Abhinandan Hazarika v. Ashokananda Infrastructure Solution
2015-08-11
INDIRA SHAH
body2015
DigiLaw.ai
ORDER : 1. This application under Article 227 of the Constitution of India has been preferred against the order dated 15.07.2014 passed by learned Civil Judge No. 3, Kamrup (Metro) in Misc (J) Case No. 23 of 2014 arising out of T.S. No. 392 of 2013, whereby the learned Civil Judge on application filed by the Opposite parties under Section 8 of the Arbitration and Conciliation Act 1996, referred the parties to arbitration. 2. Heard the learned counsel appearing for both the parties. The facts of the case in brief are that the petitioner intending to purchase a flat in the multi storied building to be constructed by Opposite Parties entered into an agreement with the Opposite Party No. 1, whereby the Opposite Party agreed to sale a duplex flat to the petitioner to a consideration of Rs. 60,00,000/-. The aforesaid agreement in case of any dispute between the parties relating to sale of flat to be referred to Arbitration and the agreement also provides that Principal Bench of Gauhati High Court and its subordinate Courts at Guwahati shall have exclusive jurisdiction to such disputes. 3. Petitioner's case is that there was also a Tripartite Agreement between the opposite parties and the petitioner along with United Bank of India (Opposite Party No. 4) which provides the creation of Equitable Mortgage of the flat and that payment will be made through bank to be repaid by the petitioner. Thereafter, the petitioner through Opposite Party No. 4, bank paid Rs. 57 Lakhs to the Principal Opposite Parties. It was the petitioner's case that the Principal Opposite Parties took some signature of the petitioner on some Non-Judicial Stamp papers on the pretext of using the same for getting electric connection. But subsequently, the Principal Opposite Parties fraudulently used those Non-Judicial Stamp papers showing cancellation of agreement and repayment of advance amount to the petitioner. The petitioner then filed the Title Suit for specific performance of contract and khas possession with prayer for pass a decree of Specific Performance of contract directing the principal defendants:- (a) To handover the khas possession of the flat mentioned in Schedule 'B' to the plaintiff on accepting the balance price. (b) To execute and register deed transferring the flat mentioned in Schedule 'B'. (c) To pay cost of the suit. (d) Any other relief or reliefs to which the plaintiff is entitled.
(b) To execute and register deed transferring the flat mentioned in Schedule 'B'. (c) To pay cost of the suit. (d) Any other relief or reliefs to which the plaintiff is entitled. The Principal Opposite Parties filed an application under Section 8 of the Arbitration and Conciliation Act for referring the parties to Arbitration as the agreement for purchase of the flat mentioned above contains an Arbitration Clause as Article XII to the said Agreement. 4. Petitioner in his objection to the petition filed under Section 8 of Arbitration and Conciliation Act contended that the agreement also provides option to the party, for resolution of dispute either through arbitration or adjudication by any competent Court at Guwahati. The agreement with heading Article XII: Arbitration contains Clause 12.1 and 12.2 which reads as under-Article 12: Arbitration "12.1 All disputes and differences by the parties hereto relating to construction or interpretation of any of the terms and conditions herein contained or touching these presents or determination of any liability or any matter relating to or connected with the said land and or the said building and/or this agreement and or anything done in pursuance thereof including those done upon its termination shall be referred to arbitration by a sole Arbitrator and the same shall be deemed to be a reference within the meaning of Arbitration and Conciliation Act, 1996 or any statutory enactment or modification thereunder. The Arbitrator shall have summary power to give interim award and/or Final Awards or directions which shall be binding upon the parties. 12.2 The principal Bench of the Gauhati High Court and its subordinate courts at Guwahati shall have exclusive jurisdiction to try and settle matters relating to these presents." Learned trial Court rejected the petitioner's plea on three counts:- (1) There is explicit agreement between the parties for referring their dispute and differences to arbitration. (2) There is nothing in Article XII to the effect that an option given to the parties for adjudication in any competent Court at Guwahati, as both the clauses are under the heading. "Article 12 : Arbitration" and therefore Clause 12.2 has to be construed as pertaining to matters to be dealt with by the Courts at Guwahati in connection with Arbitration, like reference of parties to arbitration (Section 8), interim measures etc.
