Back
2011 Supreme(Mad) 1350
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Vinod K. Sharma, J.
Sai Sri Saraswathy Construction (P) Ltd., rep. by its Managing Director, R. Balakumar, T. Nagar, Chennai 600 017
Versus
Ariyakudi Kasi Viswanathan Chettiar Trust (Private Trust) rep. by its Chairman, Vairam S. Vadivel Chettiar, Triplicane, Chennai 600 005
O.A. No. 81 of 2011
Decided On : 10 March 2011
The presence of an enforceable arbitration clause and the impact of transfers made during the pendency of litigation on the right to invoke Section 9 of the Arbitration Act.
Headnote:
Arbitration Agreement - Specific Performance - The court dismissed the application for temporary injunction restraining the respondent from alienating the property, ruling that there was no enforceable arbitration clause between the parties and that the transfers made during the pendency of the litigation are affected by lis pendens, but clarified that the opinion expressed by the court should not be taken as an expression of opinion on merit as it shall be for the arbitration to decide the case on merit.
Fact of the Case:
The applicant entered into an agreement for the sale of land but the respondent refused to execute the sale deed. The applicant filed an application for appointment of an arbitrator and moved for a temporary injunction to protect the right of specific performance.
Finding of the Court:
The court found no merit in the application and dismissed it, stating that the absence of an enforceable arbitration clause and the transfers made during the pendency of the litigation affected the applicant's right to invoke Section 9 of the Arbitration Act.
Issues: Enforceable arbitration clause, transfers during pendency of litigation
Ratio Decidendi: The court held that there must be an enforceable arbitration clause between the parties, and transfers made during the pendency of the litigation are affected by lis pendens.
Final Decision: The application for temporary injunction was dismissed, and the court clarified that its opinion should not be taken as an expression of opinion on merit as it shall be for the arbitration to decide the case on merit.
VINOD K. SHARMA, J.
1. This application has been filed under Order 14 Rule 8 of Original Side Rules read with Sec.9 of the , 1996, praying for grant of temporary injunction restraining the respondents or their agents from alienating the properties mentioned in the schedule to the Judges summon.
2. The applicant is Sai Sri Saraswathy Construction (P) Ltd. It entered into an agreement for sale of land measuring 34.33 acres at Puliyur Village, Karur Taluk and District. The land was developed and divided into house sites after getting approval from D.T.C.P.
3. The case of the applicant is that inspite of the agreement and the instalments having been paid, the respondent refused to execute the sale deed. The applicant therefore filed the application under Section 11 of the Arbitration and Conciliation Act for appointment of an Arbitrator. In order to protect the right of specific performance, the applicant has moved this application with a prayer for grant of temporary injunction restraining the respondent from alienating the property or creating third party interest, during pendency of the arbitration proceedings.
4. The application is opposed by the respondent on the ground that the applicant has no prima facie case, as under the terms of the agreement executed between the parties, the sale was to be completed within five months of the execution of the agreement, i.e. 16.11.2006. But, the applicant failed to get sale deed executed within the time stipulated in the agreement.
5. The applicant thereafter, executed another agreement on 15.6.2006 for the reason best known to the applicant, he has chosen not to file copy of the said agreement with this application and placed on record, the memorandum of Understanding entered into on 19.5.2008.
6. The contention of the learned counsel for the respondents, is that the conduct of the applicant shows that the applicant is not been willing to perform his part of the contract, to entitle him to the relief of specific performance.
7. It is also the contention of the learned counsel for the respondent, that Clause 13 of the agreement on which reliance is placed by the learned counsel for the applicant, cannot be said to be an arbitration clause.
8. In support of his contention, the learned counsel for the respondent referred to Clause 13 of the agreement, which read as under:
“ 13. If any disputes arise, the matter should be decided by the common Arbitrator, under the Arbitration Clause. ”
9. The contention of the learned counsel for the respondent therefore is that since the agreement is not existing, the applicant is not entitled to invoke the provisions of the 1996.
10. The learned counsel for the applicant on the other hand placed reliance on Section 7 of the Arbitration & Conciliation Act, 1996 which read as under:
“ 7. Arbitration agreement – (1) In this Part, “arbitration agreement ” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in –
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other;
(5) The reference in a contract to a document to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract. ” to contend, that Clause 13 of the Agreement reproduced above, will be an arbitration clause, as the reference in a contract to a docu
