Allahabad High Court
M/S Ultra Tech Cement Ltd. (Utcl) Thru. ... vs U.P. Rajya Vidyut Utpadan Nigam Ltd., ... on 17 February, 2020
Author: Jaspreet Singh
Bench: Jaspreet Singh
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH Reserved A.F.R. Court No. - 6 Case :- ARBITRATION APPLICATION No. - 44 of 2019 Applicant :- M/S Ultra Tech Cement Ltd. (Utcl) Thru. Nitin Duraphe Opposite Party :- U.P. Rajya Vidyut Utpadan Nigam Ltd., Lucknow Thru. M.D. Counsel for Applicant :- Rajat Gangwar,Rahul Agarwal Counsel for Opposite Party :- Vibhanshu Srivastava,Suyash Manjul,Vibhanshu Srivastava Alongwith Case :- ARBITRATION APPLICATION No. - 45 of 2019 Applicant :- M/S Ultra Tech Cement Ltd. (Utcl) Thru. Nitin Duraphe Opposite Party :- U.P. Rajya Vidyut Utpadan Nigam Ltd., Lucknow Thru. M.D. Counsel for Applicant :- Rajat Gangwar,Rahul Agarwal Counsel for Opposite Party :- Vibhanshu Srivastava,Suyash Manjul,Vibhanshu Srivastava Hon'ble Jaspreet Singh,J.
Heard Shri Jaideep Narain Mathur learned Senior Advocate alongwith Shri Rahul Agarwal and Shri Rajat Gangwar learned counsel for the petitioner and Shri Sandeep Dixit learned Senior Advocate alongwith Shri Suyash Manjul for the respondent.
The aforesaid two petitions have been preferred under Section 11 (6) of the Arbitration and Conciliation Act, 1996. Both involve similar facts and common questions of law and as such have been heard together and are being decided by this common judgment.
In order to appreciate the controversy involved in the above petitions, briefly the facts giving rise to the present petitions are being noted hereinafter.
M/s. Jai Prakash Associates Limited "hereinafter referred to as JAL" had entered an agreement for the purposes of consumption of fly ash which was to be generated as a by product at 1x250 Unit 9 MW Harduganj Thermal Extension Power Project, Kasimpur, Aligarh while the aforesaid fly ash was to be consumed by the petitioner for its Portland Pozzollona Cement "hereinafter referred to as PPC" at Sikandrabad U.P. However, on account of changed circumstances, in term of the order passed by the National Company Law Tribunal at Mumbai & at Allahabad, a scheme for acquiring the identified cement plants of JAL in the States of Madhya Pradesh, Andhra Pradesh, Himachal Pradesh, Uttar Pradesh and Uttarakhand was prepared and the petitioner entered in an agreement with JAL on 31st of March, 2016 which was approved by the NCLT at Mumbai and Allahabad, by means of the order dated 15th of February 2017 and 2nd of March, 2017 respectively.
Subsequently the Board of Directors of the petitioner's company and JAL in their meeting held on 29th of June, 2017 declared the scheme to be made effective and all the identified assets of JAL vested with the petitioner's company with effect from 29th of June, 2017. It is in this backdrop that the petitioner's company, namely, M/s. Ultra Tech Cement Limited "hereinafter referred to as UTCL" acquired all the rights and the liabilities of JAL including the rights, obligation in terms of the agreement which was entered between JAL and the respondent dated 16th of February, 2007.
The respondent is a State Thermal Power Utility and is wholly owned and controlled by the State of Uttar Pradesh. The respondent corporation i.e. Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd. "hereinafter referred to as UPRVUNL" was constituted for the purposes of construction of new Thermal Power Projects in the State and is responsible for the generation, transmission and distribution of power within the State of Uttar Pradesh. It is with the aforesaid purpose that the operations of the State Sector Thermal Power Stations were handed over to it.
To put the controversy in a prespective, certain background facts which led the parties to enter in an agreement dated 16th of February, 2007 "hereinafter referred to as the said agreement of 2007" and which is in the eye of the storm, may be noted first:-
(i) Usually, thermal power is generated from coal which leads to generation of fly ash as its by-product. This, by-product which is generated from the thermal power is a hazardous product and causes environmental damage and accordingly the Ministry of Environment and Forest, Union of India has made strict regulations in respect thereto and necessarily all thermal power plants are required to have a fly ash pond for stocking of fly ash generated by the said power plants;
(ii) The aforesaid by product i.e. fly ash is used in production of several products such as bricks, roads and cement amongst others;
(iii) The Ministry of Environment and Forest, Union of India had issued a notification dated 14th of September 1999, a copy of which has been annexed as Annexure no.1 with the petition. The aforesaid notification with the objective of restricting the excavation of top soil for manufacture of bricks and promoting the utilization of fly ash in the manufacture of building material and in construction activity within a specified radius of fifty kilometers from the coal or lignite based thermal power plants as well as to prevent the dumping of fly ash and regulate the disposal of fly ash discharged from coal or lignite based thermal power plants had issued the aforesaid notification.
(iv) For the present purposes, clause 2 of the aforesaid notification dated 14th of September, 1999 relating to utilization of ash by thermal power plant is being reproduced hereinafter, for ready reference:-
(1) Every coal or lignite based thermal power plant shall make available ash, for at least ten years from the date of publication of this notification, without any payment or any other consideration, for the purpose of manufacturing ash-based products such as cement, concrete blocks, bricks, panels or any other material or for construction of roads, embankments, dams dykes or for any other construction activity.
(2) Every coal or lignite based thermal power plant commissioned subject to environmental clearance conditions stipulating the submission of an action plan for full utilisation of fly ash shall, within a period of nine years from the publication of this notification, phase out the dumping and disposal of fly ash on land in accordance with the plant. Such an action plan shall provide for thirty per cent of the fly ash utilisation, within three years from the publication of this notification with further increase in utilisation by at least ten per cent points every year progressively for the next six years to enable utilisation of the entire fly ash generated in the power plant at least by the end of ninth year. Progress in this regard shall be reviewed after five years.
(v) It is in this backdrop that the respondent which is managing the operations of the State sector thermal power station and is responsible for generation of thermal power as a result of its production, fly ash was being generated, whereas in terms of the aforesaid notification of 14th of September, 1999, the respondent was required to create appropriate model for disposal of fly ash. On the other hand, the petitioner who is a Company engaged in production of cement wherein the aforesaid fly ash is used as a natural raw material accordingly had set up its cement plant at Sikandrabad.
(vi) Thus, the predecessor of the petitioner i.e. JAL and the respondent had entered in an agreement dated 16th of February, 2007.
It is this agreement dated 06.02.2007 which contain the arbitration clause which reads as under:-
"If any dispute or difference arises between two parties, the same shall be conducted in accordance with Arbitration and Conciliation Act, 1996. All disputes of any nature shall be subject and the jurisdiction of Allahabad High Court, Bench of Lucknow."
