Vandana Batra vs Aerens Goldsouk International ...
2014 Latest Caselaw 4975 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

%                             Order delivered on: 1st October, 2014

+             I.A. No.12399/2013 in CS(OS) No.988/2012

        VANDANA BATRA                                         .....Plaintiff
                    Through           Mr.H.L. Tiku, Sr. Adv. with
                                      Ms.Yashmeet Kauar and
                                      Mr.Shubhankar Sengupta, Advs.

                          versus

        AERENS GOLDSOUK INTERNATIONAL LTD. .....Defendant
                    Through Mr.G.P. Thareja, Adv. with Mr.R.Y.
                            Kalia, Adv.

        CORAM:
        HON'BLE MR. JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J.

1. By this order I propose to decide the application filed by the plaintiff under Order XLVII Rule 1 read with Section 114 and Section 151 of the Code of Civil Procedure (hereinafter referred to as CPC) for restoration of suit by recalling of order dated 13th September, 2012.

2. Few facts are that the plaintiff filed the suit for ejectment from immovable property and recovery of arrears of rent and for mesne profits/damages for use and occupation. The defendant was a tenant of the plaintiff in respect of a flat bearing No.402 having a super area of 1907.249 sq. ft. comprising of drawing cum dining room, three bedrooms, three bathrooms car parking on the 4th floor of the multistoried building known as "Adishwar Apartment" situated at 34,

Ferozshah Road, New Delhi-110 001 along with car parking at a rent of Rs.1 lac per month besides electricity, water and maintenance charges payable directly by the defendant to the concerned authorities.

3. The lease deed executed between the parties being inadequately stamped and unregistered. The tenancy as per settled law of the defendant of the said flat was from month to month. The plaintiff by legal notice dated 16th February, 2012 determined/terminated the tenancy of the defendant of the said flat and called upon the defendant to hand over the vacant, peaceful and physical possession of the same to him. Despite receipt of the said notice, the defendant failed to comply with the same who have also failed to pay admitted rent to the plaintiff. Thereafter, the present suit was filed against the defendant for ejectment and mense profits etc. Undisputed position that relationship between the landlord and tenant is not denied by the defendant. The rent was more than Rs.3500/-. Notice of termination was sent by the plaintiff.

4. The defendant upon service of the summons appeared before Court on 21st May, 2012 and made their submission before Court that there is an arbitration clause in the agreement and that he would file an appropriate application under the Arbitration and Conciliation Act, 1996. The defendant filed an application dated 21st August, 2012, being I.A. No.15686/2012 under Section 8 of the Act, praying for the following reliefs:

"a. allow the present application under Section 8 of Arbitration and Conciliation Act, 1996 and direct the parties to resolve the dispute through arbitration by appointing a mutually agreed arbitrator as per clause 9 of

the said Lease Deed to arbitrate the dispute involved in the present case.

b. appoint any retired Judge of High Court to arbitrate the dispute involved in the present case..."

5. The defendant also filed an additional affidavit by stating that the original lease deed dated 15th January, 2010 is attached. However, the case of the plaintiff is that same was not filed as per inspect done by him. The suit was disposed of by order dated 13th September, 2012 with the consent of the parties. The extract of the said order reads as under:

"This application has been filed by the defendant stating inter alia that as the Lease Deed dated 15.01.2010 governing the parties, contains an arbitration clause for referring the disputes in relation to the Lease Deed to an Arbitrator under the Arbitration and Conciliation Act, 1996, they may be relegated to arbitration.

On the last date of hearing, time had been sought on behalf of the plaintiff to obtain instructions. Today, Mr.H.L. Tiku, Senior Advocate appearing for the plaintiff states on instructions that his client has no objection to the aforesaid proposal.

Accordingly, the present application is allowed. Mr.S.M. Chopra, ADJ (Retd.) (Mobile No.9213230349 & 9871361683) is appointed as an Arbitrator to adjudicate upon all the disputes between the parties in respect of the Lease Deed in question. Both parties shall be entitled to file their claims/counter claims against each other for adjudication by the learned Arbitrator. The learned Arbitrator's fee is fixed in accordance with the terms and conditions of payment laid down by the Delhi High Court Arbitration Centre; to be borne in equal share by both sides."

