Delhi High Court
Suresh Kumar vs Satish Mehra And Anr. on 6 August, 2012
Author: S. Muralidhar
IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 19th July, 2012
Decision on: 6th August, 2012
O.M.P. No. 245 of 2003
SURESH KUMAR ..... Petitioner
Through: Mr. A.P. Aggarwal, Advocate.
Versus
SATISH MEHRA AND ANR. ..... Respondents
Through: Mr. Deepak Bhattacharaya with
Mr. Rajesh Kumar, Advocates for R-1.
Mr. Kirti Uppal, Sr. Advocate with
Md. Amanullah, Advocate for R-3&4 in
CCP No. 74 of 2004
with
CCP No. 74 of 2004
SATISH MEHRA ..... Petitioner
Through: Mr. Deepak Bhattacharaya with
Mr. Rajesh Kumar, Advocates.
Versus
SURESH KUMAR AND ANR. ..... Respondents
Through: Mr. A.P. Aggarwal, Advocate for
R-1/Ccontemnor.
Mr. Kirti Uppal, Senior Advocate with
Md. Amanullah, Advocate for
R-3 & 4/ Contemnors.
CORAM: JUSTICE S. MURALIDHAR
JUDGMENT
06.08.2012
1. Suresh Kumar has filed the present petition under Section 34 of the
Arbitration and Conciliation Act, 1996 ('Act') challenging an Award passed
by the sole Arbitrator (Respondent No.2) dated 19th April 2003 in the disputes
between the Petitioner and Respondent No.1, Satish Mehra.
Background Facts
2. Respondent No. 1 was the Claimant before the learned Arbitrator. He
stated that the Petitioner herein was the owner of the second floor of the
property at B-123, Swasthya Vihar, Delhi - 110092. In respect of the said
property the Petitioner executed an Agreement to Sell on 21st March 2002
whereby the Petitioner agreed to sell the said property to Respondent No.1 for
a total consideration of Rs.5 lakhs. The case of the Petitioner was that he
never agreed to sell the property but had signed the said documents only as
security for a loan of Rs.5 lakhs. The case of the Petitioner further was that he
had already refunded Respondent No. 1 a sum of Rs.1,50,000.
3. The original of the Agreement to Sell as produced by Respondent No. 1
before the learned Arbitrator was exhibited as Ex.CW1/3 and forms part of
the arbitral record perused by this Court. Each page of the said Agreement to
Sell contains the signature of the Petitioner in English. Also produced before
the learned Arbitrator were the registered General Power of Attorney ('GPA')
signed by the Petitioner (Ex.CW1/2), receipt (Ex.CW1/1), Special Power of
Attorney ('SPA') (Ex.CW1/5), and affidavit (Ex.CW1/1). Also produced
before the learned Arbitrator was the rent deed (Ex.CW1/7) executed by the
parties whereby Respondent No. 1 described as the owner of the property in
question gave on rent the said property to the Petitioner at a monthly rent of
Rs.17,000. The lease deed was consistent with the fact that after the
Respondent No.1 received symbolic possession of the property, thereafter the
Petitioner continued to retain physical possession. The arbitration agreement
entered into between the parties was also exhibited (Ex.CW1/6). In terms
thereof "any kind of disputes" arising between the parties were to be referred
to a sole Arbitrator.
4. According to Respondent No.1 the Petitioner defaulted in the payment of
rent. A notice dated 27th November 2002 was sent by Respondent No. 1
terminating the tenancy and requesting the Petitioner to hand over vacant and
physical possession of the premises. In the said notice the arrears of rent with
effect from 31st March 2002 were demanded. The Petitioner replied to the
said notice on 2nd December 2002 claiming that it was only a loan transaction
in lieu of which the Petitioner executed certain documents. The title of
Respondent No. 1 as landlord of the property was also denied. This was
followed by a further notice dated 23rd December 2002 from Respondent No.
1 to the Petitioner invoking the arbitration clause. Thereafter, the disputes
were referred to the sole Arbitrator.
Proceedings before the Arbitrator
5. In the said statement of claim filed before the learned Arbitrator,
Respondent No. 1 prayed that:
(a) the Petitioner be directed to execute a proper sale deed in favour of
Respondent No. 1 pursuant to Agreement to Sell dated 21st March 2002;
(b) an order for eviction of the Petitioner be passed;
(c) an order for recovery of rent of Rs.1,53,000 till 20th December 2002 from
the Petitioner be passed;
(d) mesne profits for the used and occupation of the tenanted premises by the
Petitioner after termination of the tenancy with effect from 21st December
2002 till the date of handing over of possession of the said premises be
awarded; and
(e) costs of arbitration be awarded to Respondent No.1.
6. In the reply filed by the Petitioner before the learned Arbitrator it was first
contended that there was no valid arbitration agreement between the parties.
