Uttarakhand High Court

ARBAP/22/2017 on 3 May, 2023

                                                           RESERVED JUDGMENT


      IN THE HIGH COURT OF UTTARAKHAND
                 AT NAINITAL

           HON'BLE THE CHIEF JUSTICE SRI VIPIN SANGHI


      ARBITRATION APPLICATION No. 22 OF 2017

              JUDGMENT RESERVED         :     23RD DECEMBER, 2022
              JUDGMENT DELIVERED        :     03rd MAY, 2023



Between:

Smt. Neelam Jain.                                               ...Applicant

and

M/s Texla Towers Limited and another.                       ...Respondents

Counsel for the applicant.         :         Mr. Abhijay    Negi,   the   learned
                                             counsel.

Counsel for the respondents.       :         Mr. Piyush Garg, learned counsel.


JUDGMENT :

The applicant has preferred the present

application under Section 11(6) of the Arbitration and

Conciliation Act, 1996, to seek the appointment of an

arbitrator to adjudicate the disputes between the parties

arising out of their agreement dated 14.10.1992.

2. The brief facts of the case are that the husband

of the applicant, namely, Late Shri Satish Chand Jain, and

his brothers and sister viz. Shri Sushil Chand Jain, Shri

Ramesh Chand Jain and Smt. Saroj Gupta entered into an

agreement dated 14.10.1992 with respondent No. 1-M/s Texla Towers Ltd. through its Chairman, Shri Sardar Raja

Singh - respondent no. 2. This agreement contains an

arbitration clause, in Clause 19, which provides "That in

case of any dispute or difference arising between the

parties during the subsistence of this contract the same

shall be settled through Arbitration and the provisions of

the Arbitration Act will apply.

3. After the parties entered into the aforesaid

agreement, a follow-up meeting was held on 24.12.1992,

wherein Shri Sushil Chand Jain, Shri Satish Chand Jain,

Shri Ramesh Chand Jain, and S. Raja Singh participated.

The minutes of the said meeting were drawn up and

agreed by the said persons. Some of the salient terms

recorded in the minutes are as follows :-

"1. That Property No. 13/A, Rajpur Road, Dehradun consisting of Rink Hall on the first floor and New Empire Cinema on the ground floor shall be purchased by Texla Towers Ltd in furtherance and in continuance of agreement dated 14/10/92 between Sardar Raja Singh on the one hand and Sarvshri Sushil Chand Jain, Satish Chand Jain, Shri Ramesh Chand Jain and Smt. Saroj Gupta on the second hand. This would also include the contents of the letter dated 29/9/92.

2. That the following persons shall have shares with percentage of shares as detailed hereunder:

               (a) S. Raja Singh                  55%
               (b) Shri Sushil Chand Jain         9%
               (c) Shri Satish Chand Jain         13.5%
               (d) Shri Ramesh Chand Jain         13.5%
               (e) Smt. Saroj Gupta               9%

3. That Shri Sushil Chand Jain, Shri Satish Chand Jain and Shri Ramesh Chand Jain have nominated the

following persons as share holders of the Company against their respective share as detailed hereunder

(a) Nominee of Shri Sushil Chand Jain Smt. Vimlesh Jain

(b) Nominees of Shri Satish Chand Jain

1. Smt. Neelam Jain

2. Shri Sanjay Jain

3. Smt. Rachna Jain

(c) Nominees of Shri Ramesh Chand Jain

1. Smt. Manju Rani Jain

2. Shri Sandeep Jain

4. That out of the nominees of Shri Satish Chand Jain, Smt. Neelam Jain shall be one of the directors of the aforesaid company.

5. That out of the nominees of Shri Ramesh Chand Jain, Shri Sandeep Jain shall be one of the directors of the aforesaid Co.

6. That Sushil Chand Jain shall be one of the Directors of the Co."

4. The applicant states that in terms of the

Agreement dated 14.10.1992, and the Resolution dated

24.12.1992, five sale deeds were executed by the owners,

i.e. the applicant's husband and other co-owners, in favour

of respondent no. 1, i.e., M/s Texla Towers Limited in

respect of immovable properties.

5. The applicant states that under the Agreement

dated 14.10.1992, and the Resolution dated 24.12.1992,

45% of the shares of Texla Towers Limited belong to the

applicant's family, and 55% of the shares belong to the

family of Respondent No. 2, and the applicant was also

appointed as a director of the respondent-company.

6. It is the case of the applicant that after the

execution of the sale deeds, pursuant to the Agreement

and Resolution, respondent no. 1 applied for renewal of

licence by the Entertainment Department, of the New

Empire Cinema Hall, and for the change of name of the

licencee to that of M/s Texla Towers Limited, through its

Chairman Sardar Raja Singh, and of Shri Sushil Chand

Jain. Consequently, a renewed/ amended license was

issued to New Empire Cinema Hall in the name of M/s

Texla Towers Limited - through its chairman Sardar Raja

Singh, and Director Shri Sushil Chand Jain for the period

24.05.1993 to 31.03.1994. The applicant states that,

later on, by omission, the name of Sushil Chand Jain was

not mentioned in subsequent renewals. Shri Satish Chand

Jain expired on 21.11.1997, Shri Sushil Chand Jain expired

on 14.05.2009, and Shri Ramesh Chand Jain expired on

26.08.2012.

