Gauhati High Court
M/S G.G. Transport (P) Ltd vs Bhupendra Singh Ananda & 4 Ors on 30 May, 2017
Equivalent citations: AIR 2017 (NOC) 825 (GAU.)
Author: Arup Kumar Goswami
Bench: Arup Kumar Goswami
IN THE GAUHATI HIGH COURT
(THE HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Arbitration Petition 3 of 2013
M/S G.G. Transport (P) Ltd.,
(A Pvt. Ltd Company registered
under Companies Act, 1956,
having its regd. Office at Solapara Road,
Paltan Bazar, Guwahati-8)
Being represented by its Director-
Sri Suresh Sharma, son of Late
Satyanarayan Sharma,
Resident of Fatasil, Guwahati (Assam).
......Petitioner/Applicant
- Versus -
1. Sri Bhupendra Singh Ananda,
Son of Late Santosh Singh,
Resident of Kalapahar,
Guwahati-35, District-Kamrup(M),
Assam.
2. Sri Pranab Mahanta,
Son of Late P.K. Mahanta,
Resident of Boko,
District-Kamrup (Assam).
....Opposite Party(s)
3. Sri Hardayal Singh,
Son of Late Santosh Singh,
Resident of Kalapahar,
Guwahati-35, District-Kamrup(M),
Assam.
4. Sri Gurudayal Singh,
Son of Late Santosh Singh,
Resident of Kalapahar,
Guwahati-35, District-Kamrup(M),
Assam.
5. Sri Devendra Singh
Son of Late Santosh Singh,
Resident of Kalapahar,
Guwahati-35, District-Kamrup(M),
Assam. ....Pro-forma Opposite Party(s)
(Opposite party Nos. 3, 4 and 5 struck-off as per order dated 1.3.2017).
Arb.P 3/2013 Page 1 of 10
For the Petitioner : Mr. P.K. Kalita,
Sr. Advocate.
Mr. G.J. Saikia,
Advocate.
For the Respondents : Ms B. Das,
Advocate.
Dates of hearing : 20.4.2017, 27.4.2017 & 18.5.2017
Date of judgment : 30.05.2017
BEFORE
HON'BLE MR. JUSTICE ARUP KUMAR GOSWAMI
JUDGMENT AND ORDER
I have heard Mr. P.K. Kalita, learned senior counsel for the petitioner as well as heard Ms B. Das, learned counsel appearing for opposite party No.1.
2. By this application under Section 11 of the Arbitration and Conciliation Act, 1996, for short, the 1996 Act, the petitioner prays for appointment of an arbitrator. Though the opposite party No. 2 had filed affidavit, none has appeared. The opposite party Nos. 3, 4 and 5 were struck-off by an order dated 1.3.2017 on the request of Mr. Kalita.
3. After hearing was concluded, the judgment was reserved on 27.4.2017. However, as some clarifications were required, the case was posted on 18.5.2017 under heading "To be spoken to". The clarifications having been received, the case was again reserved for judgment.
4. The pleaded case of the petitioner, in short, is that the petitioner is a Private Limited Company registered under the Companies Act, 1956 and it carries on business of transportation as transporters. The opposite party No. 1 and proforma opposite party Nos. 3 to 5 (since struck-off) are joint owners of different plots of land and the opposite party No. 1 and opposite party Nos. 3 to 5 (since struck-off), who are brothers, are occupying different plots of land and are using their share of land for their own purpose. The opposite party No. 1 appointed opposite party No. 2 as his attorney by executing a registered Power of Attorney being Deed No. 221/11 (corrected 94/2011) dated 10.1.2011 and another Power of Attorney being Deed No. 1259 dated 19.4.2011 for carrying out acts and duties mentioned therein including enabling him to enter into agreement for sale of land, to receive consideration amount, to apply for permission, to execute sale deed, etc. Arb.P 3/2013 Page 2 of 10
5. Pursuant to execution of the registered Power of Attorney dated 10.1.2011, the opposite party No. 2, on behalf of opposite party No. 1, entered into an agreement with the petitioner for sale of his share of land measuring 36 bighas out of total land measuring 36 bighas 3 kathas 2 lechas covered by different dag numbers and patta numbers mentioned in the agreement at the total value of Rs. 1,80,00,000/- and the said agreement for sale was registered as deed No. 897/11 (Serial No. 1249 dated 1.2.2011). In terms of the said agreement of sale, the petitioner had made payment of Rs. 25,00,000/- in cash as advance payment as well as another sum of Rs. 5,00,000/- by a cheque.
