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2016 DIGILAW 737 (RAJ)

Dhamu Builders & Developers v. Korel Infragold Pvt. Ltd.

2016-05-23

ARUN BHANSALI

body2016
JUDGMENT : Arun Bhansali, J. These two cross proceedings have been filed by the parties in relation to proceedings under Section 8 of the Arbitration and Conciliation Act, 1996 (‘the Act’). 2. While petitioner Dhamu Builders & Developers (‘Dhamu Builders’) has challenged the order dated 18.5.2015 passed by the Trial Court, whereby, the application filed by it under Section 8 of the Act has been rejected; the writ petition has been filed by Korel Infragold Pvt. Ltd. (‘Korel Infragold’) aggrieved against order dated 8.7.2015 passed by the Trial Court, whereby, pursuant to the remand order passed by this Court initially while accepting the present revision petition on 27.5.2015, the dispute has been referred to arbitration and suit has been disposed of. 3. The present proceedings have a bit of chequered history; the plaintiff Korel Infragold filed a suit for permanent injunction against Dhamu Builders, inter alia, seeking following reliefs: ^^fygktk okn izLrqr dj fuosnu gS fd okn cgd oknh f[kykQ izfroknh fuEu izdkj ls fMdzh ikfjr Qjek;k tk;s%& 1- ;g fd LFkk;h jksd vkKk f[kykQ izfroknh bl vk'k; dh tkjh Qjek;h tkos fd izfroknh oknh dEiuh ds dk;Z esa dksbZ ck/kk mRiUu ugha djsa ,oa uk gh mDr Hkwfe ij izfroknh vc dCtk djs vFkok djus dk iz;kl djs ,oa uk gh fdlh ls dCtk djok;s ,oa uk gh mDr Hkwfe fdlh Hkh vU; O;fDr dks fdlh Hkh izdkj ls jgu cS; ;k vU;Fkk vUrfjr djsaA 2- ;g fd vkKkid O;kns'k f[kykQ izfroknh bl vk'k; dk tkjh Qjek;k tk, fd izfroknh }kjk tks lkoZtfud uksfVl nSfud v[kckjksa esa izdkf'kr djok, gS mUgsa iqu% mUgha v[kckjksa ds tfj;s foKfIr foM~k djs ,oa fn;s x;s fyf[kr jftLVMZ uksfVl dks Hkh foM~k djs ftlds fy;s izfroknh dks vknsf'kr fd;k tk,A 3- ;g fd LFkk;h jksdk vkKk f[kykQ izfroknh bl vk'k; dh tkjh dh tkos fd tc rd mDr Hkwfe ds laca/k esa oknh dEiuh dk vuqca/k gS] rc rd izfroknh mDr Hkwfe ls lEcaf/kr vuqcU/k fdlh vU; dks ugha ns ,oa uk gh mldk vuqca/k lekIr djsa uk gh ,slk dksbZ Qsy ;k rdZ Qsy djs ftlls oknh ds vf/kdkjksa ij dqBkjk?kkr gksrk gksA 4- ;g fd [kpkZ eqdnek fnyok;k tk;saA 5- ;g fd vU; dksbZ vuqrks"k tks cgd oknh f[kykQ izfroknh tks Jheku~ th mfpr le>s fnyk;k tk;sA** 4. Defendant Dhamu Builders filed application under Section 8 of the Act with the averments that reliefs have been sought by the plaintiff in the plaint based on agreement dated 13.3.2013 entered into between the parties, in which, under Clause-18 there is a provision for referring the dispute to three Arbitrators for arbitration and, therefore, order be passed referring the parties to arbitration. 5. A reply was filed on behalf of Korel Infragold, inter alia, contending that the agreement has not yet started on account of failure to give power of attorney; the defendant by a registered notice has cancelled the agreement and, therefore, cannot seek arbitration; a false F.I.R. has been registered with the allegation that fraud has been committed with the defendant and allegations pertaining to fraud can only be investigated by a Civil Court and ultimately it was prayed that dispute cannot be referred for arbitration. 6. The Trial Court after hearing the parties by its order dated 18.5.2015 found that the dispute pertain not only to the terms enumerated in the agreement, but certain issues regarding validity/void ability of the agreement also arise in the suit, which can only be decided after evidence is recorded, the existence of the agreement itself is in question and, therefore, there does not appear any justification in referring the dispute to arbitration and, consequently, dismissed the application. 7. Feeling aggrieved, Dhamu Builders filed I he present revision petition. 8. A Co-ordinate Bench of this Court on 27.5.2015 without issuing notices to the respondent Korel Infragold disposed of the revision petition with the following directions:- "6. Accordingly and in view of the above, the present revision petition filed on behalf of the petitioner-defendant-Dhamu Builders & Developers, Bikaner is disposed of; and the impugned order dated 18.5.2015 is set aside. No orders as to costs. A copy of this order be sent to the Trial Court concerned and to both the parties concerned forthwith." 