7. The applicant states that she is the sole

surviving director of respondent no. 1 - who represents

the applicant's family, and owns 45% shares of the

respondent No. 1, which runs the New Empire Cinema.

8. The applicant states that in terms of the

Agreement dated 14.10.1992, a joint bank account was to

be opened for the business of the respondent-company,

and the same was to be operated by Shri Sushil Chand

Jain, Ramesh Chand Jain - on behalf of the applicant's

family, and the opposite party no. 2. It was also agreed

that the license of the New Empire Cinema shall be taken

in the joint names of Sardar Raja Singh and Shri Sushil

Chand Jain on behalf of the company, and it was also

agreed upon that no cash transaction will be made by any

of the Directors of the company, and all bank transactions

will be made by cheque/ Bank drafts.

9. The applicant states that since all the three

brothers, namely Shri Satish Chand Jain, Shri Sushil

Chand Jain and Shri Ramesh Chand Jain have expired, and

the applicant is the only surviving director on behalf of

family of applicant, the applicant sent a letter dated

07.04.2017 to the Assistant Commissioner, Entertainment

Development, Dehradun for adding the name of the

applicant in the license of New Empire Cinema as a

Director of M/s Texla Towers Limited, in the place of Shri

Sushil Chand Jain.

10. The applicant also sent a letter dated

10.04.2017 to the opposite parties to provide to the

applicant the complete bank accounts for the last three

years, with the balance sheet of the respondent-company,

within 7 days, and to get the name of the applicant added

as a director of the respondent-company in the license of

the New Empire Cinema, and in the bank accounts. The

applicant also requested the opposite parties not to let out

any part of the property to any third person, without the

consent of the members of the applicant's family.

11. That the applicant sent another registered letter

to the opposite parties dated 20.04.2017, for making the

compliance of the earlier letter dated 10.04.2017, and to

not let out any part of the cinema building to any third

party.

12. The applicant states that the opposite parties

have not given any response, and have not complied with

her directions as mentioned in the letter.

13. The applicant states that, therefore, disputes

have arisen between the parties, and the same are

covered by the Arbitration Agreement dated 14.10.1992.

The applicant, therefore, seeks the appointment of an

arbitrator to adjudicate the disputes, which have arisen

between the parties.

14. The applicant invoked the arbitration agreement

vide registered letter dated 20.04.2017. However, no

arbitrator has been mutually appointed in terms of

agreement dated 14.10.1992. Consequently, this

application has been preferred.

15. The submission of Mr. Negi, learned counsel for

the applicant is that the respondents have not seriously

disputed the factum of execution of the Agreement dated

14.10.1992. The said agreement contains an Arbitration

Clause in Clause 19, which provides the disputes arising

between the parties under the said Agreement, shall be

adjudicated/ resolved through arbitration. He submits

that, since the applicant is the successor-in-interest of one

of the parties to the said agreement, namely Shri Satish

Chand Jain, the rights under the said agreement, which

vested in Shri Satish Chand Jain, have devolved upon her.

16. Mr. Negi submits that, since the meeting dated

24.12.1992 was held between three of the signatories,

namely Shri Sushil Chand Jain, Shri Satish Chand Jain and

Shri Ramesh Chand Jain on the one hand, and respondent

no. 2, who is representing respondent no. 1, on the other

hand, in pursuance of the said agreement, wherein further

decisions were taken, the applicant is entitled to enforce

rights under the Agreement, as well as under the Minutes

of Meeting held on 24.12.192, since they were acted upon

by the parties to the agreement.

17. The respondents have opposed this application

on several grounds. The respondents contend that the

alleged cause of action pleaded by the applicant arose

between the period 1992 to 1993. The notice for

appointment of an arbitrator has been, allegedly, given on

20.04.2017, and the present petition has been filed in

March, 2018. Thus, it is claimed that the present

arbitration petition is barred by time. The submission of

Mr. Piyush Garg, learned counsel for the respondents is

that the name of the predecessor-in-interest of the

applicant, namely Shri Sushil Chand Jain, was not included

in the license of New Empire Cinema after 31.03.1994.

Thus, according to the respondents, the cause of action

arose in favour of Shri Sushil Chand Jain in the year 1994

itself. It is further argued that the applicant had herself

sought the complete bank account statements of the

respondent no.1-company on 10.04.2017. Thus, the

cause of action arose in favour of the applicant, firstly, in

1994 and, thereafter, in the year 2017.

18. The respondents also contend that the claim

regarding 45% shares by the applicant, in the respondent

company, can be raised only under the Companies Act,

2013, and such dispute cannot be settled through

arbitration. Moreover, any claim raised by any person with

regard to his shareholding in the company; his claim to

become a Director of a company, or; with regard to

oppression and mismanagement of a company, can only

be raised before the NCLT by virtue of Section 434 of the

Companies Act. Such a claim cannot be decided or

adjudicated upon by means of an arbitration. The

respondents claim that the disputes raised by the

applicant are, thus, non-arbitrable disputes.

19. The respondents state that the arbitration

agreement is unstamped and unregistered and, therefore,

cannot be acted upon. They further submit that the

agreement in question was relating to creation of right,

title and interest in immovable property. Such an

agreement is, necessarily, registrable as per Section 17 of

the Registration Act, as applicable in the State of

Uttarakhand. Therefore, the respondents state that, since

the agreement dated 14.10.1992 is unregistered, the

same has no legal or evidentiary value, and cannot be

relied upon.