The aforesaid agreement, a copy of which has been annexed with the Annexure no.2 with the petition, contained certain recitals which are relevant for the effective disposal of the present petition and are being quoted hereinafter:-
a. UPRVUNL is desirous to dispose off dry fly ash from their proposed 2 x 250 MW Harduaganj Thermal Power Station Kasimpur, Aligarh [referred as HTPS] in the state of U.P. which will in the process of electricity generation will produce huge quantity of fly ash which need to be disposed off in an effective manner so as to prevent environmental hazards according to quidelines issued by MOEF, Government of India vide gazette notification 763 [Aa] dated 14.09.1999.
b. UPRVUNL intends to commission the 2 x 250 MW power plant extention by August 2009 and fly ash availability thereafter 'JAL' intends to commission Grinding Unit at Sikandrabad U.P. by October 2008.
c. 'JAL' intends to use fly ash for cement manufacturing of its proposed cement manufacturing units of Sikandfabad U.P. for manufacture of fly ash based Portland Pozzollona Cemen [PPC].
d. 'JAL' in pursuance of the proposal submitted by them have agreed to use entire quantity (approximate 4.5 lac tones per annum. (MIPA) or 1350 tones per day (MTPO) of 1 x 250 MW [Unit no.9].
e. Both the parties viz UPRVUNL and 'JAL are desirous of recording the terms and conditions which have been agreed by both the parties.
various discussions were held between the representatives of UPRVUNL and JAL which have culminated in certain agreed terms and conditions and a MOU dated 29.09.2006 was signed relating to utilization of dry fly ash of 2 x 250 MW (Unit No.9) Harduaganj Thermal Power Project Kasimpur, Aligarh of UPRVUNL by JAL for their Cement Plants as detailed above.
NOW THEREFORE forth and in consideration of the discussion, mutual convenient set forth herein and MOU dated 29.09.2006 and proposal submitted dated 6th Jan.,2007 by JAL both the parties enter into an agreement as follows:-
1. That JAL shall install, maintain and operate the Dry Fly Ash Extraction System (DFAES) starting from ESP hopper's bottom to Silos and its loading system into close bulkers for 1 x 250 MW (Unit no.9) HTPS of UPRVUNL at its own cost as per the layout plant to be submitted by JAL and approved by Chief Engineer, Environment & Safety UPRVUNL.
2. UPRVUNL shall allow to collect the entire quantity (Approximate 45 lacs MTPA of Dry Fly Ash generated from ESP of Unit No.9 on as is where is basis from the date of installation and operation of the Dry Fly Ash Extraction System, free of cost. JAL shall make arrangements for carrying the same to their premises of their own cost.
3. UPRVUNL shall allow to collect the Dry Fly Ash, Free of Cost for a period of 25 years or life time of the plant of either of the said parties whichever is earlier.
4. As the DFAES is the integral part of Thermal Power Station, hence electricity and wather used for collection of Dry Fly Ash from ESP hoppers and conveying it to the silos and loading pipes shall be treated as the auxiliary consumption of Thermal Power Station.
5. JAL shall obtain NOC/permissioin from the other related department if any as required, however, assistance if any shall be provided by UPRVUNL.
6. If any dispute or difference arises between the two parties, the same shall be conducted in accordance with the Arbitration & Conciliation Act, 1996. All disputes of any nature shall be subject and the jurisdiction of Allahabad High Court Bench of Lucknow.
7. UPRVUNL shall transfer the right to use and work at HTPS land for construction activities of DFAES System. Power and Water required for construction shall be charged as per prevailing tariff.
8. UPRVUNL shall help in securing the 9 MVA/132 KV power supply from UPPCL. However, it will no have any contractual liability on the UPRVUNL.
9. UPRVUNL will not be liable legally or financially to pay any kind of damages or compensation to JAL in the event of not being able to supply dry fly ash during the period of the agreement for reasons beyond its control and decision regarding shut down and maintenance of electricity generating units will be solely of UPRVUNL and will be on "JAL".
10. 'JAL' shall observe all the safety rules & regulations as per Indian Factory Acts and Rules and UP Factor Act and Rules and will arrange labour insurance for their employees in case of any accident or mis-happening during installation, operation & maintenance of DFAES. JAL shall be responsible for payment of compensation to their employees as per Workmen's Compensation Act and any other rules & regulations as prevalent at that point of time.
11. Any change in GOI guidelines regarding cost of fly ash shall be binding on both the parties.
Under the head general conditions as mentioned in the aforesaid agreement, it contained certain more clauses which are being mentioned hereinafter:-
5. 'JAL' will actually use the lifted quantity of fly ash for manufacturing of PPC/RMC plants only and trading of fly ash will not be permitted.
6. 'JAL' will develop greenbelt on the 5 hectare land of UPRVUNL by planting the 5000 nos of non exotic India species plant such as Neem, Peepal, Kadam, Jangli Jalebi, Shisham, Imli etc., however the cost of the plant and their maintenance shall be borne by the 'JAL'. The plants shall remain the properties of UPRVUNL.
9. All cost necessary for modification of the system for taking fly ash from DFAES of HTPS, if any required shall be borne by the JAL, subject to prior approval from Chief Engineer, Environment and Safety, unit UPRVUNL Lucknow.
10. All the operation and maintenance instructions for DFAES given by Chief Engineer, HTPS or his appointed nominee shall be binding on JAL.
11. In case JAL is not able to lift the fly ash for a continuous period of four weeks because of their own inability and no genuine reasons agreed by Chief Engineer (E & A). Chief Enginerr (E & S) UPRVUNL may impose a penalty as deemed fit to a maximum of Rs.10,000/- (Rupees Ten Thousand only) per day.
12. UPRVUNL shall not be responsible for supply of any specific quality/grade of fly ash to 'JAL'. The chemical composition and physical properties of fly ash depends on grades of coal and varying firing conditions in the boiler.
15. All vehicles of 'JAL', which will carry fly ash shall be liable for checking by HTPS for ensuring of safety regulations enforced in the area from time to time. The JAL shall indemnify UPRVUNL's properly by their workmen or any member of their establishment. The JAL must ensure that the fly ash must be transported through closed vessel carriers.
16.UPRVUNL reserves the right to terminate the contract earlier and forfeit the security deposit in case of Chief Engineer [E & S] is satisfied without prejudice to any other proceedings that may be taken up by UPRVUNL that the progress of installation of Dry Fly Ash Extraction System is not up to the mark and may delay the implementation of the 2 x 250 MW Harduaganj Extension Project as a whole such termination will not entitle 'JAL' to any claim for compensation of any kind whatsoever.
17. UPRVUNL reserves the right to terminate the contract earlier for non-fulfillment of any of the conditions as stipulated in the contract without prejudice to any other proceedings that may be taken up by UPRVUNL. Such termination will not entitle "JAL to any claim for compensation of any kind whatsoever. This clause shall not be effective for day to day working minor disputes at site.
20. 'JAL' shall indemnify and save harm to the property of HTPS against all actions, claims suits, demand, costs or expenses arising in connection with injuries suffered during the Agreement period by persons employed by the JAL or his sub-contractor on the works whether under the General Law or under the Workmen's Compensation Act 1923 or any other statute in force during the currency of the agreement.
