THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE
AND
THE HON'BLE SRI JUSTICE N.V.SHRAVAN KUMAR
+ C.M.A. Nos.315, 316 and 317 of 2023
% Date:27.09.2023
# M/s.Dakshin Shelters Private Limited
... Appellant
v.
$ Mr. Parikshit Shah and another.
... Respondents
! Counsel for the appellant : Mr.A.Venkatesh,
learned Senior Counsel for
Ms.B.Aruna
^ Counsel for respondent No.1 : Mr. Vedula Srinivas,
Learned Senior Counsel for
Ms.Vedula Chitralekha
< GIST:
HEAD NOTE:
? CASES REFERRED:
1. 2015 (6) ALD 584 (DB)
2. (2021) 4 SCC 786
3. (2000) 4 SCC 539
4. (2015) 14 SCC 444
5. (2003) 7 SCC 517
6. (2007) 3 SCC 557
7. (2022) 8 SCC 713
8. (2021) 2 SCC 1
9. (2023) 7 SCC 193
2
THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE
AND
THE HON'BLE SRI JUSTICE N.V.SHRAVAN KUMAR
C.M.A.Nos.315, 316 and 317 of 2023
COMMON JUDGMENT: (Per the Hon'ble the Chief Justice Alok Aradhe)
These appeals under Section 37 of the Arbitration
and Conciliation Act, 1996 (briefly, '1996 Act') emanate
from orders dated 02.06.2023 passed by the Court of
Special Judge for Trial and Disposal of Commercial
Disputes, Ranga Reddy District, at L.B.Nagar (briefly 'the
Commercial Court') by which the applications preferred by
the appellant under Section 8 of the 1996 Act have been
dismissed.
2. On admitted facts, common issues of law arise for
consideration in this batch of appeals and therefore, we
have heard the same analogously and this batch of cases is
decided by this common judgment. For the facility of
reference, facts from C.M.A.No.315 of 2023 are being
referred to.
3
3. Facts
giving rise to filing of appeal briefly stated are that the appellant and respondent No.1 had entered into a Development Agreement cum General Power of Attorney (briefly, 'DAGPA') on 23.03.2006 in respect of land measuring Acs.10.02 guntas situate across survey Nos.160, 244(P) and 264/1 of Vattinagulapalli Village, Rajendranagar Mandal, Ranga Reddy District. The relevant clause 25 of the aforesaid DAGPA contains an arbitration clause, which reads as under:
25. Arbitration:
25.1. Tribunal: Disputes relating to this Agreement or its interpretation shall be referred to the arbitration of an arbitral tribunal, consisting of three arbitrators (Tribunal), one each to be appointed by the Parties hereto and the third to be appointed by the two arbitrators so appointed. The award of the Tribunal shall be final and binding on the Parties. The arbitration proceedings will be held only in Secunderabad and the courts situated in the Ranga Reddy District alone shall have the territorial jurisdiction to entertain the dispute. The provisions 4 of Arbitration and Conciliation Act shall comply to the arbitration procedures.
4. The dispute between the parties in relation to matters covered under DAGPA had arisen and therefore, under clause 25 of DAGPA, arbitral proceedings were initiated and the arbitral tribunal comprising of Justice (Retired) Vaman Rao and Justice (Retired) A.Gopal Reddy and Mr. L.Ravichander, learned Senior Counsel of this Court was constituted.
5. In Alien Developers v. M.Janardhan Reddy 1, the High Court of Andhra Pradesh held that the dispute regarding cancellation of registered document cannot be referred for adjudication to the arbitration. Thereupon, in view of the aforesaid decision, the respondent No.1 withdrew the arbitration proceedings on 28.10.2017.
6. Thereafter, respondent No.1 filed suit against the appellant seeking relief of cancellation of DAGPA, forfeiture of deposit amount and other reliefs. The appellant entered 1 2015 (6) ALD 584 (DB) 5 appearance in the suit and filed an application under Section 8 of the 1996 Act seeking referral of dispute to arbitration in view of the decision of the Hon'ble Supreme Court in Deccan Paper Mills Company Limited v. Regency Mahavir Properties 2.
