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TMI Blog2009 (11) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... t a factory shed and office premises. 4. The applicant was inducted by the respondent as a tenant to the said industrial plot at a monthly rent in the year 2000. 5. According, to the facts as stated by the applicant in the year 2002, the respondent company approached the applicant and offered to sell the said property in occupation of the applicant and two other concerns as its tenants for a total sale consideration of ₹ 60 lakhs. A sum of ₹ 10 lakhs was to be paid by the applicant, which was paid by an account payee cheque and the respondent encashed the same and acknowledged receipt thereof. 6. A reference may be had to Clauses 1, 1 (a), (b) and (c) and Clauses 2 and 3 of the agreement to sell dated 6.12.2002, which is on record as Annexure 3 to the application. The same are quoted below: 1. That the total consideration of the sale of plot and factory shed and attachments thereto has been fixed for ₹ 60,00,000/- (Rupees sixty lacs only) to be paid by the party of the second pat to the party of the first parts as under; (a) Rs,10,00,000/- (Rupees ten lacs only) has been paid by the party of the second party by way of cheque No. 101705 dated 6.12.02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the certificate of the banker are already appended on record as Annexure 4 and 5 to the application. 10. After signing of this agreement and payment of initial amount of ₹ 10 lakhs, the applicant company awaited the clearances and no objections to be obtained by the respondent from various authorities. The applicant states that the respondent at all times kept giving oral assurances that it was in the process of obtaining clearances from various authorities and it was taking time to do so. 11. The applicant has further averred that during the period that the applicant was awaiting the clearances, the relationship between the parties was cordial and the applicant continued to occupy the industrial plot and during this period, no rent was ever demanded by the respondent from the applicant. Although under Clause 10 of the agreement, it had been agreed that the sale deed would be executed upto 31.12.2003 or earlier by giving 15 days notice. However, the clearances had not come through and the applicant continued to occupy the plot. 12. Initially, the relationship of the applicant and the respondent was that of a landlord and tenant, a rent deed dated 1.6.2000 had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cution of that deed, which contains an arbitration clause also, therefore, the dispute between the parties is to be decided by the Arbitrator in accordance with the agreement. Whether the alleged agreement to sell dated 6.12.2002 is actually an agreement to sell plot No. B-27 of Block B, Sector 3, Noida, or it is a receipt of the security amount of the rent, is also to be decided by the Arbitrator. I am also of the view that since prima-facie the agreement dated 6.12.02 shows that it is an agreement to sell and not a receipt of the security amount of rent, therefore, there appears no reason to doubt the contentions of the petitioner. The question relating to the circumstances under which the alleged agreement could not be acted-upon, is also to be decided by the arbitrator, as the parties are disputing those circumstances.... 9.... 10. Admittedly, the petitioner is in possession of the property in dispute. Whether the possession of the petitioner is in part performance of the agreement to sell as prospective owner in accordance with the agreement dated 6.12.2002, or as a tenant, is a matter of dispute and requires to be decided by the Arbitrator.... 18. The applicant has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ridhi Sidhi Logistic at a rent of ₹ 2,500/- per month. 26. Secondly, the respondent also does not deny that agreement to sell was entered between the parties on 6.12.2002. However it contends that agreement dated 6.12.2002 was an unregistered document and also admitted that the property which was rented out to the applicant would continue on the rent agreement till the document dated 6.12.2002 i.e. agreement to sell was registered. 27. The respondent further contends that the agreement to sell provided two remedies - (i) If the party of the first part shall fail to register the sale deed in respect of the said property, the part of the 2nd party would be free to enforce sale and registration thereof at the cost of the 1st party after full payment. (ii) Any dispute if arises in respect of terms of this agreement it shall be solely decided by Mr. Hari, Advocate son of Late Sri Mekhraj R/o 90-40-B Malviya Nagar, New Delhi, whose decision/award shall be final on both parties. 28. The facts as stated by the respondent further are that upto 31.3.2003, the applicant paid rent at the rate of ₹ 39,000/- per month and thereafter from 1.4.2009, the applicant became ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any transaction affecting such property or conferring such power, unless it has been registered: Provided that an unregistered document affecting immovable property and required by this Act, or the Transfer of Property Act, 1882, to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877, or as evidence of any collateral transaction not required to be effected by registered instrument. 