Divi Satchandra Kiran v. Wisdom Mines Educational Society
2025-05-02
P.SREE SUDHA, T.VINOD KUMAR
body2025
DigiLaw.ai
JUDGMENT : P. Sree Sudha, J. This Civil Miscellaneous Appeal is filed against the Order dated 01.07.2024 in Arb.O.P.No.34 of 2024, passed by the learned XXV-Additional Chief Judge, City Civil Court, at Hyderabad. 2. The Wisdom Mines Educational Society/respondent herein represented by its authorized signatory V.Kesavan, had filed an application against the appellants herein before the trial Court vide Arb.O.P.No.34 of 2024, under Section 9 of Arbitration and Conciliation Act, 1996. The trial Court after considering the arguments of both sides allowed the application with costs. Aggrieved by the said Order, respondents therein preferred the present Civil Miscellaneous Appeal. 3. The brief facts of the case are that the appellants herein are the joint owners of the subject property and they let out the same to respondent Society by way of unregistered and unstamped lease deed dated 14.11.2018. The respondent Society was running a school named “Mount Banyan School”, in the said property, but it was not paying rents regularly, as such appellants issued legal notice to the respondent on 05.07.2021, terminating the lease deed. On that, respondent Society has issued reply notice on 14.07.2021. A copy of the legal notice and reply notice are filed before this Court. The respondent Society requested time till November, 2023, to find an alternate premise to relocate the school and also assured the appellants that they will pay the arrears of rent and also continue to pay the rentals to the concerned owner in time. Appellants have also categorically informed to the respondent Society that lease will not be renewed after November, 2023. 4. Thereafter, appellants executed an unregistered gift deed dated 20.07.2021, in favour of one Chandravadana, and handed over all the rights over the property in her favour. The said Chandravadana, in turn sold the property to Divi Properties Pvt. Ltd., i.e, part of the subject property through a sale deed bearing document No.1327 of 2022, dated 20.04.2022, and the balance through a sale deed bearing No.1156 of 2024, dated 23.03.2024. In November, 2023, respondent Society refused to vacate the premises and also to pay the arrears of rents and accordingly, respondent Society got issued legal notice to the appellants on 07.02.2024, invoking the arbitration clause vide clause 9.2 of the lease agreement dated 14.11.2018. Thereafter, appellants received summons from the trial Court in O.S.No.668 of 2024, which was filed by the respondent Society, for perpetual injunction.
Thereafter, appellants received summons from the trial Court in O.S.No.668 of 2024, which was filed by the respondent Society, for perpetual injunction. Upon discussions and deliberations, respondent Society intended to withdraw the same and the appellants had also filed a petition under Section 8 of the Arbitration and Conciliation Act, 1996, on 21.02.2024, seeking to refer the matter for arbitration. Subsequently, respondent Society has filed a withdrawal petition on 01.04.2024 vide I.A.No.801 of 2024 in O.S.No.668 of 2024. The trial Court allowed the said application and dismissed the suit on 03.04.2024, on the ground that matter was settled out of Court. 5. Later, respondent Society filed a writ petition vide W.P.No.8907 of 2024, with a mala fide intention challenging the proceedings bearing No.R.C.No.0466/A2/2024, dated 11.03.2024, falsely stating that suit was still pending. The said writ petition was disposed of on 04.04.2024. The respondent Society and their President and Vice-President played fraud on the Court basing on the fraudulent representation. The respondent Society taking undue advantage of the lease deed dated 14.11.2018, fraudulently filed a petition in Arb.O.P.No.34 of 2024, under Section 9 of the Arbitration and Conciliation Act, 1996, and appellants herein have also filed their counter to the said petition, but the trial Court allowed the said petition by Order dated 01.07.2024. 6. Learned Counsel for the appellants herein mainly contended that the lease deed dated 14.11.2018, was terminated on 05.07.2021 and thus there was no agreement between both the parties and the question of following terms under the arbitration agreement does not arise. He also contended that there was incorrect interpretation of legal principles. The trial Court erred in observing that the respondent Society has made out prima facie case, balance of convenience and established irreparable loss and no proper reasons were assigned. Therefore, requested the Court to set aside the Order of the trial Court. 7. Heard arguments of both sides and perused the record. 8. Learned Counsel for the appellants relied upon the decision of the High Court Delhi, in the case of National Textile Corporation Ltd., and another Vs.Ashval Vaderaa, 2008 SCC Online Del 1201 in which the Court held that arbitration clause finding place in earlier lease deed cannot be invoked by a tenant and also held as follows: “5.
