Urmil Kumari vs Bharat Mehta And Others
2015 Latest Caselaw 2695 Del

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*    IN THE HIGH COURT OF DELHI AT NEW DELHI

                                            Date of decision: 06.04.2015
+     CS(OS) 854/2012

      URMIL KUMARI                                    ..... Plaintiff
                         Through      Mr.Abhay Mani Tripathi,Advocate
              versus
      BHARAT MEHTA AND OTHERS                   ..... Defendants
                     Through Mr.Amit Anand Tiwari,
                             Mr.Abhinav Raghuvanshi and
                             Mr.Abhinandan Banerjee,
                             Advocates for D-1 to 3.
                             Mr.S.K.Chudhary, Advocate for
                             defendants No.6 to 9.

      CORAM:
      HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J. (ORAL)

IA No. 16200/2012

1. This is an application under section 8 of the Arbitration and Conciliation Act, 1996 filed by defendants No.1 to 3. This is a small application of three paragraphs claiming that the entire dispute raised in the present suit arises out of a collaboration agreement and that the agreement contains an arbitration clause being clause 13. Hence, it is averred that the suit be rejected under section 8 of the Arbitration and Conciliation Act.

2. The plaintiff has filed the accompanying suit seeking a decree of declaration for declaring that Sale Deed dated 9.6.2010 in favour of defendant No.2 in respect of First Floor of the suit property G-35/A Kirti

Nagar, New Delhi is cancelled; a decree of declaration declaring that Sale Deed dated 2.8.2010 in favour of defendant No.2 in respect of second floor of the said property be declared as null and void, decree of declaration declaring that the third Sale Deed also dated 2.8.2010 in favour of defendant No.3 in respect of third floor and terrace rights of the third suit property be declared as null and void and without consideration. The plaint avers that the plaintiff who is the owner of the suit property entered into a collaboration agreement with defendant No.1 on 7.6.2010. As per the Collaboration Agreement defendant No.1 was to pay Rs.23 lacs and provide three constructed floors with stilt parking to the plaintiffs. Other terms and conditions are also agreed upon. One floor was to go to the builder.

3. On the request of defendant No.1 the first floor, which was at that stage not even ready, was transferred to defendant No.2 the mother of defendant No.1 vide Sale Deed dated 9.6.2010 in good faith and trust. As there was delay in completion of the building, the defendant No.1 is stated to have proposed to give her one flat on first floor built in half portion of rear side of A-12, Kirti Nagar, New Delhi as a guarantee till he completes the construction of the said house. It is further said that on 28.7.2010 defendant No.1 brought two cheques of Rs.20 lacs each in the name of plaintiff to make payment of the flat i.e. property No.A-12, Kirti Nagar, New Delhi. Thereafter on 30.7.2010 plaintiff was surreptitiously said to have been taken to the office of Sub Registrar where various documentation was executed under the guise of having executed the sale deed for A-12, Kirti Nagar, New Delhi. A sum of Rs.9 lac and another sum of Rs.3,35,575/-was also taken back from the plaintiff. Later on the

plaintiff came to know that the property A-12, Kirti Nagar, New Delhi was actually a disputed property in a dispute pending between son of defendant No.1 and his brother. It is stated that under the garb of getting the sale deed executed in favour of the plaintiff in respect of the said A- 12, Kirti Nagar, New Delhi defendants have in connivance with each other manoeuvred, cheated and defrauded the plaintiff in respect of second floor, third floor and terrace of the suit property. Hence, the suit has been filed. In the course of submissions it has been admitted that the first floor of the property which was transferred in favour of defendant No.2, the said defendant No.2 sold the said first floor flat to defendants No.4 and 5. They further sold the flat to defendants No.6 & 7. Similarly, as far as the second floor is concerned, the same was transferred in favour of defendants No.2 and 3 who have further sold it to defendants No.7 and

8. As far as third floor is concerned the same was sold to defendant No.3 who has thereafter sold it to defendants No.4 and 5. Defendants No.4 and 5 have thereafter sold it to defendant No.9.