9. On becoming aware of passing of the order dated 27.5.2015, Korel Infragold filed S.B. Civil Review Application No. 27/2015 seeking review of order dated 27.5.2015. 10. In the meanwhile, pursuant to the order dated 27.5.2015 (supra) the Trial Court by its order dated 8.7.2015 referred the dispute to arbitration and disposed of the suit by noticing the directions issued by the High Court in its order dated 27.5.2015. 11. 10. In the meanwhile, pursuant to the order dated 27.5.2015 (supra) the Trial Court by its order dated 8.7.2015 referred the dispute to arbitration and disposed of the suit by noticing the directions issued by the High Court in its order dated 27.5.2015. 11. Feeling aggrieved, the Korel Infragold filed present S.B. Civil Writ Petition No. 7710/2015 questioning the validity of the order dated 8.7.2015. 12. The review application filed by Korel infragold after notice came to be accepted by the Bench, which passed the order dated 27.5.2015 on 10.9.2015, inter alia, directing as under:- "4. Accordingly, the present Review Petition filed by the petitioner - M/s Korel Infragold Pvt. Ltd. is hereby allowed and the order dated 27.5.2015 is recalled. No costs. A copy of this order be sent to the concerned parties and the Court below forthwith. 5. In view of the aforesaid, let the S.B. Civil Revision Petition No. 94/2015 be now listed for admission. The respondent is now represented through its counsels Mr. Manoj Bohra and Mr. Mahesh Joshi and their name be shown in the cause list." 13. In the above circumstances, both the revision petition as well as writ petition filed by the respective parties are before this Court. 14. It is submitted by learned Counsel for the petitioner Dhamu Builders with reference to Clause-18 of the agreement that an arbitration agreement exists between the parties, wherein, every dispute pertaining to the construction, post construction has been agreed to be referred to Arbitral Tribunal consisting of three Arbitrators; the reliefs claimed in the plaint are all pertaining to the agreement itself and, therefore, the dispute was bound to be referred to arbitration by the Court and the Court under Section 8 of the Act is not left with any discretion but to refer the dispute to arbitration; it was submitted that the Trial Court fell in error in coming to the conclusion that on account of the notice issued by the petitioner Dhamu Builders terminating the agreement in question, the arbitration agreement itself has come to an end, inasmuch as, provisions of Section 16(1)(a) of the Act clearly provides otherwise and, as such, the order impugned passed by the Trial Court cannot be sustained; it was prayed that revision petition may be allowed, the writ petition be dismissed and parties be referred to arbitration. 15. 15. Reliance was placed on Ashapura Mine-Chem Limited v. Gujarat Mineral Development Corporation, (2015) 8 SCC 193 , Everest Holding Limited v. Shyam Kumar Shrivastava & Ors., (2008) 16 SCC 774 , Reva Electric Car Company Private Limited v. Green Mobil, (2012) 2 SCC 93 , SBP & Co. v. Patel Engineering Ltd. & Anr., (2005) 8 SCC 618 , Swiss Timing Limited v. Commonwealth Games, 2010 Organising Committee, (2014) 6 SCC 677 and Enercon (India) Limited & Ors. v. Enercon Gabh & Anr., (2014) 5 SCC 1 . 16. Vehemently opposing the submissions made by learned Counsel for Dhamu Builders, learned Counsel for Korel Infragold submitted that the reliefs, which have been claimed in the plaint, goes beyond the agreement and, therefore, the same fall beyond the arbitration agreement and the Trial Court was justified in rejecting the application filed by the defendant; the agreement, which embodies the arbitration clause has been cancelled by the defendant itself and on that count also the arbitration agreement has lost its efficacy and, therefore, the order passed by the Trial Court rejecting the application does not call for any interference; it was submitted that the application filed by the defendant itself was not maintainable, inasmuch as, the same was not accompanied by the original arbitration agreement or a duly certified copy thereof as required by the provisions of Section 