Back
High Court Of Calcutta
Sanjib Banerjee, J.
Ghanshyam Sharma – Appellant
Versus
South City Projects (Kolkata) Limited – Respondent
GA No. 143 of 2012, AP No.139 of 2011
Decided on : Jan 31, 2012
ARBITRATION - INCORPORATION OF ARBITRATION CLAUSE - DEED OF CONVEYANCE - REFERENCE TO EARLIER AGREEMENT - NO SPECIFIC INCORPORATION OF ARBITRATION CLAUSE - NO DEEMED ARBITRATION AGREEMENT UNDER SECTION 7(4) OF THE ARBITRATION AND CONCILIATION ACT, 1996.
Fact of the Case:
Petitioners, owners of a flat in South City Complex, aggrieved by the developer's alleged poor workmanship and breach of representations, sought to invoke an arbitration clause contained in a previous agreement referred to in the deed of conveyance. The developer denied the existence of a subsisting arbitration agreement.
Finding of the Court:
The court found that the deed of conveyance did not specifically incorporate the arbitration clause from the earlier agreement. The reference to the earlier agreement and the requirement to observe its terms did not imply the incorporation of the arbitration clause unless specifically included.
Issues: 1. Whether the arbitration clause contained in the first declaration was incorporated into the deed of conveyance by reference. 2. Whether there was a deemed arbitration agreement under Section 7(4) of the Arbitration and Conciliation Act, 1996.
Ratio Decidendi: 1. An arbitration clause in a previous agreement is not incorporated into a subsequent agreement by mere reference unless specifically included or deemed to be included by practice or convention. 2. Section 7(5) of the Arbitration and Conciliation Act, 1996, sets out the conditions for incorporating an arbitration clause by reference. 3. Clauses (b) and (c) of Section 7(4) of the Act operate as a corroboration of an arbitration agreement when there is no primary document recording it. 4. If there is a document signed by the parties containing an arbitration agreement, the requirement of Section 7(4) is complete, and clauses (b) and (c) need not be considered.
Final Decision: The court dismissed the petition, holding that there was no subsisting arbitration agreement between the parties and that the request under Section 11 of the Arbitration and Conciliation Act, 1996, could not be entertained.
1. GA No. 143 of 2012 is an application for recalling an order dated December 22, 2011 passed on a request under Section 11 of the Arbitration and Conciliation Act, 1996. In view of the grounds shown, the order dated December 22, 2011 is recalled and AP No.139 of 2011 is restored to the file. G.A.No.143 of 2012 is allowed without any order as to costs.
2. BY consent of the parties, AP No. 139 of 2011 is immediately taken up by treating the matter as on the day's list. The request under section 11 of the Arbitration and Conciliation Act, 1996 has been carried to the Chief Justice of this Court or his designate on the strength of the reference to a previous agreement contained in a clause of the deed of conveyance executed between the parties. The petitioners are the owners of a flat at the South City Complex. The petitioners have a grievance against the developer on account of alleged poor workmanship, the developer acting contrary to the specific representation as to the use of the space and in the developer attempting to sell space beyond its entitlement to unjustly enrich itself by leaving the complex cluttered. At the time that the petitioners applied for a flat at the complex there was an agreement entered into between the parties which has been referred to in the deed of conveyance as the first declaration. Under such first declaration the developer undertook certain obligations and the petitioners' present grievance is that the developer's conduct is in breach of the obligations contained in the first declaration. There was a further document executed by the parties which has been referred to in the deed of conveyance as the second declaration. The following clauses of the deed of conveyance are relevant:
"5.4 To enable the intending purchasers of flats/apartments/units to acquire on ownership basis a flat/apartment/unit in all the buildings to be constructed on the Residential Zone, the First Vendor had executed a Declaration of the Standard Terms and Conditions dated 31st August 2005 registered at the office of the District Sub Registrar-I, South 24 Paraganas in Book No.1, Volume No.186, Pages 106 to 138, Being No.02715, for the year 2005 (hereafter the 'First Declaration') which expressly provides that the First Vendor shall have the right to alter and/or modify and/or amend the terms and conditions of the First Declaration." "5.7 Accordingly, the First Vendor caused another Declaration dated 30th January, 2009 to be executed which was registered at the office of the Additional District Sub Registrar, Alipore, South 24 Paraganas in Book No.1, CD Volume No.3, Pages 1606 to 1616, Being No.00540 for the year 2009 (hereafter the 'Second Declaration')." "6.3 Observance of covenants: The Vendors and the Purchaser do hereby mutually covenant with each other to observe, perform and fulfill all the covenants, stipulations and conditions contained in the Declarations 4 and not to commit any breach or to fail or refuse to perform any of them in any circumstances whatsoever and acknowledges that the observance thereof is for the benefit of all the Apartment Owners."
There is no dispute between the parties that the first declaration contained an arbitration clause. The petitioners suggest that in the deed of conveyance referring to the first declaration and in clause 6.3 thereof requiring, inter alia, the observance of the terms of the first declaration, there is ample indication in the deed of conveyance that the entirety of the first declaration remains alive and the petitioners are, as such, entitled to invoke the arbitration clause contained in the first declaration. On the petitioners' understanding that the arbitration clause could be invoked, the petitioners addressed a letter dated September 24, 2010, barely ten days after the execution of the deed of conveyance, to the respondent and its board of directors. The 12-page letter is a veritable litany of complaints against the developer and the developer having acted
AI
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
