Delhi District Court
Sh. Sarabh Balraj Kapoor & Sons vs Mahanagar Telephone Nigam Ltd on 31 January, 2013
1
IN THE COURT OF MS. SUJATA KOHLI:ADDITIONAL DISTRICT JUDGE:
WEST DISTRICT:TIS HAZARI COURT:DELHI
MCA No. 165/11
Sh. Sarabh Balraj Kapoor & Sons
through its Karta Sh. Balraj Kapoor
1/7 WHS, Timber Market, Kirti Nagar,
New Delhi.
.......APPELLANT
VERSUS
1. Mahanagar Telephone Nigam Ltd.
Through its Chairman,
K.L. Bhawan,
New Delhi110050.
2. Sh.A.P. Handa, Arbitrator
General Manager (TR & IFRS),
Sarabh Balraj Kapoor Vs. MTNL
2
Mahanagar Telephone Limited,
501, K.L. Bhawan
New Delhi110050.
..........RESPONDENTS
DATE OF INSTITUTION OF THE CASE : 19.05.2011
DATE OF RESERVATION OF ORDER : 23.01.2013
DATE OF JUDGMENT/ORDER : 31.01.2013
ORDER
Petitioner/objector/claimant instituted a claim before respondent no.2, sole arbitrator for recovery of Rs.18,92,192/ on account of damages, arrears of electricity and water bills, maintenance of lift etc. and besides he also claimed another amount of Rs. 1,36,785/ on account of repair and maintenance of tenanted building situated at C31, Naraina Industrial Area, New Delhi. Petitioner/Objector had let out the aforesaid tenanted premises on lease to respondent no.1 by Lease Deed dated 07.10.1978 for a period of 5 years initially, which was extended/continued by way of successive Lease Deeds dated 04.05.1985, 28.06.1991, 05.05.1993, 01.05.1996 and 06.04.1999. The successive lease deeds were executed having common terms.
Sarabh Balraj Kapoor Vs. MTNL 3
2. During the continuance of the aforesaid lease, the respondent demanded various goods/articles/fixtures which were agreed to be returned at the time of handing over the physical and vacant possession back to the lessor. It was alleged that while some of such articles/fixtures were returned by the respondent at the time of handing over the possession, others were not. Despite issuance of letter dated 10.04.2000, terminating the lease dated 06.04.1999, respondent did not vacate the tenanted premises within the stipulated period and though after much persuasion they ultimately vacated on 30.04.2001, the same was uninhabitable and in a deteriorated condition. Due inspection was conducted and comprehensive estimate of the damage and the list of missing goods/articles/fixtures were prepared. Petitioner vide notice dated 04.06.2001, demanded a sum of Rs.18,92,192/ from the respondent on this account but in vain and hence the petitioner instituted a civil suit for recovery but the same was later on referred to the arbitrator under Section 8 of Arbitration and Conciliation Act.
3. Respondent in its written statement has challenging the validity of the Lease Agreement dated 06.04.1999 as being insufficiently stamped and being nonregistered. According to petitioner, respondent did not lead any evidence in support of its plea while petitioner produced the said Lease Deed in evidence, it had been referred to, only Sarabh Balraj Kapoor Vs. MTNL 4 for collateral purposes i.e. to ascertain the figures of the damages only, Ld. Arbitrator on one side held the lease agreement dated 06.04.1999 as being invalid, without appreciating, that doing so, would go to the very root of his own jurisdiction, but still at the same time, in the absence of any evidence even, Ld. Arbitrator decided the claim on merits.
4. Ld. Arbitrator in the conclusion observed that the agreement entered into on 07.10.1978 was neither on a stamp paper nor was registered as such they were not valid and binding on any one of the parties. It was further stated that respondent was in occupation since 1978 till 2001 and the fixtures had lost their life due to use and normal wear and tear. The claimant had been asked to take possession of the premises several times but he was lingering over it on one pretext or another and it was only when respondent sent a legal notice that claimant came to take possession of the premises. As long as respondent was using the premises, they paid house tax and other bills and also maintained the lift and other infrastructure well and thereafter, the Ld. Arbitrator held that respondent was not liable to pay any claim whatsoever raised by the claimant, dismissing the claim.
5. During final arguments, ld. counsel for petitioner/objector, contended that Sarabh Balraj Kapoor Vs. MTNL 5 on one hand when the lease agreement in question was not held admissible in evidence, for the reasons put forth by Ld. Arbitrator, then the very power of Ld. Arbitrator, which was flowing from the same very agreement would itself become questionable and the lease agreement could not have been looked into for any purpose whatsoever, including the arbitration clause.
