Rakesh Bala Aneja & Ors. vs J.S.Sood And Ors.
2009 Latest Caselaw 4403 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                          Date of Reserve: August 12, 2009
                                           Date of Order: October 30, 2009
+ OMP No.491/03

%                                                           30.10.2009

       RAKESH BALA ANEJA AND ORS.                           .... Petitioner
       Through : Mr. J.P.Sengh, Sr. Adv. with
                 Mr. Manoj Saxena, Adv.

       Versus

       J.S. SOOD AND ORS.                      .... Respondents
       Through:   Mr. Sandeep Sethi, Sr. Adv. with
                  Mr. Gulshan Rai Bajaj & Mr. Nishant Dutta, Advs.

       JUSTICE SHIV NARAYAN DHINGRA

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

2.     To be referred to the reporter or not?

3.     Whether judgment should be reported in Digest?

       JUDGMENT

By this petition, the petitioner has assailed validity of award dated

14th/23rd August, 2003 passed by Mr. J. S. Sood, sole Arbitrator on various

grounds.

2. The facts relevant for purpose of deciding this petition are that Sh.

S.C.Aneja and Smt. Sushil Bajaj had entered into a collaboration agreement

on 5th January, 1983. The collaboration agreement contained following

arbitration clause:-

"11. That in case of any dispute/objection arising out of, touching or in any manner connected with the agreement above mentioned, the same shall be referred to the Sole Arbitration of Shri J.S. Sood, Managing Director, Great Arts Pvt Ltd., Film Distributors, Jogdhian Building, Chandni Chowk, Film Colony, Delhi whose decision shall be binding and final on the parties.

It is specifically made clear that both the parties have complete faith in his honesty and integrity and he is known to both of them."

3. Smt. Sushil Bajaj filed a claim before the Arbitrator against Sh

S.C.Aneja, predecessor in interest of the present petitioners, alleging therein

that Sh.S.C.Aneja who had entered into a collaboration agreement with her on

5th January, 1983, was allotted a commercial land bearing no.P-2, Sector-5,

Noida measuring about 850 sq. yards for construction and running of a

temporary cinema. On allotment of land, Sh.S.C.Aneja was not in a position

to pay the amount as demanded by Noida authority and he approached

claimant and entered into a collaboration agreement dated 5 th January, 1983

with the claimant for purpose of making payment of the allotment money to

Noida authority as well as for raising the construction and running the cinema

thereon. In pursuance of the agreement claimant paid money to the Noida

authority and invested about Rs.20 lakh on the construction of the temporary

cinema and thereafter started running the cinema. In the year 1986

administration of Noida authority agreed to allot more land to Sh.S.C.Aneja for

purpose of cinema. Sh.S.C.Aneja wanted claimant to invest another sum of

Rs.30 lakhs (26 lakhs as allotment value and Rs.4 lakhs as penalty etc.) for

the same. Claimant and her husband Sh.Inderjeet Bajaj agreed to do so and

another agreement dated 10th January, 1987 was entered into between Sh.

Inderjeet Bajaj and Sh.S.C.Aneja whereby Sh. Inderjeet Bajaj agreed to invest

Rs.30 lakhs in due course of time. The investment was made by paying

Rs.14 lakhs in cash which was remitted to Noida authority and for balance

amount of Rs.16 lakhs, a bank guarantee was given to ensure payment of

Rs.1 lakh per month by claimant‟s husband, Sh. Inderjeet Bajaj. Thus

claimant and her husband together invested a sum of Rs.50 lakhs in the

cinema plot which is now known as „Alka cinema‟ for construction as well as

running the cinema and Sh.S.C.Aneja had not spent any amount. The

cinema was being managed and run by claimant and her husband in

accordance with the agreement. The parties had also created a private

limited company in the name of „S. C. Aneja Theaters Pvt. Ltd.‟ in which Sh.

S.C.Aneja was one of the director and remaining 3 directors were Smt.Sushil

Bajaj (claimant), Sh.Inderjeet Bajaj (claimant‟s husband) and Sh.Sanjay Bajaj

(a family member of the claimant). Sh. Inderjeet Bajaj was the managing

director of the company and Noida authority was requested to transfer the

allotment of cinema plot to this company. As per article of association of this

company Sh. S. C. Aneja was to hold 25% of the share capital of the

company and balance was to be held by the family of Smt. Sushil Bajaj and

her husband.