6. Sh.S.M. Chopra, retired ADJ, being sole Arbitrator, entered upon the reference on 19th September, 2012. The plaintiff filed its statement of claim on 5th October, 2012. The defendant before the learned Arbitrator filed an application dated 5th December, 2012 under Indian Stamp Act for impounding the lease deed dated 15th January, 2010 alleging that the plaintiff was relying upon the lease deed. The defendant before the learned Arbitrator also denied that the tenancy in question was a month to month. It is the case of the defendant that it was the plaintiff who himself has relied upon the lease deed in various paras of the plaint and prayer clause and now it is not open to the plaintiff to take contrary stand.

7. The learned Arbitrator heard the arguments on 9th July, 2013 and passed the order dated 15th July, 2013 by disposing of the application of the defendant. The operative portion of the order dated 15th July, 2013 reads under:

"...In CS(OS) No.988/2012 titled Vandana Batra v Aerens Goldsouk International Ltd., on an application u/s 8 of the Arbitration & Conciliation Act, 1996, by the defendant, vide order dated 13.09.2012 the Hon'ble High Court was pleased to allow the application and relegate the parties to arbitration in terms of the arbitration clause in the Lease Deed dated 15.01.2010.

Before the Arbitrator, the Respondent who was defendant in the above mentioned suit, has filed an application for impounding the Lease Deed dated 15.01.2010 on the premises that the said Lease Deed is 'unregistered' and is not 'stamped' under the Stamp Act, 1899 and therefore, the Arbitration Clause in the Lease Deed could not be acted upon in terms of the law laid down by the Hon'ble Supreme Court in the case of SMS Tea Estate reported in 2011 VIII AD (SC) 89.

Having heard Shri Subhankar Sen Gupta, Ld. Counsel for the claimant and Shri R.Y. Kalia, Ld. Counsel for the respondent, I am of the considered view that the propriety demanded that the aforesaid judgment of the Hon'ble Supreme Court which is now being cited could have been cited at the time of consideration of the application u/s 8 of the Arbitration & Conciliation Act, 1996 of the defendant. Admittedly, the original Lease Deed was filed by the defendant in the said suit and the same is not before the Arbitrator.

The respondent is at liberty to take such steps, as may be advised in CS(OS) 988/2012. These arbitration proceedings are adjourned to 10.10.2013 (1 a.m. at the same venue) for further directions...."

8. Mr.H.L. Tiku, learned Senior counsel appearing on behalf of the plaintiff, argued that in the present case, the defendant has created a peculiar situation by raising objection with regard to lease deed, who does not want that the matter be decided on merit and to pay the admitted rent of the tenanted premises and wants to enjoy the same by raising technical points. He says that the plaintiff is not relying upon the lease deed which is unregistered. The said dispute cannot be decided in the arbitration proceedings. The plaintiff under those circumstance is left with no option but to seek restoration of the suit in view of the judgment of the Supreme Court in the case SMS Tea Estate Pvt. Ltd. vs. M/s. Chandmari Tea Co. Pvt. Ltd., 2011(7) Scale 747, as the Arbitrator may not be able to decide the dispute between the parties since the lease deed is inadequately stamped and the same cannot be read at all.

In the said case, it was held that the lease deed, being inadequately stamped can unregistered, cannot be looked into even for collateral purpose including the arbitration clause.

9. Mr.Tiku submits that the defendant did not refer the decision of SMS Tea Estate Pvt. Ltd. (supra) before Court at the time of passing the consent order dated 13th September, 2012 deliberately. Even the plaintiff was not aware about the said decision passed by the Supreme Court otherwise the plaintiff would not have agreed for referring the matter before the Arbitral Tribunal. It was only referred before the Arbitrator by the defendant in order to delay the proceedings and to take the advantage of the situation which is created by the defendant after the suit was disposed of.

10. Mr.Tiku argued that had the said judgment been referred before this Court, the suit ought not to have been disposed of and the plaintiff even ought not to have given the consent to refer the matter before the Arbitrator. He submits that under the bonafide belief the plaintiff had given the consent before the Court to refer the matter before the learned Arbitrator who did not have jurisdiction to adjudicate the dispute under the lease deed which is unregistered. He submits that no prejudice would be caused to the defendant if the order dated 13th September, 2012 is recalled and the suit is restored to its original position.