8 (2) of the Act, which are mandatory; further allegations of fraud and malpractices have been made by the plaintiff as well as defendant and the said aspect cannot be made subject matter of arbitration and on that count also the application was liable to be dismissed; it was submitted that though these aspects i.e. objection regarding non-compliance of provisions of Section 8(2) of the Act and dispute involving fraud were not raised before the Trial Court, but the same being legal issues, can always be submitted in support of the order passed by the Trial Court; it was prayed that the revision petition be dismissed, the writ petition be allowed and the Trial Court be directed to proceed with the suit expeditiously. 17. Reliance was placed on Young Achievers v. IMS Learning Resources Private Limited, (2013) 10 SCC 535 , N. Radhakrishnan v. Maestro Engineers & Ors., (2010) 1 SCC 72 and Atul Singh & Ors. v. Sunil Kumar Singh & Ors,. (2008) 2 SCC 602 . 18. 17. Reliance was placed on Young Achievers v. IMS Learning Resources Private Limited, (2013) 10 SCC 535 , N. Radhakrishnan v. Maestro Engineers & Ors., (2010) 1 SCC 72 and Atul Singh & Ors. v. Sunil Kumar Singh & Ors,. (2008) 2 SCC 602 . 18. In rejoinder, learned Counsel for Dhamu Builders submitted that besides the fact that no such plea was raised before the Trial Court and the Trial Court has not dealt with the aspects sought to be now raised, the fact that original arbitration agreement or a certified copy thereof was not Filed along with application, loses significance as the plaintiff Korel Infragold itself had filed the agreement along with the plaint and nowhere in the proceedings and even before this Court the existence of Clause 18 of the agreement between the parties has been disputed; the allegations of fraud and malpractice sought to be relied on by the plaintiff, do not find mention in the plaint and, therefore, the same have only been raised with a view to frustrate the provisions of the Act. 19. Reliance was placed on Bharat Sewa Sansthan v. U.P. Electronic Corpn. Ltd., AIR 2007 SC 2961 and M/s. Whiz Enterprise Private Ltd. v. The Oriental Insurance Co. Ltd. & Ors., Civil Appeal No. 2093/2015 decided by Hon'ble Supreme Court on 20.2.2015. 20. I have considered the submissions made by learned Counsel for the parties and have perused the material available on record. 21. At the outset, it would be appropriate to notice Clause-18 of the agreement dated 13.3.2013, which reads as under:- ^^18- ;g fd bl bdjkjukesa ds rgr~ izFke o f}rh; i{k ds e/; fuekZ.k ds nkSjku vFkok fuekZ.k dh lekfIr ij gj izdkj ds okn fookn rhu O;fDr;ksa dh vkjfcV~s'ku dks jSQj fd;k tkosxkA bu rhu O;fDr;ksa dh fu;qfDr nksuksa i{kksa ij ckbfMax gksxkA fdlh Hkh i{k dks bl bdjkjukes ds rgr mBs fdlh fookn ds fy, fdlh Hkh U;k;ky; esa rc rd tkus dk vf/kdkj ugha gksxk tc rd fd vkjfcV~s'ku fdlh mfpr dkj.k ls vokMZ nsus esa vl{ke gks tkosA** 22. The said clause forms part of the developer’s agreement entered Into between Dhamu Builders and Korel Infragold pertaining to construction of a multistory building and, inter alia, contains the terms of agreement between the parties including the provision for referring the dispute between the parties to Arbitral Tribunal consisting of three arbitrators. 23. The said clause forms part of the developer’s agreement entered Into between Dhamu Builders and Korel Infragold pertaining to construction of a multistory building and, inter alia, contains the terms of agreement between the parties including the provision for referring the dispute between the parties to Arbitral Tribunal consisting of three arbitrators. 23. The suit was filed seeking permanent injunction with the reliefs as already quoted hereinbefore, the reliefs essentially pertain to injunction, against obstruction in the working, taking back possession of the land, sale or transfer of the property, withdrawal of the notice published in the daily newspaper and till such time the agreement is in force not to enter into agreement with anybody else, not to terminate the agreement and desist from taking any action, which is against the interest of the plaintiff. 