6. On 13.6.2011, the opposite party No. 2 met one of the Directors of the petitioner Company and informed him that the opposite party No. 1, in an illegal and arbitrary manner, had revoked both the deeds of Power of Attorney and also furnished such deeds of revocation of Power of Attorney being deed Nos. 162/11 and 163/11. The opposite party No. 2, thereafter, filed a suit against the opposite party No. 1 on 16.6.2011 praying for, amongst others, a declaration that deeds of revocation are illegal and arbitrary; permanent injunction from giving effect to the said deeds of revocation in respect of lands of Schedule A and B, from selling, encumbering and transferring the said lands. The suit was registered as Title Suit No. 174/2011 in the Court of Civil Judge, No. 3, Kamrup. An application for temporary injunction was also filed which was registered as Misc. (J) Case No. 99/2011.
7. The present petitioner had filed an application on 27.6.2011 for impleadment in the suit through one of its Directors. Before the said application was considered, on 17.8.2011, the opposite party No. 2 filed an application to allow him to withdraw the Title Suit No. 174/2011 and the same was allowed to be withdrawn.
8. Though it was recited in Deed No. 162/11 dated 7.6.2011 that any act, deed or things lawfully done or cause to be done by the attorney before the revocation shall not be rendered invalid or ineffective, the opposite party Nos. 1 and 2 did not apply for permission to the competent authorities within the stipulated period as indicated in the agreement for sale dated 1.2.2011. On the contrary, the opposite party No. 1 had applied for sale permission of the land for which the agreement of sale was entered into by the opposite party No. 2 with the petitioner. The petitioner issued a letter dated 9.9.2011 by registered post with A/D requesting the opposite party No. 1 to honour the deed of agreement executed by the opposite party No. 2 on his behalf with the Arb.P 3/2013 Page 3 of 10 petitioner. No response was forthcoming from the opposite party No. 1 and it came to light that the opposite party No. 1 was planning to sell the land to some other intending purchasers. Faced with such a situation, the petitioner filed a suit for specific performance of the contract against the opposite party Nos. 1 and 2 which was registered as Title Suit No. 342/2011 in the Court of the Civil Judge No. 3, Kamrup.
9. By lodging a caveat, the opposite party No. 1 had entered appearance in the suit and filed an application under Section 8 of the 1996 Act for referring the parties to arbitration in view of Clause 15 of the agreement for sale dated 1.2.2011 and the said application was numbered as Misc. (J) Case No. 211/2011. The learned Civil Judge No. 3, thereafter, by an order dated 19.12.2011, referred the parties to arbitration for adjudication of the disputes in terms of 1996 Act.
10. Subsequent to the order dated 19.12.2011 passed by the learned Civil Judge No. 3, the petitioner had issued a registered letter with A/D dated 24.2.2012 to the opposite party Nos. 1 and 2 as well as the proforma opposite parties (since struck-off) demanding appointment of arbitrator and had also given its choice by suggesting two names for appointment of a neutral arbitrator for settlement of dispute.
11. In response of the said letter, Mr. S.P. Roy, Advocate, acting on behalf and under instruction of the persons named in the notice dated 24.2.2012, wrote a letter enquiring as to whether the persons suggested in the letter 24.2.2012 had at any point of time were engaged as counsel, or as to whether any opinion was received from them on legal matters. This was replied to in the negative and some correspondences ensued on the subject. However, the parties could not come to any final decision on the names suggested. A suggestion was given by the opposite party to appoint Mr. Jyotirmoy Roy, Advocate, but the same was declined by letter dated 5.11.2012 issued by the petitioner.
12. The petitioner had filed an application under Section 9 of the 1996 Act before the Court of District Judge, Kamrup, which was registered as Misc. (Arb) case No. 366/2012. The application was transferred to the Court of the Additional District Judge, Kamrup and initially, by an order dated 1.8.2012, the learned Court had passed an order of maintenance of status-quo and thereafter, by the final order dated 8.10.2012, the earlier order of status quo dated 1.8.2012 was made absolute.
