration and Conciliation Act,1996. Part III of the said Act provides for a mechanism with its own procedure while dealing with the conciliation. The Supplemental Agreement dated 17.02.2009 clearly states the reasons for which it has been executed between the parties. A conciliation would come under Part 3 of the Arbitration and Conciliation Act,1996. Part III of the said Act provides for a mechanism with its own procedure while dealing with the conciliation. We do not find any reason to hold that the Supplemental Agreement is a settlement agreement as contended by the learned Senior Counsel appearing for the appellant. Merely because there is a reference in Clause 8 of the Supplemental Agreement regarding the placement of gas cylinders as recommended by Mr. Kapil Chitale, the same would not amount to conciliation at his behest. Even the said clause would be contrary to the contention of the learned Senior counsel appearing for the appellant as it can only be confined to the placement of gas cylinders and further more, it only deals with the recommendation. Therefore, the said contention is rejected. 5.2. The learned Senior counsel appearing for the appellant has also submitted that the arbitration clause contained in Development Agreement dated 27.03.2006 will have to be confined to liquidated damages alone. The said contention of the learned Senior counsel is contrary to Clauses 17 and 23 of the Development Agreement dated 27.03.2006. Clause 17 of the said agreement specifically states about remedy for breach of agreement. It includes an entitlement to specific performance of the said agreement apart from liquidated damages. Clause 23, which deals with the arbitration also reiterates the very same position. If the contention of the learned Senior counsel is accepted, then it would amount to re-writing the terms and conditions mentioned in the Development Agreement dated 27.03.2006 entered into between the parties, which is impermissible in law. Hence, the said contention is also rejected. 5.3. The learned Senior counsel has further submitted that until and unless there is a specific clause in the Supplemental Agreement dated 17.02.2009, there cannot be an arbitration. We have extensively perused the two agreements as well as the order passed by the learned single Judge. Clause 23 of the Development Agreement dated 27.03.2006 is as follows: "If any dispute arises between the Owners and the Developer from or out of the terms of this agreement, such disputes shall be resolved by Arbitration under the Arbitration and Conciliation Act, 1996. The decision of the Arbitrator shall be final and binding on both parties. Clause 23 of the Development Agreement dated 27.03.2006 is as follows: "If any dispute arises between the Owners and the Developer from or out of the terms of this agreement, such disputes shall be resolved by Arbitration under the Arbitration and Conciliation Act, 1996. The decision of the Arbitrator shall be final and binding on both parties. The jurisdiction relating to any dispute in this matter shall be at Chennai only and the Language will be English." Clause 11 of the Supplementary Agreement dated 17.02.2009 is also extracted here under: "That all the other terms and conditions and specifications of the said agreement dated 27.03.2006 shall remain in force and this deed shall not affect the legality or enforceability thereof." Similarly, the operative portion of the Supplemental Agreement dated 17.02.2009 states as follows: "Whereas certain disputes arose between the said parties in the interpretation of their respective allotments of plots/villas, OSR area, extent of site etc." 5.4.A conjoint reading of the above three statements recorded in writing in both the documents would leave no doubt in our mind that the intention of the parties is very clear that in the event of any dispute, they must seek recourse through the arbitration proceedings. The disputes between the parties have arisen only in the interpretation of their respective allotments of plots/villas/OSR area, extent of site etc. That is the reason why the Supplemental Agreement dated 17.02.2009 came into existence. Further more, as noted earlier, the Development Agreement dated 27.03.2006 itself speaks about the fact that the villas ear-marked to the parties will be identified and finalised through consequential agreement later. Therefore, the consequential agreement covers only the dispute which has arisen subsequent to the earlier Development Agreement dated 27.03.2006. With that factual position, if we see clause 11 of the Supplemental Agreement dated 17.02.2009, it is very clear that the agreement clause mentioned in the earlier agreement would stand incorporated in the subsequent one as well. More over, even in the suit filed, the appellant has traced the cause of action from 27.03.2006, which is the date of the Development Agreement. Therefore, the appellant seeks the relief based upon the agreements. The Supplemental Agreement by its own nomenclature is in addition to the main agreement as it merely supplements. Hence both the documents are read together. There is also no intention on the parties to dispense with the arbitration clause. Therefore, the appellant seeks the relief based upon the agreements. The Supplemental Agreement by its own nomenclature is in addition to the main agreement as it merely supplements. Hence both the documents are read together. There is also no intention on the parties to dispense with the arbitration clause. On the contrary, the definite intention of the parties is to resolve the dispute by way of arbitration. Therefore, we have no hesitation in holding that the arbitration clause contain in the Development Agreement dated 27.03.2006 would stand incorporated in the Supplementary Agreement dated 17.02.2009 as well. In such view of the matter, we do not find any illegality or irregularity in the order passed by the learned single Judge. Accordingly, this Original Side appeal is dismissed. No costs. Consequently, connected miscellaneous petition is also dismissed.