Parshottam Parkash & Anr vs Swati Bharara & Ors
2013 Latest Caselaw 2807 Del

          *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                          Date of decision: 8th July, 2013

+      CS(OS) 2731/2011, I.A. No.2634/2012 (u/S 8 of Arbitration &
       Conciliation Act), I.A. No.5675/2012 (u/O 11 R-12&14 CPC) &
       I.A. No.17516/2011 (u/O 39 R-1& 2 CPC)
       PARSHOTTAM PARKASH & ANR                   ..... Plaintiffs
                  Through: Mr. Jos Chiramel, Adv.
                                  Versus
    SWATI BHARARA & ORS                         ..... Defendants
                 Through: Ms. Amrit Kaur Oberai, Ms. Jesica
                           Gill and Ms. Neha Mishra, Advocates
                           for D-1.
                           Mr. Vivek Ojha, Adv. for Mr.
                           Prakash Gautam, Adv. for D-2&3.
                           D-4 in person.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J
1.

Though hearing on 9th May, 2013 was commenced on IA

No.2634/2012 of the defendant no.1 under Section 8 of the Arbitration &

Conciliation Act, 1996 but during the course of hearing a doubt was raised

as to the very maintainability of the suit and arguments on that aspect also

were heard and orders reserved.

2. The two plaintiffs i.e. Shri Parshottam Parkash and his wife Smt. Sita

Devi have instituted this suit for recovery of balance sale consideration of

Rs.1,03,80,000/- together with interest thereon i.e. total Rs.1,38,05,400/- and

in the alternative for declaration of the Agreement to Sell (recovery of

balance sale consideration whereunder is claimed as aforesaid) as illegal,

fraudulent, sham and bogus and for cancellation of the General Power of

Attorney also executed in pursuance thereto and for recovery of possession

of HIG flat No.407, Savera Apartments, Sector-13, Rohini, Delhi - 110 085

and for permanent injunction restraining the defendants from dealing with or

parting with possession thereof.

2. It is the case in the plaint:-

(a). that the plaintiffs are the joint owners of HIG flat No.407,

Savera Apartments, Sector-13, Rohini, Delhi - 110 085;

(b). that the defendant no.2 Shri Vikram Prakash is the son and the

defendant no.3 Smt. Ritu Prakash is the daughter-in-law of the

plaintiffs;

(c). that the defendants no.2&3 though carrying on their business as

a Cable Operator from elsewhere, gave the address thereof as of

the aforesaid flat of the plaintiffs;

(d). that on 10th August, 2005 a raid was conducted by the Service

Tax authorities in connection with the aforesaid business of the

defendants no.2&3 and a demand for recovery of

Rs.46,04,477/- along with interest and penalty raised against the

plaintiff no.1 described as the proprietor of the said business for

the reason of the said business being at his address;

(e). similar demands were also raised by the Entertainment Tax

authorities;

(f). the defendants no.2&3 agreed to arrange funds for the plaintiffs

on a condition that the plaintiffs immediately sell their flat

aforesaid;

(g). that the plaintiffs had no choice since they were knee deep in

debt and hence agreed to the said proposal to sell the said flat;

(h). that the defendants no.2&3 introduced the defendant no.1 as

the proposed purchaser and each of the plaintiffs was handed

over a cheque for Rs.10,60,000/- in their individual names total

Rs.21,20,000/-, while all other amounts received in cash were

retained by the defendants no.2&3 on the pretext that they had

to bear the tax burden of approximately Rs.1,50,00,000/- in

connection with the business of which the plaintiff no.1 was the

sole proprietor;

(i). that the defendant no.4 Shri Deepak Lamba is a property dealer

and an acquaintance of the defendant no.2;

(j). that the plaintiffs were thereafter in November, 2009 forced to

deliver possession of the flat to the defendant no.1 and handed

over an Agreement dated 14 th November, 2009 recording that

the plaintiffs had sold the flat to the defendant no.1 against

receipt of full sale consideration; however the sale

consideration was not mentioned; it was further stated therein

that if any liabilities/penalties regarding Department of Service

Tax & Entertainment Tax of the business running from the said

flat became payable against the said flat then the plaintiffs shall

clear the same and in lieu thereof, the defendant no.1 had

retained a sum of Rs.15 lacs for a period of one year;