13. It is pleaded in this petition that it came to the knowledge of the petitioner that the opposite party No. 1 and the pro-forma opposite parties (since struck-off) executed Arb.P 3/2013 Page 4 of 10 various sale deeds on 13.10.2011 and 14.10.2011 in respect of land including the land covered under the agreement for sale dated 1.2.2011 during the pendency of the Title Suit No. 342/2011 to one M/s Brahmaputra Realtors Private Limited.
14. The learned counsel appearing for the parties have pointed out that against the order dated 1.8.2012 an appeal was preferred by Brahmaputra Realtors Private Limited, claiming that the disputed land falling under the agreement of sale dated 1.2.2011 was sold to them, before this Court, which was registered as Arb. Appeal No. 2/2013 and this Court, by an order dated 25.7.2013, had set aside the said order dated 1.8.2012. The judgment is reported in 2015 (2) GLT 137 (Brahmaputra Realtors Pvt. Ltd. vs. G.G. Transports (P) Ltd. (M/S) & Ors.).
15. Clause 15 of the agreement for sale reads as follows;
"15. That, if any kind of disputes arises between both the parties, in regard to this instant DEED OF AGREEMENT FOR SALE or to its term and conditions, a suitable neutral arbitrator shall be appointed with the mutual consent of both the parties, to resolve the matter of dispute and if the initiative of the neutral arbitrator is unable to settle the dispute, the aggrieved party may approach the competent forum of law, AND in such circumstances, the Civil and Criminal Courts of Law of the District of Kamrup(M), at Guwahati, shall have exclusive jurisdiction."
16. No affidavit is filed by the opposite party No. 1.
17. Mr. P.K. Kalita, learned senior counsel for the petitioner has submitted that the opposite party No. 1 himself had filed an application under Section 8 in the suit filed by the petitioner for referring the parties to arbitration and yet, no effective steps are taken by him for appointment of the arbitrator. He has also submitted that even during pendency of the said suit, he, along with others, had transferred, by way of sale, the land falling within the scope of the agreement for sale dated 1.2.2011 along with other lands. He has submitted that in view of the fact that third party rights have come into play and since such buyers and sellers other than opposite party Nos. 1 and 2, are not party to the agreement for sale deed dated 1.2.2011, though this application was filed for appointment of arbitrator in view of order dated 19.12.2011 passed in Misc. (J) Case No. 211/2011, for effective adjudication of the dispute, the Court may consider relegating the parties to a civil suit. Mr. Kalita has relied on the following judgments:
Arb.P 3/2013 Page 5 of 10M/s SBP & Co. vs. M/s Patel Engineering Ltd. & Anr., reported in (2005) 8 SCC 618, Booz Allen and Hamilton Inc. vs. SBI Home Finance Ltd. & ors., reported in (2011) 5 SCC 532, Chloro Controls India Private Ltd. vs. Severn Trent Water Purification INC & ors., reported in (2013) 1 SCC 641, Purple Medical Solutions Pvt. Ltd., vs. Miv Therapeutics INC & anr., reported in (2015) 15 SCC 622 and A. Ayyasamy vs. A Paramasivam & ors., reported in (2016) 10 SCC 386.
18. Ms Das, learned counsel appearing for respondent No. 1 does not dispute the fact that, in the interregnum, land covered by the agreement of sale dated 1.2.2011 has since been sold by opposite party No. 1 along with other brothers by way of different sale deeds. She has also submitted that in the present state of affairs, civil court will be the appropriate forum for adjudication of the disputes. Ms Das has relied on the judgments in Booz Allen (supra), A. Ayyasamy (supra), which are also referred to by Mr. Kalita. She also refers to the judgment of the Supreme Court in the case of State of Goa vs. Praveen Enterprises, reported in (2012) 12 SCC 581.