"Article 12 : Arbitration" and therefore Clause 12.2 has to be construed as pertaining to matters to be dealt with by the Courts at Guwahati in connection with Arbitration, like reference of parties to arbitration (Section 8), interim measures etc. by Courts (Section 9), appointment of Arbitrator by the Chief Justice (Section 11) or setting aside arbitral Award (Section 34). The learned Court below also held that the United Bank (Opposite Party No. 4) is not a necessary party, as no tangible relief has been claimed against the bank. 5. It is submitted by learned counsel appearing on behalf of the petitioner that the suit filed by the petitioner is based on fraud committed by the Principal Opposite Parties by fraudulently manufacturing a money receipt showing repayment of advance money and cancellation of sale agreement of the flat in question. Therefore, the suit is required to be tried by competent Civil Court. The learned Court also failed to appreciate that there was a Tripartite Agreement between Opposite Party No. 1 & 2, the petitioner and the Proforma Opposite Party No. 4 for payment of price of the flat. The petitioner made all payments to the Proforma Opposite Party No. 4. The Proforma Opposite Party No. 4 is not a party to the alleged arbitration clause. Thus, the subject matter of suit is not covered by the arbitration on clause. In support of his contention learned counsel has cited the case of Atul Singh & Others vs. Sunil Kumar & Others, (2008) 2 SCC 602 and Sukanya Holdings Pvt. Ltd. vs. Jayesh H. Pandya & Another, (2003) 5 SCC 531 . In Sukanya Holdings Pvt. Ltd. (Supra) in para 13 and 14 it has been observed there in no provision in the Arbitration and Conciliation Act that when the subject matter of the suit includes subject matter of arbitration agreement as well as other disputes, the matter is required to be referred to arbitration. There is no provision for splitting the cause or parties and referring the subject matter of the suit to the arbitrators. There is no provision as to what is required to be done in a case where some parties to the suit are not parties to the arbitration agreement.
There is no provision for splitting the cause or parties and referring the subject matter of the suit to the arbitrators. There is no provision as to what is required to be done in a case where some parties to the suit are not parties to the arbitration agreement. In the case of Atul Singh & Others (supra) Title Suit was filed against the defendants for a declaration that the reconstituted partnership deed is illegal, void and without jurisdiction and it was held that the relief for such a declaration could only be granted by the Civil Court and not by an arbitrator. Learned counsel for the respondents has submitted that there is no allegation against the respondent No. 4 UBI. No relief against the bank has been sought for. It was impleaded by the petitioner only to show that as the respondent No. 4 is not party to the arbitral Clause, the parties may not be referred to arbitration. The petitioner in his suit has not sought any declaration for fraud. He took no such plea of fraud in his objection filed against the petition under Section 8 of the Act. learned counsel has cited Boozallen and Hamilton Inc vs. SBI Home Finance Ltd. & Others, (2011) 5 SCC 532 wherein in para 37, 38 and 39 it is observed:- "37. It may be noticed that the cases referred to above relate to actions in rem. A right in rem is a right exercisable against the world at large, as contrasted from a right in personam which is an interest protected solely against specific individuals. Actions in personam refer to actions determining the rights and interests of the parties themselves in the subject-matter of the case, whereas actions in rem refer to actions determining the title to property and the rights of the parties, not merely among themselves but also against all persons at any time claiming an interest in that property. Correspondingly, a judgment in personam refers to a judgment against a person as distinguished from a judgment against a thing, right or status and a judgment in rem refers to a judgment that determines the status or condition of property which operates directly on the property itself. (Vide Black's Law Dictionary.) 38.