33. Learned Counsel for the respondent also referred to the proviso of Section 49 of the Registration Act submitting that any unregistered document affecting the immovable property, may be taken as evidence of any collateral transaction, not required to be affected by a registered instrument. Thus his main objection is that because the agreement to sell dated 6.12.2002 is an unregistered agreement, it cannot be given effect to in view of the provisions of Section 54 of the Transfer of Property Act read with Section 17 of the Registration Act as it does not create any legal relationship between the parties and it cannot be taken in evidence and therefore is not enforceable by the law. 34. The second objection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Counsel for the respondent submits that because Sri Hari Advocate, has declined to act as arbitrator, it has brought to an end the arbitration agreement. Because the agreement does not contemplate the reference to any other arbitrator and the consequences of this is that unless the parties enter into a fresh arbitration agreement, no arbitrator can be appointed under Section 11(6) of the Act of 1996. 40. Fifthly, the respondent objects that no notice was ever given by the applicant for referring the dispute to the arbitrator but simply a notice was sent on 13.5.2006 through Sri Jitendra Mohan Mathur that Sri Hari has refused to act as arbitrator and without any further notice, the applicant thereafter approached the Delhi High Court and then Allahabad High Court. 41. Sixthly, the learned Counsel for the respondent has submitted that the present application under Section 11(6) of Act of 1996 is not maintainable in view of the fact that no request has been made by the applicant to the respondent for agreeing to the appointment of arbitrator and therefore the present application is premature and should not be entertained. 42. Seventhly, he has objected and submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in possession of the property in question in pursuance of the contract for transfer but he is in possession of it as tenant and the said possession of the applicant in pursuance of the tenancy agreement with effect from 1.6.2000, is not covered under Section 53A of the Transfer of Property Act. 49. Eightly the respondent objected that the alleged instrument of agreement to sell cannot be enforced by an arbitrator. 50. Section 28 of the Act of 1996 provides that where the place of arbitration is situated in India in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for time being in force in India. 51. The substantive law in forced in India as per provision of Section 54 of the Transfer of Property Act and Section 17 read with Section 49 of the Registration Act clearly requires that an agreement to sell relating to the immovable property must be registered and if it is not registered, the same may not create any legal relationship and the same may not be taken as evidence. 52. Thus the reference to the dispute of the arbitrator is of no conseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document, which is subject matter of arbitration, is independent and issues relating to it, would fall within the jurisdiction of the arbitrator and he would decide the merits or demerits of a particular document or its acceptance or non-acceptance. 59. Learned Counsel for the applicant has argued that in the present matter, the agreement to sell dated 6.12.2002 is accompanied by a receipt of payment and the agreement itself is an independent document as it contains a description of the property, the sale consideration and the payment received by the respondent. Further he has submitted that the receipt as issued by the respondent is an independent document and is enforceable and does not require any registration. Further he has argued that under the provisions of Section 7 of the Arbitration and Conciliation Act, 1996, there is no necessity to get the arbitration agreement registered. For this purpose, learned Counsel has relied upon a decision of Division Bench of Allahabad High Court in the case of A.R.C. Overseas Private Limited v. Bougainvillea Multiplex and Entertainment Centre Pvt. Ltd. reported in 2008 (2) AWC 1212. In this decision, this Court has held that if any arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttle the dispute by way of an award, is clearly contemplated. 64. Learned Counsel for the applicant has replied that it is wrongful of the respondent to say that because the named arbitrator refused to enter reference, the entire arbitration clause fails. 65. Learned Counsel for the applicant submits that this argument is completely fallacious in view of the provisions of Section 11(6) of the Act, which clearly contemplate that in the event a named arbitrator refuses to act or fails to performs his duty then a party to arbitration agreement can approach the Court to make the appointment of arbitrator under Section 11(6) of the Act. In this case also, he has argued because Sri Hari refused to act as an arbitrator, the necessity had arisen to appoint arbitrator. 