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2003 Supreme(Del) 402
High Court Of Delhi
A.K.JAJU - Appellant
Versus
AVNI KUMAR - Respondent
Interim Application 11417 of 2001
Decided On : 04/29/2003
Dev Ashish Mishra, N.K.Khetarpal, Valmiki Mehta
Headnote:Arbitration and Conciliation Act, 1996 - Section 8 — Power of court — Reference — Conditions precedent to exercise of — There should be an arbitration agreement, one of the parties to the agreement should initiate action in court against the other, subject-matter of the action to be same as subject-matter of the agreement, and the other party moves the court for referring the party to arbitration before it submits first statement on the substance of the subject — Suit for recovery of possession, mesne profits and permanent injunction under Order 39, Rule 7 of CPC — Defendant filing application for reference of dispute to arbitration under Section 8 of the Act — First agreement continuing arbitration clause and second agreement not in supersession of first agreement — Dispute referable to arbitration — Sole arbitrator appointed — Civil Procedure Code, 1908, Order 39 Rule 7.
Held :
In the context of application under Section 8 of the Arbitration and Conciliation Act, 1996, the question to be answered is a short one. The plea on behalf of the plaintiff against the defendant seeking to invoke arbitration clause contained in the agreement dated 9.1.1999 is that with the supersession of this agreement by a fresh agreement to sell dated 3.4.1999, the arbitration agreement contained in the first agreement in paragraph 14 thereof did not survive and, thereforee, in the absence of an arbitration agreement, Section 8 of the Act has no application. On the contrary, it was contended on behalf of the defendant that subsequent agreement dated 3.4.1999 was simply in continuation of the first agreement dated 9.1.1999 and, thereforee, the same constitutes part and parcel of the agreement dated 9.1.1999 containing the arbitration clause. In short, nucleaus of the plaintiffs argument is that since there is no arbitration agreement, the plea for reference of disputes to an arbitral tribunal for adjudication, is misconceived.
Normally, where one agreement is followed by another it is specifically indicated in the subsequent agreement if the earlier one stands superseded. There is, however, no mention, in the present case, in the second agreement dated 3.4.1999 that the first agreement dated 9.1.1999 stood superseded. The copies of both these agreements have been placed on record by the plaintiff himself and no part of either of these agreements was subjected to any challenge by him.
The plaintiff was approached by the defendant to agree to reference of the disputes and adjudication thereon by a sole arbitrator suggested by him. The plaintiff, however, did not respond. In the circumstances, the Court must step in to discharge its obligation by appointing an independent arbitrator. Accordingly retired High Court Judge, is appointed as sole Arbitrator to enter upon reference and adjudicate upon the disputes relating to the subject matter of the present suit and agreements for sale dated 9.1.1999 and 3.4.1999 and make his award in accordance with law. The arbitrators fee is fixed at Rs. 50,000/-, to be shared equally by both the parties. Justice N.C. Kochar be informed of his appointment.
Disputes including the one relating to claim of the plaintiff in regard to use and occupation charges being subject matter of arbitration, merits of claim in this respect cannot be gone into by this Court.
( 1 ) IN a suit for recovery of possession, mesne profits and permanent injunction, the plaintiff filed an IA. 11417/01 under Order XXXIX Rule 7 CPC seeking a direction to the defendant to pay to him use and occupation charges in respect of the suit property @ Rs. 80,000/- per month during the pendency of the suit. The defendant, on the other hand, on his appearance, came up with an IA. 1008/02 under Section 8 of the Arbitration and Conciliation Act, 1996 seeking reference of disputes forming subject matter of the suit to arbitration or in the alternative to stay the proceedings in the suit. In the event of aforesaid application made by the defendant being allowed, it may not be open to take up IA. No. 11417/01 as it will be for the arbitrator concerned to adjudicate upon all the disputes, including the entitlement of the plaintiff to recover use and occupation charges in respect of the suit premises at the rate stated aforesaid. It would, therefore, be appropriate to deal with IA. 1008/02 first.
( 2 ) FACTS relevant for disposal of IA. 1008/02 may be stated briefly. One Ms. Rachna Sethi owned a plot of land bearing No. D-125, Anand Niketan, New Delhi admeasuring 262. 85 sq. yds. being a perpetual sub-lessee thereof. She entered into a property development agreement dated 30. 7. 1997 with the plaintiff, in pursuance of which the plaintiff constructed a two storeyed building with basement, on the said plot at his own costs. In consideration, in terms of the said property development agreement, the entire second floor of the suit property fell to the share of the plaintiff with a right to sell the same. An agreement to sell was executed between the parties on 9th of January, 1999 in respect of the second floor of the property for a total sale consideration of Rs. 65 lakhs, out of which a sum of Rs. 20 lakhs was paid by the defendant to the plaintiff on the very date when the agreement to sell was executed and the balance of Rs. 45 lakhs was payable as stipulated under the agreement. This agreement contained an arbitration clause. Transfer by sale was to be effected on conversion of the land from leasehold to freehold in favour of Ms. Rachna Sethi. Another agreement to sell came to be executed between the parties on 3rd of April, 1999. Unlike the agreement dated 9. 1. 1999, the second one did not contain any arbitration clause. With the execution of the said agreement dated 3. 4. 1999, the possession of the flat on second floor of the property was handed over by the plaintiff to the defendant and the defendant was to make payment of Rs. 20,000 per month as licence fee till such time the balance consideration amount of Rs. 45 lakhs was paid. In a course of time, conversion from leasehold to freehold of the land underneath the building, was permitted by the Delhi Development Authority and a conveyance deed in that respect was executed in favour of Ms. Rachna Sethi on 10th of August, 2001. The plaintiff, thereafter, by a letter dated 15. 10. 2001 called upon the defendant to pay the balance consideration amount of Rs. 45 lakhs to facilitate transfer of the flat on the second floor in his favour. The defendant, however, failed to make the payment of the balance consideration amount to get the suit premises transferred in his favour. On the contrary, the defendant got a legal notice dated 30. 10. 2001 issued to the plaintiff through an Advocate making certain claims against him on account of the aforesaid transaction. According to the plaintiff, as the defendant is not prepared to perform his obligation under the agreement by paying the balance consideration amount of Rs. 45 lakhs, he is liable to pay in addition to Rs. 1. 20 lakhs on account of liquidated damages as per agreement, the amount of Rs. 45 lakhs with interest thereon @ 36% per annum from October/november, 2001 or in the alternative, he is liable to immediately surrender vacant physical possession of the suit premises to the plaintiff since his licence has
