Telangana High Court
Dr.S.Abhilash vs Prasanth Busareddy on 21 May, 2025
Author: P.Sam Koshy
Bench: P.Sam Koshy, N.Tukaramji
THE HONOURABLE SRI JUSTICE P.SAM KOSHY
AND
THE HONOURABLE SRI JUSTICE N.TUKARAMJI
CIVIL MISCELLANEOUS APPEAL No.692 of 2023
JUDGMENT:
(per the Hon'ble Sri Justice P.Sam Koshy)
The instant is an appeal under Section 37 of the Arbitration
and Conciliation Act, 1996 (briefly the 'A&C Act' hereinafter). The
challenge is to the order dated 06.11.2023, in I.A.No.134 of 2022
in O.S.No.603 of 2022, passed by the IX Additional District Judge,
R.R. District at L.B. Nagar.
2. Heard Mr. S.Vivek Reddy, learned Senior Counsel,
representing Mr. Kailash Nath P S S, learned counsel for the
appellants, and Mr. B.Chandrasen Reddy, learned Senior Counsel,
representing M/s. Chandrasen Law Offices for the respondents.
3. Vide the impugned order, the Trial Court dismissed a petition
filed by the appellants herein under Section 8 of the A&C Act read
with Order VII Rule 11 of Civil Procedure Code, 1908 (for short,
'CPC') seeking to refer the parties to resolve the dispute by
resorting to arbitration clause.
4. The brief facts which led to filing of the instant appeal are
that the respondents herein preferred a suit in O.S.No.603 of 2022
for specific performance seeking relief of a direction to the
appellants to execute and register sale deed in favour of the
respondents in respect of the suit schedule 'B' property after
receiving balance sale consideration of Rs.1,12,00,000/-.
5. The contention of the respondents in the suit was that the
appellants had offered to sell the suit schedule property which was
accepted by the respondents and on negotiations the sale
consideration was arrived at Rs.1,85,00,000/- inclusive of stamp
duty, registration charges, amenities, corpus funds and advance
maintenance charges for two years. In terms of the agreement,
the respondents paid some amount in advance and the balance
was to be paid at the time of registration of the sale deed.
However, since the appellants, the owners, were not showing keen
interest in executing the sale deed, the respondents have filed the
suit for specific performance which was registered as O.S.No.603
of 2022. Notices were issued and the appellants entered
appearance and filed a petition under Section 8 of the A&C Act
read with Order VII Rule 11 of CPC seeking to refer the dispute to
be resolved by way of arbitration.
6. The Trial Court was of the view that whether there was a
valid draft sale deed executed between the parties with an
arbitration clause, is a matter which needs to be decided after
recording of the evidence and after framing of issues and, until
and unless the same is not decided, the question of referring the
matter to arbitration does not arise.
7. It is this order passed by the Trial Court which is under
challenge in the instant appeal.
8. According to the learned Senior Counsel for the appellants,
the very basis for insistence on the part of the respondents
seeking for specific performance was based on various draft
agreements that were sent on e-mail between the appellants and
respondents and invariably these draft agreements had a dispute
resolution clause to settle the disputes by way of arbitration.
Therefore, it has to be construed that there was a valid agreement
between the parties and the agreement also had an arbitration
clause as a means to settle the disputes between the parties.
Thus, the Section 8 petition ought to have been allowed by the
Trial Court.
9. Learned Senior Counsel for the appellants in support of his
contentions relied upon the following decisions:
a) Trimex International FZE Limited, Dubai vs. Vedanta
Aluminium Limited, India 1
b) Enercon (India) Limited and Others vs. Enercon GMBH
and Another 2
c) Cox and Kings Limited vs. SAP India Private Limited
and Another 3
10. Per contra, the learned Senior Counsel for the respondents
opposing the appeal contended that there was firstly no valid
agreement between the parties, much less an arbitration
agreement; therefore, at the threshold itself the Section 8 petition
has rightly been dismissed. It was also contended that until and
unless there is a written agreement entered into between the two
sides and both of them having accepted the agreement and the
conditions referred thereto and having signed the said document,
any agreement, in the absence of these aforementioned essential
ingredients cannot be said to be an enforceable agreement under
the A&C Act.
(2010) 3 Supreme Court Cases 1
(2014) 5 Supreme Court Cases 1
(2024) 4 Supreme Court Cases 1
11. According to the learned Senior Counsel for the respondents,
the Section 8 petition filed by the appellants does not meet the
requirement as is envisaged under Section 7 of the A&C Act.