20. The respondents state that the applicant is

guilty of concealment and suppression of material facts,

and has concealed previous litigations between the parties.

The parties are into litigation since 2003, and the

applicant, for the first time, after such lengthy litigation

between the parties, is now seeking appointment of an

arbitrator, which is now barred by law. It is claimed that

the applicant has waived the arbitration agreement by her

conduct. The respondents contend that disputes in the

aforesaid litigations arise out of the same agreement

dated 14.10.1992, and is in respect of the self-same

properties. Since the parties have already invoked their

remedies before the Civil Court, the arbitration agreement

stands waived. Thus, the applicant is estopped from filing

an application under Section 11(6) of the Arbitration and

Conciliation Act before this Court to seek appointment of

an Arbitrator, as the same is hit by principles of res

judicata, constructive res judicata and issue estoppel. To

buttress their argument the respondents rely on Section 8

of the Arbitration and Conciliation Act.

21. The respondents contend that there can be no

bifurcation of disputes i.e., disputes arising out of one

agreement can either be agitated in a civil suit, or in

arbitration. They cannot be bifurcated. One dispute

arising under the agreement cannot be taken to a Civil

Court, and the other be taken to arbitration.

22. The respondents argue that the applicant is

basing her claim on the arbitration clause contained in the

agreement dated 14.10.1992. The arbitration clause

contained in agreement dated 14.10.1992 refers to the

dispute or difference arising between the parties during

subsistence of the said agreement. The applicant is also

claiming her rights on the basis of resolution dated

24.10.1992, which does not contain an arbitration clause.

It is argued that it was never intended by the parties to

borrow and incorporate the arbitration clause in the

subsequent resolution dated 24.12.1992. Thus, claims

arising out of the Resolution/ Minutes of Meeting dated

24.12.1992 cannot be arbitrated.

23. The respondents have raised several other

factual pleas in their defence, which touch upon the merits

of their defence to the claim that the applicant may raise.

They are not relevant for the present purpose, and,

therefore, are not being noticed in this judgment.

24. In response to the plea that this application is

barred by limitation, the submission of Mr. Negi is that the

present Arbitration Application has been preferred within

time. Mere non-inclusion of the name of Mr. Sushil Chand

Jain in the license after 01.04.1994 did not give a cause of

action to the applicant, as that was an act/ omission on

the part of the licensing authority.

25. It is further argued that the arbitration

agreement was invoked on 20.04.2017, and the

Arbitration Application was preferred on or about

12.06.2018.

26. I have considered the submissions of the

learned counsels on the aspect of the application being

barred by limitation.

27. I may refer to the observations made by the

Constitution Bench of the Supreme Court in SBP & Co. v.

Patel Engg. Ltd., (2005) 8 SCC 618, wherein the

Supreme Court observed that the High Court, while

dealing with an application under Section 11(6) of the

Arbitration and Conciliation Act, can also decide the

question, whether the claim was a dead one; or a long-

barred claim that was sought to be resurrected, and

whether the parties have concluded the transaction by

recording satisfaction of their mutual rights and obligations

or by receiving the final payment without objection. It

may not be possible at that stage, to decide whether a live

claim is made, and whether the claim made comes within

the purview of the arbitration clause. It will be appropriate

to leave that question to be decided by the Arbitral

Tribunal on taking evidence, along with the merits of the

claims involved in the arbitration. The Chief Justice has to

decide whether the applicant has satisfied the conditions

for appointing an arbitrator under Section 11(6) of the Act.

For the purpose of taking a decision on these aspects, the

Chief Justice can either proceed on the basis of affidavits

and the documents produced or take such evidence or get

such evidence recorded, as may be necessary. It was held

that adoption of this procedure in the context of the Act

would best serve the purpose sought to be achieved by

the Act of expediting the process of arbitration, without

too many approaches to the court at various stages of the

proceedings before the Arbitral Tribunal.

28. Limitation is a mixed question of fact and law in

most cases, and the present case is no exception. The

issue of limitation, in my view, in the facts of the present

case, cannot be decided at this stage. The

correspondence undertaken by the applicant with the

respondents in the year 2017, prima facie, shows that the

cause of action arose in her favour, when the respondents

did not comply with her requests to provide her the bank

statements and accounts, and when the respondents

sought to disregard her rights under the aforesaid

agreement. Thus, it cannot be said that the issue of

limitation can be decided by me at this stage, and in these

proceedings.

29. The next submission of Mr. Garg, learned

counsel for the respondents, is that, the claim towards

45% shareholding in the respondent-company, and for

being inducted in as a Director of the respondent no.1-

company, can be agitated only before the NCLT and not in

Arbitration.

30. The Supreme Court in SBP & Co. (supra) drew

a distinction between a non-arbitrable claim and a non-

arbitrable subject matter. It held that the former may

arise on account of scope of the arbitration agreement,

and also when the claim is not capable of being resolved

through arbitration. On the other hand, generally non-

arbitrability of the subject-matter would relate to non-

arbitrability in law.