Secondly, it was contended that any dispute arising out of the alleged lease
deed pertaining to the property was beyond the scope of the reference of
disputes to arbitration. It was reiterated by the Petitioner that he had only
taken a loan of Rs.5 lakhs from respondent No.1 of which he had repaid Rs.
1,50,000. It was pleaded that there was no Agreement to Sell and that "even
otherwise, the alleged agreement to sell is a waste paper and it can neither be
looked into in the evidence nor can be basis of making any claim against the
Party No.2. The said document is neither sufficiently stamped nor registered
and as such the said document cannot be looked into for any purpose
whatsoever." Since there was no tenancy there was no question of termination
of such tenancy.
7. The parties also filed their respective affidavits by way of evidence. In his
affidavit, the Petitioner claimed that he had entered into a loan transaction with
Respondent No.1 and stated that "to secure the loan amount of Rs. five lakh,
the Party No.1 got executed certain blank papers from me. The documents
were blank at the time when I signed the said documents and even the
documents were not witnessed at that time. No witness was present when the
said documents were signed by me. After signing the said documents and after
getting the said documents attested from the Notary Public, the original was
kept by the Party No.1 and photocopy of the same were provided to me." The
Petitioner marked the photocopy as A to G along with his affidavit. It was
claimed that Respondent No. 1 "afterwards got filled the said documents
which has been produced by the Party No.1 in these proceedings got signed
from the witnesses and also signed by the Party No.1, himself." The Petitioner
also claimed that "the arbitration agreement was blank when I signed the said
arbitration agreement. The Party No.1 has filled the arbitration agreement later
on." The Petitioner claimed to have never vacated the property in question and
also that he never agreed to refer the dispute to the learned Arbitrator claiming
that the property in question was valued at more than Rs.20 lakhs at the
relevant time in March 2002. The Petitioner claimed that he would have never
agreed to sell the said property for a meager sum of Rs.5 lakhs. In his cross
examination the Petitioner admitted to his signatures on CW1/1 to CW 1/7 and
to having "executed all these documents on 21st March 2002." Although he
came to know on that date itself that the documents signed by him were blank
he neither made any complaint nor gave any notice to Respondent No.1 in that
regard. He admitted to receiving Rs. 5 lakhs, but maintained that it was a loan.
He claimed not to have deposited it in his bank account but to have bought
some "sarees" with it. He had no details as to when he paid the sum of Rs.
1,50,000 to the Petitioner "in six times" and had no receipt in proof of such
payment. Respondent No.1 filed an affidavit and was extensively cross-
examined. Mr. Deepak Kapoor and Mr. Raghav Mehra filed affidavits
supporting the case of Respondent No.1 and were also cross-examined.
The impugned Award
8. The learned Arbitrator in the impugned Award dated 19th April 2003
negatived the case of the Petitioner that he had signed on blank papers. Also,
he had admitted in his cross-examination that he had not lodged any complaint
or sent any notice in that regard. It was not likely that if he had repaid a sum
of Rs.1,50,000 to Respondent No.1 he would not have obtained any receipt. It
was also held that no documents, much less, proof by the Petitioner regarding
the loan transaction and his repayment of Rs.1,50,000 to Respondent No.1,
were furnished. The Petitioner had also not produced any witnesses in support
of the said claim.
9. As regards the plea that Agreement to Sell required registration, the
learned Arbitrator observed that "it was an interim (bare) agreement and
therefore needed no registration. Similarly the rent deed was for 11 months
which needed no registration." The learned Arbitrator held that the Petitioner
had indeed agreed to sell the property in question and that further a rent
agreement had been entered into whereby Respondent No. 1 had let out the
second floor of the property in question to the Petitioner. Consequently, in the
impugned Award dated 19th April 2003 the learned Arbitrator ordered:
"Suresh Kumar Party No.II to execute regular sale deed
regarding 2nd floor house no. B-123, Swasthya Vihar with
common roof rights as per terms of agreement to sell dated
21.03.2002 Ex.CW1/3.
2. Respondent Suresh Kumar is further directed to hand over
the vacant and peaceful possession of the aforesaid premises
to Satish Mehra Party No.I.
3. Suresh Kumar Party No.II is further directed to pay a sum
of Rs.2,04,000/- as rent for the aforesaid premises for the
period ending 20.03.2003 and thereafter Rs.17,000/- per
month as mesne profits thereof till possession of said property
is delivered to Party No. I.
Arbitration Costs:- Rs.11,000/- to be shared equally by Party
No.I and Party No.II
Party No.I is also directed to pay Rs.1,500/- towards the
stamp paper and other miscellaneous expenses."