(k). that from a complaint dated 5 th October, 2010 lodged by the

defendant no.3 with the Crime Against Women Cell of Delhi

Police, it was revealed that the said flat was sold for

Rs.1,25,00,000/-;

(l). that the plaintiffs thereafter got the records of the Sub Registrar,

Rohini, Delhi searched and obtained certified copy of the

Agreement to Sell registered on 21st December, 2009 which

revealed that the defendants no.2&3 had pocketed huge sale

consideration and the sum of Rs.15 lacs promised by the

defendant no.1 to be paid after one year had also not been paid;

it was further learnt that the Agreement to Sell though

registered on 21st December, 2009 remained undated and had

been presented for registration at home on medical grounds;

and,

(m). that the Agreement to Sell is a sham and bogus document as the

same was procured fraudulently and in a mala fide manner from

the plaintiffs by the defendant no.1 in collusion with defendants

no.2 to 4.

3. Summons of the suit and notice of the application for interim relief

were issued, though no interim relief granted. The defendants no.2&3 and

the defendant no.4 have filed written statements. The defendant no.1 as

aforesaid has applied under Section 8 of the Arbitration & Conciliation Act,

1996.

4. The defendants no.2&3 in their written statement have pleaded that

they were not parties to the agreement and are not in possession of the

property and the suit in so far as against them is misconceived; that the

relations between the plaintiffs and the said defendants have not been cordial

and thus the question of the defendants persuading the plaintiffs to enter into

the Agreement to Sell did not arise; that the plaintiffs are in control of their

daughter and son-in-law.

5. The defendant no.4 in his written statement has also denied any role in

the transaction save as a witness to the Agreement to Sell.

6. The defendant no.1 seeks reference of the disputes in the suit to

arbitration on the basis of an 'Agreement to appoint Arbitrator' dated 13th

November, 2009 between the two plaintiffs on the one hand and the

defendant no.1 on the other hand and which provides for reference, of any

dispute at any stage between the parties thereto of any matter relating to the

said flat/transaction or agreement or any matter incidental thereto to the sole

arbitration of Shri Darshan Kumar Singh, S/o Shri Luda Ram, R/o 7/17

Double Storey, Vijay Nagar, Delhi.

7. The plaintiffs in their reply to the application of the defendant no.1

under Section 8, have though not denied their signatures on the 'Agreement

to appoint Arbitration' but have pleaded that while under the Agreement to

Sell, the arbitration provided is of an arbitrator to be mutually appointed by

the parties, the Agreement on the basis whereof the application under

Section 8 has been filed is of arbitration of a named arbitrator who is not

even known to the plaintiffs. Reference is made to S.B.P & Co. Vs. Patel

Engineering Ltd. (2005) 8 SCC 618 and other judgments mentioned in

paras 7 & 8 of the reply to contend that when there is a doubt as to the

authenticity and genuineness of the Agreement, no reference to arbitration is

to be made.

8. The counsel for the plaintiffs has at the outset referred to Section 17

and Section 50 of the Registration Act, 1908 providing for documents

compulsorily registrable and registered documents to take effect against

unregistered documents. He has next referred to Section 21 of the Indian

Evidence Act, 1872 dealing with proof of admissions against persons

making them. Reference is next made to the dicta of the Supreme Court in

Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana (2012) 1 SCC 656

and to the recent judgment of Justice Shakdher in Pace Developers and

Promoters Pvt. Ltd. Vs. Govt. of NCT 199 (2013) DLT 347 dealing with

Notification of the Delhi Government prohibiting registration of Power of

Attorney. It is contended that the plaintiffs were compelled to execute the

various documents and which is evident from the dates in the agreement

having been left blank and having been written in hand in the original

agreement/documents. The validity of the Arbitration Agreement is

contested on the basis of inconsistency in the arbitration clause contained in

the registered Agreement to Sell and in the Agreement to appoint Arbitrator

on the basis whereof the application is made. Validity of the documents is

also challenged on the ground of the same containing the address of the

plaintiffs of the same premises which was sold; it is argued that if the

possession of the premises was being given in pursuance to the documents

executed, the address of the plaintiffs could not be the same. It is further

contended that the judgment of the Division Bench of this Court in Asha M.