31. The applicant is yet to file her claims. Her

notice invoking arbitration dated 20.04.2017 raises

grievance with regard to the letting out of the part of the

Cinema Hall building to one Bazaar India for opening a

retail outlet, and the failure of the respondents to provide

accounts. The applicant has stated that disputes have

arisen between the parties under the Agreement dated

14.10.1992 and the Resolution dated 24.12.1992. As to

what would be the ultimate claims that the applicant may

raise, in case disputes are referred to arbitration, is not

yet known. As and when the applicant raises her claims, it

shall be open to the respondents to raise all their

defences, including to the non-maintainability of any part

of the claim, before the Arbitrator. It would be premature

for me to assume that the applicant would raise her claim

towards her entitlement for 45% shareholding in the

respondent-company, or for appointment as a Director of

the respondent-company. Even if such a claim were to be

raised, it would be for the respondents to raise their

objections/ defences, including to the arbitrability of such

claims, which shall be examined by the Arbitral Tribunal.

In my view, on the basis of the aforesaid assumptions, the

present application cannot be rejected at this stage.

32. Section 16 of the Arbitration and Conciliation

Act, 1996 vests the Arbitral Tribunal with the power to rule

on its own jurisdiction, including ruling on any objections

with respect to the existence or validity of the arbitration

agreement. Thus, the issue of non-arbitrability of any one

or more of the claims that the claimant may raise, would

fall for consideration by the Arbitral Tribunal.

33. The submission of Mr. Garg is that prior to

institution of the present arbitration application, the

applicant herein filed a petition under Section 9 of the

Arbitration and Conciliation Act, 1996 before the learned

Commercial Court/Additional District Judge, Dehradun.

The learned Commercial Court, vide its judgment dated

10.11.2017 dismissed the said arbitration application, and

recorded a categorical finding that there is no subsisting

arbitration clause between the parties. It is argued that

this finding is binding on the parties, and on this Court.

34. Learned counsels have also adverted to Section

11(6A) of the Arbitration and Conciliation Act, which was

inserted in the Statute Book by Act 3 of 2016, w.e.f.

23.10.2015. Sub-Section (6A) of Section 11 provides that

the Supreme Court or, as the case may be, the High

Court, while considering any application under sub-section

(4) or sub-section (5) or sub-section (6), shall,

notwithstanding any judgment, decree or order of any

Court, confine to the examination of the existence of an

arbitration agreement.

35. Sub-Section (6A) was omitted subsequently by

Act 33 of 2019, w.e.f 09.08.2019, which has, however, not

been notified.

36. In Bharat Sanchar Nigam Ltd. & Anr. v. M/s

Nortel Networks India Pvt. Ltd., Civil Appeal Nos.

843-844 of 2021, the Supreme Court observed :-

"27. The 2019 Amendment to Section 11 Section 11 has been further amended by the Arbitration and Conciliation (Amendment) Act, 2019 to promote institutionalization of arbitration in India. The 2019 Amendment Act has deleted sub-section (6A) in Section 11. However, the amended to Section 11 is yet to be notified. Consequently, sub-section (6A) continues to remain on the statute book, and governs the scope of power under Section 11 for the present."

37. Thus, when the present Arbitration Application

was preferred by the applicant, Section 11(6A) existed on

the Statute Book, and it still forms part of the Act.

38. It has been argued by Mr. Negi that, in the light

of Section 11(6A), this Court is not required to go into any

judgment, decree or order of any Court, relied upon by the

respondents - to claim that the arbitration agreement does

not survive.

39. On the other hand, the submission of Mr. Garg

is that the purpose of insertion of Sub-Section (6A) in

Section 11 was to legislatively overrule the pre-existing

judgment on the scope and power of the High Court, while

exercising jurisdiction under Section 11 of the Act. The

words "any judgment, decree or order of any Court" do

not mean that the Court, dealing with an application under

Section 11 of the Act, would ignore judgments, decrees

and orders inter se the parties.

40. On the aforesaid aspect, I find merit in the

submission of Mr. Garg. In my view, Sub-Section (6A) of

Section 11 cannot be understood to mean that the

judgments and decrees rendered inter se the parties can

be ignored by the Court, while dealing with an application

under Section 11 of the Act. For the Court to ignore

judgments and decrees inter se the parties, may lead to

miscarriage of justice, as, in a given case, issues and

disputes, which have finally been adjudicated and

determined, in relation to the existence of the arbitration

agreement, may go unnoticed. Therefore, I am inclined to

examine the submissions of Mr. Garg, premised on the

earlier litigations referred to by him.

41. It is argued by Mr. Garg that there has been

previous litigation between the parties, including Suit

bearing Original Suit No. 727 of 2003, "Shri Sanjay Jain

v. Texla Tower Ltd. and others"; Original Suit No. 93 of

2007, "Smt. Saroj Gupta v. M/s Texla Tower and

others"; Original Suit No. 276 of 2006, "Shri Sanjay Jain

and another v. Texla Towers Ltd. and others"; and

Original Suit No. 263 of 2014, "M/s Texla Tower Ltd. v.

State of Uttarakhand and others", with regard to the

same property, seeking declaration, possession and

injunction.

42. I may deal with each of the aforesaid suits/

proceedings referred to by Mr. Garg.

43. Original Suit No. 727 of 2003 was instituted by

Shri Sanjay Jain, S/o Shri Satish Chand Jain, i.e., the son

of the applicant, and the defendants in the said Suit were

respondent no. 1 herein, i.e., Texla Towers Ltd., Mussoorie

Dehradun Development Authority, State of Uttarakhand,

Shri Sushil Chand Jain and Shri Ramesh Chand Jain. The

reliefs sought in the said Suit were directed against

defendant nos. 1, 2 and 3 i.e., Texla Towers Ltd.,

Mussoorie Dehradun Development Authority and the State

of Uttarakhand. Pertinently, the said Suit does not even

whisper about the Agreement dated 14.10.1992, which

forms the basis of the present application. No rights were

sought to be enforced by the plaintiff-Shri Sanjay Jain,

under the aforesaid Agreement dated 14.10.1992 in the

said Suit. Therefore, the said Original Suit No. 727 of

2003 can certainly not come in the way of the applicant in

pursuing the present application.