22. Liability for damages to works or plants:
JAL shall during the currency of Agreement, property protect the work/plant and shall take every reasonable, proper, timely and useful precaution against the accident or injury to the same from any cause and shall remain answerable and liable for all accidents or injuries there to which until the same be or deemed to be or be occasioned by the acts or commissions of or their contractor or their workmen or their sub-contractors and all losses and damages JAL to the work/plant arising from such accidents or injuries as aforesaid shall be made good in the most complete and substantial manner by and at the cost of JAL and to the reasonable satisfaction of the Chief Engineer HTPS or any other persons designated by him.
The aforesaid agreement is stamped with a duty of rupees one hundred and it has been acted upon between the parties. It will be relevant to point out that as far as the parties are concerned, there is no dispute regarding the factum of signing and entering into the aforesaid agreement dated 16th of February, 2007. It is also not disputed that the parties acted upon the same and the terms and conditions contained in the aforesaid agreement was followed by the parties, until the controversy erupted.
The contents and recital of the agreements in between the parties in the two petitions are identical. The only difference is that in the Arbitration Application No.44 of 2019, relates to the thermal power plant 1x250 Unit 9 MW Harduganj, whereas the Arbitration Application No.45 of 2019 relates to 2x250 Unit 8 MW Harduganj. The parties are the same and the same controversy is in both the petitions hence they were consolidated and are being disposed of by this common judgment. However, for the sake of convenience the facts relating the Arbitration Case No.44 of 2019 has been noticed by this Court.
It would be seen from the perusal of the agreement entered between the parties that the petitioner's Company was required to lift the fly ash from the thermal power station at Harduganj which was to be used by the petitioner as raw material for its cement plant at Sikandrabad.
It was specifically provided in the agreement that the respondent shall allow the petitioner to collect the entire quantity of dry fly ash generated from its power plant on 'As Is Where Is Basis' from the date of installation and operation of the dry fly ash extraction system, free of cost. JAL "the predecessor in the interest of the petitioner's Company" was required to make arrangement for carrying the same to their premises at their own cost.
In furtherance of the aforesaid agreement dated 16th of February 2007, the respondent got the permission from the Ministry of Environment and Forest for setting up its thermal power plant at Harduganj, Kasimpur and Aligarh. The respondent commissioned its Unit 9 and the petitioners have been lifting the fly ash generated from the said Unit 9 with the effect from May 2013.
On 3rd of November, 2009, the Ministry of Environment and Forest issued another notification, a copy of which has been annexed as Annexure no.3 to the petition.
By the instant notification, the earlier notification issued on 14th of September, 1999 was amended and as a result of the aforesaid notification the thermal power station which were earlier required to provide the fly ash free of costs, now, enabled the power plant to charge for the fly ash upto 80% and 20% of the fly ash was to be made available free of charge. The relevant portion of the notification of 2009 reads as under:-
"(1) All coal or lignite based thermal power stations would be free to sell fly ash to the use agencies subject to the following conditions, namely:-
(i) the pond ash should be made available free of any charge on "as is where is basis" to manufacturers of bricks, blocks or tiles including clay fly ash product manufacturing unit(s), farmers, the Central and the State road construction agency Public Works Department, and to agencies engaged in back filling or stowing of mines.
(ii) at least 20% of dry ESP fly ash shall be made available free of charge to unit manufacturing fly ash or clay-fly ash bricks, blocks and tiles on a priority basis over other users and if the demand from such agencies falls short of 20% of quantity, the balance quantity can be sold or disposed of by the power station as may be possible;
Provided that the fly ash obtained from the thermal power station should be utilized on for the purpose for which it was obtained from the thermal power station or plant failing which no fly ash shall be made available to the defaulting users."
Be that as it may, despite the aforesaid notification of 2009, the parties to the instant agreement continued to follow the earlier notification of 1999.
In terms of the agreement, the petitioner had invested large sum of money for the purposes of installation of Dry Fly Ash Extraction System "hereinafter referred to as DFAES" at it own cost. The aforesaid investment included the monetary involvement towards silos, compressor, vacuum pumps, panel etc. In terms of the agreement, it was the petitioner who had to bear the maintenance and operational charges of the DFAES.
It is only on the 4th of May, 2011 the respondent wrote a letter to JAL (predecessor in interest of the petitioner) regarding negotiating the rate for lifting of fly ash from Harduaganj thermal power station. The same was replied by the predecessor of the petitioner stating that the agreement between the parties required the respondent to provide the fly ash free of cost and it was not fair for the respondent to charge for the same. This negotiations continued for quite sometime and it was also informed that in the audit conducted of the respondent power plant, it revealed that the respondent were charging for the fly ash from others then why the charge should not be levied from the petitioner. It was in light of the objection so raised by the audit team that the respondent initiated the negotiation regarding the price of lifting of the fly ash.
Number of meetings took place between JAL and the respondent, however, no conclusive decision could be arrived at and as late as on 31st of January, 2018 i.e. by this time the present petitioner had acquired the assets of its predecessor and made an offer by means of its letter dated 31st January, 2018 a price of rupees fifty per metric tonne for lifting fly ash from Harduaganj Thermal Power Plant. This offer made by the petitioner was not acceptable to the respondent. In the meantime, the respondent issued a tender seeking bids from third parties for lifting of dry ash. It is this publication of tender which trigerred the dispute and the petitioner reacting to the same sent a letter dated 15th of May, 2019 objecting to the tender notice published on 29th of April, 2019.
The respondent replied to the said letter vide its reply dated 24th of May, 2019 and invited the petitioner to a meeting which were scheduled to be held on 29th of May, 2019 between the representative of the petitioner and the concerned officers of the UPRVUNL. The said meeting did not result in any fruitful outcome and thereafter the petitioner instituted a petition before the Commercial Court at Lucknow invoking Section 9 of the Arbitration & Conciliation Act, 1996. The said petition was registered as Arbitration Case No.619 of 2019 which, after hearing the parties, was dismissed by the Commercial Court at Lucknow by means of its judgment/order dated 10th of July, 2019. The petitioner also preferred an appeal before the High Court. However, the same was also dismissed on 14th of June, 2019, a copy of which has been annexed as Annexure No.22 with the petition.
The petitioner by means of its notice dated 04.06.2019, a copy of which has been annexed as Annexure No.23, invoked the arbitration clause and suggested the name of retired Judge of this Court to act as the sole arbitrator. The aforesaid notice was duly served on the respondents. However, the respondents did not take any active participation in the constitution of the arbitral tribunal, hence the aforesaid petition.
The respondents filed their counter-affidavit seeking rejection of the aforesaid petition. At the very outset, it may be stated that the scope of this Court while entertaining a petition under Section 11(6) of the Arbitration & Conciliation Act is limited to the extent that this Court is required only to look into the fact whether the agreement entered between the parties contained an arbitration clause or not. It is also required to look into the fact whether the proper court having jurisdiction has been approached for the aforesaid purpose and primarily all contentious issues have to be left to be decided by the Arbitrator.
