Madras High Court
M/S.True Sai Motors [P] Ltd vs Dr.Ajay Venkatesh on 9 November, 2018
Author: N. Sathish Kumar
Bench: N. Sathish Kumar
O.P.No.572 of 2020
THE HIGH COURT OF JUDICATURE AT MADRAS
Date 08.07.2021
CORAM:
THE HONOURABLE MR.JUSTICE N. SATHISH KUMAR
O.P.No.572 of 2020
M/s.True Sai Motors [P] Ltd.,
Representated by its Managing Director,
S.E.Palanivel,
Office at 390/73 A. Cherry Road,
Hasthampatty, Salem – 636 007. . . . Petitioner
Versus
1. Dr.Ajay Venkatesh
2. Dr.Lalitha Ajay Venkatesh . . . Respondents
PRAYER : Petition filed under Section 11 [6] of Arbitration and Conciliation
Act, 1996 to appoint a sole arbitrator to go into the dispute between the petitioner
and the respondent in respect of Lease Agreement dated 9.11.2018.
For petitioner : Mr.M.Sriram
For respondents : Mr.A.V.Arun
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O.P.No.572 of 2020
ORDER
This Original petition has been filed for appointment of an arbitrator to resolve the dispute are arose between the parties in respect of a lease agreement dated 19.11.2018.
2. It is the contention of the petitioner that the contract is basically in the form of a lease deed wherein the parties have agreed to put up a construction and thereafter, the lease would commence from a certain point of time. However, before construction, the lease deed got cancelled due to dispute arise between lessor and lessee. Hence, seeks appointment of an arbitrator in pursuant to the so called lease deed.
3. In the counter, the main objection by the respondent is that he lease deed cannot be looked into since it is not registered and stamped and the arbitration clause will be commenced only after blossoming of relationship into lessor and lessee.
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4. Heard the learned counsel for the petitioner and the learned counsel for the respondents.
5. The main contention of the learned counsel Mr.Sriram, appearing for the petitioner is that though the document is written as a lease deed and the same indicate that lessor and lessee relationship has not been created and it is only a contract entered to create lease in future. Even in the contract, the parties have agreed to refer the dispute to a sole arbitrator. Therefore, the deed containing arbitration clause need not be registered as per the Indian Contract Act. Therefore, it is his submission that the question of registration of the document and stamp duty does not arise at all. Hence, prayed for appointment of an arbitrator.
6. The learned counsel Mr.Arun appearing for the respondents submitted that the clause containing in the contract for arbitration will not be applicable in the present case since the relationship has fructified as that of lessor and lessee. Only on such relationship blossomed, the dispute can be referred to arbitration. Other submission of the learned counsel Mr.Arun, is that though the document is styled as a lease deed, if a document is for a period more than one year, Page 3 / 10 https://www.mhc.tn.gov.in/judis/ O.P.No.572 of 2020 registration and stamp duty is compulsory. Without being satisfied with these conditions, the document cannot be looked into. In support of his contentions, he relied on the following judgments of the Apex Court :
United India Insurance Company Limited and another Vs. Hyundai Engineering and Construction Company Limited and others reported in 2018 [17] Supreme Court Cases 607 Garware Wall Ropes Limited Vs. Coastal Marine Constructions and Engineering Limited reported in 2019 [9] Supreme Court Cases 209 Dharmaratnakara Rai Bahadur Arcot Narainswamy Mudaliar Chattram and other Charities and others Vs. Bhaskar Raju and Brothers and others reported in 2020 [4] Supreme Court Cases 612
7. The parties have entered into a lease agreement dated 19.11.2018. Wherein, the owner of the place is termed as a lessor and the applicant is termed as a lessee. The owner has agreed to construct certain construction and on Page 4 / 10 https://www.mhc.tn.gov.in/judis/ O.P.No.572 of 2020 completion of such construction, the property has to be given on lease. Though, the entire document is styled as a lease deed, on a perusal of the document, this Court is unable to accept the contention that the above document is a lease deed which create lessor and lessee relationship. It is only a contract to create a lease in future, on fulfilling certain conditions, i.e., putting up construction, prior to the commencement of the very lease. Relationship as lessor and lessee will commence from 01.08.2019, only on completion of construction as per the agreement. However, dispute is said to have arisen between the parties and the agreement was cancelled on 19.04.2019 itself.
