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Madhya Pradesh High Court · body

2017 DIGILAW 444 (MP)

B. N. R. Enterprises (M/s. ) Thr. Akash Sachdev v. Laxmidevi

2017-04-03

PRAKASH SHRIVASTAVA

body2017
ORDER 1. This application under section 11(6) of Arbitration and Conciliation Act, 1996 has been filed by applicant seeking appointment of an independent arbitrator to resolve the dispute between the parties. 2. The case of applicant is that respondents were owner in possession of the land in question and they had entered into a ratio-deal-cum-development agreement with applicant for developing residential group housing scheme on the land. The development agreement was executed on 15.4.2011 vide Anexure A-1 and a sum of Rs.3 lacs was paid by applicant. Further plea is raised that respondent No.3 was not present at the time of execution of agreement but it was assured by respondents No.1 and 2 that they would get thumb impression and when the applicant had approached respondent No.1 on 26.4.2011 to get thumb impression of respondent No. 3, with an intention to destroy the agreement, respondent No.1 tried to disfigure it hence police report was lodged. Thereafter the applicant had sent the notice dated 21.5.2011 which was replied on 1.6.2011 and another notice dated 25.8.2015 was sent for appointment of arbitrator but since no action was taken by respondents therefore, present AC was filed. 3. Respondents have filed their reply opposing the prayer and raising objection to appointment of arbitrator. 4. Learned counsel for applicant submits that execution of agreement has been admitted in the reply dated 1.6.2011 and that the claim of applicant is not a dead claim and land in question is the joint property of respondents No.1 to 3, therefore, respondent No.3 is also bound by agreement and the original agreement has been seized by the police therefore, its notarized copy has been filed with arbitration case and certified copy obtained from the concerned Court has been received and filed separately and since applicant is not tendering the agreement in evidence, therefore, the issue of stamp duty is irrelevant at this stage. 5. As against this learned counsel for respondents No.1 to 3 has raised an objection that original agreement has not been filed and the claim is time barred and respondent No.3 admittedly is not the signatory to the agreement and notarized copy could not be filed in absence of the original and there is no authentic signed copy of the agreement on record and stamp duty on the agreement has not been paid. 6. 6. Having heard the learned counsel for parties and on perusal of the record it is noticed that the original agreement is not on record. The applicant has filed notarized photocopy of the agreement Annexure A-1 on which the thumb impression and signatures of respondents No.1 and 2 are shown but in the certified copy of the said agreement, part of the page containing those signatures and thumb impression is missing. 7. The plea of applicant in arbitration application as also para 3 of rejoinder is that respondent No.2 had cut the sign portion of the agreement with scissor with an intention to disfigure and destroy the agreement. Factual finding on such a plea can be recorded only after the evidence is led. The existence of arbitration agreement is a pre- condition for exercising the power under section 11 of Act but in the present case there is serious dispute about existence of agreement signed by all the concerned parties and leading of elaborate evidence is required to establish the same. As per the applicant’s own averments the respondent No.3 who is also the joint owner of the property is not a signatory of the agreement. 8. The reply dated 1.6.2011 relied upon by counsel for applicant contains the plea to the extent that signatures of respondent No.2 were taken by pressurizing him and criminally intimidating him and other co owner had not agreed to it. The applicant has raised a plea that other co-owners who have not signed the agreement are also bound by it. Such a plea also needs to be established by leading detail evidence. 9. The Supreme Court in the matter of N. Radhakrishnan v. Maestro Engineers and others, reported in (2010)1 SCC 72 , has held that if a dispute requires detailed investigations and production of elaborate evidence, proper remedy is the civil suit and in that case since serious allegations of fraud and malpractices committed in account books and manipulation of finances of partnership firm were alleged, hence the civil suit was found to be the proper remedy. 10. In the matter of N. Radhakrishnan (supra), it has been held by the Supreme Court : “23. 10. In the matter of N. Radhakrishnan (supra), it has been held by the Supreme Court : “23. …………In our view and relying on the aforesaid observations of this Court in the aforesaid decision and going by the ratio of the above mentioned case, the facts of the present case does not warrant the matter to be tried and decided by the Arbitrator, rather for the 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 matter involving various questions and issues raised in the present dispute. 24. This view has been further enunciated and affirmed by this Court in the decision of Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd. [ AIR 1999 SC 2354 ], wherein this Court under para 4 observed : "4. Sub-section (1) of section 8 provides that where the judicial authority before whom an action is brought in a matter, will refer the parties to arbitration the said matter in accordance with the arbitration agreement. This, however, postulates, in our opinion, that what can be referred to the Arbitrator is only that dispute or matter which the Arbitrator is competent or empowered to decide." 25. The learned counsel for the respondent further elaborated his contention citing the decision of the High Court of Judicature at Madras in H.G. Oomor Sait v. Aslam Sait wherein it was held (CTC pp. 269-70) : "Power of civil Court to refuse to stay of suit in view of arbitration clause on existence of certain grounds available under 1940 Act continues to be available under 1996 Act as well and the civil Court is not prevented from proceeding with the suit despite an arbitration clause if dispute involves serious questions of law or complicated questions of fact adjudication of which would depend upon detailed oral and documentary evidence. The civil Court can refuse to refer matter to arbitration if complicated question of fact or law is involved or where allegation of fraud is made. The civil Court can refuse to refer matter to arbitration if complicated question of fact or law is involved or where allegation of fraud is made. Allegations regarding clandestine operation of business under some other name, issue of bogus bills, manipulation of accounts, carrying on similar business without consent of other partner are serious allegations of fraud, misrepresentations etc., and therefore application for reference to Arbitrator is liable to be rejected." We are in consonance with the above-referred decision made by the High Court in the concerned matter. 26. In the present dispute faced by us, the appellant had made serious allegations against the respondents alleging him to commit malpractices in the account books and manipulate the finances of the partnership firm, which, in our opinion, cannot be properly dealt with by the Arbitrator. As such, the High Court was justified in dismissing the petition of the appellant to refer the matter to an Arbitrator. In this connection, it is relevant to refer the observation made by the High Court in its impugned judgment : "The above decision squarely applies to the facts of the present case. In the present case as well there is allegation of running rival firm, interference with the smooth administration of the firm. As already stated since the suit has been filed for declaration to declare that the revision petitioner is not a partner with effect from 18.11.2005, and for consequential injunction restraining the petitioner from disturbing the smooth functioning of the first respondent firm, the issue relates to the causes which compelled the respondents to expel the revision petitioner from the partnership firm and the necessity to reconstitute the firm by entering into a fresh partnership deed. Therefore, such issues involve detailed evidence which could be done only by a civil Court......" 11. Having regard to the aforesaid position in law and the serious disputed factual questions involved in the matter and the fact that original or authentic copy of agreement signed by all the parties is not placed on record, I am of the opinion that the prayer made in the AC for appointment of arbitrator cannot be granted. 12. AC is accordingly dismissed, however with liberty to applicant to take recourse to the civil suit or such other appropriate remedies as are available in law.