66. In reply to the contention of the respondent that no notice was given by the applicant to the respondent for referring the matter to an arbitrator is also wrong and is not a good plea because the applicant had, by the notice dated 31.3.2006, complained of the breach of the agreement to the respondent. In the said notice the applicant called upon the respondent to furnish no objection and the clearances that it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed between the parties that the possession shall be in part performance of the terms of the agreement. Moreso the parties mutually decided not to transact payment of rent and only thus no rent was demanded or paid since December, 2002 till March, 2006 when the respondent made its first demand. 71. According to the applicant that the tenancy agreement dated 1.6.2000 was initially upto 31.3.2002 and was extended till 31.3.2003. Thereafter there was no extension of the rent deed inasmuch as in December, 2002, the parties had entered upon the agreement for sale/transfer with respect to the said property. Thus admittedly the possession of the applicant was in part performance of the agreement and as provided under Section 53A of the Transfer of Property Act. 72. Lastly in reply to the objections of the respondent that the agreement to sell cannot be enforced by an arbitrator. The applicant sought leave to refer the judgment of Hon'ble 73. Apex Court in the case of Olympus Superstructure Pvt. Ltd. v. Meena Vijay Kheta and Ors. reported in AIR 1999 (SC) 2102. Para 38 of the judgment reads as under: 38. In our opinion, the view taken by the Punjab, Bombay and Calcutta H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us the proposition laid in the said judgment has no application. 76. The decision of the Hon'ble Supreme Court in the case of TDM Infrastructure Private Limited v. UE Development India Private Ltd. reported in (2008) 14 ScC 271(supra) as cited by the learned Counsel for the applicant has no relevance to the fact of the case in hand inasmuch as it provides that in respect to arbitration where the place of arbitration is situated in India, the arbitrator is bound to decide the dispute as per law of the land. The applicant has no issue on the said question at all and thus the said judgment is irrelevant to the facts of the present matter. 77. Learned Counsel for the applicant has submitted that the issue in the present case has been rightly answered by the Hon'ble Apex Court in the case of ARC Overseas Pvt. Ltd. v. Bougainvillea Multiplex and Entertainment Centre Pvt. Ltd. reported in 2008 (2) AWC 1212 (supra). 78. Learned Counsel for the applicant has thus concluded that the objections as raised by the learned Counsel for the respondent have no substance and are liable to be rejected by this Court and the prayer should be granted in favour of the applicant. 79. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith regard to this for all these years and has allowed the applicant to remain in possession till now. The applicant then sent notice on 31.3.2006 seeking a reference to arbitration. 85. The respondent has very strongly opposed for appointment of arbitrator by saying that the document was not registered and the document being related to immovable property was not a valid document and no arbitration can be made in respect of it. The second objection is that the arbitration clause in the agreement does not amount to arbitration agreement within the meaning of Section 7 of the Act of 1996 and other objections have already been detailed. 86. However, upon examination of the agreement to sell and upon examination of the arbitration clause, I am of the view that arbitration clause certainly reflects the intention on part of the both the parties that in event there is dispute, the matter shall be referred to arbitrator and the award passed by the arbitrator shall be final and binding on both the parties. 87. Upon examination of the said clause also, it is clear that the arbitration clause is a valid clause within the meaning of the arbitration clause as entailed in Section 7 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies to refer the dispute to arbitration can be clearly ascertained from the terms of the agreement, all other thing become immaterial, i.e. to say that it is the facts and circumstances of each case, which are to be considered and if the intention of the parties can be gathered from the communications exchanged between the parties and the surrounding circumstances then it would be sufficient to satisfy the test of Section 7 and application under Section 11(6) would lie. 93. For this purpose, I rely on a decision of the Hon'ble Apex Court in the case of Visa International Ltd. v. Continental Resources (USA) Ltd. reported in (2009) 2 SCC 55. In another decision of the Hon'ble Apex Court in the case of Great Offshore Limited v. Iranian Offshore Engineering and Construction Company reported in (2008) 14 SCC 240, also, it has been held that the intention to arbitrate should be exercised between the parties and in this case where a fax message had been sent, the Hon'ble Apex Court upheld the intention of the parties to arbitrate and held that the technicalities like stamps, seals and signatures are not to be given importance, rather the intention to arbitrate should not be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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