Jain Vs. Canara Bank 94 (2001) DLT 841 which was overruled in Suraj

Lamp dealt with cases in which entire sale consideration was paid and

would have no application to the present case where the entire sale

consideration has not been paid.

9. Since the registered Agreement to Sell shows the sale consideration as

Rs.21,20,000/- only and which admittedly has been paid, the basis of the

plea, of the entire sale consideration having not been paid, was enquired.

10. The counsel refers to the complaint dated 5 th October, 2010 stated to

have been made by the defendant no.3 Smt. Ritu Prakash against the

plaintiffs with the ACP, Crime Against Women Cell in which she has stated

that the said flat was sold by the plaintiffs for Rs.1,25,00,000/- to contend

that payment of Rs.21,20,000/- is only in part. Attention is also invited to

the Agreement dated 14th November, 2009 between the plaintiffs and the

defendant No.1 about retention of Rs.15 lacs for a period of one year to

contend that there is no arbitration clause therein. Attention is next invited to

para 4 of the rejoinder by the defendant no.1 to the reply of the plaintiffs to

Section 8 application whereunder the defendant no.1 has admitted liability to

pay Rs.15 lacs separately towards the interior work and modern electrical

and sanitary fittings and kitchen. It is contended that under Section 91 of the

Evidence Act, 1872 the defendant no.1 is not entitled to set up a new plea

inconsistent with the agreement with respect to the reason for payment of the

said amount of Rs.15 lacs.

11. I, herein below, consider the matter under two separate heads i.e. on

the plea of the defendant no.1 under Section 8 of the Arbitration Act and on

the maintainability of the suit of the plaintiffs in so far as the defendants no.2

to 4 are concerned.

12. As far as the application of the defendant no.1 under Section 8 of the

Arbitration Act is concerned, the plea of the plaintiffs of the same being not

maintainable for the reason of the very validity of the agreements containing

the arbitration clause having been challenged, has no merit. It cannot be lost

sight of that the primary relief claimed in the suit is for recovery of balance

sale consideration stated to be due under the documents. The plaintiffs by

doing so are seeking enforcement or implementation of the agreement which

is claimed to have been arrived at with the defendant no.1. If there were to

be no agreement of sale of the flat by the plaintiffs to the defendant no.1, the

question of the plaintiffs recovering the balance amount thereunder would

not arise. The relief sought in the alternative, of declaration of the sale

documents to be illegal, fraudulent, sham and bogus is made, I reiterate,

only in the alternative to the primary relief of recovery of money in

enforcement of the agreement. The basis, for the said relief claimed in the

alternative, of cancellation of sale documents is non-payment of the balance

sale consideration. Section 55(4) of the Transfer of Property Act, 1882

provides that where the ownership of the property has passed to the buyer

before payment of the whole of the purchase money, the seller is entitled to a

charge upon the property in the hands of the buyer for the amount of the

purchase money remaining unpaid and for interest thereon from the date

possession is delivered. The principles of law thus is that the right of an

unpaid seller of immovable property is only to recover the unpaid sale

consideration and not to cancel the sale. The plaintiffs thus, even if their

version were to be believed, are only entitled to, recover the balance sale

consideration and not to seek cancellation of the sale documents. The

plaintiffs, during the said recovery proceedings, can claim the security of the

title which has passed onto the defendant no.1 but no more.

13. The Agreement to Sell registered on 21st December, 2009 admittedly

has the following clause:-

"24. That in case any dispute arises between the parties regarding the terms and conditions of this agreement in future, then both parties or their nominee(s), or attorneys shall mutually appoint sole ARBITRATOR, who will decide the disputed matter, and the award of the said Arbitrator shall be final and binding on both the parties as per provision of Indian Arbitration Act."