44. The next Suit referred to by Mr. Garg is Original

Suit No. 276 of 2006 preferred by Shri Sanjay Jain and

Shri Ramesh Chand Jain against Texla Towers Ltd., Shri

Sushil Chand Jain and Smt. Alka Gupta. In the said Suit,

the plaintiffs sought a permanent injunction to restrain

defendant no. 1 i.e., Texla Towers Ltd. from trespassing

over the open land described in the schedule of the plaint,

and using the same. Once again, it is seen that in this

plaint as well, there is absolutely no reference to the

Agreement dated 14.10.1992, and the plaintiffs did not

seek to enforce any rights under the said agreement.

Consequently, even this Suit is of no avail to the

respondents - to claim that the applicant is not entitled to

maintain the present application.

45. Original Suit No. 263 of 2014 is a Suit preferred

by respondent no. 1, wherein the State of Uttarakhand,

Mussoorie Dehradun Development Authority, Shri Sanjay

Jain and one Smt. Radhika Kaarwa were impleaded as

defendants. Even this Suit is not premised on the

Agreement dated 14.10.1992. The parties to this Suit, as

noticed hereinabove, include the State of Uttarakhand and

the Mussoorie Dehradun Development Authority, and the

first relief sought in the said Suit also relates to the said

defendants. Therefore, in my view, even the aforesaid

Suit instituted by the respondent herein can certainly not

come in the way of the applicant, in pursuing the present

Application.

46. Though the respondents have referred to the

filing of another suit - being Original Suit No. 93 of 2007

by Smt. Saroj Gupta against Texla Towers Ltd., the

respondents have not placed on record the plaint of the

said Suit. Only the order dated 16.09.2008 passed by the

First Additional Civil Judge (Senior Division) has been

placed on record, which shows that the said Suit was

withdrawn by the plaintiff - Saroj Gupta. Therefore, the

filing of the said Suit also cannot be a bar to maintenance

of the present application.

47. Mr. Garg has also placed heavy reliance on the

order dated 10.11.2017 passed by the 3rd Additional

District Judge, Dehradun in proceedings under Section 9 of

the Arbitration and Conciliation Act, 1996 initiated by the

applicant. Mr. Garg has argued that the learned 3rd

Additional District Judge dismissed the said application by

holding that the scope and purpose of the Agreement

dated 14.10.1992 was only to agree upon the properties,

which were to be transferred by the owners, including the

predecessor-in-interest of the applicant, in favour of

respondent no. 1, and since the transfer of the properties

had taken place, the said Agreement has worked itself out.

The agreement being a concluded transaction, no dispute

could be referred to arbitration under the Arbitration

Agreement contained in the Agreement dated 14.10.1992.

48. Reliance placed by Mr. Garg on the aforesaid

order dated 10.11.2017 is opposed by Mr. Negi on the

ground that, while dealing with an application under

Section 9 of the Arbitration and Conciliation Act, the

learned Judge could not have gone into the merits of the

case of the parties, and, in any event, the findings

returned by the learned Judge in an application under

Section 9 of the Arbitration and Conciliation Act, are only

tentative, and founded upon prima facie appreciation of

facts. Thus, those findings are, in any event, not final and

binding on the parties. It is only in arbitral proceedings

that the final determination of the rights and obligations of

the parties to the agreement can be made. He submits

that an appeal being AO No. 237 of 2018 titled Smt.

Neelam Jain v. M/s Texla Towers Ltd. has been preferred

by the applicant before this Court, which is pending

consideration.

49. The order dated 10.11.2017 passed by the

learned 3rd Additional District Judge in the petition

preferred by the applicant under Section 9 of the

Arbitration and Conciliation Act has been placed on record

and perused by me. The said petition, under Section 9 of

the Act, had been preferred by the applicant to seek a

restraint against the respondents from renting or

transferring the suit property, and for appointment of a

receiver in relation to the suit property.

50. A perusal of the order dated 10.11.2017 shows

that the same has been rendered only on a prima facie

appreciation of the case of the parties. The said findings

are not founded upon any evidence, since, proceedings

under Section 9 of the Arbitration and Conciliation Act are

not a Civil Suit, and are interlocutory in nature. The

learned 3rd Additional District Judge has proceeded on the

assumption that the only purpose and objective of the

Agreement dated 14.10.1992 was the transfer of certain

properties by the owners, including the predecessor-in-

interest of the applicant, in favour of the respondent-

company. However, this understanding of the learned 3rd

Additional District Judge, prima facie, is not made out on a

plain reading of the said agreement. I may notice one of

the recitals of the said agreement, where the second party

is the respondent-company , i.e. Texla Towers Limited

acting through its Chairman S. Raja Singh. The said

recital reads :-

"AND WHEREAS the second party has approached the first party for starting business enterprises/ establishment / construction of building or any other business of any nature as may be mutually decided between the first and the second party."