However, in so far as this aspect of the matter is concerned, the respondent does not dispute the arbitration clause nor the signing of the agreement dated 16th of February, 2007. Though the respondent while filing its counter-affidavit have raised objection on the merit. However, suffice to state that this Court is not inclined to go into the merits of the dispute and confines itself only to the fact that the agreement dated 16th of February, 2007 is not disputed by the respondent and so also the arbitration clause.
Having said that, it would be relevant to mention that the respondent has raised a primarily objection regarding the maintainability of the above petition. The ground so raised by the respondent is squarely based on the decision of the Apex Court in the case of Garware Wall Ropes Ltd. Vs. Coastal Marine Constructions & Engineering Ltd., reported in AIR 2019 SC page 2053.
On the strength of the aforesaid case, the respondent has raised a plea that unless and until the agreement which contain the arbitration clause is duly stamped as required in law till then the agreement becomes unenforceable and the court in terms of Section 11(6) of the Arbitration & Conciliation Act is denuded of its jurisdiction to appoint an Arbitrator.
Thus, the gist of the preliminary objection raised by the respondent is that the agreement dated 16th of February, 2007 is under stamped and as such unless and until the same is impounded and properly stamped as required in law, no Arbitrator can be appointed.
It is in this backdrop that the question before this Court to be considered and decided is whether the agreement dated 16th of February, 2007 is appropriately stamped or not. In case if it is properly stamped, then the Court possesses the jurisdiction to appoint an Arbitrator and in case if the answer is in the negative, then the agreement requires to be impounded and unless appropriately stamped as per provisions contained in the Stamp Act, the Court will not appoint an Arbitrator.
It is in light of the aforesaid question so formulated that the Court has heard the learned Senior Counsel appearing on the two sides at length.
Shri Jaideep Narain Mathur learned counsel for the petitioner has plainly, but vehemently, submitted that as far as the agreement dated 16th of February, 2007 is concerned, the said instrument is governed by Article 5 (c) of Schedule 1-B of the Indian Stamp Act as duly amended and applicable in the State of Uttar Pradesh. It is the submission of Shri Mathur that the aforesaid agreement entered between the parties is appropriately stamped; inasmuch as a stamp duty of rupees one hundred is provided for an instrument which is mentioned in Article 5 entry (c) contained in Schedule 1-B. To elaborate his submission Shri Mathur has taken the Court extensively through the recital of the notification dated 14th of September, 1999 and the agreement dated 16th of February, 2007. On the strength of the aforesaid, it has been argued by Shri Mathur that the agreement in question only relates to lifting of fly ash and that too free of cost. It has been submitted that though the petitioner was required to install operate and maintain the DFAES at the costs of the petitioner. In the entire agreement, there is not a single word or terminology which is used to indicate that the aforesaid DFAES has been either sold or transferred to the respondent.
Shri Mathur has also emphasized that as far as the lifting of the dry fly ash is concerned, the same was to be done by the petitioner at his own costs by providing its own vehicle and since the aforesaid fly ash was generated from the power plant of the respondent and in terms of notification dated 14th of September, 1999 and it was for a period of 25 years, the dry fly ash in terms of the agreement dated 16th of February, 2007 was required to be given/provided to the petitioner free of costs. Thus, for the entire transaction as mentioned and depicted in the agreement of February 2007, there is neither any transfer nor any consideration as such it cannot be treated either as a conveyance nor it can be said that it relates to any transfer of movable or immovable property, accordingly the agreement falls within Article 5(c) of Schedule 1-B of the Stamp Act as amended in the State of U.P., accordingly there is no deficiency of any stamp duty and there is no impediment for the court to appoint an Arbitrator.
Per contra, Shri Sandeep Dixit, learned Senior Advocate appearing for the respondent has also meticulously taken the Court to the terms of the agreement as well as the notification dated 14th of September, 1999 and 3rd of November, 2009 and has submitted that the entire transaction as indicated in the said agreement is squarely covered by Article 23 relating to a conveyance of Schedule 1-B of the Stamp Act and has submitted that apparently in terms of the aforesaid Article 23, the agreement in between the parties is under stamped accordingly the agreement requires to be impounded and only when the stamp duty is properly paid alongwith the penalty, can the Court appoint an Arbitrator.
Shri Dixit in order to buttress his submission has vehemently urged that in terms of the agreement which clearly provides that the DFAES which is to be installed, operated and maintained by the petitioner on the premises belonging to the respondent is embedded in earth and as such would be treated as an immovable property. It has also been submitted that since according to the petitioner, the value of the said DFAES is in several lacs accordingly that should be taken minimum as the value and appropriate stamp duty be paid.
Shri Dixit has also submitted that the agreement provides that the said DFAES shall form an integral part of the power station of the respondent, thus it implies that the DFAES has been transferred to the respondent, accordingly it is squarely covered under Article 23 of Schedule 1-B of the Uttar Pradesh Stamp Act.
Another limb of argument of Shri Dixit is, that the petitioner was required to develop a green belt on an area of about five hectares of land belonging to the respondent by planting five thousand, non-exotic Indian species plants such as Neem, Peepal, Kadam, Jangaljalebi, Shisham, Imli etc. on the costs as well as its maintenance which was to be borne by the petitioner whereas the plants shall remain the property of the respondent. Thus in view thereof, Shri Dixit has submitted that the agreement also contemplates transfer of five thousand trees which are embedded in and as such also amounts to a transfer of immovable property attracting Article 23 of Schedule 1-B of the Stamp Act applicable in the State of U.P. Since the stamp duty applicable on conveyance is on ad- volerum basis directly connected with the valuation hence the value of the aforesaid agreement runs in several lacs and in any case stamp duty of rupees one hundred on the agreement is grossly deficient and thus in light of the decision rendered by the Apex Court in the case of SMS Tea Estates (P) Ltd. Vs. Chandmari Tea Company (P) Ltd. reported in 2011 (14) SCC page 66 and Garware Wall Ropes Ltd. (supra), the request of the petitioner to appoint the Arbitrator, cannot be acceded unless the stamp duty is made good.
In order to appreciate the submission of the respective parties, it will be essential to note the ratio of the decision rendered by the Apex Court in the case of Garware Wall Ropes Ltd. (supra) and SMS Tea Estates (P) Ltd. (supra).
The Apex Court in the case of Garware Wall Ropes Ltd. (supra) was confronted with the question as to what is the effect of an arbitration clause contained in a contract which requires to be stamped. The Apex Court further noticed that in the case of SMS Tea Estates (P) Ltd. (supra) the Court had held that when an arbitration clause is contained in an unstamped agreement, the provisions of the Indian Stamp Act requires the Judge hearing the petition under Section 11 to impound the agreement and ensure that the stamp duty and penalty (if any) are paid before proceeding further with the petition under Section 11.