7. The Commercial Court, however, by an order dated 02.06.2023 inter alia held that the appellant since 23.03.2006 did not take any steps to resolve the dispute under clause 25 of the DAGPA. It was further held that the appellant did not even suggest the name of the arbitrator and had no intention for resolution of the dispute by arbitral tribunal. It was held that no justified reason has been made out to refer the dispute to the arbitration. Accordingly, the application preferred by the appellant under Section 8 of the 1996 Act was dismissed. In the factual background, this appeal has been filed.
8. Learned Senior Counsel for the appellant submits that the appellant was justified in filing the application under Section 8 of the 1996 Act in view of the subsequent 2 (2021) 4 SCC 786 6 decision of the Hon'ble Supreme Court in Deccan Paper Mills Company Limited (supra). It is further submitted that the Commercial Court ought to have appreciated that the respondent No.1 could not have suggested the name of the arbitrator in a proceeding under Section 8 of the 1996 Act. It is urged that the there is no estoppel against the appellant. In support of the aforesaid submissions, learned Senior Counsel has placed reliance on the decisions of the Hon'ble Supreme Court in P.Anand Gajapathi Raju v. P.V.G.Raju 3, Sundaram Finance Limited v. T.Thankam 4, Deccan Paper Mills Company Limited (supra), M.A.Murthy v. State of Karnataka 5, P.V.George v. State of Kerala 6 and Krishna Rai v. Banaras Hindu University 7.
9. On the other hand, learned Senior Counsel for respondent No.1 submits that in the fact situation of the case, it is not permissible for the appellant to invoke the provisions of Section 8 of the 1996 Act. It is further 3 (2000) 4 SCC 539 4 (2015) 14 SCC 444 5 (2003) 7 SCC 517 6 (2007) 3 SCC 557 7 (2022) 8 SCC 713 7 submitted that the doctrine of estoppel applies to the fact situation of the case. It is further submitted that the direction sought for in the suit to the Sub Registrar to register the document, which is the sovereign power, cannot be exercised and no relief can be given by the arbitral tribunal. The same can be adjudicated only by the civil Court. In support of the aforesaid submissions, learned Senior Counsel for respondent No.1 has placed reliance on the decision of the Hon'ble Supreme Court in Vidya Drolia v. Durga Trading Corporation 8 and Gujarat Composite Limited v. A Infrastructure Limited 9.
10. We have heard the submissions on both sides and perused the record. The High Court of Andhra Pradesh in Alien Developers (supra) held that the dispute regarding cancellation of a registered document cannot be referred for adjudication to an arbitral tribunal. Thereupon, respondent No.1 sought leave of the Court to withdraw the arbitral proceedings initiated before the arbitral tribunal. Thereupon, the arbitral tribunal, vide proceedings dated 8 (2021) 2 SCC 1 9 (2023) 7 SCC 193 8 28.10.2017, terminated the arbitration proceedings, which reads as under:
The parties invoked the Arbitration under a Development Agreement dated 23.03.2006. On claimant filing a claim petition, respondent filed I.A. under Section 16(1) of the Arbitration and Conciliation Act on 02.01.2017 to Rule on the jurisdiction of the Tribunal for granting the relief claimed in the light of the Judgment in 2015 (6) ALD 584.
Today, claimant filed a Memo seeking leave to withdraw the Arbitration proceedings with liberty to work out remedies before appropriate forum.
The claimant is permitted to withdraw the claim, liberty is granted to pursue such other remedies as are available under the law.
The Arbitration Proceedings are accordingly terminated.
11. Before proceeding further, it is apposite to deal with Rule of Estoppel. The Hon'ble Supreme Court in B.L.Sreedhar v. K.M.Muni Reddy 10, in para 16 has held as under:
10
(2003) 2 SCC 355 9 "The essential factors giving rise to an estoppel are, I think --
(a) A representation or conduct amounting to a representation intended to induce a course of conduct on the part of the person to whom the representation was made.
(b) An act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation was made.
