Mahesh Chand vs M/S Basanti Devi Family Trust ...
2013 Latest Caselaw 4187 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

?Court No. - 10
 

 
Case :- CIVIL REVISION DEFECTIVE No. - 87 of 2005
 

 
Revisionist :- Mahesh Chand
 
Opposite Party :- M/S Basanti Devi Family Trust Thru' Its Trustee & Others
 
Counsel for Revisionist :- Pankaj Mithal,Nirvikar Gupta
 
Counsel for Opposite Party :- M.K. Gupta
 
Hon'ble Arun Tandon, J.

The defendant revisionist made an application under Section 8 of the Arbitration and Conciliation Act, 1996 in the said suit with the allegation that between the parties a rent note had been executed which contained an arbitration clause. Therefore, the suit could not be proceeded with and the dispute referred for arbitration.

This application was registered as Application No. 26-C. Objections were filed to the application by the plaintiff landlord being Paper No. 50-C. It was stated amongst other that no rent note was executed between the parties in respect of the tenancy in question nor any arbitration was agreed upon. It has also stated that originally the tenancy was in respect of two separate persons entered into in the year 1990 but in the year 1995, a new tenancy was entered into in respect of one shop. This tenancy was created orally and there exists no agreement between the parties for the dispute being referred to arbitration. It was therefore contended that the application made under Section 8 of the Arbitration Act was misconceived.

Defendant revisionist produced a photocopy of the rent note said to have been signed by the landlord and the lease holders. The rent note contains no date, however, it mentions that the rent of the shop shall be Rs.1400/- per month and shall be for a period of 14 years commencing from 01.03.1990. This rent note contained Clause 14 which according to the applicant was the arbitration clause. It was stated that original rent note was not available with the tenant and, therefore, only photostat copy was filed.

The judge, Small Causes, under the order dated 29.07.2005 had rejected the application made under Section 8 of the Arbitration Act after recording following findings :

(a) The rent note produced by the defendant revisionist was unregistered. According to him it was a lease deed for a period of more than one year (to be specific for 14 years). It was, therefore, compulsorily register-able under Section 107 of the Transfer of Property Act. The rent note being un-registered, therefore, could not have been read in evidence. It has been held also held that in view of the judgment of the Apex Court in the case of Satish Chand Makhan and others vs. Govardhan Das Byas and others reported in AIR 1984 SC, 143, the rent note could be read for collateral purposes but such collateral purpose will not include the terms and conditions of the lease. For the same reason reference has also been made to the judgment of the Apex Court in the case of Jai Kishan Dass Mull vs. Luchhimi Narain Kanoria & Company reported in AIR 1974 SC, 1579.

(b) The rent note relied upon by the defendant revisionist refers to two shops, the period of tenancy whereof commences from 01.03.1990 while the plaint allegations were in respect of eviction from only one shop, the tenancy whereof was initiated on 01.09.1995. It has, therefore, been recorded that the rent note was not pertaining to the tenancy of the shop subject matter of the suit.

(c) The Judge, Small Causes further held that according to own case of the defendant revisionist the rent note contemplate a tenancy for 14 years which period expired on 01.03.2004, therefore, the conditions mentioned therein exhausted by efflux of time. Any conditions of the rent note including the arbitration clause cease to be applicable after 01.03.2004.

In view of the said findings, the Judge, Small Causes has rejected the application made by the defendant revisionist.

It is against this order that the present revision under Section 25 of the Small Causes Courts Act has been filed.

Shri Nirvikar Gupta, counsel for the defendant revisionist contended that even if the rent note could not be read for the purposes of establishing the conditions of lease for want of registration, it could be read for the purposes of referring to the arbitration clause between the parties as arbitration clause is not required to be registered. The unregistered document could be read for collateral purposes. He further submits that the Judge, Small Causes has mis-directed himself in recording a finding that because of expiry of the period of 14 year, the arbitration clause would loose its life inasmuch as the Apex Court in the case of Branch Manager, Magma Leasing & Finance Ltd. and another vs. Potluri Madhavilata and another reported in 2009 (10) SCC, 103 has held that arbitration clause shall not cease to application merely because the contract has come to an end.