Petition under Section 34 of the Act
10. Thereafter, the present petition was filed on 28th May 2003 and notice
was directed to be issued in the petition on 30th May 2003. Respondent No.1
filed I.A. No. 1613 of 2004 in which he stated that he had filed an execution
petition in the trial Court on 22nd July 2003 after the expiry of three months
of the Award dated 19th April 2003. Respondent No. 1 had not received
notice in the present O.M.P. No. 245 of 2003 till then. Respondent No.1
stated that on 10th February 2004 he was approached by one of the property
dealers in the area asking if Respondent No. 1 had given up his rights in the
property or sold it back to the Petitioner. Apprehending that the Petitioner
was trying to create third party rights in the property in question he filed the
said application. On 12th March 2004 an order was passed by the Court in
I.A. No. 1613 of 2004 directing the Petitioner not to transfer, alienate or
create any third party interest in the suit property B-123, Second floor,
Swasthya Vihar, Delhi - 110092.
Contempt Petition
11. On coming to know that the Petitioner had violated the terms of the said
interim order dated 12th March 2004, Respondent No.1 filed a contempt
petition being C.C.P. No. 74 of 2004 on 22nd May 2004 against the Petitioner
(Contemnor No.1) and Smt. Maya Kumar, the wife of the Petitioner, Shri
Bhagwan Das and Smt. Geeta Rani (Contemnor Nos. 2,3 and 4 respectively).
In the said contempt petition it was stated by Respondent No. 1 that on or
around 29th April 2004 Respondent No. 1 learnt that since 13th April 2004
unauthorised occupants were staying in the property. A complaint was made
by Respondent No.1 to the police. Upon investigation made by the police,
documents were recovered from the occupants who claimed that they had
purchased the property in question from the Petitioner and his wife Smt.
Maya Kumar. The said documents included copy of a sale deed dated 26th
February 2004 executed by Smt. Maya Kumar as GPA holder of the
Petitioner in favour of herself. Also recovered were copies of a GPA, SPA
and Will deed dated 24th March 2004 purportedly selling the property in
question in favour of Shri Bhagwan Das and Smt. Geeta Rani. Photocopies
of the said documents were enclosed with the contempt petition.
Accordingly, Respondent No. 1 prayed that the said four contemnors should
be punished for violating the order dated 12th March 2004 passed by the
Court.
12. Notice in the contempt petition was issued on 24th May 2004. A reply
was filed on 15th July 2004 by the Petitioner (Contemnor No.1) in which he
disclosed that Respondent No.1 had harassed him so much that he had to
leave the premises. For the first time he disclosed that there was a breaking of
the matrimonial alliance with his wife and that he had filed a petition for
divorce by mutual consent in the Court of learned Additional District Judge
('ADJ') in January 2004 and that the wife of the Petitioner was in possession
of the premises in question. It was stated that divorce had been granted in
April 2004 and that the Petitioner was not in possession of the premises since
January 2004 and, therefore, he had no knowledge of unauthorised occupants
being in possession of the disputed premises. The Petitioner claimed that
after receiving a copy of the contempt petition he learnt that his wife had
illegally got the property in dispute transferred to herself by a registered sale
deed dated 26th February 2004 on the strength of the GPA executed by him in
favour of his wife in March 2002 and, thereafter, entered into an Agreement
to Sell with other persons on the strength of the said sale deed dated 26th
February 2004. It was the claim of the Petitioner that he came to know about
the above facts only after receiving notice in the contempt petition which
enclosed photocopies of the said documents; that he otherwise had no
knowledge about the said facts and that he was always under the impression
that his wife was still in occupation of the premises.
13. In the contempt petition, the wife of the Petitioner, Smt. Maya Kumar
(Contemnor No.2) was served by way of publication requiring her to appear
on 15th March 2005. That upon her failing to appear, the Court on 23rd March
2005 directed the issuance of a bailable warrant. On 23rd May 2005
Contemnor No.2 appeared through her counsel and was asked to be present
on 27th May 2005 on which date copies of the petition were directed to be
furnished to her. As far as Contemnors 3 and 4 are concerned, the order
sheets show that they first entered appearance through counsel in both, the
O.M.P No. 245 of 2003 and in the contempt petition on 9th December 2004.
Clearly, therefore, Contemnors 3 and 4 were served with notice of the main
petition and contempt petition sometime prior thereto. They were put on
notice therefore that any transaction involving the property thereafter would
be subject to the orders in the petitions.
14. A reply was filed by Contemnors 3 and 4 only on 19th November 2005 in
this Court. In the said reply it was claimed that the property had been
purchased by them from Smt. Maya Kumar for a consideration of Rs.7 lakhs.
It was stated that a registered GPA, registered SPA, Agreement to Sell and
Will deed dated 24th March 2004 were executed in their favour by her.