12. Learned Senior Counsel for the respondents, in support of his
contentions, relied upon the following decisions:
a) Union of India vs. Kishorilal Gupta & Bros. 4
b) Interplay Between Arbitration Agreements under
Arbitration and Conciliation Act, 1996 and Stamp Act,
1899, IN RE 5
13. Having heard the contentions put forth on either side and on
perusal of records, the relevant factual matrix which goes to the
core of the issue involved in the instant case are as follows:
a) The appellants admittedly are the owners of the suit schedule
property;
b) The appellants offered to sell the suit schedule property to
the respondents and the sale consideration on negotiations
arrived at was Rs.1,85,00,000/-;
AIR 1959 SC 1362
Curative Petition (C) No.44 of 2023 in Review Petition (C) No.704 of 2021
in Civil Appeal No.1599 of 2020 with Arbitration Petition No.25 of 2023,
decided on December 13, 2023
c) The respondents also paid some advance money to the
appellants. However, it is contended that the appellants
thereafter were not showing keen interest to sell the
property to the respondents and, therefore, the respondents
had no other option but to file a civil suit for specific
performance of contract;
d) There was no written agreement entered into between the
parties;
e) The so-called offer and acceptance of the sale of property
was oral;
f) Though there appears to be certain draft agreements
exchanged between the parties, none were signed by either
of the parties and none could be termed as a final agreement
between the parties; and
g) The so-called draft agreements did not bear the signatures of
either sides.
14. Now to better understand the objection raised by the
appellant under Section 8 of the A&C Act, it would be necessary to
under the provisions of Section 8(1) of the A&C Act, which for
ready reference is being reproduced hereunder:
"8. Power to refer parties to arbitration where there is an
arbitration agreement.-
[(1) A judicial authority, before which an action is brought in a
matter which is the subject of an arbitration agreement shall, if
a party to the arbitration agreement or any person claiming
through or under him, so applies not later than the date of
submitting his first statement on the substance of the dispute,
then, notwithstanding any judgment, decree or order of the
Supreme Court or any Court, refer the parties to arbitration
unless it finds that prima facie no valid arbitration agreement
exists.]"
15. When we read the aforesaid clause pertaining to reference to
arbitration, it is also necessary to understand what an arbitration
agreement is. Arbitration agreement is one which is defined under
Section 7 of the A&C Act. For ready reference, Section 7 is also
reproduced hereunder:
"7. Arbitration agreement.-
(1) In this Part, arbitration agreement means an agreement by
the parties to submit to arbitration all or certain disputes which
have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an
arbitration clause in a contract or in the form of a separate
agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in-
(a) a document signed by the parties;
(b)an exchange of letters, telex, telegrams or other means
of telecommunication [including communication through
electronic means] which provide a record of the agreement;
or
(c) an exchange of statements of claim and defence in which
the existence of the agreement is alleged by one party and
not denied by the other.
(5) The reference in a contract to a document containing an
arbitration clause constitutes an arbitration agreement if the
contract is in writing and the reference is such as to make that
arbitration clause part of the contract."
16. Plain reading of the aforesaid statutory provisions dealing
with reference and also the definition of arbitration agreement
makes it amply clear that, to constitute an arbitration agreement,
what is required is an existence of a valid agreement between the
parties and one of the parties to the arbitration agreement raising
a statement of claim flowing from the said agreement. In other
words, whether there is an arbitration agreement or not, can be
best gathered from the terms of the agreement.
17. In the instant case, the Section 8 petition filed by the
appellants was on the so-called draft agreements exchanged
between the parties in respect of the sale and purchase of the suit
schedule property. Undoubtedly, the draft agreements remained at
the draft stage with there being no finality to it, and unless there is
a finality to the agreement, it is difficult to presume that the
parties had entered into an agreement with an arbitration clause in
it so as to call it an arbitration agreement.
18. To make things worse for the appellants, it is also necessary
to take into consideration the averment made in the first line of
paragraph No.2 of their Section 8 petition, which again for ready
reference is reproduced hereunder:
"We state that the draft agreements filed by the Plaintiffs are
not valid, null and void."
19. The very reading of the aforesaid averment in the affidavit
filed in support of Section 8 petition would reveal that the
appellants themselves have in very categorical terms denied of an
agreement entered into between the parties. The appellants
themselves have stated on oath that the draft agreements filed
along with the plaint are not valid and are rather null and void.
This by itself clearly indicates that the stand of the appellants is
that they have not entered into any agreement at all with the
respondents. Therefore, there cannot be an arbitration agreement
at all for allowing of Section 8 petition.
20. It is also necessary to take note of the fact that even
otherwise the requirement for a valid arbitration agreement as is
envisaged under Section 7 of the A&C Act is also missing in the
instant case, more particularly with the averments that the
appellants have raised in their affidavit in Section 8 petition where
there is a categorical denial. In the said circumstances, we are of
the considered opinion that the impugned order passed by the
Trial Court does not warrant any interference.
21. The judgments referred to by the learned Senior Counsel for
the appellants would not be applicable in the instant case for the
reason that those judgments have been decided under entirely
different contextual backdrop where the facts and the documents
and correspondences exchanged between the parties does reveal
of an accepted contract between the parties, unlike in the instant
case. Therefore, those judgments are distinguishable on facts
itself.
22. Accordingly, the instant appeal being devoid of merit,
deserves to be and is accordingly dismissed.
23. As a sequel, miscellaneous applications pending if any, shall
stand closed. However, there shall be no order as to costs.
_____________
P.SAM KOSHY, J
_____________
N.TUKARAMJI, J
Date: 21.05.2025
GSD