8. It is an admitted case that a sum of Rs.25 lakhs is said to have been paid by the applicant towards construction while entering into the contract. The contention of the respondents is that they have also spent huge amount based on the above contract. Admittedly, the parties have agreed to refer the dispute to arbitrator. Therefore, when the entire contents of the documents harmoniously read, it will lead to a conclusion that it is a contract for creating jural relationship of lessor and lessee in future and it further indicate that lessor and lessee relationship has not been created on that date. It is only an agreement to transfer Page 5 / 10 https://www.mhc.tn.gov.in/judis/ O.P.No.572 of 2020 an interest in future, i.e., on 01.08.2019. Mere nomenclature of the document is not a decisive to conclude that the document is a lease deed. Otherwise, the intention of the parties has to be gathered from the document.
9. The document is mere a contract to create a right from 01.08.2019 and not from the date of agreement, i.e., 19.11.2018. Therefore, merely because the document is styled as a lease deed, it cannot be said that the document require stamp duty and registration. Though in the judgment relied by the learned counsel for the respondent in Garware Wall Ropes Limited Vs. Coastal Marine Constructions and Engineering Limited reported in 2019 [9] Supreme Court Cases 209, the Apex Court has held that when the document is not properly stamped and registered, it cannot be looked into for any other purpose, it can be impounded and stamp duty be collected. Admittedly, in this case, the question of stamp duty does not arise as the contract has been entered for transfer of interest in future. The relationship of lessor and lessee will take place only in future and not on the same day. In such view of the matter, the above judgment will not be applicable to the facts of the case. At the same time, the parties had agreed to refer the dispute to the arbitrator, merely because lessor and lessee terms have been Page 6 / 10 https://www.mhc.tn.gov.in/judis/ O.P.No.572 of 2020 used, it cannot be said that until the contract blossom into such relationship, the matter cannot be arbitrable. If such contention is accepted, the very object of the Arbitration and Conciliation Act will be defeated.
10. The agreement may be in the form of arbitration clause in a contract or in the form of a separate agreement. Therefore, when the parties have admittedly entered into a contract to create a future lease and in the above contract, they have agreed to refer the dispute. Therefore, the judgment relied by Mr.Arun in this regard reported in United India Insurance Company Limited and another Vs. Hyundai Engineering and Construction Company Limited and others reported in 2018 [17] Supreme Court Cases 607 is in a different context wherein the Apex Court has held that clause in the insurance policy as to repudiation of claim and the same cannot be arbitrable and cannot be referred to arbitration. The above judgment is not applicable to the facts of this case. s
11. Accordingly, it is ordered as follows:
i) that Mr.S,Jagannathan, District Judge [retired], residing at 69/73, Nadu Street, Annathanapatty, Page 7 / 10 https://www.mhc.tn.gov.in/judis/ O.P.No.572 of 2020 Salem – 636 002 Mobile No.9865025011 is appointed as a Sole Arbitrator to enter upon reference and adjudicate the matter.
ii] That the learned Arbitrator appointed herein, shall after issuing notice to the parties and upon hearing them, pass an award as expeditiously as possible, preferably within a period of six months from the date of receipt of the Order. It is open to the parties to raise all the disputes before the arbitrator including objections as per law.
iii] That the learned Sole Arbitrator appointed herein shall fix his fees and other incidental charges and the same shall be borne by the parties equally.
5. This Original Petition is ordered accordingly, leaving the parties to bear their own costs.
08.07.2021 Index : Yes / No Page 8 / 10 https://www.mhc.tn.gov.in/judis/ O.P.No.572 of 2020 Internet: Yes Speaking/non speaking order vrc To Mr.S,Jagannathan, District Judge [retired], 69/73, Nadu Street, Annathanapatty, Salem – 636 002.
Mobile No.986502501 Page 9 / 10 https://www.mhc.tn.gov.in/judis/ O.P.No.572 of 2020 N. SATHISH KUMAR, J.
vrc order in:
O.P.No.572 of 2020
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