6. Another argument addressed on behalf of the petitioner/objector was also that the relief that was sought by the petitioner/objector was only with regard to movable property and not an immovable property mentioned in the lease agreement, and as such whether the lease agreement was registered or not, would not have been material, as any agreement regarding movable property would not have required any registration.
7. Ld. counsel for petitioner/objector at the outset has referred to the object of the statute by referring to the preamble of the Arbitration and Conciliation Act, 1996 hereinafter referred to as the 'Act', the same being to consolidate and amend the law relating to domestic arbitration, International Commercial Arbitration and Enforcement of Foreign Arbitral Awards as also to define the law relating to conciliation and for matters connected therewith.
8. Section 7 further goes on to state breifs that 'Arbitration Agreement' means Sarabh Balraj Kapoor Vs. MTNL 6 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 the defined legal relationship, whether contractual or not and further that an arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
9. Ld. counsel for petitioner/objector further contended that the decision given by Ld. Arbitrator has been self contradictory in as much as while on one hand, the document containing the arbitration clause has been held invalid by Ld. Arbitrator, how then the arbitration clause contained in the said document would be held valid. The consequence of the conclusion drawn by Ld. Arbitrator with respect to the lease agreement would lead to the jurisdiction of the Arbitrator himself as lacking.
10. However, ld. counsel for respondent has relied upon the case law laid down in Monika Singla Vs. MTNL raising the question, as to can one document be held admissible for one purpose and inadmissible for another?
11. The point put forth by ld. counsel for respondent was that the arbitration agreement does not require registration and it is an indepenent agreement from that point of view, the main argument addressed on behalf of the respondent being that the lease agreement being relating to the immovable properties being unstamped and Sarabh Balraj Kapoor Vs. MTNL 7 unregistered was clearly violative of Indian Registration Act, as well as Stamp Act, and as such was inadmissible for the purpose of evidence but at the same time, it was contended that the arbitration clause contained therein would survive independently for the purpose of appointment of Arbitrator.
12. On the same analogy, ld. counsel for petitioner/objector also argued that if the lease agreement can be divided and considered in its different portions for the different purposes contained therein independently of each other, the clauses that petitioner/objector was relying upon were solely with regard to the movable and not with respect to the immovable property, and going by the argument raised by ld. counsel for respondent himself, ld. counsel for petitioner/objector also contended that to the extent that relief sought by the petitioner/objector related only to the movables or compensation for the loss/damage of the movables, the fact that the agreement was registered or not would not matter.
13. It was further the main contention on behalf of the petitioner/objector that the award in question was not a speaking award in as much as in the last conclusive part, there has hardly been any reason given by ld. Arbitrator to substantiate as to how and why he arrived at that conclusion. The relevant portion of the impugned award would be Sarabh Balraj Kapoor Vs. MTNL 8 necessary to be reproduced herein being as under: "I, A.P.Handa, G.M. (TR&IFRS), MTNL, Delhi, being Sole Arbitrator in this case have carefully gone through the contents of the case. I have observed that the initial agreement entered into n dated 07.10.1978 was neither on a stamp paper nor was registered and thus, they were not valid and binding on any of the parties. The respondent was in occupation from 1978 to 2011 and the furniture and fixtures had lost their lives due to use and normal wear and tear. The claimant was asked to take the possession of the premises several times but he was lingering it on one pretext or the other. When the respondent was sent a legal notice, then only he came to take the possession of the premises. As long as the respondent was using the premises, they have paid the house tax and other bills and also maintained the lift and infrastructure also. As such, the respondent is not liable to pay any claims whatsoever, as have been raised by the claimant."
14. Ld. counsel for petitioner/objector has then referred to Section 1 of the Evidence Act, Section 19 of Arbitration and Conciliation Act and Section 49 of the Indian Registration Act.
15. Ld. counsel for respondent on the other hand referred to the provision of Registration Act mainly Section 17, 35 and 49.
16. The arguments were addressed at length and during the course of which, reliance was placed by the ld. counsels for parties on the following case laws: Sarabh Balraj Kapoor Vs. MTNL 9
17. Case laws relied upon by the ld. counsel for Petitioner/objector:
1. Jajodia (Overseas) Pvt. Ltd. VS. Industrial Development Corporation of Orissa Ltd. (1993)2 SCC 106
2. P. Sadananda Reddy Vs. C. Venkata Ratnam and Others 2000(4) Raj 548 (A.P.)
3. M. Chelamayya and Anr. Vs. M. Venkataratnam and Anr. (1972) 3 SCC 799 Case laws relied upon by the Ld. counsel for respondent:
1. Avinash Kumar Chauhan Vs. Vijay Krishna Mishra - AIR 2009 SC 1489
2. M/s. Mckenzies Ltd. VS. State of Mysore - AIR 1978 Karnataka 89
3. SMS Tea Estates Pvt. Ltd. Vs. Chandmari Tea Co. Pvt. Ltd. V(2011) SLT 697
4. Mahanagar Telephone Nigam Ltd. Vs. Arya Cooperative Housing Soceity Ltd. in FAO No.373/10 of Hon'ble High Court of Delhi.
