M/S Sky Tech Construction Pvt Ltd vs Shyam Sunder Taparia
2017 Latest Caselaw 966 Del

$~A-41
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                            Date of Decision: 20.02.2017

+     CM(M) 203/2017 and CM Nos. 6562-6565/2017

      M/S SKY TECH CONSTRUCTION PVT LTD ..... Petitioner
                    Through Mr. B.P. Singh and Mr.K.V.
                            Sreemithun, Advocates.

                         versus

      SHYAM SUNDER TAPARIA                               ..... Respondent
                  Through

      CORAM:
      HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J. (Oral)

1. By the present petition filed under Article 227 of the Constitution of India, the petitioner seeks to impugn the order dated 22.10.2016 by which an application filed by the petitioner under Order 7 Rule 11 CPC was dismissed.

2. The respondent has filed a suit for recovery of Rs. 9,01,599/-. The respondent had booked a flat in a multi storey building being built by the petitioner at Ghaziabad vide Builder Buyer Agreement dated 15.11.2009 for a total sale consideration of Rs.22,75,000/-. The respondent also took a back to back loan from HDFC Bank for Rs.19 lakhs. It is the case of the respondent that the petitioner had promised that in September 2011 the building would be ready. It is further the case of the respondent that the petitioner failed to complete the project within the committed period,

CM(M) 203/2017 Page 1 namely, September 2011 and rather started demanding other miscellaneous charges. It is claimed by the respondent that the miscellaneous charges have also been paid. Finally after a delay of two years, the petitioner on 07.08.2013 declared that the flat is ready for possession. The flat was finally handed over in a raw state on 29.11.2013 and a sale deed was registered on 29.11.2013 i.e. as per the respondent with a delay of two years. Hence, the respondent claims that the petitioner is liable to pay interest @ 9% per annum for the delayed possession of the flat. Certain other averments have also been made in the plaint regarding promises allegedly made by the petitioner regarding furnishing of the flat.

3. The petitioner filed the present application under Order 7 Rule 11 CPC. The stress of the argument of the petitioner is that the civil courts in U.P. have the territorial jurisdiction and reliance is placed on para 34 of the sale deed dated 29.11.2013. It is also claimed that as per the Builder Buyer Agreement dated 15.11.2009, there exists an arbitration clause and the jurisdiction of the court is barred under Section 8 of the Arbitration and Conciliation Act. Based on these grounds, the application was filed.

4. The trial court by the impugned order noted that as per the letter dated 01.12.2010 an undertaking was given by the petitioner that 9% interest would be paid to the respondent if possession was not handed over up to September 2011. It noted the clause of the sale deed regarding jurisdiction of the courts in U.P. and held that clause pertains to only disputes arising out of or touching upon or concerning the sale deed and hence, held that the same would not apply to the facts of the case. It also relied upon para 31 of the Agreement between the parties where it is stated that arbitration proceedings will be held at Delhi/New Delhi and the courts in Delhi shall

CM(M) 203/2017 Page 2 have the jurisdiction in all the matters arising out of the Agreement. It also noted that the petitioner having filed an application under Section 8 of the Arbitration Act has already withdrawn the same on 03.11.2011 stating that he will get an arbitrator appointed but no steps have been taken for the said purpose. Noting that the address of the petitioner is that of Delhi and that the suit is only for recovery of money against the petitioner and not relating to any property, it held that the courts in Delhi would have territorial jurisdiction and dismissed the application.

5. I have heard the learned counsel for the petitioner. He has reiterated the submission contended earlier that as there is an arbitration clause, it was mandatory on the part of the civil court to refer the parties to arbitration. He relies upon the judgment of the Supreme Court in the case of Sundaram Finance Ltd. & Ors. vs. T.Thankam, AIR 2015 SC 1303. He has also relied upon Clause 34 of the sale deed to contend that the High Court of Allahabad and the courts subordinate to it in Ghaziabad only have the territorial jurisdiction to the matters between the parties.

6. As far as the arbitration clause is concerned, the copy of the Builder Buyer Agreement has not been placed on record. However, in the course of arguments a copy of the said Agreement dated 15.11.2009 has been handed over in the Court. The relevant portion of the said clause reads as follows:-

"51. All or any disputes arising out of or touching upon or in relation to the terms of this Agreement including the interpretation and validity of the terms thereof and the respective rights and obligations of the parties shall be settled amicably or mutual discussion failing which the same shall be settled through arbitration. The arbitration proceedings shall be governed by the Arbitration and Conciliation Act, 1996 and/or statutory amendments/modifications thereof for the time being

CM(M) 203/2017 Page 3 in force. The arbitration proceedings shall be held at an appropriate location in New Delhi/Delhi. Subject to the Arbitration as referred above, the courts at Delhi/New Delhi shall have the jurisdiction in all the maters arising out of /or touching upon and/or in connection with this Agreement."

7. Hence, as per this clause there exists an arbitration agreement. There is also a stipulation that the arbitration proceedings shall be held at a proper location in Delhi. It also stipulates that subject to the arbitration clause, the court at Delhi and New Delhi shall have jurisdiction in all matters arising out of or touching upon or in connection with this agreement.