The Apex Court also noticed that the legislative amendment brought in the Arbitration & Conciliation Act, 1996 by the Arbitration & Conciliation "Amendment" Act, 2015 whereby Section 11 (6-A) has been introduced and its effect on such understamped or unstamped agreement containing Arbitration Clause. In order to under stand the controversy before the Apex Court, it will be worthwhile to reproduce Section 11 (6-A) as amended by 2015 Act and which reads as under:-
[(6A) The supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.] Now the question arises as to the effect of the decision of SMS Tea Estates (P) Ltd. (supra) on dispute which arises post the amendment of 2015; inasmuch as by the aforesaid Section 11 (6A), the High Court while considering an application under sub-sections (4)(5) or (6) shall confine itself only to the examination of the existence of an arbitration agreement, notwithstanding any judgment, decree or order of any court. Thus, whether in the changed circumstances the dictum of SMS Tea Estates (P) Ltd. (supra) would continue to govern the field or post 2015 even if an agreement is under stamped, the court while dealing with an application under Section 11(6) will still confine itself only to the examination of the existence of an arbitration agreement.
It is in this backdrop that the Apex Court considering the various provisions of both the Arbitration & Conciliation Act as well as the Stamp Act as applicable to the State of Maharashtra including the provisions of the contract Act and the earlier binding decision of the Apex Court and thereafter held as under and the relevant paragraphs reads as under:-
16. ... A close look at Section 11(6A) would show that when the Supreme Court or the High Court considers an application under Section 11(4) to 11(6), and comes across an arbitration clause in an agreement or conveyance which is unstamped, it is enjoined by the provisions of the Indian Stamp Act to first impound the agreement or conveyance and see that stamp duty and penalty (if any) is paid before the agreement, as a whole, can be acted upon. It is important to remember that the Indian Stamp Act applies to the agreement or conveyance as a whole. Therefore, it is not possible to bifurcate the arbitration clause contained in such agreement or conveyance so as to give it an independent existence, as has been contended for by the respondent. The independent existence that could be given for certain limited purposes, on a harmonious reading of the Registration Act, 1908 and the 1996 Act has been referred to by Raveendran, J. in SMS Tea Estates (supra) when it comes to an unregistered agreement or conveyance. However, the Indian Stamp Act, containing no such provision as is contained in Section 49 of the Registration Act, 1908, has been held by the said judgment to apply to the agreement or conveyance as a whole, which would include the arbitration clause contained therein. It is clear, therefore, that the introduction of Section 11(6A) does not, in any manner, deal with or get over the basis of the judgment in SMS Tea Estates (supra), which continues to apply even after the amendment of Section 11(6A).
17. Looked at from a slightly different angle, an arbitration agreement which is contained in an agreement or conveyance is dealt with in Section 7(2) of the 1996 Act. We are concerned with the first part of Section 7(2) on the facts of the present case, and therefore, the arbitration clause that is contained in the sub-contract in question is the subject matter of the present appeal. It is significant that an arbitration agreement may be in the form of an arbitration clause "in a contract".
18. Sections 2(a), 2(b), 2(g) and 2(h) of the Indian Contract Act, 1872 ["Contract Act"] read as under:
"2. Interpretation clause.--In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context:--
(a) When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal;
(b) When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise;
xxx xxx xxx
(g) An agreement not enforceable by law is said to be void;
(h) An agreement enforceable by law is a contract;
xxx xxx xxx"
19. When an arbitration clause is contained "in a contract", it is significant that the agreement only becomes a contract if it is enforceable by law. We have seen how, under the Indian Stamp Act, an agreement does not become a contract, namely, that it is not enforceable in law, unless it is duly stamped. Therefore, even a plain reading of Section 11(6A), when read with Section 7(2) of the 1996 Act and Section 2(h) of the Contract Act, would make it clear that an arbitration clause in an agreement would not exist when it is not enforceable by law. This is also an indicator that SMS Tea Estates (supra) has, in no manner, been touched by the amendment of Section 11(6A).
27. ... One reasonable way of harmonising the provisions contained in Sections 33 and 34 of the Maharashtra Stamp Act, which is a general statute insofar as it relates to safeguarding revenue, and Section 11(13) of the 1996 Act, which applies specifically to speedy resolution of disputes by appointment of an arbitrator expeditiously, is by declaring that while proceeding with the Section 11 application, the High Court must impound the instrument which has not borne stamp duty and hand it over to the authority under the Maharashtra Stamp Act, who will then decide issues qua payment of stamp duty and penalty (if any) as expeditiously as possible, and preferably within a period of 45 days from the date on which the authority receives the instrument. As soon as stamp duty and penalty (if any) are paid on the instrument, any of the parties can bring the instrument to the notice of the High Court, which will then proceed to expeditiously hear and dispose of the Section 11 application. This will also ensure that once a Section 11 application is allowed and an arbitrator is appointed, the arbitrator can then proceed to decide the dispute within the time frame provided by Section 29A of the 1996 Act.
In light of the pronouncement of the Apex Court in the case of Garware Wall Ropes Ltd. (supra), it cannot be doubted that while dealing with an application under Section 11(6) even post 2015 amendment, this Court is required to prima facie consider whether the agreement, the subject matter of these petitions, dated 16th of February 2007 is properly stamped or not.
In the quest to ascertain whether the aforesaid agreement is properly stamped or not, it will be apposite for this Court to notice the settled legal principles which are applicable on the authority including a court while determining the manner in which the Stamp Act and the instrument in question is to be examined.
It will be gainful to state, at the very out set, that the Stamp Act is a fiscal statute which has been enacted with an object to secure revenue for the State on certain classes of instrument as mentioned therein. It must be equally remembered that the Act does not arm a litigant with a weapon of technicality to meet the case of his opponent. The stringent provision of the Act are conceived only for the purposes of securing interest of the revenue.
Since the Stamp Act is a fiscal legislation accordingly its provisions have to be strictly construed and it does not permit liberal interpretation as is applicable as far as remedial statutes are concerned. It is equally well settled that while interpreting a fiscal law there is no scope for equity or judiciousness if the letter of law is clear and unambiguous.
It is in the backdrop of the above noted principles that the agreement dated 16th of February, 2007 is to be examined by this Court for the purposes of ascertaining the applicability of stamp duty. For ready reference, Article 5 as contained in Schedule 1 B of the Stamp Act as amended an applicable in the State of U.P. is being reproduced hereinafter for ready reference:-
. Agreement or memorandum of an agreement
(a) if relating to the sale of a bill of exchange [Ten Rupees]
(b) if relating to the sale of a Government security or share in an incorporated company or other body corporate Subject to a maximum of 46[One thousand rupees; ten rupees for every Rs. 20,000"] or part thereof the value of the security or share.
[(b-1) if relating to the sale of an immovable property where possession is not admitted to have been delivered nor is agreed to be delivered without executing the conveyance.
The same duty as on conveyance [no. 23 clause (a)] on one half of the amount of consideration as set forth in the agreement.
Provided that when conveyance in pursuance of such agreement is executed, the duty paid under this clause in excess of the duty payable under clause(c) shall be adjusted towards the total duty payable on the conveyance.
[(b-2)] If relating to the construction of a building on a land by a person other than the owner or lessee of such land and having a stipulation that after construction, such building shall be held jointly or severally by that other person and the owner or the lessee, as the case may be, of such land, or that it shall be sold jointly or severally by them or that a part of it shall be held jointly or severally by them and the remaining part thereof shall be sold jointly or severally by them.