19. I have considered the submissions of the learned counsel for the parties and have perused the materials on record.
20. Section 8 confers power on judicial authority before which an action is brought in a matter, which is the subject matter of an arbitration agreement, to refer the dispute to arbitration if a party applies for the same. In Ayyasamy (supra), the decision was rendered in the context of applicability of Section 8 of the 1996 Act when fraud is alleged in a suit. It was held that mere allegation of fraud in the pleading by one party against the other cannot be a ground to hold that the matter is incapable for settlement by arbitration and that it should be decided by a civil court. The allegation of fraud should be such that not only those allegations are serious in normal course but they may constitute criminal offence as well. The allegations have to be complex in nature and decision on these issues demands extensive evidence for which a civil court should appear to be more appropriate forum than the Arbitral Tribunal.
21. Section 16 of the 1996 Act deals with the competence of an arbitral tribunal to rule on its own jurisdiction including ruling on any objections with respect to the existence or validity of arbitration clause in the agreement. A person aggrieved by the rejection of his objection by a tribunal on its jurisdiction may make an application for setting aside such an arbitral award in accordance with Section 34 of the Act. But the acceptance of objection on jurisdiction can be challenged under Section 67 of the Act.
Arb.P 3/2013 Page 6 of 1022. In Praveen Enterprise (supra), the Supreme Court had explained, amongst others, the term "reference to arbitration". It was held that the term "reference to arbitration" describes various acts and that reference to arbitration can be by parties themselves or by an appointing authority named in the arbitration agreement or by a Court on an application by a party to the arbitration agreement.
23. In the case of Konkan Railway Corporation Ltd. and ors., vs. Mehul Construction Co., reported in (2000) 7 SCC 201, the Supreme Court had taken a view that the nature of function of the Chief Justice or his designated Judges under Section 11 of 1996 Act is primarily an administrative action and that it is neither a judicial nor a quasi-judicial action and, the Chief Justice or his nominee, performing under Section 11 (6) of the Act, cannot decide any contentious issue between the parties. The aforesaid decision was approved by the Constitution Bench in Konkan Railway Corporation Ltd. and anr., vs. Rani Construction Pvt. Ltd., reported in (2002) 2 SCC 388.
24. The seven-Judge Bench of the Supreme Court in SBP Co. (supra), by a majority of 6:1, while overruling the decision in Konkan Railway Corporation vs. Rani Constructions (supra), concluded that the power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11(6) of the 1996 Act is not an administrative power. It is a judicial power. The Chief justice or the designated Judge will have the right to decide preliminary aspect: whether he has jurisdiction, whether there is an arbitration agreement, whether the applicant before him is a party, whether the conditions for exercise of the power is fulfilled and if arbitrator is to be appointed, who is the fit person. It is further held that Section 16 is a recognition of the principle of Kompetenz Kompetenz and that where the jurisdictional issues are decided under Section 8 and Section 11 of the 1996 Act, before a reference is made, Section 16 cannot be held to empower an Arbitral Tribunal to ignore the decision given by the judicial authority or the Chief Justice before the reference to it was made. The Arbitral Tribunal can decide on its jurisdiction only when parties had gone to the Arbitral Tribunal without recourse to either Section 8 or Section 11 of the 1996 Act.
25. In Booz Allen (supra), it was also observed that disputes relating to specific performance of contract could be referred to arbitration.
26. In Chloro Controls (supra), the decision was rendered in the context of Section 45 of the 1996 Act falling under Chapter 1 of Part II, which is a self contained code, Arb.P 3/2013 Page 7 of 10 where the expression "any person" clearly refers to the legislative intent of enlarging the scope of the words beyond "the parties", who are signatory to the arbitration agreement. At paragraphs 70 and 73, the Supreme Court stated as follows:
"70. Normally, arbitration takes place between the persons who have, from the outset, been parties to both the arbitration agreement as well as the substantive contract underlining that agreement. But, it does occasionally happen that the claim is made against or by someone who is not originally named as a party. These may create some difficult situations, but certainly, they are not absolute obstructions to law/the arbitration agreement. Arbitration, thus, could be possible between a signatory to an arbitration agreement and a third party. Of course, heavy onus lies on that party to show that, in fact and in law, it is claiming 'through' or 'under' the signatory party as contemplated under Section 45 of the 1996 Act. Just to deal with such situations illustratively, reference can be made to the following examples in Law and Practice of Commercial Arbitration in England (Second Edn.) by Sir Michael J. Mustill:
"1. The claimant was in reality always a party to the contract, although not named in it.
