2009 (11) TMI 988 - HC - Indian Laws

Summary

Issues Involved:
1. Validity of the unregistered agreement to sell.
2. Existence and enforceability of the arbitration agreement.
3. Appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

Issue-wise Detailed Analysis:

1. Validity of the Unregistered Agreement to Sell:
The respondent contended that the agreement to sell dated 6.12.2002 is void as it is an unregistered document and does not create any interest or charge on the property under Section 54 of the Transfer of Property Act and Section 17(1)(b) of the Registration Act, 1908. The respondent argued that the unregistered document could not affect any immovable property or be received as evidence of any transaction affecting such property unless it is registered, as per Section 49 of the Registration Act. The applicant countered by stating that the arbitration clause in an agreement to sell or any document is independent and issues relating to it fall within the jurisdiction of the arbitrator. The applicant relied on the case of A.R.C. Overseas Pvt. Ltd. v. Bougainvillea Multiplex and Entertainment Centre Pvt. Ltd., which held that an arbitration clause in an unregistered document still obligates the court to refer the parties to arbitration.

2. Existence and Enforceability of the Arbitration Agreement:
The respondent argued that the agreement to sell does not constitute an arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996, as it does not create a defined legal relationship. The respondent further contended that the arbitration clause does not provide for enforcement of the agreement to sell and its registration by referring the dispute to the arbitrator. The applicant argued that the arbitration clause clearly reflects the intention of the parties to arbitrate disputes arising from the agreement. The applicant also relied on the decision in Olympus Superstructure Pvt. Ltd. v. Meena Vijay Kheta, which affirmed that issues relating to specific performance of an agreement of sale can be referred to arbitration.

3. Appointment of an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996:
The applicant sought the appointment of an arbitrator under Section 11(6) after the named arbitrator, Sri Hari, declined to act. The respondent opposed this, arguing that the refusal of the named arbitrator brought an end to the arbitration agreement. The court noted that under Section 11(6), if the named arbitrator refuses to act, the parties can approach the court for the appointment of an arbitrator. The court found that the arbitration clause in the agreement to sell is valid and reflects the intention of the parties to arbitrate disputes. Therefore, the court appointed a retired judge of the High Court, Mr. Justice M.C. Agarwal, as the arbitrator, subject to his consent.

Conclusion:
The court concluded that the arbitration clause in the agreement to sell dated 6.12.2002 is valid and enforceable. The application under Section 11(6) of the Arbitration and Conciliation Act, 1996, was allowed, and Mr. Justice M.C. Agarwal was appointed as the arbitrator to adjudicate the dispute. The remuneration for the arbitrator was fixed at Rs. 20,000 per sitting, with both parties bearing an equal share of the costs.