Correspondingly, a judgment in personam refers to a judgment against a person as distinguished from a judgment against a thing, right or status and a judgment in rem refers to a judgment that determines the status or condition of property which operates directly on the property itself. (Vide Black's Law Dictionary.) 38. Generally and traditionally all disputes relating to rights in personam are considered to be amenable to arbitration; and all disputes relating to rights in rem are required to be adjudicated by courts and public tribunals, being unsuited for private arbitration. This is not however a rigid or inflexible rule. Disputes relating to subordinate rights in personam arising from rights in rem have always been considered to be arbitrable. 39. The Act does not specifically exclude any category of disputes as being not arbitrable. Sections 34(2) (b) and 48 (2) of the Act however make it clear that an arbitral award will be set aside if the court finds that "the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force." In the cited case of Hindustan Petroleum Corporation Ltd. vs. Pink City Midway Petroleums, (2003) 6 SCC 503 in para 15 and 16 it is held:- 15. The question then would arise: what would be the role of the civil court when an argument is raised that such an arbitration clause does not apply to the facts of the case in hand? Learned counsel for the appellant contends that it is a matter which should be raised before the arbitrator who is competent to adjudicate upon the same and the civil court should not embark upon an inquiry in regard to the applicability of the arbitration clause to the facts of the case. While learned counsel appearing for the respondent contends that since the applicability of the arbitration clause to the facts of the case goes to the very root of the jurisdiction of the reference to arbitration, this question will have to be decided by the civil court before referring the matter to arbitration even in cases where there is admittedly an arbitration clause. The answer to this argument, in our opinion, is found in Section 16 of the Act itself.
The answer to this argument, in our opinion, is found in Section 16 of the Act itself. It has empowered the Arbitral Tribunal to rule on its own jurisdiction including rule on any objection with respect to the existence or validity of the arbitration agreement. That apart, a Constitution Bench of this Court in Konkan Rly. with reference to the power of the arbitrator under Section 16 has laid down thus: (SCC p. 405, para 21) "21. It might also be that in a given case the Chief Justice or his designate may have nominated an arbitrator although the period of thirty days had not expired. If so the Arbitral Tribunal would have been improperly constituted and be without jurisdiction. It would then be open to the aggrieved party to require the Arbitral Tribunal to rule on its jurisdiction. Section 16 provides for this. It states that the Arbitral Tribunal may rule on its own jurisdiction. That the Arbitral Tribunal may rule 'on any objections with respect to the existence or validity of the arbitration agreement' shows that the Arbitral Tribunal's authority under Section 16 is not confined to the width of its jurisdiction, as was submitted by learned counsel for the appellants, but goes to the very root of its jurisdiction. There would, therefore, be no impediment in contending before the Arbitral Tribunal that it had been wrongly constituted by reason of the fact that the Chief Justice or his designate had nominated an arbitrator although the period of thirty days had not expired and that, therefore, it had no jurisdiction." (Emphasis supplied) 16. It is clear from the language of the section, as interpreted by the Constitution Bench judgment in Konkan Rly. that if there is any objection as to the applicability of the arbitration clause to the facts of the case, the same will have to be raised before the Arbitral Tribunal concerned. Therefore, in our opinion, in this case the courts below ought not to have proceeded to examine the applicability of the arbitration clause to the facts of the case in hand but ought to have left that issue to be determined by the Arbitral Tribunal as contemplated in clause 40 of the Dealership Agreement and as required under Sections 8 and 16 of the Act. 6.
6. In the instant case the Arbitration Clause Article XII, reads:- Thus the arbitration clause includes about any all disputes and difference of any matter or anything done in pursuance upon termination of the contract. The petition in his suit has claimed specific performance of contract. In his objection against the petition filed under Section 8 of the Act, it appears that he interpreted that the agreement provides an option to the parties to approach competent Court at Guwahati, which in fact is misinterpretation of the Clause. The trial Court rightly observed that claim of the petitioner is arbitrable. 7. Admittedly there is an arbitration agreement among the petitioner and Principal Opposite Parties. The relief sought in the suit can be adjudicated and granted in arbitration. No relief or allegation is made against the Opposite Party bank, who is not the party to the agreement. Therefore, the trial Court has committed no error referring the parties to arbitration. 8. In view of above, this petition stands dismissed and disposed of.