8. We may have a look at the judgment of the Supreme Court in the case of M/s Swastik Gases Pvt. Ltd. v. Indian Oil Corporation Ltd., CA No.5086/2013, decided on 03.07.2013, (2013) 7 S.C.R. 581 in which the court while interpreting the ouster clause held as follows:

"31.In the instant case, the appellant does not dispute that part of cause of action has arisen in Kolkata. What appellant says is that part of cause of action has also arisen in Jaipur and, therefore, Chief Justice of the Rajasthan High Court or the designate Judge has jurisdiction to consider the application made by the appellant for the appointment of an arbitrator under Section 11. Having regard to Section 11(12)(b) and Section 2(e) of the 1996 Act read with Section 20(c) of the Code, there remains no doubt that the Chief Justice or the designate Judge of the Rajasthan High Court has jurisdiction in the matter. The question is, whether parties by virtue of clause 18 of the agreement have agreed to exclude the jurisdiction of the courts at Jaipur or, in other words, whether in view of clause 18 of the agreement, the jurisdiction of Chief Justice of the Rajasthan High Court has been excluded. For answer to the above question, we have to see the effect of the jurisdiction clause in the agreement which provides that the agreement shall be subject to jurisdiction of the courts at Kolkata. It is a fact that whilst providing for jurisdiction clause

CM(M) 203/2017 Page 4 in the agreement the words like 'alone', 'only', 'exclusive' or 'exclusive jurisdiction' have not been used but this, in our view, is not decisive and does not make any material difference. The intention of the parties - by having clause 18 in the agreement

- is clear and unambiguous that the courts at Kolkata shall have jurisdiction which means that the courts at Kolkata alone shall have jurisdiction. It is so because for construction of jurisdiction clause, like clause 18 in the agreement, the maxim expressio unius est exclusio alterius comes into play as there is nothing to indicate to the contrary. This legal maxim means that expression of one is the exclusion of another. By making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other courts. Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts. A clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend Section 28 of the Contract Act in any manner.

32. The above view finds support from the decisions of this Court in Hakam Singh, A.B.C. Laminart, R.S.D.V. Finance, Angile Insulations, Shriram City, Hanil Era Textiles and Balaji Coke."

9. On the issue of territorial jurisdiction, it is manifest that the petitioner/defendant is based in Delhi. Clause 51 of Builder Buyer Agreement also stipulates that the courts in Delhi are the appropriate court for adjudication of any dispute.

10. Hence, based on the ouster clause and the fact that a part of cause of action arose in Delhi, the courts in Delhi would have exclusive jurisdiction to try the present petition. In the light of the same, in my opinion, there is no infirmity in the order of the trial court holding the territorial jurisdiction lies

CM(M) 203/2017 Page 5 with the court.

11. Reliance of the petitioner on the jurisdiction clause as stated in the sale deed is misplaced. The said clause as rightly held by the trial court does not apply to the facts of the case. That clause reads as follows:-

"34. That the High Court of Allahabad and the Courts subordinate to it at Ghaziabad shall have jurisdiction in all matters arising out of or touching and/or concerning of this Deed."

The said clause deals with matters arising out of the sale deed only.

12. Coming to the submission of the petitioner regarding the existence of an arbitration clause in the agreement between the parties. Admittedly the petitioner filed an application under Section 8 of the Arbitration Act. Thereafter he has withdrawn the said application on 03.11.2015. On that date a submission was made that he does not press the said application under Section 8 of the Arbitration and Conciliation Act without prejudice to his rights, to move to the Hon'ble High Court for appointment of an arbitrator. He also sought seven days time to file a written statement. Admittedly, the petitioner has not moved any court for appointment of an arbitrator despite lapse of more than one year from the date of the said order. He has filed his written statement though of course taking the plea of existence of an arbitration clause.

13. It is clear that the petitioner has abandoned the arbitration agreement between the parties.

14. Reliance of the learned counsel for the petitioner on the judgment of the Supreme Court in the case of Sundaram Finance Ltd. & Ors. vs. T.Thankam(supra) is misplaced. The opening sentence of the judgment

CM(M) 203/2017 Page 6 states that it is dealing with a situation regarding the approach of the court once an application is duly filed in terms of Section 8 of the Arbitration and Conciliation Act. It is in these circumstances that the Supreme Court held that the provisions are mandatory and that Section 8 is pre-emptive in nature. However, the said legal position cannot apply to a party who has himself withdrawn the application under Section 8 of the Arbitration and Conciliation Act.

15. The Supreme Court in the case Sukanya Holdings (P) Ltd. v. Jayesh H.Pandya & Anr., (2003) 5 SCC 531 held as follows:

"12. For interpretation of Section 8, Section 5 would have no bearing because it only contemplates that in the matter governed by Part-I of the Act, Judicial authority shall not intervene except where so provided in the Act. Except Section 8, there is no other provision in the Act that in a pending suit, the dispute is required to be referred to the arbitrator. Further, the matter is not required to be referred to the arbitral Tribunal, if-(1) the parties to the arbitration agreement have not filed any such application for referring the dispute to the arbitrator; (2) in a pending suit, such application is not filed before submitting first statement on the substance of the dispute; or (3) such application is not accompanied by the original arbitration agreement or duly certified copy thereof. This would, therefore, mean that Arbitration Act does not oust the jurisdiction of the Civil Court to decide the dispute in a case where parties to the Arbitration Agreement do not take appropriate steps as contemplated under Sub-sections (1) & (2) of Section 8 of the Act."

16. In the present case, the petitioner has filed his defence, i.e. written statement. Admittedly, the petitioner had filed any application under Section 8 of the Act but withdrew the same on 03.11.2015. Later, he didn't move to any court making it clear that petitioner has abandoned the arbitration

CM(M) 203/2017 Page 7 agreement between the parties.

17. In view of the above, there is no merit in the present petition and the same is dismissed. All pending applications also stand dismissed.

                                                   JAYANT NATH, J
FEBRUARY 20, 2017
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CM(M) 203/2017                                                         Page 8