51. So, it was not merely an agreement to transfer

immovable property for consideration, as the learned 3rd

Additional District Judge concluded. The agreement

provided that the Second Party shall pay Rs. 35 lakhs to

the First Party to acquire 55% shares in the schedule

property. Clause 5 of the agreement provided that upon

payment of Rs. 35 lakhs, the First Party and the Second

Party shall be in joint possession of the schedule property,

and they will not enter into any agreement till the

subsistence of the agreement in question with any other

party. Clause 7 provided that the Second Party shall

develop, carry out renovation in consultation with the First

Party and shall keep proper accounts for the expenses

incurred for such purposes. Clause 8 provided that in case

any construction is to be done, whether in the form of

raising a multi-storeyed building or any other business

requiring construction work in the said building or

otherwise, the same shall be commenced after the plans

are duly approved and sanctioned by the Mussoorie

Dehradun Development Authority, Dehradun. Clause 11

restrained both parties from mortgaging the schedule

property. Clause 13 provided that change of business,

terms of contract or any other matter concerning the

business in the schedule property shall be done by mutual

consent of the First and Second Party. The parties agreed

to operate a joint account, to be operated by Shri Sushil

Chand Jain and Shri Rakesh Chand Jain on behalf of the

First Party, with the Second Party (Clause 14).

52. The aforesaid Clauses, prima facie, show that

the agreement was not merely an agreement for transfer

of a share in the schedule property by the owners in

favour of respondent no. 1. The agreement contemplates

joint running of the business, with the defined shares of

the owners collectively as 45%, and respondent no. 1 as

55%. The obligations cast under the said agreement,

prima facie, continue to bind the parties even after the

transfer of the 55% share in the schedule property in

favour of respondent no. 1-company.

53. Thus, the reasoning adopted by the 3rd

Additional District Judge, while passing the order dated

10.11.2017, prima facie, appears to be flawed.

54. The submission of Mr. Garg that the Agreement

dated 14.10.1992 was superseded by the Resolution/

Minutes of Meeting dated 24.12.1992, and that, with the

execution of the five Sale Deeds, the Agreement dated

14.10.1992 stood exhausted, is an argument on merits,

which does not fall for my consideration in these

proceedings. Even otherwise, the same has no bearing on

the maintainability of the present application under

Section 11(6) of the Act.

55. At this stage, I may refer to the judgment of the

Supreme Court in Vidya Drolia (supra). A three Judge

Bench of the Supreme Court decided a reference made to

it, as doubts were raised on the view expressed in

Himangni Enterprises v. Kamaljeet Singhy

Ahluwalia, (2017) 10 SCC 706. The issues considered

by the Supreme Court in Vidya Drolia (supra) were the

following: -

"2. A deeper consideration of the order of reference [Vidya Drolia v. Durga Trading Corpn., (2019) 20 SCC 406] reveals that the issues required to be answered relate to two aspects that are distinct and yet interconnected, namely:

2.1. (i) Meaning of non-arbitrability and when the subject-matter of the dispute is not capable of being resolved through arbitration.

2.2. (ii) The conundrum -- "who decides" -- whether the court at the reference stage or the Arbitral Tribunal in the arbitration proceedings would decide the question of non-arbitrability.

2.3. The second aspect also relates to the scope and ambit of jurisdiction of the court at the referral stage when an objection of non-arbitrability is raised to an application under Section 8 or 11 of the Arbitration and Conciliation Act, 1996 (for short "the Arbitration Act")".

56. After detailed discussion of earlier decisions

rendered by the Supreme Court on the subject, in

paragraph no. 154 of the judgment, the Supreme Court

observed as follows: -

"154. Discussion under the heading "Who Decides Arbitrability?" can be crystallised as under:

154.1. Ratio of the decision in Patel Engg. Ltd. [SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] on the scope of judicial review by the court while deciding an application under Sections 8 or 11 of the Arbitration Act, post the amendments by Act 3 of 2016 (with retrospective effect from 23-10-2015) and even post the amendments vide Act 33 of 2019 (with effect from 9-8-2019), is no longer applicable.

154.2. Scope of judicial review and jurisdiction of the court under Sections 8 and 11 of the Arbitration Act is identical but extremely limited and restricted.

154.3. The general rule and principle, in view of the legislative mandate clear from Act 3 of 2016 and Act 33 of 2019, and the principle of severability and competence-competence, is that the Arbitral Tribunal is the preferred first authority to determine and decide all questions of non-

arbitrability. The court has been conferred power of "second look" on aspects of non-arbitrability post the award in terms of sub-clauses (i), (ii) or

(iv) of Section 34(2)(a) or sub-clause (i) of Section 34(2)(b) of the Arbitration Act.

154.4. Rarely as a demurrer the court may interfere at Section 8 or 11 stage when it is manifestly and ex facie certain that the arbitration agreement is non-existent, invalid or the disputes are non-arbitrable, though the nature and facet of non-arbitrability would, to some extent, determine the level and nature of judicial scrutiny. The restricted and limited review is to check and protect parties from being forced to arbitrate when the matter is demonstrably "non- arbitrable" and to cut off the deadwood. The court by default would refer the matter when contentions relating to non-arbitrability are plainly arguable; when consideration in summary proceedings would be insufficient and inconclusive; when facts are contested; when the party opposing arbitration adopts delaying tactics or impairs conduct of arbitration proceedings. This is not the stage for the court to enter into a mini trial or elaborate review so as to usurp the jurisdiction of the Arbitral Tribunal but to affirm and uphold integrity and efficacy of arbitration as an alternative dispute resolution mechanism."