15. It may be mentioned that on 21st May 2004 itself I.A. No.3565 of 2004
had been filed by Respondent No.1 under Section 52 of the Transfer of
Property Act, 1882 ('TPA') seeking a declaration that the execution of
documents by Smt. Maya Kumar in favour of Contemnors 3 and 4 had no
validity in the eye of law and that they should deposit the documents and
keys of the said premises in the Court. In the said application notice was
accepted by Contemnor No. 1 on 26th May 2004 and Contemnors 3 and 4 on
9th December 2004. Contemnor No.2 was served through publication.
Pleadings in the said application have been completed.
Orders on stamping of the Agreement to Sell
16. On 15th March 2010 an order was passed by the Court with regard to the
objections raised by learned counsel for the Petitioner in O.M.P. No. 245 of
2003 that since the Agreement to Sell dated 21st March 2002 relied upon by
Respondent No. 1 was in the nature of part performance as per Section 53A
of the TPA and under which possession was delivered, the said document
was liable to be stamped under Article 23A of the Stamp Act, 1899 ('Stamp
Act') as applicable to Delhi. However, the stamp paper on which the
Agreement to Sell was typed was of Rs.50 denomination and therefore the
said document was insufficiently stamped. It was observed by the Court that
once Respondent No.1 paid the necessary stamp duty along with penalty as
would be adjudicated by the Collector of Stamps under Section 38 of the
Stamp Act, the Award could be read as having been passed on payment of
the stamp duty. Consequently, the Agreement to Sell dated 21st March 2002
exhibited as Ex.CW1/3 by the Arbitrator was impounded by the Court under
Sections 33 and 38 of the Stamp Act. A direction was issued for adjudication
of the proper stamp duty and penalty by the Collector of Stamps under the
Stamp Act.
17. The order dated 15th March 2010 was challenged in appeal by the
Petitioner in FAO (OS) No. 384 of 2010 which was disposed of on 31st May
2010 by the Division Bench by the following order:
"It is a common case at the bar that the learned Single Judge
has not yet returned a finding as to whether it was open to the
learned Arbitrator to look into and give effect to the
Agreement to Sell, which is insufficiently stamped and has not
been registered. All that the learned Single Judge has done is
that he has impounded the document. This could, arguably,
have also been done by the Arbitrator but has not been done
so. We do not think that the present Appeal is maintainable for
the simple reason that the learned Single Judge will give final
verdict on this aspect when the objections are finally disposed
of. In view of above, the Appeal and all the pending
applications are disposed of."
Submissions of Counsel
18. Mr. A.P. Aggarwal, learned counsel for the Petitioner submitted that
inasmuch as the Agreement to Sell, Arbitration Agreement, GPA, SPA and
rent deed, had all been signed in blank by the Petitioner and had been filled
in later by Respondent No.1, they have no validity in the eyes of law and
should not be relied upon. As regards the order dated 15th March 2010, it was
submitted that even if Respondent No.1 had paid the necessary stamp duty
and penalty under the Stamp Act, it would not cure the said document of its
patent illegality. As was made clear by the Division Bench in its order dated
31st May 2010 the question whether it was open to the learned Arbitrator to
have acted upon the said document which was both unstamped and
unregistered had to be examined in the present proceedings. Reliance was
placed on the decision in D. Parkash v. Jai Narain Goel 1996 R.A.J. 400 to
urge that even if a document requiring registration was properly stamped it
could not be looked into even for a collateral or secondary purpose if it was
not registered under Section 17 of the Registration Act, 1908.
19. Mr. Aggarwal further submitted that the lease deed was for a period
exceeding eleven months and, therefore, had to be compulsorily registered. It
was also insufficiently stamped and could not have been looked into. That
defect was not cured by the order dated 15th March 2010. The dispute arising
out of the lease deed was outside the scope of arbitration between the parties,
the validity of which was in any event disputed. He submitted that the Stamp
Act also encompasses the public policy of India. An Award based on
documents not legally admissible as they were contrary under the provisions
of the Stamp Act was liable to be set aside under Section 34 of the Act.
Reliance was placed upon the decision in Gurbachan Singh v. Raghubir
Singh AIR 2010 P&H 77 where it was held that an unregistered Agreement
to Sell did not give a right to seek a decree for specific performance or
possession. Reference was also made to the decision of the Supreme Court in
M/s. SMS Tea Estates Pvt. Ltd. v. M/s Chandmari Tea Co. Pvt. Ltd. 2011(7)
SCALE 747. It was submitted that in the recital in the Agreement to Sell it
was stated that Respondent No. 1 was in possession and had let out the
property to the Petitioner. For the purpose of Section 53A of the TPA, the
burden was on Respondent No. 1 to prove that he was actually in possession
of the property.