11. Mr.G.P. Thareja, learned counsel appearing on behalf of the defendant, has raised various objections to the prayer made in the application. He argues that the application under Section 151 CPC is not maintainable as it amounts to a review of order dated 13th September, 2012. The half of the court fee ought to have been paid

by the plaintiff at the time of filing of present review application. He submits that it is the plaintiff who himself relied upon the lease deed dated 15th January, 2010 in various paras of the plaint. As far as judgment SMS Tea Estate Pvt. Ltd. (supra) is concerned, he explained that the said decision came to the notice of the defendant after passing of consent order on 13th September, 2012.

12. Mr.Thareja argues that on the date of filing the present application, the matter was still pending before the Arbitrator who has terminated the proceedings subsequently. Therefore, the application was not maintainable. The application was pre-mature. His submission is that two options are left with the plaintiff either to go before Arbitral Tribunal or to file a fresh suit. The application for recalling of order is not maintainable once with the consent of parties the suit is disposed of. According to him, since lease deed is inadequately stamped, therefore, the defendant had got every right to raise the objection and the same has to be sent before the Collector of Stamp for making up the deficiency of stamp, the document which is relied upon by the plaintiff himself.

13. Having heard the learned counsel for the parties, no doubt the present application was filed by the plaintiff on 24th July, 2013 for restoration of the suit by recalling the order dated 13th September, 2012. Learned sole Arbitrator has terminated the arbitration proceedings by order dated 25th March, 2014 under clause (c) of sub- section (2) of Section 32 of the Arbitration and Conciliation Act, 1996. The extract of the said order reads as under:

"Pursuant to the order dated 15.07.2013 passed by the Arbitrator, and the claimant having filed IA 12399-

12400/2013 in CS(OS) 988/2012, these arbitration proceedings were adjourned sine die. The claimant has now prayed for termination of these proceedings and in making such a request the claimant has filed a copy of the order dated 03.03.2014 passed by the Hon'ble High Court in the aforesaid suit.

Taking note of the developments noted in the order dated 03.03.2014, referred to above, these arbitration proceedings are terminated under clause (c) of sub- section (2) of Section 32 of the Arbitration & Conciliation Act, 1996."

14. It is the admitted position between the parties is that the lease deed in question was unregistered document and in view of the settled law, the said document cannot be looked into even for collateral purpose and particularly the matter could not have referred in the arbitration proceeding in view of decision of SMS Tea Estate Pvt. Ltd. case (supra). The factual position of law is not disputed by the learned counsel for the defendant. The order was passed on 13th September, 2012. The judgment in the case of SMS Tea Estate Pvt. Ltd. (supra) referred by the learned counsel for the defendant before the Arbitrator was delivered on 20th July, 2011 i.e. prior to the date of passing the said orders.

The relevant paras 5, 12 and 13 are reproduced as under: "5. On the contentions urged the following questions arise for consideration:

(i) Whether an arbitration agreement contained in an unregistered (but compulsorily registrable) instrument is valid and enforceable?

(ii) Whether an arbitration agreement in an unregistered instrument which is not duly stamped, is valid and enforceable?

(iii) Whether there is an arbitration agreement between the Appellant and Respondent and whether an Arbitrator should be appointed?

12. We may therefore sum up the procedure to be adopted where the arbitration clause is contained in a document which is not registered (but compulsorily registrable) and which is not duly stamped:

(i) The court should, before admitting any document into evidence or acting upon such document, examine whether the instrument/document is duly stamped and whether it is an instrument which is compulsorily registrable.

(ii) If the document is found to be not duly stamped, Section 35 of Stamp Act bars the said document being acted upon. Consequently, even the arbitration clause therein cannot be acted upon. The court should then proceed to impound the document under Section 33 of the Stamp Act and follow the procedure under Section 35 and 38 of the Stamp Act.

(iii) If the document is found to be duly stamped, or if the deficit stamp duty and penalty is paid, either before the Court or before the Collector (as contemplated in Section 35 or 40 of the Stamp Act), and the defect with reference to deficit stamp is cured, the court may treat the document as duly stamped.

(iv) Once the document is found to be duly stamped, the court shall proceed to consider whether the document is compulsorily registrable. If the document is found to be not compulsorily registrable, the court can act upon the arbitration agreement, without any impediment.