(emphasis supplied)

57. In his concurrent judgment, N.V. Ramana, J. (as

His Lordship then was) held as follows: -

"236. Having established the threshold standard for the court to examine the extent of validity of the arbitration agreement, as a starting point, it is necessary to go back to Duro Felguera [Duro Felguera, S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764] , which laid down : (SCC p. 759, para 48)

"48. ... From a reading of Section 11(6-A), the intention of the legislature is crystal clear i.e. the court should and need only look into one aspect-- the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to that is simple--it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement."

At first blush, the Court seems to have read the existence of the arbitration agreement by limiting the examination to an examination of its factual existence.

However, that is not so, as the existence of arbitration agreement does not mean anything unless such agreement is contractually valid. This view is confirmed by Duro Felguera case [Duro Felguera, S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764] , wherein the reference to the contractual aspect of arbitration agreement is ingrained under Section 7 analysis. A mere agreement is not legally binding, unless it satisfies the core contractual requirements, concerning consent, consideration, legal relationship, etc.

238. At the cost of repetition, we note that Section 8 of the Act mandates that a matter should not (sic) be referred to an arbitration by a court of law unless it finds that prima facie there is no valid arbitration agreement. The negative language used in the section is required to be taken into consideration, while analysing the section. The court should refer a matter if the validity of the arbitration agreement cannot be determined on a prima facie basis, as laid down above. Therefore, the rule for the court is "when in doubt, do refer".

240. Courts, while analysing a case under Section 8, may choose to identify the issues which require adjudication pertaining to the validity of the arbitration agreement. If the court cannot rule on the invalidity of the arbitration agreement on a prima facie basis, then the court should stop any further analysis and simply refer all the issues to arbitration to be settled.

242. We are cognizant of the fact that the statutory language of Sections 8 and 11 are different, however materially they do not vary and both sections provide for limited judicial interference at reference stage, as enunciated above.

244. Before we part, the conclusions reached, with respect to Question 1, are:

244.1. Sections 8 and 11 of the Act have the same ambit with respect to judicial interference.

244.2. Usually, subject-matter arbitrability cannot be decided at the stage of Section 8 or 11 of the Act, unless it is a clear case of deadwood.

244.3. The court, under Sections 8 and 11, has to refer a matter to arbitration or to appoint an arbitrator, as the case may be, unless a party has established a prima facie (summary findings) case of non-existence of valid

arbitration agreement, by summarily portraying a strong case that he is entitled to such a finding.

244.4. The court should refer a matter if the validity of the arbitration agreement cannot be determined on a prima facie basis, as laid down above i.e. "when in doubt, do refer".

244.5. The scope of the court to examine the prima facie validity of an arbitration agreement includes only:

244.5.1. Whether the arbitration agreement was in writing? Or

244.5.2. Whether the arbitration agreement was contained in exchange of letters, telecommunication, etc.?

244.5.3. Whether the core contractual ingredients qua the arbitration agreement were fulfilled?

244.5.4. On rare occasions, whether the subject-matter of dispute is arbitrable?

58. In the light of the aforesaid legal position

elucidated by the Supreme Court in Vidya Drolia (supra),

I have no hesitation in rejecting the submission of Mr.

Garg that the present application, under Section 11 of the

Arbitration and Conciliation Act, should be rejected on any

of the grounds taken by the respondents. As aforesaid,

the existence of the agreement between the parties, is not

in serious doubt. The applicant is the widow of (Late) Shri

Satish Chand Jain, one of the parties to the said

agreement, and rights, which vested in (Late) Shri Satish

Chand Jain under the said agreement now inhere in the

applicant. There is no challenge to the territorial

jurisdiction of this Court to entertain the present

application. From the submissions of Mr. Garg, it cannot

be said that the subject matter, namely the disputes under

the Agreement dated 14.10.1992 are demonstrably "non-

arbitrable". The submission of Mr. Garg with regard to

non-arbitrability are argumentative; cannot be

conclusively decided in these summary proceedings, and;

arise from contested facts. The disputes under the said

Agreement have been hanging fire for decades, and clearly

the endeavour of the respondent is to avoid an

adjudication on those disputes. Thus, the respondent,

prima facie, appears to be interested in delaying the

resolution of the disputes.

59. The submission of Mr. Garg, that the agreement

dated 14.10.1992 being unregistered, cannot be acted

upon, or looked into for any purpose, has no merit. The

said agreement does not purport to transfer any

immovable property by itself. The said agreement was,

therefore, not required to be registered, and it can be

looked into by the Court. The said Agreement was

engrossed on Stamp Paper of Rs. 100, as is evident from

the copy placed on record. Therefore, it cannot be said

that the said Agreement is not duly stamped.

60. A similar argument was raised before the High

Court for the State of Telangana at Hyderabad on behalf of

the respondent in M/s Meenakshi Solar Power Pvt. Ltd. v.

M/s. Abhyudaya Green Economic Zones Pvt. Ltd. and Ors.