24. A perusal of the reliefs clearly indicates that nothing has been claimed, which goes beyond the agreement and in fact what is being sought is protection of the agreement and the actions taken there under; Counsel for the plaintiff Korel Infragold even failed to point out if any of the reliefs as claimed in the plaint could not be granted by the Arbitral Tribunal; the submissions now sought to be made regarding allegations of fraud and malpractices in the suit do not find any mention in the plaint as such; the fact that loosely word like fraud has been used in the notice given by the defendant and similarly responded to by the plaintiff using similar language cannot by itself involve fraud/malpractices in the suit as such. 25. So far as the finding of the Trial Court in its order dated 18.5.2015 for refusing to refer the dispute to arbitration on account of termination notice issued by the defendant is concerned, there is substance in the submissions made on behalf of Dhamu Builders with reference to provisions of Section 16(1) (a) of the Act, which specifically deal with such a situation, as has been ignored by the Trial Court. The provisions of Section 16(1) of the Act read as under:- "16. The provisions of Section 16(1) of the Act read as under:- "16. Competence of Arbitral tribunal to rule on its jurisdiction.-(1) The Arbitral Tribunal may rule on its jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,- (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and (b) a decision by the Arbitral Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause." 26. A perusal of the said provision clearly reveals that an arbitration clause, which forms part of a contract, is to be treated as an agreement independent of the other terms of the contract, which necessarily means that the said arbitration clause survives even after the termination of the agreement. In the present case, the clause itself provides that even after the construction is over, the dispute shall be referred to arbitration, which further fortifies the above aspect of the matter. 27. Hon'ble Supreme Court in Ashapura Mine-Chem Limited (supra) while dealing with the provisions of Section 16(1)(a) of the Act in the context of Section 11(6) of the Act for appointment of Arbitrator held that arbitration clause contained in MOU is an independent arbitration agreement and even if MOU is terminated, arbitration agreement continues to remain and parties are entitled to invoke the said clause and exercise option for appointment of Arbitrator. 28. Similarly, in Everest Holding Limited (supra) in para 26 it was held that though the JVA may have been terminated and cancelled but it was a valid JVA containing a valid arbitration agreement for settlement of disputes arising out of or in relation to the subject matter of the JVA and it was held that the argument of the respondent that the disputes cannot be referred to arbitration, as the agreement is not in existence, is devoid of merit. 29. In the case of Reva Electric Car Company Private Limited (supra) relying on observations in the case of Everest Holding Limited (supra) it was held that a plain meaning of Section 16(1) (a) of the Act would tend to show that even on the termination of the agreement/contract, the arbitration agreement would still survive. 30. 29. In the case of Reva Electric Car Company Private Limited (supra) relying on observations in the case of Everest Holding Limited (supra) it was held that a plain meaning of Section 16(1) (a) of the Act would tend to show that even on the termination of the agreement/contract, the arbitration agreement would still survive. 30. So far as judgment cited by learned Counsel for the respondent in the case of Young Achievers (supra) is concerned, the agreement was superseded by another agreement, which did not contain the arbitration clause and, in those circumstances, it was held that arbitration clause contained in a superseded agreement cannot be used for seeking reference to arbitration, the judgment has no application to the facts of the present case. 31. In view of the above discussion, it is apparent that the Trial Court committed mistake in initially refusing to refer the dispute to arbitration on account of termination of agreement dated 13.3.2013 by its order dated 18.5.2015 and on wrongfully coming to the conclusion that reliefs claimed in the suit were beyond the agreement. 