4. The claimant submitted that while claimant was running Alka cinema as

per the agreement upto 1st April, 1998 when suddenly on the night, 2nd April,

1998, Sh. S. C. Aneja with the help of one inspector Bal Sharma and other

police official broke open the locks of the building, abused and manhandled

the representatives and employees of claimant, kept them in illegal custody

throughout night and obtained their signatures on blank papers. The officials

and employees of claimant were allowed to leave, only on the next morning

and the cinema was forcibly occupied by Sh.S.C.Aneja.

5. It is only after this forcible occupation of cinema by Sh.S.C.Aneja with

the help of local police that the claimant invoked arbitration clause and filed

claim before the Arbitrator named in the agreement between the parties.

6. Sh.S.C.Aneja filed counter claim in his defence before the Arbitrator.

He stated that he had never executed agreement dated 5 th January, 1983 and

the agreement did not bear his genuine and original signatures and was a

forged document. He further submitted that even if the document was not

held as a fabricated document, the license of the cinema plot allotted to him

could not be assigned and he could not legally assign his rights under

Cinematography Act to an outsider. He submitted that Clause 8(b) of the

license agreement prohibited direct or indirect transferring, assigning, selling,

encumbering or parting with his interest without consent of the grantor, i.e.,

Noida authority.

7. Mr. S.C. Aneja did not challenge the claims of the claimant about

investment made by the claimant or her husband in construction of the

cinema or in payment to Noida authority and submitted that the existing site of

the cinema was allotted with the stipulation that it would not be sublet,

transferred without prior permission of the Chief Executive Officer of Noida

authority. Thus, the agreement entered into between the claimant and himself

was a void agreement and was not binding on him. He contended that

handing over of the possession and management and control of the cinema to

Sh. Inderjeet Bajaj was in total contravention of the terms of the license

agreement dated 12th March, 1982 and allotment letter dated 18th February,

1986. He also contended he had been in possession of cinema premises as

sole owner of cinema since 21.3.81 till date.

8. During proceedings Sh.S.C.Aneja died and his legal heirs, i.e., the

present petitioners were substituted in his place.

9. The learned Arbitrator after considering the entire evidence produced

by both the sides came to conclusion that the allegations made by the

petitioner‟s husband i.e. Sh.S.C.Aneja and by the petitioners about the

agreement being forged were false. He also turned down the objections

against his own jurisdiction. On the basis of evidence and considering the

letters written by Sh.S.C.Aneja to Noida authority regarding constitution of

„S.C.Aneja Theaters Pvt. Ltd.‟ and request made by him to transfer the

cinema running license in the name of this company and transfer the plot in

the name of this company, concluded that the entire stand of Sh.S.C.Aneja

and his legal heirs was false. He came to conclusion that it was claimant Smt.

Sushila Bajaj and her family members who had invested money and both the

agreements dated 5th January, 1983 and subsequent agreement dated 10th

January, 1987 were validly executed agreements.

10. He also concluded that it was claimant who was in possession of „Alka

cinema‟ by virtue of the two agreements and it was the claimant who had

been running the cinema till 1st April, 1998 and Sh. S.C.Aneja, deceitfully &

mischievously took the possession of the cinema and removed the claimant

from the cinema in an illegal manner on 2 nd April, 1998. Thus the claimant

was justified in claiming back the possession of the „Alka cinema‟. He held

that the claimant was entitled to all the benefits of collaboration agreement.

He therefore gave an award directing the respondents to hand over the

possession of cinema to the claimant and to observe the terms and conditions

of the agreement. He held that since 2nd April, 1998 upto the date of award or

till the possession was handed over to the claimant, the respondents were

liable to render the true accounts of the income and directed the respondents,

i.e., the present petitioners to render accounts of Alka cinema for this period

and directed them to give effect to the collaboration agreement in future.

11. The petitioners in this petition under Section 34 had narrated her

version of the facts and the different proceedings which continued in between

the parties or otherwise and assailed the award on following grounds:

"I. Because the Award given by Shri J.S.Sood the sole Arbitrator is wholly illegal as the same is based on so called Arbitration agreement which is not valid in law and thus the Award is illegal.

II. Because even otherwise neither the petitioner was given proper information and notice about the Arbitration proceedings and therefore the entire Arbitration proceedings before Shri J.S.Sood the so called sole Arbitrator was illegal and bad in law.

III. Because Shri Indrajeet Bajaj himself filed a suit in Civil Court Ghaziabad in the name of M/S S.C. Aneja Theatre Pvt. Ltd. and M/S. S.C. Aneja Theatre Pvt. Ltd. was a different entity and as such was having no value and having any connection with the property of ALKA Cinema.