14. The Agreement dated 13th November, 2009 on the basis of which the

application under Section 8 has been filed is as under:-

"1. That in the parties hereto mutually agree that in the eventuality of any dispute at any stage, in between the parties an any matter relating to said flat/transaction/agreement or any matter incidental thereto, shall be referred to sole ARBITRATION of Sh. Darshan Kumar S/o Lt. Sh. Luda Ram R/o 7/17 Double Story, Vijay Nagar, Delhi whose decision

shall be final and binding in between the parties thereto."

15. Though undoubtedly, while in the registered Agreement to Sell the

parties had agreed to mutual appointment of a sole Arbitrator and in another

agreement of the same date the parties have agreed to appoint Shri Darshan

Kumar aforesaid as sole Arbitrator but the inconsistency if any to the said

extent in my view is no ground to defeat Section 8 of the Arbitration Act.

The fact remains that the parties had agreed to the arbitration of disputes

arising between them relating to the transaction of sale/purchase of the

subject flat. Whether the said arbitration is to be of Shri Darshan Kumar or

of any other Arbitrator to be mutually agreed by the parties is not in the

domain of Section 8. Under Section 8, the Court is only required to see

whether the action brought before it is subject of an arbitration clause or not

and if it is found to be so, to refer the parties to Arbitration. Reliance in this

regard can be placed on Hindustan Petroleum Corporation Ltd. Vs.

Pinkcity Midway Petroleums (2003) 6 SCC 503 and P. Anand Gajapathi

Raju Vs. P.V.G. Raju (2000) 4 SCC 539.

16. The challenge to the documents, on the basis of the certified copies

not bearing the dates or certain columns therein being blank is found to have

no merit and such pleas appear to have been taken in ignorance of the

procedure for registration. A document is required to be presented for

registration in duplicate and of which the original after endorsement of

registration having been made is returned to the presenter and the duplicate

copy thereof retained in the record of the Registrar's office and certified

copies issued therefrom. It is well nigh possible that some blanks left in the

document at the time of preparation, as is often the practice, to be filled in on

the date of execution or registration may be filled in the original and may be

remained unfilled in the duplicate and owing whereto the same are not

shown in the certified copies issued from the said duplicate also. However

the same does not in any manner affect the registration of the document.

17. As far as the claim of the plaintiffs for recovery of balance sale

consideration from the defendants no.2 to 4 is concerned, the plaintiffs have

been unable to show the liability of the defendants no.2 to 4 to pay the sale

consideration to the plaintiffs. The only plea of the plaintiffs is of the

defendants no.2 to 3 having pocketed the sale consideration received in cash.

However the plaintiffs have admitted, (a) the sale of the property,

whatsoever may be the reasons or circumstances therefor; (b) of the

plaintiffs having shifted from the said flat to another flat belonging to their

acquaintances; and, (c) the plaintiffs having so remained in the other flat for

at least two years prior to the institution of the present suit. The only basis

for the plaintiffs to allege the sale consideration to be different from that as

reflected in the registered document (and which the plaintiffs admit to have

received) is the complaint filed by the defendant no.3 against the plaintiffs

before the Crime Against Women Cell.

18. The Registration Act has provided for compulsory registration of

certain documents to give legal sanctity thereto and to prevent pleas

inconsistent thereto being taken. The plaintiffs in the present case thus

cannot be permitted to aver contrary to the registered document. The factum

of the defendant no.3 having been shown as a witness in the Agreement to

Sell is also not such which would require the claim of the plaintiffs against

the defendants no.2 to 4 to be put to trial. The defendants no.2 to 4 else are

admittedly not claiming any title to the property and the reliefs against them

of cancellation of documents and of possession are in any case not tenable.

The only relief against them could have been recovery of monies but which

as aforesaid, is in contravention of a registered document and not tenable in

law.

19. The suit in so far as the defendant no.1 is concerned, is thus disposed

of by reference to arbitration under Section 8 of the Arbitration &

Conciliation Act, 1996 and in so far as against the defendants no.2 to 4, is

dismissed as not maintainable. No costs.

Decree sheet be drawn up.

RAJIV SAHAI ENDLAW, J

JULY 08, 2013 pp..