The same duty as a conveyance [(No. 23 Clause(a)] for a consideration equal to the amount or value of the land.
(1)Explanations For the purpose of this clause the expression "land" shall include things attached to the earth, or permanently fastened to anything attached to the earth.
(2)the expression "lessee" shall mean a holder of a lease in perpetuity or for a period of thirty years or more.
(3)the expression "building" shall mean a building having more than one flat or office accommodation or both and the expression "flat" shall have the meaning assigned to it in the Uttar Pradesh Ownership of Flats Act, 1975.]
(c) if not otherwise provided for "[One hundred rupees].
Exemption Agreement or memorandum of agreement--
(a) [***]
(b) made in the form of tenders to the Central Government for, or relating to, any loan.
Agreement to lease- See "Lease" (No. 35) As the submission of the learned Senior Counsel for the respondent hinges on the premise that the agreement amounts to a conveyance which has been defined under Section 2 (10) of the Stamp Act and the duty is indicated in Article 23 of Schedule 1 B. Thus, Section 2(10) of the Stamp Act as well as Article 23 are being reproduced hereinafter for ready reference:-
"Section 2(10) "Conveyance" includes a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos and which is not otherwise specifically provided for by [by Schedule I, Schedule I-A or Schedule 1-B], [as the case may be];
23. Conveyance [as defined by Section 2 (10)] not being a Transfer charged or exempted under No.62-
(a) if relating to immovable property where the amount or value of the consideration of such conveyance as set forth therein or the market value of the immovable property which is the subject of such conveyance, whichever is greater does not exceed Rs.500.
Where it exceeds Rs.500 but does not exceed Rs.1,000.
and for every Rs.1,000 or part thereof in excess of Rs.1,000.
(b) if relating to movable property where the amount or value of the consideration of such conveyance as set forth therein does not exceed Rs.1,000.
and for every Rs.1,000 or part thereof in excess of Rs.1,000.
Exemption Assignment of copyright in musical, works by resident of, or first published in India.
Explanation For the purposes of this Article, in the case of an agreement to sell an immovable property, where possession is delivered before the execution or at the time of execution, or is agree to be delivered without executing the conveyance, the agreement shall be deemed to be a conveyance and stamp duty thereon shall be payable accordingly:
Provided that the provisions of Section 47-A shall mutatis mutandis apply to such agreement:
Provided further that when conveyance in pursuance of such agreement is executed, the stamp duty paid on the agreement shall be adjusted towards the total duty payable on the conveyance] Sixty rupees.
One hundred and twenty-five rupees.
One hundred and twenty-five rupees:
Provided that the duty payable shall be rounded off to the next multiple of ten rupees.
Twenty rupees.
Twenty rupees.
Section 2(10) of the Stamp Act defines a conveyance including a conveyance on sale and every instrument by which property whether movable or immovable property is transferred inter vivos and which is not otherwise specifically provided. An explanation is also appended to the aforesaid Section which for the present case is not relevant.
Upon reading of the terminology which has been used to define conveyance as well as on the reading of Article 23 contained in Schedule 1-B of the Indian Stamp Act. What needs to be established before an instrument can be covered as a conveyance covered by Article 23 is that such an instrument must affect a transfer which may relate to movable or immovable property. The important word in Section 2(10) as well as in Article 23 is the word 'transfer'.
The aforesaid word 'conveyance' and 'transfer' as defined in the Black's Law Dictionary (Eighth Edition) is marked as "(a)" hereinafter and in Osborn's Law Dictionary (Seventh Edition) is marked as "(b)" hereinafter for perusal:-
(a) "Conveyance 1. The voluntary transfer of a right or of property.
Absolute conveyance:- A conveyance in which a right or property is transferred to another free of conditions or qualifications (i.e., not as a security). CF conditional conveyance.
Conditional conveyance:- A conveyance that is based on the happening of an event, usu. payment for the property; a mortgage. CF. absolute conveyance, derivative conveyance. See secondary conveyance."
"Transfer 1. To convey or remove from one place or one person to another; to pass or hand over from one to another, esp. to change over the possession or control of. 2. To sell or give."
(b) "Conveyance:- A mode of transfer of property; the deed or instrument other than a will whereby an interest in property is assured by one person to another. It includes a mortgage, charge, lease, assent, vesting declaration, vesting instrument, disclaimer, release and every other assurance of property, except a will."
"Transfer:- The passage of a right from one person to another (i) by virtue of an act done by the transferor with that intention, as in the case of a conveyance or assignment by way of sale or gift, etc.; or (ii) by operation of law, as in the case of forfeiture, bankruptcy, descent, or intestacy. A transfer may be absolute or conditional, by way of security, etc."
From the above, it would indicate that transfer in so far as any movable or immovable property is concerned, relates to transfer of rights from one party to another. It necessarily includes consideration for such a transfer whereas Article 5 relates to an agreement or memorandum of an agreement which have been mentioned in the aforesaid Article including of sale of both movable and immovable property and the residuary Article 5(c) states that if an agreement which is not otherwise provided for which stamp duty of rupees one hundred has been prescribed.
The agreement dated 16th of February, 2007 clearly emphasis the intention between the parties to the effect that as far as the thermal power plant at Harduaganj is concerned, the same is in the undisputed ownership of the respondent. The cement plant undisputedly belongs to the petitioner.
The agreement has been necessitated on account of the notification dated 14th of September, 1999. In terms thereof, certain obligations have been conferred upon the parties that is to say that the petitioner was required to install, operate and maintain DFAES at his own cost. The respondent permitted the petitioner to lift the fly ash generated from its thermal power plant without consideration. The petitioner was required to plant five thousand trees on the land belonging to the respondent free of costs and maintain the said greenbelt.
However, the entire agreement is completely silent to the consequences regarding the status of DFAES at the end of the term of the agreement or its prior termination as the case may be. As far as the maintenance of greenbelt is concerned, it is clearly provided that the trees so planted by the petitioner at his costs shall always be treated as that of the respondent. Apparently the agreement in between the parties is to be construed in the way it intended to be and it is not permissible for the court to add or infer something and read something in the agreement which does not exist or is not provided for by the parties.
In the above backdrop where the agreement does not indicate any exchange of consideration nor it uses any terminology by which it can be inferred that the parties intended to transfer DFAES nor the agreement spells out the consequence and any contrary status regarding the aforesaid DFAES at the time of termination or expiry of the aforesaid agreement. Thus, it is difficult to stretch the language of the agreement to give a meaning and create a transaction which from the agreement in question was not intended by the parties themselves.
At this juncture, it will be gainful to ascertain that if the agreement falls short of a conveyance in the sense that it does not contemplate transfer of rights then what would be the nature of such an agreement, dated 16.02.2007.
In the aforesaid background it will be imperative to notice the definition of the word 'licence' as defined in the Indian Easements Act, 1882. Section 52 of the Indian Easements Act reads as under:-
"52. "License" defined- Where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a license."
From the perusal of the aforesaid definition, it would indicate that the license is a privilege given by the grantor to the grantee to do something on the premises of the grantor which otherwise without such permission would be unlawful.