(Arbitration Application No. 55 of 2020). The High Court

examined the said plea on merits, and accepted the same,

resulting in dismissal of the application under Section

11(6) of the Act. The Supreme Court allowed the Civil

Appeal preferred against the judgment of High Court being

Civil Appeal No. 8818 of 2022 in M/s Meenakshi Solar

Power Pvt. Ltd. v. M/s. Abhyudaya Green Economic

Zones Pvt. Ltd. and Ors., vide its judgment rendered on

23.11.2022. The Supreme Court noticed its earlier

decision in National Insurance Co. Ltd. v. Boghara

Polyfab Pvt. Ltd., (2009) 1 SCC 267, wherein it

enumerated the issues, which the Chief Justice/ Court is

bound to decide; the issues which he may choose to

decide or leave it to the Arbitral Tribunal to decide; and

the issues, which would be left to be determined by the

Arbitral Tribunal, while dealing with an application under

Section 11(6) of the Act.

61. The Supreme Court in National Insurance Co.

Ltd. (supra), inter alia, observed as follows: -

"22.1. The issues (first category) which the Chief Justice/his designate will have to decide are:

(a) Whether the party making the application has approached the appropriate High Court.

(b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement.

22.2. The issues (second category) which the Chief Justice/his designate may choose to decide (or leave them to the decision of the Arbitral Tribunal) are:

(a) Whether the claim is a dead (long-barred) claim or a live claim.

(b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection.

22.3. The issues (third category) which the Chief Justice/his designate should leave exclusively to the Arbitral Tribunal are:

(i) Whether a claim made falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration).

(ii) Merits or any claim involved in the arbitration."

62. The Supreme Court, went on to observe as

follows:-

"16. In Vidya Drolia (supra), it has been further observed in relation to the aforesaid three categories in Boghara Polyfab Pvt. Ltd. (supra). The first category of issues, namely, whether the party has approached the appropriate High Court, whether there is an arbitration agreement and whether the party who has applied for reference is party to such agreement would be subject to a more thorough examination in comparison to the second and third categories/issues which are presumptively, save in exceptional cases, for the arbitrator to decide. In the first category, the question or issues are relating to whether the cause of action relates

to action in personam or rem; whether the subject- matter of the dispute affects third-party rights, have erga omnes effect, requires centralised adjudication; whether the subject-matter relates to inalienable sovereign and public interest functions or by necessary implication non-arbitrable as per mandatory statutes. On the other hand, issues relating to contract formation, existence, validity and non-arbitrability would be connected and intertwined with the issues underlying the merits of the respective disputes/claims. They would be factual and disputed and for the Arbitral Tribunal to decide."

63. Thus, the aforesaid submissions of Mr. Garg,

even otherwise, cannot be dealt with by this Court, while

dealing with the present Arbitration Application.

64. Mr. Garg has placed reliance on Indian Oil

Corporation Limited v. NCC Limited, 2022 SCC

OnLine SC 896. He has laid special emphasis on

paragraph no. 89 of this judgment, wherein the Supreme

Court observed as follows: -

"89. Having heard the learned counsel appearing for the respective parties and in the facts and circumstances of the case, the issue/aspect with regard to "accord and satisfaction" of claims is seriously disputed and is debatable. Whether, in view of the acceptance of Rs 4,53,04,021 by the respondent NCCL which was released by IOCL on the offer/letter made by the respondent NCCL dated 2-11-2016 there is an instance of "accord and satisfaction" of the claims is a good and reasonably arguable case. It cannot be said to be an open and shut case. Therefore, even when it is observed and held that such an aspect with regard to "accord and satisfaction" of the claims may/can be considered by the Court at the stage of deciding Section 11 application, it is always advisable and appropriate that in cases of debatable and disputable facts, good reasonably arguable case, the same should be left to the Arbitral Tribunal. Similar view is expressed by this Court in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549]. Therefore, in the facts

and circumstances of the case, though it is specifically observed and held that aspects with regard to "accord and satisfaction" of the claims can be considered by the Court at the stage of deciding Section 11(6) application, in the facts and circumstances of the case, the High Court has not committed any error in observing that aspects with regard to "accord and satisfaction" of the claims or where there is a serious dispute will have to be left to the Arbitral Tribunal. However, at the same time, we do not agree with the conclusion arrived at by the High Court that after the insertion of sub-section (6-A) in Section 11 of the Arbitration Act, scope of inquiry by the Court in Section 11 petition is confined only to ascertain as to whether or not a binding arbitration agreement exists qua the parties before it, which is relatable to the disputes at hand. We are of the opinion that though the Arbitral Tribunal may have jurisdiction and authority to decide the disputes including the question of jurisdiction and non-arbitrability, the same can also be considered by the Court at the stage of deciding Section 11 application if the facts are very clear and glaring and in view of the specific clauses in the agreement binding between the parties, whether the dispute is non-arbitrable and/or it falls within the excepted clause. Even at the stage of deciding Section 11 application, the Court may prima facie consider even the aspect with regard to "accord and satisfaction" of the claims."

65. There can be no quarrel with the proposition laid

down by the Supreme Court in the aforesaid judgment.

However, in the facts of the present case, the same is not

attracted for the reasons indicated hereinabove.

66. For the aforesaid reasons, I allow this

application and appoint Hon'ble Mr. Justice Rajiv Sahai

Endlaw, retired Judge, Delhi High Court having Mobile No.

9717495002, to act as the sole Arbitrator to adjudicate the

disputes between the parties arising out of their

Agreement dated 14.10.1992. The Arbitral Tribunal shall

be entitled to fix its fee.

67. Consequently, pending application(s), if any,