20. As regards the contempt petition, Mr. Aggarwal claimed that the
Petitioner had no knowledge of his wife having executed the sale deed dated
26th February 2004 in her own favour on the basis of the GPA executed by
him in her favour. He submitted that the Petitioner had no knowledge of the
subsequent sale of the property in question by his wife to Contemnors 3 and
4.
21. None appeared at the time of final hearing on behalf of
Respondent/Contemnor No.2 Smt. Maya Kumar. Mr. Kirti Uppal, learned
Senior counsel appearing for Contemnors 3 and 4 maintained that they were
bonafide third party purchasers of the property in question and that they were
not aware of any previous transaction involving Respondent No. 1 or of the
dispute in OMP No. 245 of 2003. A sale deed was executed on 10th February
2005 by Smt. Maya Kumar in favour of Contemnors 3 and 4 which was
registered. Contemnors 3 and 4 had paid Rs.7 lakhs as sale consideration.
Respondent No. 1 could not seek cancellation of the said sale deed in the
arbitration proceedings. Mr. Uppal supported the submission of Mr.
Aggarwal that the documents relied upon by Respondent No. 1 were both,
unstamped and unregistered and were therefore inadmissible in law.
22. Mr. Deepak Bhattacharaya, learned counsel appearing on behalf of
Respondent No. 1, submitted that a fraud had been played on Respondent No.
1 by the Petitioner in connivance with his wife (Contemnor No.1) as well as
Contemnors 3 and 4. The Petitioner acted with total dishonesty in refusing to
complete the sale transaction or parting with possession after receiving the
entire consideration pursuant to the Agreement to Sell. The case of the
Petitioner having repaid Respondent No. 1 Rs.1,50,000 was demonstrated to
be false in the arbitral proceedings. Also, behind the back of Respondent No.1
the Petitioner had executed a GPA in favour of his wife which she then used
for executing the sale deed in favour of herself on 26th February 2004. This
was a sham transaction with a view to defeating the valuable right of
Respondent No. 1 flowing from the Agreement to Sell, GPA and other
documents. Relying on the decisions in Javer Chand v. Pukhraj Surana
AIR 1961 SC 1655, Rajendra Prasad v. Most. Siba Devi AIR 1982 Patna 65,
and Hindustan Steel Limited v. M/s Dilip Construction Co. AIR 1969 SC
1238 Mr. Bhattacharya submitted that once a document was exhibited in the
arbitration proceedings, the fact that it was neither stamped nor registered
would not impinge on the validity of the Award. Referring to the decision in
Suraj Lamp and Industries Pvt. Ltd. v. State of Haryana 2011 (11) SCALE
438 he submitted that the Agreement to Sell pre-dated the decision and its
validity would not, as explained in the said decision itself, be affected. As
regards the Registration Act, 1908 reliance was placed upon the decision of S.
Kaladevi v. V.R. Somasundaram AIR 2010 SC 1654 in which it was held
that an unregistered sale deed can also be admitted in evidence as evidence of
any collateral transaction not required to be effected by a registered
document. Thus, an unregistered sale deed could be rendered in evidence as
proof of an oral Agreement to Sell.
23. As regards the contempt petition, Mr. Bhattacharya submitted that
Contemnors 3 and 4 were aware of the stay order passed by the Court on 12th
March 2004 and yet they proceeded with execution of the sale deed on 10th
February 2005 in their favour. They clearly had no value and respect for the
order of the Court. The contemnors had acted in concert to defeat the stay
order and therefore should be held liable for contempt.
Admissibility of the documents
24. The first issue to be considered is whether the learned Arbitrator erred in
relying upon the documents produced by Respondent No.1. There are two
aspects of this issue. One, is whether the said documents were fabricated as
alleged by the Petitioner and second is whether, in any event, since the
documents were not stamped and registered, they could not have been relied
upon in the arbitral proceedings.
25. The Agreement to Sell, GPA, SPA, affidavit, receipt, Arbitration
Agreement and rent deed, all dated 21st March 2002, and signed by the
Petitioner, were exhibited in the arbitral proceedings and formed part of the
arbitral record. The Petitioner does not deny signing the documents on the
date shown in each of them i.e. 21st March 2002. He alleges that the blanks in
the documents were later filled by Respondent No.1. Far from proving this,
the Petitioner stated in his cross examination before the learned Arbitrator
that despite knowing that the documents signed by him were blank he neither
made any complaint nor issued any notice to respondent No.1 in that regard.
The mere fact that the dates in the documents were written in ink will not per
se render them fabricated or tampered, or mean that the said dates were not
written contemporaneously with the signing of the said documents. There had
to be some credible evidence to prove the case of the Petitioner that the
documents were fabricated or tampered. There was no such evidence.