8. Learned Counsel for the appellants relied upon the decision of the High Court Delhi, in the case of National Textile Corporation Ltd., and another Vs.Ashval Vaderaa, 2008 SCC Online Del 1201 in which the Court held that arbitration clause finding place in earlier lease deed cannot be invoked by a tenant and also held as follows: “5. It is settled law that in case of lease of immovable properties, if the lease is for a period of one year or more lease deed is required to be compulsorily registered… …The Court cannot look into or rely upon an unregistered document which purports to create lease of one year or more than one year. If a document is inadmissible because of its non-registration or because of its not having proper stamp duty, all its terms are inadmissible including the one which provides for an arbitration between the parties. An arbitration agreement can be enforced only along with the contract between the parties and such a contract must be a valid contract, admissible under law. If a contract is not admissible in law, every clause of it is inadmissible in law including arbitration clause.” 9. Learned Counsel for the appellants also relied upon the decision of the High Court of Delhi, in the case of Vardhaman Spinning and General Mills Ltd., Vs.Veena Kumari Wadhawan, 1997 SCC Online Del 694 in which it was held that “where the lease deed is inadmissible for want of registration, the term regarding reference to arbitration in case of a dispute, cannot be enforced and accordingly proceedings before a Court cannot be stayed under Section 84 of the Arbitration Act.” 10. In fact, respondent Society entered into lease agreement with the appellants for a period of five years for running the school on 14.11.2018, as such agreement was in existence till November, 2023, but in the meanwhile appellants issued legal notice dated 05.07.2021, by terminating the lease agreement, for which respondent Society issued reply notice on 14.07.2021 and three years after the reply notice, subsequent to the accepting rental payment it is stated that appellants are interfering with the subject property. In a legal notice dated 07.02.2024, respondent Society invoked the arbitration clause 9.2 of lease agreement dated 14.11.2018, calling upon the arbitrator to resolve the disputes between the parties.
In a legal notice dated 07.02.2024, respondent Society invoked the arbitration clause 9.2 of lease agreement dated 14.11.2018, calling upon the arbitrator to resolve the disputes between the parties. Admittedly, it was an unregistered and unstamped lease deed entered into by the parties only for a period of five years, as such the arbitration in the said clause cannot be invoked by the tenant that too after the period of lease in November, 2023, but the respondent approached the appellants for execution of renewed lease deed and they orally agreed to be remained in possession and respondent also issued two cheques each for an amount of Rs.2,29,500/- dated 10.04.2024. Appellants have issued the notice of termination on 04.07.2021, terminating the lease deed dated 14.11.2018. The trial Court observed that respondent Society was running a school in the subject premises and if the appellants interfere with the functioning the of the school, there is every possibility of causing damage to the academic year of the students and no injury or irreparable loss would be caused to the appellants if the injunction is granted and accordingly allowed the application. 11. Admittedly, lease deed was in existence only for five years as it was unregistered and unstamped lease deed. It is settled principle of law that a person who approached the Court for grant of relief, equitable or otherwise, is under a solemn obligation to candidly disclose all the material/important facts which has bearing on the adjudication of the issues raised in the case. It is the duty of the party asking for an injunction to bring to the notice of the Court all facts material to the determination of his right to have injunction and it is not an excuse for him to say that he was not aware of the importance of any facts which he has omitted to bring forward. Where plaintiff does not act bona fidely and does not put every material facts before the Court, the Court is within its inherent power to refuse to grant him injunction, even though there might be facts upon which injunction might be grant. Conduct of the plaintiff is very material in bringing the case and disclosing the facts before the Court.
Where plaintiff does not act bona fidely and does not put every material facts before the Court, the Court is within its inherent power to refuse to grant him injunction, even though there might be facts upon which injunction might be grant. Conduct of the plaintiff is very material in bringing the case and disclosing the facts before the Court. Plaintiff is required to make fullest possible disclosure of all material facts within his knowledge to the Court and if he does not make that fullest possible disclosure, he cannot obtain any advantage from the proceedings and is liable to be deprived of any advantage he might have already obtained by means of the order which has thus wrongly been obtained by him by concealment of material facts. Moreover though the period of lease was completed, respondent Society again revoked the arbitration clause mentioned in the lease deed, but the trial Court without considering the same, allowed the application, which is patently erroneous. Therefore, this Court finds that it is just and reasonable to set aside the Order of the trial Court. 12. In the result, the present Civil Miscellaneous Appeal is allowed by setting aside the Order of the trial Court in Arb.O.P.No.34 of 2024, dated 01.07.2024. There shall be no order as to costs. Miscellaneous petitions pending, if any, shall stand closed.