32. Coming to the issue raised by Counsel for Korel Infragold regarding non-compliance of provisions of Section 8(2) of the Act on account of non-filing of original arbitration agreement or a duly certified copy thereof by the defendant along with application under Section 8 of the Act, the plaintiff in para 3 of the plaint made the following averments:- ^^3- ;g fd oknh dEiuh ,oa izfroknh ds chp izfroknh dh mDr tk;nkn ij ,d eYVh LVksjh fcfYMax cukus ckcr ,d vuqca/k fnukad 13-03-2015 dks fu"ikfnr gqvk ,oa vuqcU/kkuqlkj oknh dEiuh }kjk izfroknh dks vfxze rkSj ij dqy :0 21]00]000@& crkSj flD;qfjfV vnk fd;k x;k ,oa ekSdk ij fuekZ.k dk;Z 'kq: djus ds fy, oknh ,oa izfroknh ds chp gq, vuqca/k dh reke 'krZ r; gqbZ ftldk gokyk oknh ,oa izfroknh ds chp gq, vuqca/k i= esa gS tks fd layXu oknh gSA** 33. A perusal of the said averment indicates that plaintiff had made a specific reference to the agreement dated 13.3.2013, wrongly indicated as 13.3.2015 and submitted that all the terms of the agreement were settled between the parties, which have been referred to in the agreement and annexed a copy of the agreement with the plaint. 34. A perusal of the said averment indicates that plaintiff had made a specific reference to the agreement dated 13.3.2013, wrongly indicated as 13.3.2015 and submitted that all the terms of the agreement were settled between the parties, which have been referred to in the agreement and annexed a copy of the agreement with the plaint. 34. Though, it is also not disputed during course of submissions that a copy of the agreement is in fact on the record of the Trial Court, which contains the arbitration agreement;. however, the plea raised is that irrespective of the availability of copy of the agreement dated 13.3.2013 containing the arbitration agreement as filed by the plaintiff on record, it was incumbent on the defendant to file original agreement or a certified copy thereof for the purpose of invoking provisions of Section 8 of the Act, in absence whereof, the power cannot be exercised by the Court. Strong reliance has been placed on the case of Atul Singh (supra). 35. In the case of Atul Singh (supra) Hon'ble Supreme Court while interpreting Section 8 of the Act, insisted on filing of original arbitration agreement or duly certified copy thereof along with such application, observed as under:- "10. Shri Ranjit Kumar, learned Senior Counsel for the appellants, has submitted that the main relief claimed in the suit is that a declaration be made that the reconstituted partnership deed dated 17.2.1992 was illegal, void and without jurisdiction as there was no intention or desire on the part of Shri Rajednra Prasad Singh to retire from the partnership and that the plaintiffs being heirs of Shri Rajendra Prasad Singh, shall be deemed to be continuing as partners to the extent of his share. The other relief regarding rendering of accounts of all transactions from 1.4.1992 onwards was dependent upon the first relief inasmuch as Shri Rajendra Prasad Singh or the plaintiffs were admittedly not shown as partners of the firm in the deed dated 17.2.1992 and unless the said document was declared as void, they could not claim any rights on the basis of earlier deed dated 13.1.1989. Learned Counsel has submitted that Shri Rajendra Prasad Singh or the plaintiffs being not parties to the deed dated 17.2.1992, Section 8 of the 1996 Act can have no application to the facts and circumstances of the case and the High Court committed manifest error of law in setting aside the order of the Trial Court and allowing the revision petition filed by Defendant 3." 36. A perusal of the above judgment would reveal that Hon'ble Supreme Court dismissed the application referred under Section 8 of the Act merely on the ground that predecessor in interest of the plaintiff was not a party to the partnership deed and the main relief sought for in the suit was that the partnership deed was illegal and void and that question could only be decided by the Civil Court and such dispute could not have been referred to the Arbitrator. 