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TMI Blog2020 (2) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... No.1 is a registered Charitable Trust. Rest of the appellants are Trustees of the appellant No.1 - Trust. The appellant No.1 - Trust desired to develop the land owned by it and construct a multipurpose community hall with office complex. 6. As such, the respondent No.1 offered to develop the said property and also to renovate the Samadhi of the founder of the Trust existing on the said piece of land. Negotiations were held between the appellant No.1 - Trust and the respondent No.1. 7. As an outcome of the negotiations, a lease deed was executed between the appellant No.1 Trust and the respondent No.1 - lessee for a period of 38 years. As per the said lease deed, the respondent No.1 - lessee was required to pay an amount of Rs. 55,00,000/( Rupees Fifty five lakh only) as an interest free deposit, which was to be refunded to it at the end of the period of 38 years, if the lease was not extended between the parties. As per the terms of the said lease deed, a certain monthly ground rent was also required to be paid by the respondent No.1 - lessee to the appellant No.1 Trust. As per the said lease deed, the respondent No.1 - lessee was to construct a multipurpose auditorium with min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion of it. c. Decree granting of costs of the case and such other relief/reliefs as the Court may deem fit in the circumstances." 10. The City Civil Court at Bangalore, granted an interim order by directing maintaining of status quo over the Schedule property in the said suit. The suit was contested by the respondent Nos. 1 and 2 by filing written statement. 11. Respondent Nos. 1 and 2, after participating in the suit proceedings for almost a period of about two years and three months, issued a notice to the appellants on 6.9.2013 thereby, invoking arbitration clause in the lease deed dated 31.5.1996 and 12.3.1997. On 11.10.2013, the respondent Nos. 1 and 2 filed a petition under Section 11(6) of the Arbitration Act before the High Court of Karnataka. On being served with the notice, the appellants entered their appearance and filed their statement of objections on 2.6.2014 thereby, praying for dismissal of the petition on various grounds. 12. Since it was the basic contention of the appellants, that the lease deed dated 12.3.1997 being insufficiently stamped had to be mandatorily impounded under Section 33 of the Karnataka Stamp Act, 1957 and it could not be relied upon u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, the High Court was right in holding, that the agreement was for developing the property immediately after the property was made vacant by evicting the tenants. 17. It will be apposite to reproduce Sections 33 and 34 of the Karnataka Stamp Act, 1957, which are as under: "33. Examination and impounding of instruments. (1) Every person having by law or consent of parties authority to receive evidence, and every person in charge of a public office, except an officer of police, before whom any instrument, chargeable in his opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same. (2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain whether it is stamped with a stamp of the value and description required by the law in force in the State of Karnataka when such instrument was executed or first executed: Provided that,- (a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so to do, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been revised in exercise of the powers conferred by the provisions of Chapter VI." 18. Admittedly, both the lease deeds are neither registered nor sufficiently stamped as required under the Karnataka Stamp Act, 1957. Admittedly, the Registrar (Judicial) of the High Court of Karnataka had submitted a report to the High Court pointing out, that the document of 1997 executed/entered into between the parties was a lease deed and not an agreement to lease and passed an order directing the respondent Nos. 1 and 2 to pay deficit stamp duty and penalty of Rs. 1,01,56,388 /( Rupees One crore One lakh FiftySix thousand Three hundred and EightyEight only). It is also an admitted fact, that the respondent Nos. 1 and 2 have not complied with the said directions and have not paid the deficit stamp duty and penalty. In this background, a question that would arise for consideration is, as to whether clause 36 in the lease deed dated 12.3.1997 could be acted upon to enforce the arbitration clause contained therein. 19. The issue is no longer res integra. This Court in the case of SMS Tea Estates Private Limited vs. Chandmari Tea Company Private Limited (2011) 14 SCC 66 had occasion to consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument, which means that it cannot act upon the arbitration agreement also which is part of the instrument. Section 35 of the Stamp Act is distinct and different from Section 49 of the Registration Act in regard to an unregistered document. Section 35 of the Stamp Act, does not contain a proviso like Section 49 of the Regis15 tration Act enabling the instrument to be used to establish a collateral transaction. 20. The Scheme for Appointment of Arbitrators by the Chief Justice of Gauhati High Court, 1996 requires an application under Section 11 of the Act to be accompanied by the original arbitration agreement or a duly certified copy thereof. In fact, such a requirement is found in the scheme/rules of almost all the High Courts. If what is produced is a certified copy of the agreement/contract/instrument containing the arbitration clause, it should disclose the stamp duty that has been paid on the original. Section 33 casts a duty upon every court, that is, a person having by law authority to receive evidence (as also every arbitrator who is a person having by consent of parties, authority to receive evidence) before whom an unregistered instrument chargeable with duty is produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e crore One lakh Fifty six thousand Three hundred and Eighty eight only), the respondents failed to do so, the High Court has erred in relying on the said lease dated 12.3.1997. 21. Though the appellants deserve to succeed only on the aforesaid question of law, we find, that even on equity the respondents are not entitled to any relief. 22. After lease deed was executed in the year 1996-1997, though the respondent Nos. 1 and 2 have placed on record some settlement deeds with tenants executed in 1998, except one bald statement, that last of the tenants was evicted in the year 2010, nothing has been placed on record. It appears, that only after the appellants had filed a suit for injunction against the respondents which was duly contested by the respondents by filing written statement on 18.6.2011, the respondents after participating in the suit proceedings for a period of about 2 years and 3 months, filed the present application before the High Court under Section 11(6) of the Arbitration Act. It is further to be noted, that if in the pursuit of the respondents, the lease deed dated 12.3.1997 was legal and valid document and it could be relied on for referring the dispute to arb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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