(c) Detriment to such person as a consequence of the act or omission where silence cannot amount to a representation, but, where there is a duty to disclose, deliberate silence may become significant and amount to a representation. The existence of a duty on the part of a customer of a bank to disclose to the bank his knowledge of such a forgery as the one in question was rightly admitted.(Per Lord Tomlin, Greenwood v. Martins Bank [1933 AC 51 : 1932 All ER Rep 318 : 101 LJKB 623 : 147 LT 441 (HL)] , All ER p. 321 C-E.) See also Thompson v. Palmer [(1933) 49 CLR 547], Grundt v. Great Boulder [(1937) 59 CLR 675] and Central Newbury Car Auctions v. Unity Finance [(1957) 1 QB 371."
10
12. In Pratima Chowdhury v. Kalpana Mukherjee 11, the Hon'ble Supreme Court dealt with Rule of Estoppel. The relevant extract of para 35 reads as under:
"It needs to be understood that the rule of estoppel is a doctrine based on fairness. It postulates the exclusion of the truth of the matter. All, for the sake of fairness. A perusal of the above provision reveals four salient preconditions before invoking the rule of estoppel.
(i) Firstly, one party should make a factual representation to the other party.
(ii) Secondly, the other party should accept and rely upon the aforesaid factual representation.
(iii) Thirdly, having relied on the aforesaid factual representation, the second party should alter his position.
(iv) Fourthly, the instant altering of position, should be such, that it would be iniquitous to require him to revert back to the original position. Therefore, the doctrine of estoppel would apply only when, based on a representation by the first party, the second party alters his position, in such manner, that it would be unfair to restore the initial position."11
(2014) 4 SCC 196 11
13. A plea of estoppel could not be availed of or when there is no duty owed by a person sought to be estopped and no such representation is made by such a person. The Hon'ble Supreme Court in New Marine Coal Company (Bengal) Private Limited v. Union of India 12 has cited with approval the observations in Halsbury Laws of England with regard to Doctrine of Estoppel, which are extracted below:
"before anyone can be estopped by a representation inferred from negligent conduct, there must be a duty to use due care towards the party misled, or towards the general public of which he is one."
14. In the instant case, the respondent No.1 withdrew the arbitral proceedings in view of the law laid by a Division Bench of Andhra Pradesh High Court in Alien Developers (supra). Subsequently, there was a change in the law and in Deccan Paper Mills Company Limited (supra), the Hon'ble Supreme Court answered the issue involved before it, namely whether the disputes were not arbitrable since the plaintiff sought the relief of cancellation of written 12 AIR 1964 SC 152 12 instruments under Section 31 of the Specific Relief Act, 1963, in the negative. The judgment of the Andhra Pradesh High Court in Alien Developers (supra) was set aside.
15. Thereupon, the appellant preferred applications under Section 8 of the 1996 Act. There was no representation or conduct amounting to a representation intended to induce a course of conduct on the part of the appellant. In the absence of essential factors giving rise to estoppel having been fulfilled, in our considered opinion, the doctrine of estoppel has no application to the facts of the case. It is also pertinent to note that the appellant was entitled to take a stand that the dispute is arbitrable by filing an application under Section 8 of the 1996 Act, as such a plea became available to him due to subsequent decision of the Hon'ble Supreme Court in Deccan Paper Mills Company Limited (supra).
16. The Commercial Court has dismissed the applications filed by the appellant under Section 8 of the 1996 Act on extraneous considerations. The Commercial Court ought to have appreciated clause 25 of the DAGPA, 13 which provides for adjudication of the dispute by the arbitral tribunal and ought to have allowed the applications filed by the appellant under Section 8 of the 1996 Act.
17. For the aforementioned reasons, the impugned orders dated 02.06.2023 passed by the Commercial Court in the applications filed by the appellant are set aside. Consequently, the applications filed by the appellant under Section 8 of the 1996 Act are allowed.
18. In the result, the Civil Miscellaneous Appeals are allowed.
Miscellaneous applications, pending if any, shall stand closed.
______________________________________ ALOK ARADHE, CJ ______________________________________ N.V.SHRAVAN KUMAR, J 27.09.2023 Note: LR copy to be marked.
(By order) pln