18. In case of Jajodia Overseas Private Limited, relied upon by Ld. counsel for the petitioner/objector, it was held by the Hon'ble Supreme Court in a DB Judgment that Sarabh Balraj Kapoor Vs. MTNL 10 a speaking or reasoned award is one which discusses and sets out the reasons which led the Arbitrator to make the award, setting out the conclusions upon the question or issues that arise in the arbitration proceedings but without discussing the reasons for coming to these conclusions, does not make an award a reasoned or speaking award. In the award in that case, the Arbitrator had only answered the issues that were framed without any discussion or setting out the reasons for those answers and therefore, the award therein was held to be not a speaking or reasoned award. Further, Ld. Counsel also relied upon the ratio laiddown by the Apex Court in Laxmi Narayan Kanoria wherein it was held that if a contract is illegal and void and arbitration clause, which is one of the terms therein, must also perish alongwith it. It was observed as under: "6. Now, there can be no doubt that if a contract is illegal and void, an arbitration clause, which is one of the terms thereof, must also perish along with it. As pointed out by Viscount Simon, L.C. in 'Heyman V. Darwins Ltd.,' If one party to the alleged contract is contending that it is void ab initio (because, for example, the making of such a contract is illegal), the arbitration clause cannot operate, for on this view the clause also is void". The arbitration clause being an integral part of the contract cannot stand, if the contract itself is held to Sarabh Balraj Kapoor Vs. MTNL 11 be illegal. Logically speaking, it is difficult to conceive how when a contract is found to be bad, its parts must also perish, 'Ex nihilo nil fit'. One principle, therefore, it must be held that when a contract is invalid, every part of it, including the clause as to arbitration contained therein, must also be invalid. That is also the view taken by this Court in at least two decisions, namely, Khardah Company Ltd. v. Raymon & Co. (India) Pvt. Ltd. and Waverly Jute MillsCo. Ltd. v. Raymon & Co. (India) Pvt.
Ltd."
19. Ld. Counsel also relied upon the judgment of Hon'ble High Court of Andhra Pradesh in C. Venkat Ratnam & Ors., wherein, while discussing the necessity and scope of registration of an award passed under the old Arbitration Act of 1940, it was held that taking over of on undertaking by a private limited company under the same name and style of the company wold not be a case of transfer of immovable property to an outsider and nor would it involve the transfer of shares and in such case, it was held that the award was not compulsorily registrable. The award, did not fall in the category of instruments stipulated in Section 17 (1) (b) of Registration Act and on the other hand, it was Section 17, (2) (b) which was held to be applicable in the circumstances. Same was the view taken by the Apex Court in the case of Maltapalli Sarabh Balraj Kapoor Vs. MTNL 12 Chellamayya V. Mattapalli Venkatratnam, the contention of the appellant therein was that the award was a nontestamentary instrument purporting to create and declare a right, title or interest of value of more than Rs. 100/ in the immovable property and hence it was compulsorily registrable U/S 17 (1) (b) of Indian Registration Ac. However, the Apex Court was pleased to hold these submissions only as partly correct and it was held that the award in so far as it referred to partition of immovable property, did not purport to create or declare any interest or title in the immovable property.
20. It was further held that as regards the direction contained in the award to pay a sum of money by one party to another, an award containing such a direction would not require to be registered. The case n question involved two distinct matters, one being a personal liability to pay a certain amount and the second being an additional relief to recover that amount from the immovable property of the appellants, should they fail to pay as ordered and it was held that it was clear that the two did not form one transaction but two severable transactions. And accordingly it was held, that the second transaction with regard to the charge being a severable transaction, could be validly ignored and to the extent that it declared personal obligation to pay the transaction, not being required to be compulsorily registered and accordingly the award was held admissible in Sarabh Balraj Kapoor Vs. MTNL 13 evidence.
21. Ld. Counsel for respondent on the other hand also relied upon an the Apex Court decision in Avinash Kumar's case wherein it was held that an inadequately stamped document would not be admissible in evidence in terms of Section 35 of the Stamp Act and same would not also be admissible for collateral purpose and that such document should be impounded. The specific words of Section 35 of the Act were referred to emphasize that the words "for any purpose whatsoever".