2. The claimant has succeeded by operation of law to the rights of the named party.
3. The claimant has become a part to the contract in substitution for the named party by virtue of a statutory or consensual novation.
4. The original party has assigned to the claimant either the underlying contract, together with the agreement to arbitrate which it incorporates, or the benefit of a claim which has already come into existence."
73. A non-signatory or third party could be subjected to arbitration without their prior consent, but this would only be in exceptional cases. The Court will examine these exceptions from the touchstone of direct relationship to the party signatory to the arbitration agreement, direct commonality of the subject matter and the agreement between the parties being a composite transaction. The transaction should be of a composite nature where performance of mother agreement may not be feasible without aid, execution and performance of the supplementary or ancillary agreements, for achieving the common object and collectively having bearing on the dispute. Besides all this, the Court would have Arb.P 3/2013 Page 8 of 10 to examine whether a composite reference of such parties would serve the ends of justice. Once this exercise is completed and the Court answers the same in the affirmative, the reference of even non-signatory parties would fall within the exception afore-discussed."
27. In Purple Medical (supra), the principle in Chloro Controls (supra) was applied.
28. Normally arbitration takes place between the parties to the arbitration agreement. The 1996 Act provides that an arbitrator can be appointed at the instance of a party to an arbitration agreement only in respect of disputes with another party to the arbitration agreement. On the principles laid down in Chloro Controls (supra), non- signatory or third party could be subjected to arbitration without their prior consent in exceptional cases.
29. While deciding Brahmaputra Realtors (supra), at paragraphs 73 and 74, this Court had stated as follows:
73. The appellant is not claiming any right under the Respondent No. 2.
The appellant purchased the disputed land from the Respondent Nos. 2, 3, 4 and 5, which is the subject matter of the arbitration clause arising out of the agreement for sale. The right of the appellant is an independent legal right in respect of the property in dispute. Here a 'party' as per Section 2(h) means a party to the arbitration agreement. It is the onerous duty of the Court to look out whether any order passed as an interim measure in respect of the subject matter of the dispute is affecting any third party having an independent right. If a third party interest has already been created, by some overt act of the parties to the arbitration agreement, for appropriate relief civil remedy may be appropriate remedy available to them.
74. It is also an admitted fact that the Respondent No. 2 revoked the power of attorney granted in favour of the Opp. Party No. 3 on 7.6.11. The Respondent No. 2 sold the suit land to the Opp. Party No. 3 on 12.10.11, 13.10.11 and 14.10.11. Therefore, the parties to the Arbitration agreement by their own overt action already created third party right, then in that case the dispute involving a third party would not be arbitrable dispute. Rather, in the facts and circumstances, parties may choose to approach a civil Court of appropriate jurisdiction for adjudication of their dispute."
Arb.P 3/2013 Page 9 of 1030. In the above paragraphs of Brahmaputra Realtors (supra), respondent No. 2 is the opposite party No. 1 herein. The appellant therein had purchased the disputed land, which is the subject matter of arbitration clause from the respondent No. 2 as well as respondent Nos. 3, 4 and 5. The petitioner herein was the respondent No. 1 in Brahmaputra Realtors (supra). This Court had already recorded that the dispute involving the parties to the agreement would not be an arbitrable dispute as third party right had been created and that parties may choose to approach a civil court of appropriate jurisdiction for adjudication of their dispute.
31. This application for appointment of arbitrator was filed on 1.4.2013, which was prior to the judgment rendered by this Court in Brahmaputra Realtors (supra). It is to be noted that the learned senior counsel for the petitioner had pitched for relegating the parties to civil court. Ms Das, the learned counsel for the opposite party No. 1, at whose instance the learned Civil Judge by his order dated 19.12.2011 referred the parties to arbitration, has also seconded the view of Mr. Kalita in the present circumstances.
32. In view of the above, this application is disposed of by observing that the petitioner may approach the civil court, if so advised. No cost.
JUDGE Madhu Arb.P 3/2013 Page 10 of 10