26. Importantly, no evidence was produced by the Petitioner to prove that the
transaction was not an Agreement to Sell but the borrowing of a loan from
Respondent No.1. The Petitioner hopelessly failed to prove that he repaid Rs.
1,50,000 to Respondent No.1. His answers in cross-examination exposed the
falsity of his story in this regard. This in fact raised serious doubts about the
veracity of his statements and his version was rightly rejected by the learned
Arbitrator. There is indeed no merit in the contention of the Petitioner that the
documents produced in original by Respondent No.1 before the learned
Arbitrator in support of his case were not genuine.
27. The next question is whether the learned Arbitrator erred in accepting the
admissibility of the Agreement to Sell and the lease deed when neither
document was stamped or registered. The answer lies in Section 36 of the
Stamp Act. In Javer Chand it was held that under Section 36 of the Stamp
Act once a document has been admitted in evidence such document cannot
be called in question at any stage in the same suit or proceedings. It was
observed by the Supreme Court in the said decision as under (AIR, p.1656):
"Where a question as to the admissibility of a document is
raised on the ground that it has not been stamped, or has
not been properly stamped, it has to be decided then and
there when the document is tendered in evidence. Once the
Court, rightly or wrongly, decides to admit the document in
evidence, so far as the parties are concerned, the matter is
closed. Section 35 is in the nature of a penal provision and
has far-reaching effects. Parties to a litigation, where such
a controversy is raised, have to be circumspect and the
party challenging the admissibility of the document has to
be alert to see that the document is not admitted in
evidence by the Court. The Court has to judicially
determine the matter as soon as the document is tendered
in evidence and before it is marked as an exhibit in the
case. The record in this case discloses the fact that the
hundis were marked as Exs. P. 1 and P. 2 and bore the
endorsement 'admitted in evidence' under the signature of
the Court. It is not, therefore, one of those cases where a
document has been inadvertently admitted, without the
Court applying its mind to the question of its admissibility.
Once a document has been marked as an exhibit in the case
and the trial has proceeded all along on the footing that the
document was an exhibit in the case and has been used by
the parties in examination and cross-examination of their
witnesses, S. 36 of the Stamp Act comes into operation.
Once a document has been admitted in evidence, as
aforesaid, it is not open either to the Trial Court itself or to
a Court of Appeal or revision to go behind that order. Such
an order is not one of those judicial orders which are liable
to be reviewed or revised by the same Court or a Court of
superior jurisdiction."
28. Later in Hindustan Steel it was held (AIR, p.1240):
"Section 36 does not prohibit a challenge against an
instrument that it shall not be acted upon because it is not
only duly stamped, but on that account there is no bar
against an instrument not duly stamped being acted upon
after payment of the stamp duty and penalty according to
the procedure prescribed by the Act. The doubt, if any, is
removed by the terms of Section 42 (2) which enacts, in
terms unmistakable, that every instrument endorsed by the
collector under Section 42 (1) shall be admissible in
evidence and may be acted upon as if it had been duly
stamped. "
29. Turning to the requirement of the Registration Act it is seen that even an
unregistered document can be relied upon as a collateral document. In M/s.
K.B. Saha and Sons Pvt. Ltd. v. M/s. Development Consultant Ltd. AIR
2008 SC (Supp) 850 the legal position was explained thus (AIR, p.857):
"1. A document required to be registered, if unregistered is
not admissible into evidence under Section 49 of the
Registration Act.
2. Such unregistered document can however be used as an
evidence of collateral purpose as provided in the proviso to
Section 49 of the Registration Act.
3. A collateral transaction must be independent of, or
divisible from, the transaction to effect which the law
required registration.
4. A collateral transaction must be a transaction not itself
required to be effected by a registered document, that is, a
transaction creating, etc. any right, title or interest in
immovable property of the value of one hundred rupees
and upwards.
5. If a document is inadmissible in evidence for want of
registration, none of its terms can be admitted in evidence
and that to use a document for the purpose of proving an
important clause would not be using it as a collateral
purpose.
To the aforesaid principles, one more principle may be added,
namely, that a document required to be registered, if unregistered,
can be admitted in evidence as evidence of a contract in a suit for
specific performance."
30. In S. Kaladevi the purport of Section 49 of the Registration Act, 1908
was explained as under (AIR, p.1657):
"11. The main provision in Section 49 provides that any
document which is required to be registered, if not
registered, shall not affect any immovable property
comprised therein nor such document shall be received as
evidence of any transaction affecting such property.