22. It was further held as under : "7. It is now well settled that there is no prohibition under Section 49 of the Registration Act, to receive an unregistered document in evidence for collateral purpose. But the document so tendered should be duly stamped or or should comply with the requirements of Section 35 of the Stamp Act, if not stamped, as a document cannot be received in evidence even for collateral purpose unless it is duly stamped or duty and penalty are paid under Section 35 of the Stamp Act".
23. Ld. Counsel also placed reliance on the Apex Court decision given in Sarabh Balraj Kapoor Vs. MTNL 14 S.M.S. Tea Estates Pvt. Ltd.'s case wherein it was held that when a contract contains an arbitration agreement its collateral term relating to resolution of disputes as under: "7. When a contract contains an arbitration agreement, it is a collateral terms relating to the resolution of disputes, unrelated to the performance of the contract. It is as if two contracts one in regard to the substantive term of the main contract and the other relating to resolution of disputes had been rolled into one, for purposes of convenience. An arbitration clause is therefore an agreement independent of the other terms of the contract or the instrument. Resultantly, even if the contract or its performance is terminated or comes to an end on account of repudiation, frustration or breach of contract, the arbitration agreement would survive for the purpose of resolution of disputes arising under or in connection with the contract. Similarly, when an instrument or deed of transfer (or a document affecting immovable property) contains arbitration agreement, it is a collateral term relating to resolution of disputes, unrelated to the transfer of transaction affecting the immovable property. It is as if two documents - one affecting the immovable property Sarabh Balraj Kapoor Vs. MTNL 15 requiring registration and the other relating to resolution of disputes which is not compulsorily registrable - are rolled into a single instrument.
Therefore, even if a deed of transfer of immovable property is challenged as not valid or enforceable, the arbitration agreement would remain unaffected for the purpose of resolution of disputes arising with reference to the deed of transfer. These principles have now found statutory recognition in Subsection (1) of Section 16 of the Arbitration and Conciliation Act 1996 ('Act' for short) which is extracted below:
"16. Competence of arbitral Tribunal to rule on its jurisdiction - (1) The arbitral Tribunal may rule on its own jurisdiction, including ruling on any objections with respect to existence or validity of the arbitration agreement, and for that purpose,
(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and
(b) a decision by the arbitral Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause."
Sarabh Balraj Kapoor Vs. MTNL 16 Similar view was taken by our own Hon'ble High Court in MTNL v Arya Cooperative House Society Limited.
24. I have given my due consideration to the matter and at the end of the entire arguments and the case law cited from both the sides, the contention raised by Ld. Counsel of petitioner/objector, that if the lease agreement can be divided and considered in different portions for different purposes, independent of each other, and since the petitioner/objector was relying solely upon the clause with regard to movable and not with respect to immovable property, then going by the arguments of Ld. Counsel for respondent himself, the relief sought by the petitioner/objector being related only to movables or the compensation for the loss/damage to the movables, the agreement though not registered could still be looked into for the limited purpose and that the agreement as such was not registered would not matter, meets the eye and is based on reason.
25. Since if it is open for the respondent to rely upon the agreement for one purpose and not to rely for the other, the agreement would then have to be divided into different portions, one relating to the agreement for arbitration and one relating to the lease of the premises and other is relating to the loss of the movable articles in the Sarabh Balraj Kapoor Vs. MTNL 17 property and damages/compensation in the property therefor; There have all to be considered separately as rightly contended by Ld. Counsel for petitioner/objector and since the claim of the petitioner/objector was only with respect to the movables, the loss of movables it would not mean whether agreement in question was registered or was not registered.
26. Further as also rightly contended on behalf of the petitioner/objector, the impugned award cannot be considered as a speaking award, in as much as, for the last conclusive part thereof, hardly any reason has been given by Ld. Arbitrator as to on what basis he arrived at his own conclusions.
27. Relevant portion of the concluding para seems to be a presumption raised by Ld. Arbitrator to the effect that respondent was in occupation from 1978 till 2011 and the furniture and fixtures had lost their lives due to use and normal wear and tear. Further Ld. Arbitrator has stated that claimant was asked to take the possession several times, but he was lingering on it on one pretext or another. Further that as long as the respondent was using the premises and they had paid the house tax and other bills and also maintained the lift and infrastructure also and that as such the respondent is not liable to pay any claim whatsoever as raised by him. This conclusion is not stating any Sarabh Balraj Kapoor Vs. MTNL 18 reason and not making any reference to any material on the record from which Ld. Arbitrator drew these inferences.
Taking into account both the grounds, the award is not a reasoned award same is being setaside.
The original record of Ld. Arbitrator may be returned and the objection filed be consigned to record room.
(SUJATA KOHLI) Announced in open Court ADJ/WEST/DELHI/06.02.2013 today i.e. 31.01.2013 Sarabh Balraj Kapoor Vs. MTNL