Bharat Lal Maurya vs M/S. Godrej & Boyce Mfg. Co. Ltd
2014 Latest Caselaw 1353 Del

    IN THE HIGH COURT OF DELHI AT NEW DELHI

%                  Judgment Reserved on: 19 th February, 2014
                   Judgment Pronounced on: 13 th March, 2014


                              OMP 132/2014

B HARAT LA L M AURYA                                ..... P E TITIONER

                              Through:   Ms. Sneh Lata Srivastava,
                                         Advocate

                                  versus

M/S . GODREJ & B OYCE M FG . C O . L TD           ...... R ESPONDEN T

                              Through:   Mr. Vikas Tiwari, Advocate
                                         with Mr. Raji Abraham, AR
                                         of the Respondent.

                                 *********

                              OMP. 133/2014

M/S . S ANGUINE E NTERPR ISES P V T. L TD            .... P ETITIONER

                              Through:   Ms. Sneh Lata Srivastava,
                                         Advocate

                              versus

M/S . GODREJ & B OYCE M FG . C O . L TD           ...... R ESPONDEN T

                              Through:   Mr. Vikas Tiwari, Advocate
                                         with Mr. Raji Abraham, AR
                                         of the Respondent.

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OMP 132/2014 & OMP 133/2014                                 Page 1 of 21
       CORAM:

       HON'BLE MR. JUSTICE SANJEEV SACHDEVA

SANJEEV SACHDEVA, J.

1. These petitions under Section 34 of the Arbitration and

Conciliation Act, 1996 (hereinafter referred to as the

'Act') are objections to two separate but identical

arbitral awards both dated 04.10.2013 . Since the

awards are identical and the facts are similar the

objects are being disposed of by a common judgment.

2. The disputes relate to two separate tenanted premises

taken on rent by the Respondent. The terms and

conditions of letting are identical, identical pleas were

raised and evidence led by the parties and both

petitions were argued together.

3. The two tenanted premises being shop/space No.G -03

(in OMP No.132/2014) & shop/space No.G -02 (in

OMP No.133/2014) situated in Pa rsavnath Arcadia

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Complex, 1, Gurgaon Mehrauli Road, near Sector 14

Gurgaon were taken on lease on 16.02.2007 by the

Respondent from M/s. Parsavnath Developers Ltd. for

a period of 12 years.

4. Lease Agreements dated 16.02.2007 were executed

between M/s. Parsa vnath Developers Ltd. and the

Respondent. The said lease agreements stipulated

that the term of the lease to be 12 years and initial

monthly rent to be Rs.1,24,000/-. The lease

agreements were executed on a Rs. 100/- Stamp

paper each and were unregistered.

5. Subsequent to the creation of the tenancy of the

Respondent, the respective spaces were sold to the

Petitioners/objectors by M/s. Parsavnath Developers

Ltd. Subsequent to the purchase of the said space s

by the Petitioners, the Respondent attorned their

tenancy in favour of the Petitioners.

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6. As per the Petitioners, the lease agreements also

stipulated that there would be a 36 month lock -in-

period w.e.f. 16.04.2007 to 15.04.2010 in which

neither of the parties could terminate the lease. As

per the Petitioners, the Respondent in violation of the

terms and co nditions of the lease agreement, by letter

dated 20.01.2009, terminated the lease agreement ,

paid rent only upto 31.01.2009 and abandoned the

shops on 30.03.2009. The Petitioners demanded the

rent from the Respondent for the month of February

and March, 2009 and also for the unexpired period of

the lock-in-period. The Petitioners further contended

that the Respondent had never handed over physical

possession of the shops to the Petitioners and had

failed to remove the fittings and fixtures affixed

therein.

7. The Petitioners filed a suit for recovery against the

Respondent in the Court of Additional District Judge, =======================================================================

Saket on 01.08.2011. The said suit was disposed of

with a direction to the parties to settle the dispute

through arbitration. The present Arbitral Tribunal was

constituted by this Court under Section 11 of the Act.