Proviso, however, would show that an unregistered
document affecting immovable property and required by
1908 Act or the Transfer of Property Act, 1882 to be
registered may be received as an evidence to the contract in
a suit for specific performance or as evidence of any
collateral transaction not required to be effected by
registered instrument. By virtue of proviso, therefore, an
unregistered sale deed of an immovable property of the
value of Rs. 100/- and more could be admitted in evidence
as evidence of a contract in a suit for specific performance
of the contract. Such an unregistered sale deed can also be
admitted in evidence as an evidence of any collateral
transaction not required to be effected by registered
document. When an unregistered sale deed is tendered in
evidence, not as evidence of a completed sale, but as proof
of an oral agreement of sale, the deed can be received in
evidence making an endorsement that it is received only as
evidence of an oral agreement of sale under the proviso to
Section 49 of 1908 Act."
31. In S. Kala Devi the Supreme Court held on the facts of that case that the
trial court was, in a suit for specific performance, "not justified in refusing to
admit the unregistered sale deed dated 27.2. 2006 tendered by the Plaintiff in
evidence." In the present case, considering that the relief sought by
Respondent No.1 was that of specific performance, the above decisions are a
complete answer to the submission of the Petitioner regarding the Agreement
to Sell being neither stamped nor registered at the time it was produced
before the learned Arbitrator. The deficiency as regards the non-payment of
stamp duty on the Agreement to Sell stands rectified by the order dated 15th
March 2010 passed by this Court being complied with by Respondent No.1.
Therefore, this Court finds no merit in the submissions of learned counsel for
the Petitioner that the impugned Award is opposed to the public policy of
India on the ground that the Agreement to Sell was unstamped and
unregistered when it was produced before the Arbitrator and therefore could
not have been relied upon.
32. As regards the rent deed, it is seen that in fact the relevant paragraph in
the preamble contains the typed words "11 (eleven) months" whereas in
filling up the dates thereafter it has been indicated as "from 21-2-2002 and
ending on 20-3-2003" which in effect would be two months beyond eleven
months. It could well be argued that one must look at the typed number and
words which clearly state that the tenancy is for eleven months. Clearly the
intention of the parties was to execute a rent deed for an eleven month
tenancy. The learned Arbitrator cannot be held to have committed any patent
illegality in concluding that the rent deed did not require registration.
Moreover, the rent deed was also exhibited as a document in the arbitral
proceedings. On the strength of the decision in Javer Chand and Hindustan
Steel the objection to the rent deed not being duly stamped does not survive.
Scope of the arbitral proceedings
33. The rent deed was executed by the Petitioner contemporaneously with the
Agreement to Sell, the GPA and the Arbitration Agreement. The second
preamble para in the arbitration agreement contains the words "any kind of
dispute would be arisen between the parties" as well as "or any other kind of
dispute arises between the parties". The parties therefore did not confine the
disputes that could be referred to arbitration only to those arising out of the
Agreement to Sell but the rent deed as well. Consequently, the learned
Arbitrator therefore did not exceed the scope of his reference by examining
whether the Petitioner was in breach of the rent deed.
Validity of the Award
34. The scope of interference with an Award under Section 34 of the Act is
limited as has been explained in McDermott International Inc. v. Burn
Standard Co. Ltd. (2006) 11 SCC 181. The evidence on record supported the
case of Respondent No.1 that the Petitioner was trying to avoid his liability
arising out of the Agreement to Sell by setting up a false defence of a loan
transaction for which he had no proof. The Petitioner was unable to make
good his defence. Once the validity of the Agreement to Sell, the passing of
the consideration in full from the buyer to the seller stood established, and the
other requirements stood satisfied, the decree for specific performance had to
follow. The impugned Award to the extent it holds that the Petitioner was in
arrears of rent and was required to hand over vacant and physical possession
to Respondent No.1 cannot be said to be suffering from any illegality. This
Court does not find any ground having been made out by the Petitioner to
question the validity of the impugned Award.
35. Accordingly, O.M.P. No. 245 of 2003 is dismissed with costs of
Rs.10,000 which should be paid by Petitioner to Respondent No.1 within four
weeks.
I.A. No. 3565 of 2004
36. This is an application filed by Respondent No.1 seeking a declaration that
the GPA dated 1st March 2002 executed by the Petitioner in favour of his
wife, the sale deed dated 26th February 2004 executed by Contemnor No. 2 in
her own favour and the other documents executed by her in favour of
Contemnors 3 and 4 are illegal and are liable to be treated as cancelled.
37. The narration of events in the earlier part of the judgment shows that the
Petitioner suppressed the fact of his having executed a GPA in favour of his
wife in March 2002. The sale deed dated 26th February 2004 executed by his
wife both as seller and buyer in her own favour, and that too for an unrealistic
consideration of Rs. 2 lakhs makes the entire transaction highly dubious. The
said transaction was with a view to defeating the rights of The Respondent
No.1 arising out of the Agreement to Sell dated 21st March 2002. It is hit by
Section 53 TPA. Despite service and appearing before the Court once,
Respondent/Contemnor No.2, Smt. Maya Kumar has not bothered to
participate in the proceedings. The case against her remains unrebutted.