In the instant case, it is not disputed that the land and the entire power plant subsisting thereon belongs to the respondent Power Corporation. It is in furtherance of the agreement entered between the parties dated 16.02.2007 that a privilege was conferred upon the petitioner to do an act on the premises belonging to the Power Corporation and without such permission the act of the petitioner would otherwise be unlawful. It would be seen that the agreement dated 16.02.2007 which takes note of the notification dated 14th of September, 1999 culminated in grant of permission to the petitioner to enter in the premises of the respondent to install, maintain and operate the DFAES at its own costs for the purposes of Extraction of Fly Ash. This agreement read simplicitor and in light of the clauses, terms and conditions which have been noted and reproduced herein above first, unambiguously prods this Court to take a view that the agreement dated 16.02.2007 was actually more akin to grant of a license and not so much of a conveyance.
It will also be relevant to mention that the payment of license fee though is not an essential condition for the subsistence of a license. As noted above, the notification dated 14th of September, 1999 clearly envisaged that there would be no consideration between the parties and in absence of any consideration and knowing-fully well that the consideration could not be charged and yet the respondent had permitted the petitioner to use its premises for the purposes of installation, maintenance and operating, at his own costs, the DFAES and that too agreed for a shelf life of 25 years for the agreement unless it was terminated earlier. In absence of any clause indicating that at the end of the aforesaid period of 25 years or in its termination the DFAES would stand transferred to the respondent, indicates the intention which also is manifested in the conduct of the parties that the respondent had merely granted a license to the petitioner for the purposes of Extraction of Fly Ash and the obligations were duly set forth in the agreement dated 16.02.2007.
Significantly the agreement dated 16.02.2007 does not in any manner create an interest in the immovable property or a right to possess the same since the terminology of the agreement does not indicate creation of any such right. Nor the agreement results or envisages the transfer of exclusive possession specially when the right conferred under the agreement was specific and was more of a privilege granted to the petitioner, alone.
At this juncture, it is the relevant to notice the distinction between a lease or a license. The idea is to extract the ingredients of the license and to juxtapose the same with a lease, which generally is a conveyance. This Court is conscious that in the Stamp Act a separate entry has been dedicated to a lease which is different from the conveyance but the fact remains that generally all leases are conveyances but all conveyances may not be a lease.
To, lucidly comprehend the nature of a license and how it has been understood in legal parlance this Court gainfully refers to the decision of the Court of Appeal in Errington Vs. Errington and Woods Lord Denning reported in 1952 (1) KB 290 in deciding the issue whether an agreement is a lease or licence referres to the decision given by Vaughan, C.J. in the seventeenth century in Thomas Vs. Sorrell reported in (1558-1774) All ER Rep 107. In the said judgment (Sorrell case), Vaughan, C.J. outlined certain features of lease which are as follows:-
"....'A dispensation or licence properly passeth no interest nor alters or transfers property in any thing, but only makes an action lawful, which without it had been unlawful.' The difference between a tenancy and a licence is, therefore, that, in a tenancy, an interest passes in the land, whereas, in a licence, it does not. In distinguishing between them, a crucial test has sometimes been supposed to be whether the occupier has exclusive possession or not. If he was let into exclusive possession, he was said to be a tenant, albeit only a tenant at will (see Doed Tomes Vs. Chamberlaine and Lynes Vs. Snaith), whereas if he had not exclusive possession he was only a licensee.
Relying on the aforesaid principle Lord Denning explained that the difference between a tenancy and a licence is that, in a tenancy, an interest passes in the land, whereas, in a licence, it does not. The exposition has further been elucidated and it is to be ascertained whether the occupier has exclusive possession or not. However, this test of exclusive possession has been held to be not a decisive test. In order to distinguish between the two the intentions of the parties, their conduct also have to be considered.
This aspect of the matter was considered by the Apex Court in the case of Associated Hotels of India Ltd. Vs. R. N. Kapoor reported in AIR 1959 SC page 1262 and it discussed the issue as under:-
21. this issue in very lucid terms. K. Subba Rao, J. who was in minority, discussed this question with a clarity which is often associated with His Lordship's opinion. The learned Judge referred to Section 105 of the Transfer of Property Act and then compared it with Section 52 of the Easements Act, 1882. After referring to those two sections and also after referring to the decision in Errington [(1952) 1 KB 290 : (1952) 1 All ER 149 (CA)] the learned Judge pointed out the distinction between the lease and the licence by expressly approving the tests laid down by Lord Denning and which may better be quoted: (Kapoor case [AIR 1959 SC 1262 : (1960) 1 SCR 368] , AIR pp. 1269-70, para 27) "27. ... The following propositions may, therefore, be taken as well established: (1) to ascertain whether a document creates a licence or lease, the substance of the document must be preferred to the form; (2) the real test is the intention of the parties--whether they intended to create a lease or a licence; (3) if the document creates an interest in the property, it is a lease; but, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence; and (4) if under the document a party gets exclusive possession of the property, ''prima facie', he is considered to be a tenant; but circumstances may be established which negative the intention to create a lease." (SCR pp. 384-85 of the Report)
23. Subsequently, in M.N. Clubwala v. Fida Hussain Saheb [AIR 1965 SC 610] the same propositions have been reiterated by Mudholkar, J. in para 12 of the Report after relying on the decisions in Errington [(1952) 1 KB 290 : (1952) 1 All ER 149 (CA)] and also Cobb [(1952) 1 All ER 1199 (CA)] and also the decision of this Court in Associated Hotels of India Ltd. [AIR 1959 SC 1262 : (1960) 1 SCR 368] The principle laid down by the learned Judge is as follows: (Clubwala case [AIR 1965 SC 610] , AIR p. 614, para 12) "12. ... We must, therefore, look at the surrounding circumstances. One of those circumstances is whether actual possession of the stalls can be said to have continued with the landlords or whether it had passed on to the stall holders. Even if it had passed to a person, his right to exclusive possession would not be conclusive evidence of the existence of a tenancy though that would be a consideration of first importance. That is what was held in Errington v. Errington and Woods [(1952) 1 KB 290 : (1952) 1 All ER 149 (CA)] and Cobb v. Lane [(1952) 1 All ER 1199 (CA)] ."
25. Reference in this connection can also be made to a later judgment of the Court of Appeal in Marchant v. Charters [(1977) 1 WLR 1181 : (1977) 3 All ER 918 (CA)] where again Lord Denning reiterated these principles in a slightly different form by holding that the true test is the nature and quality of the occupation and not always whether the person has exclusive possession or not. The true test in the language of the learned Judge is as follows: (WLR p. 1185 F-H) "... It does not depend on whether he or she has exclusive possession or not. It does not depend on whether the room is furnished or not. It does not depend on whether the occupation is permanent or temporary. It does not depend on the label which the parties put upon it. All these are factors which may influence the decision but none of them is conclusive. All the circumstances have to be worked out. Eventually the answer depends on the nature and quality of the occupancy. Was it intended that the occupier should have a stake in the room or did he have only permission for himself personally to occupy the room, whether under a contract or not? In which case he is a licensee."