The Arbitral Tribunal has published the Award s dated

04.10.2013 that are impugned herein .

8. The Petitioners before the Arbitral Tribunal claimed the

rent for the month of February 2009 and March 2009

and further rent from 01.04.2009 to 15.04.2010 being

the rent for the balance of the lock-in-period.

9. The Respondent contested the claim of the Petitioners

on the ground that the premises were vacated by the

Respondent on 30.03.2009 after two months notice to

the Petitioners and as such, the ir liability to pay rent

after they vacated the premises ceased. Further, with

respect to the lock-in-period, the Respondent set up a

defence that the lease agreements were neither duly

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stamped nor registered and as such, no term of the

lease agreement could be enforced. The Respondent

further took a plea that as the lease agreements were

not registered , the tenancy was a month to month

tenancy terminable by 15 days' notice and no clause

of the lease agreements could be relied upon or

enforced. The Respondent further claimed adjustment

of the security deposited that was admittedly being

held by the Petitioners.

10. The following issues were framed by the Arbitral

Tribunal:

"1) Whether the claimant has no locus standi to file the present claim petition? OPR.

2) Whether the claim petition is time barred as alleged in Para 2 of the preliminary objections of the reply to the statement of claim? OPR.

3) Whether the claim petition is hit by =======================================================================

section 17(1)(d) r/w section 49 of Indian Registration Act and also hit by section 35 of the Indian Stamps Act. If so, its effect? OPR.

This issue No.3 was amended with the consent of parties on 15-07-2013 as under:

Whether the lease deed dated 16-02-2007 is hit by section 17(1)(d) r/w section 49 of Indian Registration Act and also hit by section 35 of Indian Stamps Act. If so, its effect? OPR.

4) Whether the claimant is owner of the suit premises? OPC.

5) To what amount, if any, is the claimant entitled to recover from the Respondent? OPC.

6) To what rate of interest, if any, is the claimant entitled and if so, for what period and on which amount? OPC.

7) Relief."

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11. The Arbitral Tribunal after considering the evidence

and the submissions of the parties on issue s No. 1 & 4

returned a finding that the Petitioners were the owners

and landlord of the suit premises and, as such, w ere

entitled to maintain the claim petition. This finding has

not been assailed by the Respondent. On issue No.2

pertaining to limitation, the Arbitral Tribunal has

returned a finding that as the premises was vacated

on 01.04.2009, the suit for recovery , in which the

parties were referred to arbitration, was filed on

15.04.2010 well within limitation. This finding has not

been impugned by the Respondent. The Respondent

has not impugned the awards.

12. With regard to issue No.3 i.e. issue pertaining to the

objection of the Respondent that the claim of the

petitioner for payment for the unexpired lock- in period

was hit by the provisions of the Indian Stamp Act and

the Indian Registration Act, the Arbitral Tribunal has =======================================================================

held that the Lease Deed was insufficiently stamped

and it compulsorily required registration and as it was

unregistered, it was inadmissible in evidence and the

clause of lock- in period could not be enforced.

13. The Supreme Court in the case of K.B. S AHA AND

S ONS P VT. LTD . V ERSUS . D EVELOPMEN T C ONSU LTAN T

LTD . 2008 (8) SCC 564 has laid down as under:

"21. From the principles laid down in the various decisions of this Court and the High Courts, as referred to hereinabove, it is evident that:

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

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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."

14. A document that is compulsorily required to be

registered and is not registered is inadm issible in

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evidence. A document compulsorily required to be

registered but not being so registered cannot be used

as evidence except for any collateral purpose. A

collateral transaction must be independent of and

divisible from the transaction to effect which the law

requires registration. A collateral transaction must be

a transaction not itself required to be effected by a

registered transaction. Some examples of collateral

transaction in transaction s pertaining to landlord -

tenant would be the relationship between the parties,

nature of premises, purpose of letting, rate of rent. An

unregistered lease deed can be looked into for the

purposes of ascertaining any of the above collateral

purposes but not for enforcing a term of the lease .