(v) If the document is not registered, but is compulsorily registrable, having regard to Section 16(1)(a) of the Act, the court can de-link the arbitration agreement from the main document, as an agreement independent of the other terms of the document, even if the document itself cannot in any way affect the property or cannot be received as evidence of

any transaction affecting such property. The only exception is where the Respondent in the application demonstrates that the arbitration agreement is also void and unenforceable, as pointed out in para 8 above. If the Respondent raises any objection that the arbitration agreement was invalid, the court will consider the said objection before proceeding to appoint an arbitrator.

(vi) Where the document is compulsorily registrable, but is not registered, but the arbitration agreement is valid and separable, what is required to be borne in mind is that the Arbitrator appointed in such a matter cannot rely upon the unregistered instrument except for two purposes, that is (a) as evidence of contract in a claim for specific performance and (b) as evidence of any collateral transaction which does not require registration.

13. Where a lease deed is for a term of thirty years and is unregistered, the terms of such a deed cannot be relied upon to claim or enforce any right under or in respect of such lease. It can be relied upon for the limited purposes of showing that the possession of the lessee is lawful possession or as evidence of some collateral transaction. Even if an arbitrator is appointed, he cannot rely upon or enforce any term of the unregistered lease deed. Where the arbitration agreement is not wide and does not provide for arbitration in regard to all and whatsoever disputes, but provides only for settlement of disputes and differences arising in relation to the lease deed, the arbitration clause though available in theory is of little practical assistance, as it cannot be used for deciding any dispute or difference with reference to the unregistered deed."

15. In view of SMS Tea Estate Pvt. Ltd. (supra) there is force in the submission of Mr.Tiku, learned Senior counsel appearing on behalf of the plaintiff, no purpose would be served if the matter again be referred in the arbitration proceedings who may not be able to decide the dispute between the parties as the defendant has raised

the objection about the validity of the lease deed. I also agree with Mr.Tiku that it is a settled law that in case the lease deed is unregistered, the same cannot be looked into and the tenancy becomes on month to month basis.

16. The other objection of the defendant that the half of the court fee has not been paid as the application filed by the plaintiff under Section 151 CPC is in the nature of review petition, the court fee ought to have been paid it is not in dispute that the said order is not a final judgment or decree which was passed after recording of the evidence of the parties. The present situation ought not have arisen if the decision of SMS Tea Estate Pvt. Ltd. (supra) was brought to the knowledge of the Court. The prayer made in the present application is a type of information and clarification is made as under the circumstances occurred, the disputes between the parties have to be determined by the civil court. Thus, half of the court fee is not payable as no final order on merit was passed in view of peculiar facts of this matter.

17. With regard to the objection raised by Mr.Thareja that application is not maintainable in view of the fact that the order dated 13th September, 2012 is passed with the consent of the parties, the same has also no force in view of the decision passed by this Court in the case of Balwant Singh and Ors. vs. M/s. Indraprastha Builders Pvt. Ltd. and Anr., 60 (1995) DLT 136. The relevant para 8 of the said judgment reads as under:

"8. I am satisfied about the Explanation of the appellants regarding facts which led the appellant to withdraw its eviction petition before the Controller. The statement regarding withdrawal of the petition was result of a bona

fide view about the legal position. That the legal position was unsettled at the relevant time is clear from the fact that a reference had to be made by a Single Judge of this Court to a Division Bench for settling the issue which was ultimately settled by the Division Bench by its judgment dated 25th January, 1991. Therefore, on facts, I find that it was a fit case where the order for withdrawal of the suit could have been allowed to be revoked."

18. It is not in dispute by the defendant that the relief in the present suit can be claimed by way of a separate suit filed by the plaintiff. Therefore, no prejudice would be caused if the prayer is allowed in order to avoid litigation, time, cost and to decide the real controversy between the parties. It also does not change the basic nature of the suit. Under these circumstances, the prayer is liable to be allowed.

19. From the entire gamut of the matter, it appears that the plaintiff was not within his knowledge about the legal implication of unregistered lease deed nor the decision of Supreme Court in the case of SMS (supra) otherwise, why the plaintiff would have given his consent. It was bonafide error in passing the consent order on account of mistake and there are sufficient reason to review the same.

20. In view of the above, the prayer made in the application is allowed. The suit and pending application, being I.A. No.6719/2012, are restored to their original positions.

CS(OS) No.988/2012 & I.A. No.6719/2012 List on 14th January, 2015.

(MANMOHAN SINGH) JUDGE OCTOBER 01, 2014