Back
IN THE HIGH COURT OF JUDICATURE AT PATNA
Sanjay Karol, J.
M/s Bihar Home Developers And Builders, Through Its Authorised And Registered Partner Rajiv Ranjan Kumar, Late Sh Sundeshwar Roy - Appellant
Versus
Narendra Prasad Gupta - Respondent
Request Case No. 28 of 2020
Decided On : 07-07-2021
Contract Act, 1872 – Section 17 – Section 17 of Contract Act would apply if contract was obtained by fraud or cheating – This provides a distinction between contract obtained by fraud and, post-contract fraud and cheating. (Para 17)
Real Estate (Regulation and Development) Act, 2016 – Sections 88 and 89 – Arbitration and Conciliation Act, 1996 – Sections 8 and 11(6) – Arbitration – Object and purpose of both statutes are distinct and different and there is nothing inconsistent or derogation therein – Arbitration Act was enacted to consolidate and amend law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define law relating to conciliation and for matters connected therewith or incidental thereto – Whereas RERA Act was enacted to establish Real Estate Regulatory Authority for regulation and promotion of real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect interest of consumers in real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish Appellate Tribunal to hear appeals from decisions, directions or orders of Real Estate Regulatory Authority and adjudicating officer and for matters connected therewith or incidental thereto – Section 88 provides provisions of RERA Act explicitly to be in addition to and not in derogation of provisions of any other law, with only limitation contained in Section 89 making it prevail over in any other consistent law – Arbitration Act is not inconsistent with provisions of the RERA Act. (Paras 22 and 23)
Arbitration and Conciliation Act, 1996 – Sections 8 and 11(6) – Appointment of Arbitrator – It would be wrong to consider arbitration as a flawed or inferior mode of adjudication process unfit to deal with public policy aspects of legislation – Allegation challenging validity of underlying contract and arbitration clause itself would serve as an exception to contemporary view on arbitrability of fraud – Where two remedies are available under law, one of them not to be taken as operating in derogation of other – Unless arbitration agreement prima facie is found to be invalid, Court must refer the same to arbitration – It cannot be said that petitioners' right is foreclosed in light of RERA Act – A retired Judge of High Court of Judicature at Patna, appointed as Arbitrator to adjudicate dispute inter se parties. (Paras 15, 20, 24, 26, 28 and 33)
JUDGMENT
Sanjay Karol, C.J. - The sole issue that arises for consideration in the present petition is whether the allegation of fraud alleged by the respondent would render the arbitration clause in the agreement dated 15th November 2016 null and void?
2. The facts are short and simple.
3. Sometime in November 2016, the petitioner, a registered private firm, entered into an agreement with the respondent to develop and construct a property near Danapur, Patna District. Allegedly, the petitioner paid huge sums of money to the respondent at that time. In furtherance of the agreement, the petitioner constructed a boundary wall for developing the plot and applied for necessary permissions and sanctions under the relevant statutes. Certain disputes having arisen, the parties reduced the terms afresh into writing, which agreement dated 15.11.2016 was also registered with the appropriate authority. This agreement contains an arbitration clause 17, which stands invoked by the petitioner seeking appointment of a sole arbitrator, more so in the absence of any response to the notice dated 23rd September 2019 requiring the respondent to do so. Petitioner alleges the respondent to have concealed correct information of ownership and pending litigation inter se co-owners. Further, the respondent adopted an obstructionist approach in executing the project and implementing the terms of the agreement.
4. On the other hand, the respondent alleges fraud perpetuated by the petitioner in the execution of the agreement. The document was not allowed to be read over before signing. Thus challenging its validity, the respondent initiated civil proceedings to declare the agreement null and void. They also initiated criminal proceedings on fraud falling within the purview of Sections 468 and 417 of the Indian Penal Code.
5. In reliance of his submission, supporting the petitioner, Sri Anand Mishra, learned counsel for the petitioner has referred to and relied upon the decisions of the Hon'ble Apex Court in Chloro Controls India Private Limited,2013 1 SCC 641; A. Ayyasamy Versus A Paramasivam and others, (2016) 10 SCC 386; Rashid Raza Versus Sadaf Akhtar, 2019 8 SCC 710; and N. N. Global Mercantile Pvt. Ltd. Versus Indo Unique Flame Ltd. and others,2021 SCCOnlineSC 13.
6. Seeking rejection of the petition on the ground that the agreement is null and void Sri T. N. Maitin, learned Senior Advocate, appearing for the respondent seeks reliance upon the decision of the Hon'ble Apex Court in A. Ayyasamy Versus A Paramasivam and others, (2016) 10 SCC 386 (para 23, 24 & 25); Rashid Raza Versus Sadaf Akhtar, (2019) 8 SCC 710 (para 4); Afcons Infrastructure Limited and another Versus Cherian Varkey Construction Company Private Limited and others, (2010) 8 SCC 24 (para 27).
7. To recapitulate the facts, parties did enter into an agreement on 15th November 2016, which stood registered under the law. Respondent does not categorically deny and dispute having executed an agreement and, before that, also received certain amounts. It is not his case that they received such payments for any other transaction. It is a single transaction, inter se the parties, which appears to be only concerning the agreement in question. Respondent does not also deny having signed the contract and the petitioner having taken specific consequential steps to develop the property in terms thereof. In fact, under the alleged agreement dated 15th November 2016, the petitioner launched the project on 18th August 2016 when a ceremony was performed, which fact, empathetically, is not disputed at the bar. The fact that there is litigation inter se the landowners is admitted. Title Suit No.2808 of 2015 is pending consideration before the trial court, but then the petitioner is not a party there.
8. Respondent alleges that the petitioner forged documents for obtaining sanction under the Real Estate Regulatory Authority, Patna constituted under the Real Estate (Regulation and Development) Act, 2016 (hereinafter
Point of Law : If an allegation of fraud can be adjudicated upon in course of a trial before an ordinary civil court, there is no reason or justification to exclude such disputes from ambit and purvi....
The scope of enquiry under Section 11 of the Arbitration and Conciliation Act, 1996, is restricted to the examination of the existence of the arbitration agreement. The burden lies on the party resis....
The court affirmed that allegations of fraud do not inherently preclude arbitration, emphasizing the separability of arbitration agreements from main contracts, and held that specific performance of ....
Allegations of fraud and forgery do not inherently preclude the jurisdiction of an arbitral tribunal unless they directly impinge upon the arbitration agreement itself.
The main legal point established in the judgment is that serious allegations of fraud must be proven and should go to the validity of the arbitration agreement itself to render the disputes non-arbit....
The court reaffirms the expansive nature of arbitration clauses allowing disputes from associated agreements to be subject to arbitration, notwithstanding allegations of fraud.
Arbitration agreements remain enforceable despite allegations of fraud if not serious; parties must resolve disputes through arbitration as per contract terms.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