IV. Because in the instant case the Stand taken by the Noida Authorities clearly shows that M/S S.C. Aneja Theaters Pvt. Ltd. was having legal entity and thus the action of the Arbitrator in giving an award covering the personal property of Shri. S.C. Aneja namely Alka Cinema was purely illegal and arbitrary action of the Arbitrator.

V. Because in the instant case the Award was not only against the public policy but was also against the admission of the Opposite party as well as the record of the called forged Arbitration agreement.

VI. Because the instant case as per own showing of the respondents the company M/S.S.C. Aneja Theaters Private Limited never came into existence and it is only a paper creation an more so the property of Alka Cinema was the proprietorship property of Shri S.C. Aneja and now of M/s. Alka Cinema Pvt. Ltd."

12. The respondent in its response to the objections has contended that

none of the grounds raised by the petitioner are covered under Section 34 of

the Arbitration and Conciliation Act or otherwise right for rejection of the

petition.

13. In DDA vs. R.S.Sharma & Company, New Delhi JT 2008 (9) SC 362

Supreme court had summarized the principles which emerged from different

decisions of the Supreme Court in respect of the grounds available to an

objector for setting aside an award and observed.

"From the above decisions, the following principles emerge:

(a) An Award, which is

(i) contrary to substantive provisions of law; or

(ii) the provisions of the Arbitration and Conciliation Act, 1996; or

(iii) against the terms of the respective contract; or

(iv) patently illegal, or

(v) prejudicial to the rights of the parties, is open to interference by the Court under Section 34(2) of the Act.

(b) Award could be set aside if it is contrary to :

(a) fundamental policy of Indian Law; or

(b) the interest of India, or

(c) justice or morality:

(c)The Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court.

(d) It is open to the Court to consider whether the Award is against the specific terms of contract and if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India."

14. The contention of the petitioner that the sole Arbitrator, Sh.J.S.Sood

had no jurisdiction since the Arbitration agreement was not valid in law and

the entire agreement dated 5th January, 1983 was a forged agreement does

not stand scrutiny of law. It is settled law that this Court does not sit in appeal

over the judgment of the Arbitrator and cannot re-appreciate the evidence and

come to a different conclusion on facts. The learned Arbitrator in this case

has considered the contention raised by the petitioner about the agreement

being forged and after considering entire evidence including evidence of Two

experts and considering the different letters written by Sh. S.C. Aneja himself

to Noida authority and other authorities in pursuance of the agreements, held

the agreements to be valid and genuine. This Court cannot form another

opinion on the basis of the same evidence, from what had been formed by the

learned Arbitrator. This ground taken by the petitioner for assailing the award

is therefore liable to be rejected.

15. The second ground taken by petitioners on the face of it is a baseless

ground. Sh. S.C.Aneja was given repeated notices by the Arbitrator and he

proceeded with the matter only after Sh. S.C.Aneja put appearance and filed

his counter claim-cum-reply to the claim of the claimant. He participated in the

proceedings before the Arbitrator. After his death, the summons were sent to

his LRs. LRs were served and they joined proceedings along with their

Advocate and participated in the proceedings. They also produced their

witness and gave list of witnesses. This shows that the petitioner‟s husband

Sh.S.C.Aneja and the petitioner were having notice and were given full

opportunity by the Arbitrator during the arbitration proceedings. This allegation

is malafide, fake & baseless and does not stand the scrutiny of law.

16. The third ground raised by the petitioner has no bearing on the validity

of the award. Filing of a suit by Sh.Inderjeet Bajaj in Ghaziabad in the name

of „S.C.Aneja Theater Pvt. Ltd.‟ a company and a separate entity, has nothing

to do with the award. This objection is a baseless objection.

17. The fourth objection taken by the petitioners that „Alka Cinema‟ being

the personal property of Sh.S.C.Aneja, could not have been subject matter of

award is again a baseless objection. It was Sh.S.C.Aneja who entered into a

collaboration agreement with the claimant in respect of the property allotted in

his personal name. Therefore the Arbitrator was fully justified in considering

„Alka Cinema‟ as the subject matter of the arbitration agreement. Even if „S.

C. Aneja Theaters Pvt. Ltd.‟ was a legal entity and a correspondence had

been made with Noida authority to transfer „Alka Cinema‟ in the name of

„S.C.Aneja Theaters Pvt. Ltd.‟, that would not have prevented learned

Arbitrator from considering „Alka cinema‟ as the subject matter of the dispute.

18. The plea taken by the petitioners in ground no.6 is contrary to the plea

taken by the petitioners in ground no.4. While on one hand it is stated

„S.C.Aneja Theaters Pvt. Ltd.‟ was a separate legal entity and on the other

hand plea taken is that „S.C. Aneja, Theaters Pvt. Ltd.‟ never came into

existence and was only a paper creation.