Shri M.D.Singh Shekhar, Senior Advocate assisted by Shri Pankaj Agrawal, Advocate in reply with reference to the judgment of the Delhi High Court in the case of National Textile Corporation Ltd. vs. Ashval Vadera reported in 2008 (4) Arb. L.R. 589, paragraph nos. 5 and 6 and the judgment of the Vardhman Spinning and General Mills Ltd. vs. Veena Kumari Wadhawn reported in 1997 (2) Arb. L.R. 680, paragraph nos. 4 and 6 submits that the arbitration clause is an unregistered lease deed which cannot be read in evidence for want of registration cannot be segregated and read separately. He has also placed reliance upon the judgment of the Apex Court in the case of Anthony vs. K.C. Iltoop & Sons and others reported in 2008 J.T. (8) SC, 175 for the proposition that if a document is compulsorily register-able because of being a lease for a period of more than one year, then such document cannot be read in evidence for any purposes, whatsoever.

I have heard learned counsel for the parties and have gone through the records of the present tax revision.

The arbitration clause which is subject matter of dispute between the parties, said to be a part of the rent note in respect of the lease which commenced from 01.03.1990 according to the tenant reads as follows :

?Yah Ki Dono Pakshon Ke Madhya Utpann Har Vivad Ka Nibtara Janpad Ghaziabad Nyayalaya Dwara Athwa Kisi Madhyastha Dwara Karaya Ja Sakega.?

It is not in dispute between the parties that the period of 14 years as contemplated by the said rent note expired on 01.03.2004. The suit was filed in the month of July, 2004. The condition as per the rent note, if any, therefore, exhausted itself by efflux of time on the date the suit was filed. The suit was presented by the landlord for eviction of the tenant on the basis of a lease granted in the year 1995 and in respect of one shop only. The Judge, Small Causes has specifically recorded that there was co-relationship between the rent note as relied upon by the tenant vis a vis the suit which was filed for eviction from the shop in question.

The Apex Court in the case of Om Prakash Chawla vs. Union of India has held as follows :

?The term with regard to arbitration being integral part of the lease cannot be treated as collateral transaction and where the lease deed is inadmissible for want of registration, the term regarding reference to arbitration in case of dispute cannot be enforced and accordingly proceedings before a Court cannot be stayed under Section 34 of the Arbitration Act.?

In view of the pronouncement of law as aforesaid by the Apex Court and it being admitted on record that the rent note relied upon by the defendant revisionist was for a period of more than one year and unregistered, the Judge, Small Causes, therefore, appears to be justified in recording his finding, in the facts of the case, there was no arbitration clause under any legal/valid agreement between the parties which can be read in evidence for the purposes of granting the application made by the defendant revisionist under Section 8 of the Arbitration Act. This Court is also of the opinion that the Judge, Small Causes, appears to be correct in recording a finding that the rent note as relied upon by the applicant exhausted itself in the month of March, 2004. All rights and liabilities arising under the rent note came to an automatic end with the expiry of the period of the rent note. Such rent note could not have been referred to or relied upon for the dispute being referred for arbitration in respect of a suit filed in the year 2007 for eviction of the tenant on the ground that his tenancy had been terminated after due notice under Section 106 of the Transfer of Property Act. The legal proposition in that regard is well supported by the judgment of the Delhi High Court in the case of National Textile Corporation Ltd. (supra).

So far as the judgment relied upon by the defendant revisionist is concerned, in the facts of this case is clearly distinguishable inasmuch as all rights and liabilities under the rent note came to an automatic end with the expiry of the period of tenancy as per the rent note.

No case for interference is made out.

Revision is dismissed.

Interim order, if any, stands discharged.

Dated :16.07.2013

VR/Civil Rev. No. 87-D/05

Hon'ble Arun Tandon, J.

Heard learned counsel for the parties.

Cause shown for the absence of counsel for the revisionist on 20.05.2013 is to the satisfaction of the Court. The order dated 20.05.2013 is, therefore, recalled.

Revision is restored to its original number.

Restoration application is allowed.

Dated :16.07.2013

VR/Civil Rev. No. 87-D/05