37. Hon'ble Supreme Court also noticed that the defendant has twice moved application under Section 34 of the Arbitration Act, 1940 and the third application was moved under Section 8 of the Act and in none of the applications there was a whisper with regard to arbitration agreement or duly certified copy thereof and based on the said circumstances it was held that there was necessity for filing of the original agreement or duly certified copy thereof. 38. It is apparent from reading of the above part that the said decision had been rendered in a completely different set of facts than those existing in the present case. 39. Besides the above, the existence of the arbitration agreement itself was denied in the said case, which is not the circumstance in the present case. 40. 38. It is apparent from reading of the above part that the said decision had been rendered in a completely different set of facts than those existing in the present case. 39. Besides the above, the existence of the arbitration agreement itself was denied in the said case, which is not the circumstance in the present case. 40. As already noticed hereinbefore, in the present case, the plaintiff itself has produced copy of the agreement, which contains the arbitration clause and thus copy of such agreement continues to be a part of the record for having been produced with the plaint and both the parties have relied on the said agreement for their rival claims: the existence of the agreement dated 13.3.2013 has not been questioned by any of the parties and, therefore, seeking the defendant to again file the original of the agreement dated 13.3.2013 or a certified copy thereof would be a technical approach on part of the Court to hold it against the defendant and the same would be wholly against the spirit of the Act. 41. In the case of Bharat Sewa Sansthan (supra) Hon'ble Supreme Court held that photo copies of the agreements could be taken on record under Section 8 of the Act for asserting the existence of arbitration clause. 42. Recently Hon'ble Supreme Court in the case of Whiz Enterprise Private Limited (supra), inter alia, observed as under:- "The singular question that arises for consideration is whether the High Court was justified in dismissing the writ petition on the ground that the agreement in question that contains the arbitration clause was not filed while seeking prayer for stay. Be it noted, the said agreement has been filed by the plaintiff. Regard being had to the facts obtaining in the case, we are of the considered opinion that in such a case the insistence for filing of the agreement or to treat it as a fatal, was not required. In our considered opinion, the High Court should have adverted to the merits of the case." 43. Regard being had to the facts obtaining in the case, we are of the considered opinion that in such a case the insistence for filing of the agreement or to treat it as a fatal, was not required. In our considered opinion, the High Court should have adverted to the merits of the case." 43. In view of the above state of affairs, which have been noticed hereinbefore, it is apparent that the plea raised by the plaintiff Korel Infragold based on provisions of Section 8(2) of the Act for the first time before this Court seeking to sustain the otherwise unsustainable order passed by the Trial Court on account of the fact that an undisputed agreement dated 13.3.2013, which contains the arbitration clause filed by the plaintiff itself was on record of the Trial Court, cannot be accepted in the circumstances of the case and, consequently, the plea raised in this regard also has no substance. 44. So far as the second plea pertaining to allegation of fraud and malpractice raised by the plaintiff is concerned, as already discussed hereinbefore, the same also has no substance. 45. In view of the above discussion, the revision petition filed by the defendant Dhamu Builders is allowed; the order dated 18.5.2015 passed by the Trial Court rejecting the application under Section 8 of the Act is set aside and parties are referred to arbitration in terms of Clause 18 of the agreement dated 13.3.2013. As a consequence, the writ petition filed by plaintiff - Korel Infragold against order dated 8.7.2015 passed by the Trial Court is dismissed. No order as to costs.