19. During arguments, counsel for the petitioner submitted that since the

license of the plot was granted in favour of the Sh. S. C. Aneja on a condition

that it could not be further assigned, the agreement dated 05.01.1983 itself

was void and contrary to public policy and the award was liable to set aside

on the ground that it was contrary to public policy. He relied upon Ocean

Investment and Finance Pvt. Ltd. and others vs. Union of India 40 (1990)

DLT 225. The order in Ocean Investment case (Supra) was passed by this

court on an application under Order 39 Rule 1 & 2 wherein this Court while

dealing with the application under Order 39 Rule 1 & 2 CPC, observed that

where the delivery of the possession by the allottee to the prospective

purchaser was in contravention of lease deed, it was against public policy and

the prospective purchaser in possession of such a land cannot be permitted

under law to challenge the cancellation of the sanction of building plan

originally granted by the DDA to the allottee as it would put premium on the

illegal acts of the plaintiff. This judgment has to be understood in the context

of policy of DDA to allot one plot of land only to a person that also only if the

person had no other residential property in Delhi. There being housing

problem in Delhi, in order to see that the people do not further sell the plots

allotted to them for residence, DDA used to put this condition that the plot

would not be further sold and in that context the Court observed that further

transfer of leased property was against policy of DDA that the plot could not

be sold and the Court observed that the prospective purchaser cannot be

permitted in law to challenge the cancellation of sanction of building plan.

This judgment would not be applicable to the award of the Arbitrator since the

Arbitrator has not prohibited Noida authority from taking action against any

party for violation of the terms of lease. The Arbitrator has only adjudicated

the dispute between the petitioner and the respondent in respect of a

commercial transaction entered into between the two. What would be the

consequences of violation of the license deed issued by Noida authority is for

Noida authority to consider. There is no bar against Noida authority in

proceedings in accordance with law for violation of the terms of the license

because of this award.

20. In Vishwa Nath Sharma vs. Shyam Shaker Goela & Anr. 2007(10)

SCC 595, Supreme Court observed:-

"12. The Privy Council in Motilal v. Nanhelal laid down that if the vendor had agreed to sell the property which can be transferred only with the sanction of some government authority, the court has jurisdiction to order the vendor to apply to the authority within a specified period, and if the sanction is forthcoming, to convey to the purchaser within a certain time. This proposition of law was followed in Chandnee Widya Vati Madden v. Dr. C.L. Katial and R.C. Chandiok v. Chuni Lal Sabharwal. The Privy Council in Motilal case also laid down that there is always an implied covenant on the part of the vendor to do all things necessary to effect transfer of the property regarding which he has agreed to sell the same to the vendee. Permission from the Land and Development Officer is not a condition precedent for grant of decree for specific performance. The High Court relied upon the decisions in Chandnee Widya Vati Madden v. Dr. C.L. Katial and Bhim Singhji v. Union of India to substantiate the conclusion. In Chandnee Widya this Court conformed the decision of the Punjab and Haryana High court holding that if the chief Commissioner ultimately

refused to grant the sanction to the sale, the plaintiff may not be able to enforce the decree for specific performance of the contract but that was not a bar to the court passing a decree for that relief. The same is the position in the recent case. If after the grant of the decree of specific performance of the contract, the Land and Development Officer refused to grant permission for sale, the decree holder may not be in a position to enforce the decree but it cannot be held that such a permission is a condition precedent for passing a decree for specific performance of the contract.

13. In R.S. Chandiok v. Chuni Lal Sabharwal it was held that proper form of decree in a case like the instant one would be to direct specific performance of the contract between the defendant and the plaintiff and to direct the subsequent transferee to join in the conveyance so as to pass on the title residing in him. This is because Defendant 2, son of Defendant 1 cannot take the stand that he was a transferee without notice. Admittedly he is the son of Defendant 1. The view in R.C. chandiok was a reiteration of earlier view in Durga Prasad v. Deep Chand. This Court has repeatedly held that the decree can be passed and the sanction can be obtained for transfer of immovable property and the decree in such a case would be in the way the High Court has directed. [See Motilal Jain v. Ramdasi Devi, NIrmala Anand v. Advent Corpn. (P) Ltd., HPA International v. Bhagwandas Fateh Chand Daswani and Aniglase Yohannan v. Ramlatha.]"

21. Considering the above legal position, I find no force in this ground.

22. The petitioner has not raised any valid ground for assailing the award. I

find no force in the petition. The petition is hereby dismissed.

October 30, 2009                             SHIV NARAYAN DHINGRA J.
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