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2009 Supreme(All) 3558
[2010(1) ADJ 25]
ALLAHABAD HIGH COURT
BEFORE : BHARATI SAPRU, J.
DHARAM PAL SATYA PAL LIMITED ....Applicant
Versus
DINESH ENAMELLED WIRE INDUSTRIES (P) LTD. ....Respondent
(Arbitration Application No. 89 of 2006, decided on 17th November, 2009)
Counsel :
Deepak Dhingra, Amit Kumar, Satish Dayanandan, Renu Rajat, A.K. Mehrotra, S.S. Nigam for the Petitioner; H.N. Singh, B. Narayan Singh for the Respondents.
Headnote:(A) Arbitration and Conciliation Act, 1996—Sections 11(6), 28, 7, 9—Appointment—Arbitrator—Arbitration application filed by applicant under Section 11(6) to appoint arbitrator to adjudicate upon claim of applicant on ground that Shri H. who was an Advocate had been named as a sole arbitrator conveyed his inability and declined to act as an arbitrator—In instant case, there was a valid arbitration clause, which clearly discloses intent of both parties to seek reference to an arbitrator and there a live claim, which has been made within time prescribed, and therefore, matter was liable to be referred to arbitrator—Since named arbitrator has declined to act as an arbitrator, applicant rightly sought recourse to remedy available to him under Section 11(b)—Therefore, a retired Judge (Mr. Justice M.C. Agarwal) was appointed to act as an arbitrator in the matter. [Paras 2, 3, 4, 5,13, 95 and 96]
(B) Arbitration and Conciliation Act, 1996—Sections 11(6), 28, 7, 9—Arbitrator—Earlier arbitrator refused to act—Application filed for arbitrator’s appointment by applicant—Applicant, a tenant of respondent-Company—And respondent-Company offered to sell property in occupation of applicant-Company for Rs. 60 lacs and received advance of Rs. 10 lacs—And agreement to sell entered into between parties—Respondent-Company denied existence of agreement by notice sent to applicant—Said notice replied by applicant-Company and it sought a reference of dispute to arbitrator appointed by parties in terms of said agreement, dated 6.12.2002—Respondent not disputed two facts (i) that applicant was inducted as a tenant, and that (ii) it did not deny that agreement to sell which was entered between parties—However, respondent contended that agreement, dated 6.12.2002 was an unregistered document, hence, void, and that property continue on rent agreement, till document, dated 6.12.2002, i.e., agreement to sell was registered, that agreement to sell, dated 6.12.2002 is not an arbitration agreement, there was no consent of parties, that earlier arbitrator declined to act as arbitrator, it has brought to an end to arbitration agreement, that present application under Section 11(6) of Act of 1996 was not maintainable etc.—Held, arbitration agreement reflected clearly “intention” of parties to refer matter to arbitrator if there was a dispute—Therefore, arbitration clause was a valid clause within meaning of arbitration clause as entailed in Section 7 of Act of 1996—Once named arbitrator fails, provisions of Section 11(6) of Act will come into play—Thus, since named arbitrator declined to act as an arbitrator, Mr. Justice M.C. Agarwal (retired) was appointed as arbitrator—Thus, application under Section 11(6) of Act of 1996 was allowed. [Paras 31 to 47, 77 to 89, 95, 96, 97 and 98]
Result; Application Allowed.
Hon’ble Bharati Sapru, J.—This arbitration application has been filed by the applicant Dharampal Satyapal Ltd. under Section 11 (6) of the Arbitration and Conciliation Act, 1996 with a prayer that this Court be pleased to appoint the arbitrator to adjudicate upon the claim of the applicant, which has arisen in terms of the agreement dated 6.12.2002 and further there is a second prayer that such other and further order may be passed which this Court may deem fit and proper in the facts and circumstances of the case.
2. The prayer made by the applicant is strongly opposed by the respondent Dinesh Enamelled Wire Industries (P) Ltd.
3. The facts of the case are that the respondent company had become a lease holder on 8.11.1979 of plot No. 27 Block B, Sector 3, NOIDA, District Gautam Budh Nagar (hereinafter referred to as the plot in question). The lease had been granted by New Okhla Industrial Development Authority. On the plot of the land that was leased out to the respondent, it had built a factory shed and office premises.
4. The applicant was inducted by the respondent as a tenant to the said industrial plot at a monthly rent in the year 2000.
5. According, to the facts as stated by the applicant in the year 2002, the respondent company approached the applicant and offered to sell the said property in occupation of the applicant and two other concerns as its tenants for a total sale consideration of Rs. 60 lakhs. A sum of Rs. 10 lakhs was to be paid by the applicant, which was paid by an account payee cheque and the respondent encashed the same and acknowledged receipt thereof.
A reference may be had to clauses 1, 1 (a), (b) and (c) and clauses 2 and 3 of the agreement to sell dated 6.12.2002, which is on record as Annexure 3 to the application. The same are quoted below :
“(1) That the total consideration of the sale of plot and factory shed and attachments thereto has been fixed for Rs. 60,00,000/- (Rupees sixty lacs only) to be paid by the party of the second pat to the party of the first parts as under;
(a) Rs,10,00,000/- (Rupees ten lacs only) has been paid by the party of the second party by way of cheque No. 101705 dated 6.12.02 drawn on State Bank of India, Chandni Chowk, Delhi 110 006 as advance as earnest money towards purchase of the property and factory shed to the party of the first part the receipt of which is hereby acknowledged by the party of the first part.
(b) Rs. 20,00,000/- (Rupees twenty lacs only) shall be paid upon receipt of permission from Noida Authority for transfer;
(c) Balance amount of Rs. 30,00,000/- (Thirty lacs) shall be paid at the time of transfer/registration of sale deed.
(2) That the party of the first part shall obtain no objection certificates from the Project Engineering (JAL), Noida, Area Development Officer (Industries) concerned, Uttar Pradesh State Electricity Board, Noida and/or any other agency required for said purchase before submission to Transfer Application under this agreement to NOIDA.
(3) That the party of the first part shall obtain Income Tax Certificate from the concerned Income Tax Department on Form No. 34-A under Section 230 (A)/get permission under chapter XXC of the Income Tax Act, 1956 and also obtain no objection certificate from other concerned authorities such as the financial institutions and banks before submitting Transfer Application to the office of the Sub-Registrar, Noida...”
6. The agreement to sell dated 6.12.2002 entered into between the parties contained an arbitration clause, which reads as under :
“Any dispute, if arises in respect of the terms of this agreement, it shall be solely decided by Mr. Hari Advocate, son of late Sri Megh Raj, resident of 90/40B, Malviya Nagar, New Delhi, whose decision/award shall be final on both parties.”
7. In terms of the said agreement, the respondent company accepted from the applicant part sale consideration of Rs. 10 lacs (Rupees ten lacs) by cheque No. 101705 dated 6.12.2002. The said cheque was duly en
