Ritika Jhanji vs Raghbir Singh Sehgal & Ors.
2009 Latest Caselaw 2188 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+             FAO (OS) No. 196/2009 and FAO(OS) 197/2009

                                        Reserved on        : May 19th , 2009

                                        Date of decision   : May 21st , 2009

1.      FAO (OS) No. 196/2009

        RITIKA JHANJI                        . ...Appellant
                                 Through : Mr. Viraj Datar, Advocate

              VERSUS


        RAGHBIR SINGH SEHGAL & ORS.              ....Respondents
                          Through : Mr. Nishit Kush, Advocate for
                          Respondent No. 1.

2.      FAO (OS) No. 197/2009


        RITIKA JHANJI                        . ...Appellant
                                 Through : Mr. Viraj Datar, Advocate

              VERSUS

        RAGHBIR SINGH SEHGAL & ORS.              ....Respondents
                          Through : Mr. Nishit Kush, Advocate for
                          Respondent No. 1.

CORAM:
HON'BLE MR. JUSTICE MUKUL MUDGAL
HON'BLE MR. JUSTICE VALMIKI J.MEHTA


     1. Whether the Reporters of local papers may be allowed to see
        the judgment?


     2. To be referred to the Reporter or not?

FAO (OS) No. 196/2009 and FAO(OS) 197/2009                                 Page 1
      3. Whether the judgment should be reported in the Digest?

 %                        JUDGMENT

VALMIKI J.MEHTA, J.

1. These two appeals arise from two impugned orders of the same date viz.

12.5.2009 passed in petitions being OMP Nos. 530 and 657 of 2008. Petitions

were filed under Section 9 of the Arbitration and Conciliation Act, 1996 by the

appellant, seeking reliefs against the respondents 1 & 2 herein and who were

also respondents 1 & 2 in the original petitions. The learned Single Judge by

the impugned orders has dismissed the petitions on two counts. Firstly, it has

been held by the learned Single Judge that there is no arbitration agreement

between the parties. Secondly, the learned Single Judge has further held that

even assuming there is an arbitration agreement, ye, the nature of the disputes

raised in the Section 9 petitions do not fall within the scope of the arbitration

clause.

2. Briefly the facts are that respondents 1 & 3 were the original owners of

the property B-474, New Friends Colony, New Delhi. These respondents

entered into a collaboration agreement dated 14.3.2002 with one Sh. Dinesh

Gupta. As per the collaboration agreement, in lieu of Sh. Dinesh Gupta

reconstructing, at his own cost, the entire property which was to comprise of the

FAO (OS) No. 196/2009 and FAO(OS) 197/2009 Page 2 basement, ground floor, first floor and second floor with terrace rights, Sh.

Dinesh Gupta, was to get the rights in the basement and second floor with

terrace rights of the property. The ground floor was to be owned by the

respondent No. 1 Sh. Raghbir Singh Sehgal and the first floor was to be owned

by his brother Sh. Narinder Singh Sehgal. The appellant Ms Ritika Jhanjhi w/o

Vineet Jhanji purchased the second floor vide the sale deed dated 11.2.2005.

The sale deed was preceded by an agreement to sell dated 7.10.2002. The first

floor which was originally owned by the respondent No. 3, was thereafter,

purchased by the respondent No. 2 under a sale deed dated 7.12.2007. The

respondent No. 2 is a widow and has two children. That disputes and

differences arose between the appellant and the respondent No. 1 (owner of the

ground floor) and the respondent No. 2 (owner of the first floor). These

disputes pertained to water supply related issues of underground water tank and

fixing of booster pumps by the respondents on their municipal line and also

with respect to parking of the cars. These disputes resulted in the appellant's

filing the two petitions in which the impugned orders have been passed.

3. The counsel for the appellant has urged the same points as pressed before

the learned Single Judge that there was an Arbitration Clause which was

binding between the appellant and the respondents 1 & 2 and also that the scope

of the Arbitration Clause covered the disputes which were the subject matter of

the OMPs.

FAO (OS) No. 196/2009 and FAO(OS) 197/2009 Page 3

4. In order to appreciate the contention whether the disputes pertaining to

water supply issues and parking of cars whether the same are within the scope

of the Arbitration Clause, it would be useful to refer to Arbitration Clause which

is a clause in the sale deed dated 11.2.2005 entered into between the appellant

on the one hand and Dinesh Gupta, acting as the attorney holder of the owners,

namely, the respondents 1 & 3 herein on the other hand. As stated above, the

second floor was owned by Sh. Dinesh Gupta under the collaboration agreement

in lieu of his spending the entire amount on reconstruction of the property. The

arbitration clause reads :

"In the event of any dispute arising between the parties with respect to the reconstructions of the building and/or a part of the building on account of any structural defects and/or on account of any damage to the property by an act of God or on account of other circumstances beyond the control of the parties or due to any act of omission and commission of any of the Owners of any flat then in that event the dispute shall be resolved by Arbitration in accordance with the provisions of the Indian Arbitration and Conciliation Act 1996. In the event of Arbitrator finding that the damage to the building is on account of an act of omission or commission of any of the flat Owners and/or on account of negligence of one flat owner then in that even the Arbitrator shall be obliged to compel such party to meet the costs of reconstruction and repair to restore the other parties to their original status and to compensate them for their loss and in the event of defaulting party failing to meet the costs such defaulting party's interest in the Building shall be liable to be sold under the directions of the Arbitrator to meet the costs. In the event of damage being caused due to an act of God or such similar circumstances, all parties shall jointly contribute for the restoration of the Building and a party failing to do so shall be liable to have its interest sold as aforesaid. The Arbitrator shall have the right to issue interim directions including appointing contractors etc. and proceed with the work of reconstruction and restoration pending the final Award and on such terms and conditions as the Arbitrator shall deem just and proper in the circumstances. "

FAO (OS) No. 196/2009 and FAO(OS) 197/2009 Page 4

5. A reading of the aforesaid clause makes it clear that the only disputes

which are the subject matter of the Arbitration Clause are the disputes which

pertain to structural defects or damage to the property either by the act of the

parties to the sale deed or on account of circumstances beyond their control. In

such a case, the clause provided for arbitration with respect to the reconstruction

and repair issues for the structural defects and the damage to the property.