4. The collaboration agreement is only between the plaintiff and defendant No.1 which provides that defendant No.1 shall raise construction on the property with his own funds, namely, including the stilt parking, upper ground floor, first floor and third floor within 14 months. It also provides that defendant No.1 shall be entitled to deal with the proposed first floor of the building in any manner after completion of the construction. Other connected terms and conditions are also stipulated in the said agreement. The arbitration clause reads as under:-

"13. That whenever any disputes or differences arise between the parties, the same shall be got decided by an arbitrator

under Arbitration Act, whose award will be binding upon both the parties and could be made by the rule of the Court. With the mutual consent of the parties.......... has been appointed as arbitrator."

5. The Supreme Court in the case of Sukanya Holding (P) Ltd. vs. Jayesh H. Pandya and Another, (2003) 5 SCC 531 in paragraphs 15 and 17 held as follows:-

"15. The relevant language used in Section 8 is--"in a matter which is the subject matter of an arbitration agreement". Court is required to refer the parties to arbitration. Therefore, the suit should be in respect of 'a matter' which the parties have agreed to refer and which comes within the ambit of arbitration agreement. Where, however, a suit is commenced - "as to a matter" which lies outside the arbitration agreement and is also between some of the parties who are not parties to the arbitration agreement, there is no question of application of Section 8. The word 'a matter' indicates entire subject matter of the suit should be subject to arbitration agreement.

16.....

17. Secondly, such bifurcation of suit in two parts, one to be decided by the arbitral tribunal and other to be decided by the civil court would inevitably delay the proceedings. The whole purpose of speedy disposal of dispute and decreasing the cost of litigation would be frustrated by such procedure. It would also increase the cost of litigation and harassment to the parties and on occasions there is possibility of conflicting judgments and orders by two different forums."

6. Hence, the Supreme Court has held that the matter as referred to in section 8 has to imply that the entire subject matter of the suit would be a subject matter of the Arbitration agreement.

7. The present collaboration agreement which is the arbitration clause deals only with the rights and contentions of plaintiff and defendant No.1 pertaining to construction of the suit property. However, a perusal of the plaint shows that the plaint seeks relief against not only defendant No.1,.2 and 3 but thereafter additional parties have been added as IA No.17433/2013 was allowed and includes reliefs also against defendants No.4 to 9. As per the plaintiff the three Sale Deeds have been obtained fraudulently and hence are sought to be declared as null and void.

8. Learned counsel appearing for plaintiff in the course of arguments also pointed out that on 25.7.2010 an MOU was executed between the plaintiff and defendant No.1 which modifies the terms and conditions of the collaboration agreement dated 7.6.2010. The MOU dated 25.7.2010 does not have an arbitration clause. It is urged that in view of the MOU dated 25.7.2010 the Arbitration clause has been given a go bye.

9. Apart from the above contention it is also clear that the suit as framed by the plaintiff envisages number of reliefs which are out of the scope nor in the ambit of the collaboration agreement. It is the case of the plaintiff that defendants including defendants No.3 to 9 who are not parties to the collaboration agreement dated 7.6.2010 have fraudulently connived to get the three Sale Deeds registered for the first to third floors in favour of the respective defendants. The sale deeds executed of the three floors have no co relation or connection with the collaboration agreement. Accordingly, it cannot be said that the arbitration agreement as contained in the collaboration agreement dated 7.6.2010 pertains to the disputes between the parties or encompasses the entire subject matter of the present suit. Defendants No.2 to 9 are not parties to the collaboration

agreement dated 7.6.2010. Issues of fraud have been raised in the suit. The present application is without merits and is accordingly dismissed. IA No. 14066/2014 Learned counsel appearing for defendants No. 6 to 9 seeks an adjournment as he states that he needs to file some documents which could not be filed on account of some personal problem.

List this application for arguments on 14.08.2015.

JAYANT NATH, J APRIL 06, 2015/n