27. In a rather recent judgment of this Court in C.M. Beena v. P.N. Ramachandra Rao [(2004) 3 SCC 595] the learned Judges relied on the ratio in Associated Hotels of India Ltd. [AIR 1959 SC 1262 : (1960) 1 SCR 368] in deciding the difference between lease and licence. In para 8 of the said judgment, learned Judges held that the difference between lease and the licence is to be determined by finding the real intention of the parties from a total reading of the document, if any, between the parties and also considering the surrounding circumstances. The learned Judges made it clear that use of terms "lease" or "licence", "lessor" or "licensor", "rent" or "licence fee" by themselves are not decisive. The conduct and intention of the parties before and after the creation of relationship is relevant to find out the intention. The learned Judges quoted from the treaties of Evans and Smith on The Laws of Landlord and Tenant and of Hill & Redman on Law of Landlord and Tenant in support of their proposition.
The Apex Court in the case of Qudrat Ullah Vs. Municipal Board, Bareilly reported in 1974 (1) SCC page 202 has held as under:-
".... If an interest in immovable property, entitling the transferors to enjoyment is created, it is a lease; if permission to use land without right to exclusive possession is alone granted, a license is the legal result."
Also in the case of Khalil Ahmed Bashir Ahmed Vs. Tufelhussein Samasbhai Sarangpurwala, reported in 1988 (1) SCC page 155. The Apex Court held as under:-
"To put it precisely... if permission to use land without exclusive possession was alone granted, a licence was the legal result. We are of the opinion that this was a licence."
The Constitution Bench of the Apex Court in the case of Ashoka Marketing Ltd. Vs. Punjab National Bank reported in 1990 (4) SCC page 406 as held as under:-
"It implies occupation by a person who has entered into occupation of any public premises without lawful authority as well as occupation which was permissive at the inception but has ceased to be so.... This part covers a case where a person had entered into occupation legally under valid authority but who continues in occupation after the authority under which he was put in occupation has expired or has been determined. The words 'whether by way of grant or any other mode of transfer' in this part of the definition are wide in amplitude...."
It is also to be noted from the perusal of the aforesaid mentioned decisions that a licensee does not acquire any interest in the property by virtue of grant of licence in his favour in relation to any immovable property. Once the authority to occupy and use the same is granted in his favour by way of licence, he continues to exercise that right so long the authority has not expired or has not been determined for any reason whatsoever, meaning thereby so long the period of licence has not expired or the same has not been determined on the ground permissible under the contract or law, occupation of the licensee is permissive by virtue of the grant of licence in his favour, though he does not acquire any right in the property and the property remains in possession and control of the grantor, but by virtue of such a grant, he acquires a right to remain in occupation so long the licence is not revoked or he is not evicted from its occupation either in accordance with law or otherwise.
This Court is also fortified in its view in light of the decision rendered by the Apex Court in the case of Corporation of Calicut Vs. K. Sreenivasan reported in 2002 (5) SCC page 361 and New Bus-Stand Shop Owners Association Vs. Corporation of Kozhikode and another reported in 2009 (10) SCC page 455.
In light of the principles as extracted from the various decisions of the Apex Court on the aforesaid point as noticed as, this Court has no hesitation to hold that the agreement dated 16.02.2007 merely conferred a right to the petitioner to enter on the land of the respondent for the purposes of installing, operating and maintaining the DFAES and this arrangement cannot be mirrored as a conveyance rather it replicates a license, within the meaning of Section 52 of the Indian Easement Act, 1882.
In the Stamp Act as applicable in the State of Uttar Pradesh, there is an entry for a licence which is contained in Articles 38 and 38-A appended in Schedule 1-B which mentiones the stamp duty of rupees thirty. However,the aforesaid articles 38 relate only to an agreement between a debtor and his creditor while Article 38-A relates to document evidencing the licence or renewal relating to arms and ammunition under the provisions of Arms Act 1959.
Thus it would be seem that Article 38 and 38-A does not in any manner govern the licence as envisaged under Section 52 of the Indian Evidence Act. Moreover, the agreement as mentioned in Article 5 (c) appended in Schedule 1-B clearly covers the field and as such in light of the aforesaid discussion, this Court finds it difficult to accept the contention of the learned counsel for the respondent to submit that the agreement dated 16.02.2007 amounts to a conveyance.
It will also be pertinent to notice that merely by giving a right to the petitioner to plant five thousand trees on the greenbelt also it does not amount to transfer; inasmuch as that was also a right granted by the respondent allowing the petitioner to plant the trees and as already noticed above the licence fee is not an essential condition.
Thus, for the said purpose as well, the rights conferred by the agreement were obligation which did not create any right either of transfer or interest in the land nor exclusive possession was granted to the petitioner nor by installing, maintaining and operating the DFAES the petitioner relinquished its right or created any interest in favour of the respondent, hence for all the aforesaid reasons as discussed above, this Court is of the firm opinion that the agreement dated 16.02.2007 is akin to a licence and is duly and appropriately stamped. In light of the discussions aforesaid, the objections raised by the respondent regarding the stamp duty are accordingly overruled.
Before parting with the issue, this Court deems necessary to state that any observation contained in this order may not be construed as an expression of any view on the merits of the controversy as this Court has considered the agreement only for the limited purpose of assessing the chargeability of stamp duty only.
Now the stage is set for this count to examine the petition for the purposes of appointment of an Arbitrator. Since the agreement is found by the Court to be duly stamped and the arbitration clause in between the parties is not disputed nor there is any dispute to the factum of the petitioner having invoked the arbitration clause by sending the notice dated 4th of June, 2019 by which it had proposed the name of an Arbitrator, which was not acceptable to the respondent, who did not respond.
However, from the counter-affidavit it is evident that disputes have occurred, arbitration clause subsists and the arbitration clause has been invoked by a notice duly served on the respondent and the Arbitral Tribunal comprising of a sole Arbitrator has not been constituted, thus all these facts confer this Court with ample jurisdiction to exercise its powers under Section 11(6) of the Arbitration & Conciliation Act, 1996, to appoint an Arbitrator.
In view of the above, it is a fit case for the Court to appoint an Arbitrator. This Court further finds that in both the petitions, the parties are also similar, the controversy and points of fact and law are the same hence it will be expedient to appoint the same Arbitrator in both the cases. Accordingly, this Court proposes the name of Justice D.B Bhosle (Retd. Chief Justice) of this Court 6, Bhagyoday behind Kandil Restaurant, Near State Exchange, Fort, Mumbai-400001, Mob. Nos.9494940122, 9833300555, Land Line Nos.22675858, 22675959 to act as an Arbitrator in both the cases. The learned counsel for the petitioner shall provide a complete set of the paper book, in both of cases, to the office to be forwarded to the proposed Arbitrator to seek his consent in terms of Section 12(1) of the Arbitration & Conciliation Act, 1996 to conduct the arbitration proceedings at Lucknow.
Put up this matter in the week commencing 23rd of March, 2020.
Order Date :- 17th Feb. 2020 ank