38. The facts and circumstances, unmistakably point to collusion between the
Petitioner and his wife to present the Court with a fait accompli. The
Petitioner was silent about any GPA executed by him in favour of his wife
during the pendency of the arbitral proceedings. Having himself filed the
present petition under Section 34 of the Act on 28th May 2003, he was fully
aware that any transaction concerning the property after the filing of the
petition would be governed by the doctrine of lis pendens. The Petitioner
cannot avoid his obligation under the Agreement to Sell as a result of such a
dubious sale deed dated 26th February 2004 whereby his wife purportedly
sold the property to herself. It is difficult to believe that this was done without
the participation of and knowledge of the Petitioner. The court is satisfied that
the transfer of the property in question in favour of Smt. Maya Kumar
through the GPA dated 1st March 2002 was a fraudulent transaction designed
to frustrate the rights of Respondent No. 1 and the execution of the decree
arising out of the Award dated 19th April 2003. The GPA dated 1st March
2002 executed by the Petitioner in favour of his wife and the sale deed dated
26th February 2004 executed by her on that basis in favour of herself is
declared invalid and cancelled.
39. As far as the documents executed by Smt. Maya Kumar in favour of
Contemnors 3 and 4 are concerned, they too cannot have any validity once the
base document, viz. the sale deed dated 26th February 2004 has been held to
be invalid. Consequently, the Agreement to Sell, GPA, SPA, Will and other
connected documents dated 24th March 2004 and the sale deed dated 10th
February 2005 executed by Smt. Maya Kumar in favour of Contemnors 3 and
4 are hereby declared invalid and cancelled. I.A. No. 3565 of 2004 is
disposed of in the above terms.
Contempt Petition
40. Turning to the contempt petition, there can be no manner of doubt that
the Petitioner was in breach of the order dated 12th March 2004 passed by this
Court. If the Petitioner is to be believed that he had in March 2002 executed a
GPA in favour of his wife, then he made no effort to revoke the said GPA
even after his marriage with his wife broke down. He has not been forthright
with the Court in this regard. He did not bring these facts to the knowledge of
the Court on his own. It is difficult to believe that his wife acted unilaterally
without his knowledge or tacit approval when she made bold to execute a sale
deed in her own favour on 26th February 2004. There is every reason to
suspect that the grant of divorce by mutual consent was one more ruse for the
Petitioner to seek to avoid the liability arising out of the Agreement to Sell.
41. Even after the order dated 12th March 2004 the Petitioner made no effort
to stop the execution of the sale deed dated 10th February 2005 by his wife
Smt. Maya Kumar in favour of Contemnors 3 and 4. If indeed he had
executed a GPA in her favour, the simplest thing for him to do would be to
revoke it soon after the said order. Really, therefore, the said GPA was a
sham document.
42. As far as Smt. Maya Kumar is concerned, she has been avoiding
appearing before the Court after entering appearance in May 2005. She has
offered no explanation for her conduct despite opportunities. There is no
rebuttal to the case of Respondent No.1 that the action of Smt. Maya Kumar
in executing the Agreement to Sell, GPA, SPA, Will and other connected
documents dated 24th March 2004 and the sale deed dated 10th February 2005
in favour of Contemnors 3 and 4 after being aware of the impugned Award
and of the present proceedings was with a view to frustrate the right of
Respondent No.1 to seek redressal through the judicial process.
43. The plea of Contemnors 3 and 4 that they were bonafide third party
purchasers lacks credibility in the light of the fact that even after entering
appearance in the contempt petition and OMP in December 2004, and thereby
being aware of the order dated 12th March 2004, they went on to participate in
the execution of the sale deed in their favour by Smt. Maya Kumar
Contemnor No. 2 on 10th February 2005. Apart from the fact that there can
be no excuse for this brazen defiance of the order passed by this Court on 12th
March 2004, there can also be no equities in their favour. They took a big risk
in proceeding with the sale transaction knowing that they were acting in
wilful disobedience of the stay order passed by the Court.
44. For the aforementioned reasons this Court holds Contemnors 1 to 4 guilty
of wilfully disobeying and violating the interim order passed on 12th March
2004 by this Court.
45. All the four contemnors are directed to remain personally present in the
Court on 15th October 2012 to show cause as to why they should not be
punished for committing contempt of the order dated 12th March 2004 of the
Court. The contemnors are permitted to file affidavits by that date. Since
Contemnor/Respondent No. 2 has not appeared despite service, a bailable
warrant in the sum of Rs.10,000 be issued to secure her presence in Court on
the next date. The warrant be got executed through the SHO of the concerned
police station.
S. MURALIDHAR, J.
AUGUST 06, 2012
AK
