Back
2024 Supreme(Mad) 1691
IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. Sundar, K.Govindarajan Thilakavadi, JJ.
M/s. Rattha Holding Company Pvt. Ltd. - Appellant
Versus
M/s. Global Talent Tract Pvt. Ltd. - Respondents
O.S.A(CAD)No.14 of 2022, C.M.P.No.2147 of 2022
Decided On : 24-06-2024
Advocate Appeared:
For the Appellant : Mr.Keerthikiran Murali
For the Respondent: Mr.C.T.Mohan Senior Counsel for Mr.B.Sudarshan
IMPORTANT POINT
Unregistered lease deeds cannot be considered in arbitration proceedings, as their non-registration renders them inadmissible, constituting patent illegality under the Arbitration and Conciliation Act.
Headnote:
Arbitration - Lease Agreements - Arbitration and Conciliation Act, 1996 (Sections 34, 37) and Registration Act, 1908 (Sections 17, 49) - The court discussed the implications of unregistered lease deeds on arbitration awards, emphasizing that non-registration renders such documents inadmissible, leading to a finding of patent illegality.
Fact of the Case:
The case involved an appeal against an arbitral award concerning two lease deeds between two companies. The claimant sought a refund of a security deposit, while the respondent counterclaimed for damages. The validity of the lease deeds was questioned due to their unregistered status.
Finding of the Court:
The court found that the arbitral tribunal's reliance on unregistered lease deeds constituted patent illegality, as such documents are inadmissible under the Registration Act, leading to the setting aside of the arbitral award.
Issues: Whether the ground of patent illegality can be raised in the appeal when it was not presented in the original Section 34 proceedings.
Ratio Decidendi: The court held that patent illegality can be raised in an appeal under Section 37 of the Arbitration and Conciliation Act, even if not raised in the Section 34 proceedings, particularly when it goes to the root of the matter.
Result: The appeal is allowed, and the impugned order and arbitral award are set aside.
JUDGMENT :
M.SUNDAR, J.
This judgment / order will now dispose of the captioned OSA and 'Civil Miscellaneous Petition' {hereinafter 'CMP' for the sake of brevity} thereat.
2. Captioned matter is listed under the cause list sub-caption 'PART-HEARD' today as it was heard in part in the listing on 10.06.2024 on which day, the following proceedings were made:
'O.S.A(CAD)No.14 of 2022 and C.M.P.No.2147 of 2022 in O.S.A(CAD)No.14 of 2022
M.SUNDAR,J.,
and
K.GOVINDARAJAN THILAKAVADI, J.,
(Order of the Court was made by M.SUNDAR, J.)
Captioned intra-court appeal i.e, 'Original Side Appeal' ['OSA' for the sake of brevity] has been presented in this 'Commercial Appellate Division' [CAD] on 03.01.2022 assailing an 'order dated 16.09.2021 made in O.P.No.936 of 2015' ['impugned order' for the sake of brevity] made by a Section 34 Court i.e., Hon'ble Single Judge of this Court presiding over Section 34 Court.
2.In the Section 34 Court, an Arbitral Award dated 03.10.2015 made in Arbitration Case No.01/2013 by 'a former Hon'ble Judge of this Court as sole arbitrator' [hereinafter 'AT' denoting Arbitral Tribunal for the sake of brevity and convenience] was assailed.
3.Two companies which are adversaries are 'Global Talent Tract Pvt. Ltd.', and 'Rattha Holding Company Pvt. Ltd.', ['Global' and 'Rattha' respectively for the sake of brevity]. Global was the claimant before AT and Rattha was the respondent.
4.Two lease deeds dated 25.11.2010 and 29.09.2011 constitute the nucleus of the matter.
5.Though dispute resolution clauses in the aforementioned two lease deeds provide for settlement of disputes through Arbitration, contracting parties i.e., Global and Rattha entered into a separate agreement dated 10.09.2013 appointing a former Hon'ble Judge as sole arbitrator i.e., AT. It has become necessary to record this as the questions as to two lease deeds being insufficiently stamped and not registered [both lease deeds are for five years period] arose. Therefore, SMS Tea Estates Private Limited reported in (2011) 14 SCC 66 rendered on 20.07.2011 which was the obtaining position on the date of the impugned award [03.10.2015] and the line of authorities which followed do not come into play in the case on hand. To put it differently, there is no disputation or contestation either about the existence or about validity of the arbitration agreement i.e., arbitration agreement within the meaning of Section 2(1)(b) read with Section 7 of the 'Arbitration and Conciliation Act, 1996' [hereinafter 'A and C Act' for the sake of brevity].
6.Before the AT, to put it in simple terms, the claim of Global [lessee] is primarily for refund of security deposit and counter claim of Rattha [lessor] is primarily for damages qua breach.
7.In this regard, it has also become necessary to say that there is no disputation or contestation about arbitrability of disputes as recovery of possession was not subject matter of arbitration. It has become necessary to set out this in the light of Himangni Enterprises v. Kamaljeet Singh Ahluwalia reported in (2017) 10 SCC 706 and Vidya Drolia and Others v. Durga Trading Corporation reported in (2021) 2 SCC 1 though they were rendered post impugned award. However, it is not necessary to enter into that territory.
8.Now a very interesting scenario emerges.
9.The AT after full contest acceded to the claimant's [lessee] plea of refund of security deposit and negatived the counter claims of the respondent [lessor] i.e., damages. The lessor [respondent before AT] assailed the impugned award in the Section 34 Court vide aforementioned O.P.No.936 of 2015 and the Section 34 Court in and by the aforementioned impugned order dated 16.09.2021 dismissed the challenge to the Award and sustained the Arbitral Award. Aggrieved, Rattha [lessor] has presented the captioned intra-court appeal in this CAD. The interesting scenario alluded to supra is the protagonist of the petition in the Section 34 Court has not raised any plea regarding the two lease deeds being insufficie