15. A clause in a lease deed fixing or stipulating a term of

the lease or a fixed term of lock-in-period is not a

collateral purpose. The said clause would be one of

the main clauses of the lease which in the absence of =======================================================================

registration would be inadmissible in evid ence and

unenforceable in law. The Arbitral Tribunal has rightly

held that the clause vis-a-vis the lock-in-period cannot

be called a collateral purpose and the tenancy

between the parties was not a fixed term tenancy but a

month to month tenancy terminabl e by a notice on

either side.

16. The Arbitral Tribunal has further rightly held that the

document was insufficiently stamped and as s uch,

inadmissible in evidence. If the document is found to

be not duly stamped, Section 35 of Stamp Act bars the

said document being acted upon. (SMS TEA E STATES

P VT. LTD . V ERSUS C HANDMARI TEA C OMPANY P VT. L TD .

2011 (14) SCC 66).

17. The finding of the Arbitral Tribunal, that the Lease

agreement compulsorily required registration and in

the absence of registration and being insufficiently

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stamped was inadmissible in evidence and

unenforceable and further that the clause stipulating a

lock-in period was one of the main clauses of the

lease and in the absence of registration could neither

be relied upon nor enforced, cannot be faulted with.

18. The Arbitral Tribunal has, on the appraisal of the

evidence of the parties, returned a finding of fact that

the tenancy was terminated by the Respondent by the

legal notice dated 20.01.2009, which notice also

intimated the intention of the Respondent to vacate the

premises w.e.f 01.04.2009. The Arbitral Tribunal has

further returned a finding of fact that the premises

were vacated w.e.f 01.04.2009. The Arbitral Tribunal

has held the Respondent liable to pay rent for the

months of February and March 2009 at the agreed

rate of Rs.1,24,000/- besides service tax and

maintenance char ges.

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19. The Arbitral Tribunal has held that the Respondent is

entitled to the balance of the security deposit after

adjustment of the amount held to be payable by the

Petitioners alongwith interest @ 18% per annum.

20. The Petitioners have impugned the findings of fact by

the Arbitral Tribunal.

21. A perusal of the claim petition filed by the Petitioners

shows that the Petitioners had claimed rent under two

heads, rent for the month of February and March,

2009 and rent from 01.04.2009 to 15.04.2009 as rent

from the lock-in-period separately. This segregation by

the Petitioners is an indication of the fact that the

Petitioners were themselves treating the two periods

as distinct. The rental for the said two periods was

same and thus the only purpose for showing the said

two periods separately appears to be the fact that the

Petitioners were aware that the premises had bee n

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vacated on 01.04.2009 . Further in the legal notice

dated 27.04.2009 (Ex.CW1/10) issued on beha lf of the

Petitioners, the Petitioners have themselves admitted

that the Respondent had vacated the premises on

30.03.2009. However, have disputed, the handing

over of physical possession. The finding by the Arbitral

Tribunal is that the Respondent had vacated the

premises w.e.f 01.04.2009. This finding is purely

factual.

22. The powers exercised by the Court while deciding

objections under Section 34 of the Act are not

appellate powers. The Court does not sit as a Court of

appeal. If the Arbitral Tribunal has taken a plausible

view, the Court while dealing with objections under

Section 34 would not substitute its view for the view of

the Arbitral Tribunal even in a case where the Court

were to come to a conclusion that a different view is

possible from the view taken by the Arbitral Tribunal, =======================================================================

provided the view taken by the Arbitral Tribunal was a

plausible view. The Court entertaining objections

under Section 34 is not to appreciate or re-appreciate

the evidence for the purposes of returning a finding of

fact. The findings of fact returned by the Arbitral

Tribunal are not to be interfered with unless they are

perverse or erroneous on the face of the record . No

such perversity or error apparent has been pointed out

in the present case. The finding s of the Arbitral

Tribunal that the agreement being unregistered and

insufficiently stamped and thus inadmissible in

evidence and further that no clause of the said

agreement can be enforced, are the finding s in

accordance with the settled judicial principles.