Disputes pertaining to water supply or car parking could under no

circumstances the subject matter of this Arbitration Clause. More so, because

the sale deed has worked itself out by the title in the second floor of the property

having passed on to the appellant under the sale deed, and admittedly, the

disputes do not pertain to any issue arising with respect to passing of the title

under the sale deed much less within the scope of the Arbitration Clause as

reproduced above. Simply because there are disputes between the two parties to

a sale deed (assuming that the respondent No. 1 is a party, and which he was not

as observed hereafter) cannot mean that those disputes will fall within the

subject matter of the Arbitration Clause in the sale deed. The disputes in the

present case may be between the appellant and the respondent No. 1 who are

parties to the sale deed, but, neither the disputes are such which are the subject

matter of the sale deed and nor are they such which fall within the limited scope

of the Arbitration Clause which only pertains to disputes with respect to repairs

and reconstruction for structural defects and damage to the property.

FAO (OS) No. 196/2009 and FAO(OS) 197/2009 Page 5

6. We also agree with the second finding of the learned Single Judge that

neither the respondent No. 1 nor the respondent No. 2 can be said to be parties

to the Arbitration Clause and, therefore, there is no arbitration agreement

between the parties. So far as the respondent No. 2, the owner of the first floor

is concerned, the position is very clear that she independently purchased the

first floor of the property from the respondent No. 3 and, therefore, there is no

arbitration agreement or any agreement/document whatsoever executed by and

between the appellant and the respondent No. 2. It is not understood as to how

the appellant can urge that the respondent No. 2 is a successor in interest of the

respondent No. 3 simply because the respondent No. 3 is a party to the sale deed

dated 11.5.2005 entered into between the appellant and Sh. Dinesh Gupta as

attorney of respondents 1 & 3. As already stated above not only the sale deed

had worked itself out and does not survive as there are no disputes pertaining to

the sale deed, also, the subject matter of the sale deed dated 11.2.2005 is the

second floor of the property and the subject matter of the sale deed between the

respondent No. 2 as purchaser and respondent No. 3 as seller is for a different

floor viz the first floor of the property. Though as stated above, the respondent

No. 3 was only a nominal party to the sale deed dated 11.2.2005 inasmuch as

he was acting through the general attorney Sh. Dinesh Gupta for the reason that

to transfer the title in the second floor which had vested in the builder under the

collaboration agreement, it was necessary to have the respondent Nos. 1 & 3

FAO (OS) No. 196/2009 and FAO(OS) 197/2009 Page 6 have to acted as transferors because without them a complete title would not

have passed on to the appellant of the second floor with the proportionate

interest in the land, however, that by itself cannot make the agreement of the

second floor of the appellant as between the respondents 1 & 3 acting in their

own capacity and with the appellant. The disputes which have arisen between

the appellant and the respondents 1 & 2 are simply and categorically between

two separate apartment owners and which relationship inter se the appellant and

the respondents 1 & 2 is not the subject matter of any agreement, much less

having an Arbitration Clause therein. So far as the respondent no. 1 is

concerned, the same reasoning as applicable to respondent no. 2 will also apply

to hold that the respondent no. 1 cannot be said to be the successor in interest of

the builder. The disputes are thus between owners of different flats at different

floors of the property and governed by different sale deeds and it is not thus

permissible to join these documents having different subject matters/different

apartments to hold that there is an arbitration agreement jointly between the all

the three parties viz the appellant, respondent no. 1 and the respondent no. 2.

7. The counsel for the appellant has cited the case of Punjab State

Industrial Development Corporation Ltd. Vs. Triveni Engineering Industries

Ltd. and others 2009(1) AD (Delhi) 502 in support of his contention that the

respondents No.1 and 2 are successors in interest of the builder/respondents

No.1 and 3 and, therefore, the Arbitration Clause in the Sale Deeds binds the FAO (OS) No. 196/2009 and FAO(OS) 197/2009 Page 7 parties. We fail to see how this judgment applies to the facts of the case

inasmuch as we have already held that not only the Sale Deed has been worked

out and nothing remains to be performed thereunder, but also, that the disputes

are not between parties with respect to the subject matter under the sale deed

and disputes are between different owners of different flats on different floors

and each governed by a separate document/sale deed. Additionally the

judgment will not apply as we have also held that the disputes which were the

subject matter of the Section 9 petitions do not fall in the scope of the

Arbitration Clause.

8. We further agree with the learned Single Judge that the petitions under

the Arbitration Act were simply filed to avoid paying court fees on a regular

suit.

9. The appeals, therefore, are dismissed.

                                                 VALMIKI J. MEHTA, J




                                                   MUKUL MUDGAL, J


MAY 21 , 2009
dkg




FAO (OS) No. 196/2009 and FAO(OS) 197/2009                                Page 8