23. The Supreme Court of India in the case of

M C D ERMOTT IN TERNA TIONA L INC . VERSUS B URN

S TANDARD C O . LTD . : 2006 (11) SCC 181 has laid

down as under:

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"35. The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it."

24. The Supreme Court of India in the case of ONGC L TD .

VERSUS S AW P IPES LTD ., (2003) 5 SCC 705 has laid

down as under:

"54. It is true that if the Arbitral Tribunal has committed mere error of fact or law in reaching its conclusion on the disputed =======================================================================

question submitted to it for adjudication then the court would have no jurisdiction to interfere with the award. But this would depend upon reference made to the arbitrator:

(a) if there is a general reference for deciding the contractual dispute between the parties and if the award is based on erroneous legal proposition, the court could interfere; (b) it is also settled law that in a case of reasoned award, the court can set aside the same if it is, on the face of it, erroneous on the proposition of law or its application; and (c) if a specific question of law is submitted to the arbitrator, erroneous decision in point of law does not make the award bad, so as to permit its being set aside, unless the court is satisfied that the arbitrator had proceeded illegally."

25. The Supreme Court of India in the case of

M AHARASHTRA SEB V. S TERILITE INDUSTR IES (INDIA )

2001 (8) SCC 482 has laid down as under:

"9. The position in law has been noticed by this Court in Union of India v. A.L. Rallia Ram [AIR =======================================================================

1963 SC 1685 : (1964) 3 SCR 164] and Madanlal Roshanlal Mahajan v. Hukumchand Mills Ltd. [AIR 1967 SC 1030 : (1967) 1 SCR 105] to the effect that the arbitrator's award both on facts and law is final; that there is no appeal from his verdict; that the court cannot review his award and correct any mistake in his adjudication, unless the objection to the legality of the award is apparent on the face of it. In understanding what would be an error of law on the face of the award, the following observations in Champsey Bhara & Co. v. Jivraj Balloo Spg. and Wvg. Co. Ltd. [(1922-23) 50 IA 324 : AIR 1923 PC 66] , a decision of the Privy Council, are relevant (IA p. 331) 'An error in law on the face of the award means, in Their Lordships' view, that you can find in the award or a document actually incorporated thereto, as for instance a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you =======================================================================

can then say is erroneous.'

10. In Arosan Enterprises Ltd. v. Union of India [(1999) 9 SCC 449] this Court again examined this matter and stated that where the error of finding of fact having a bearing on the award is patent and is easily demonstrable without the necessity of carefully weighing the various possible viewpoints, the interference in the award based on an erroneous finding of fact is permissible and similarly, if an award is based by applying a principle of law which is patently erroneous, and but for such erroneous application of legal principle, the award could not have been made, such award is liable to be set aside by holding that there has been a legal misconduct on the part of the arbitrator."

26. The Arbitral Tribunal has returned a finding and rightly

so, that as the Lease Agreement was unregistered and

insufficiently stamped, the clause stipulating a lock -in-

period could not be enforced. The Petitioners were

rightly held not entitled to seek any amount for the =======================================================================

unexpired lock-in-period. As regards the finding by the

Arbitral Tribunal that the premises were vacated w.e.f.

01.04.2009, the findings are factual and not an error

apparent on the face of the record. The same are not

perverse and cannot be interfered with.

27. In view of the above, I find no merit in the petition s.

The petitions are accordingly dismissed. No costs.

SANJEEV SACHDEVA, J

March 13, 2014 st

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