Punjab-Haryana High Court
Gurcharan Singh & Ors vs M/S College Estates Pvt Ltd & Ors on 27 February, 2020
Equivalent citations: AIR 2020 (NOC) 554 (P.&H.), AIRONLINE 2020 P AND H 118
Author: Alka Sarin
Bench: Alka Sarin
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Civil Revision No.2644 of 2018 (O&M)
DATE OF DECISION: 27.02.2020
Gurcharan Singh and others
.....Petitioners
versus
M/s Collage Estates Pvt. Ltd. and others
.....Respondents
CORAM:- HON'BLE MRS. JUSTICE ALKA SARIN
Present: Mr. Amit Jhanji, Advocate for the petitioners
Mr. Arun Kaundal, Advocate for respondent Nos.1 & 2
..
ALKA SARIN, J.:
The present revision petition has been preferred by the plaintiff-petitioners against the order dated 30.08.2017 passed by the Civil Judge (Junior Division), Jalandhar, whereby the application under Section 8 read with Section 5 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act of 1996") filed by the defendant- respondent Nos.1 and 2 was allowed.
Brief facts, relevant to the present case, are that the plaintiff-petitioners filed a suit for declaration to the effect that the demand notice dated 17.06.2014 or any other demand notice/notices served by defendant-respondent Nos.1 and 2 on the basis of the Assignment Agreement dated 31.05.2011 were illegal and unilateral. Defendant-respondent No.1 is a company registered under the provisions of the Companies Act, 1956, and developed a project named as Viva Collage, i.e., defendant-respondent No.2 at Jalandhar. The plaintiff-
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petitioners and the defendant-respondent No.1 entered into a Memorandum of Understanding (MoU) on 04.08.2010 qua commercial space bearing No.SF-28 on the second floor measuring 1348.13 square feet of super area in the project Viva Collage situated at Village Paragpur, G.T. Road, Jalandhar for a total consideration of `44,40,390/-. On the same day, i.e., 04.08.2010, a sale deed was entered into between the plaintiff-petitioners and the defendant-respondent No.1, transferring the said premises bearing SF No.28 on the second floor admeasuring 1348.13 square feet in favour of the plaintiff-petitioners. Thereafter, a lease deed dated 13.04.2011 was entered into between defendant-respondent No.1 and defendant-respondent No.3. Subsequently, a tripartite/ maintenance agreement dated 25.04.2011 was entered into between the plaintiff-petitioners, defendant-respondent No.1 and defendant-respondent No.3. On 31.05.2011, an Assignment Agreement was entered into between the defendant-respondent No.1 and the plaintiff-petitioners with defendant-respondent No.3 as the confirming party. On 17.06.2014, a demand notice was issued to the plaintiff-petitioners for payment of overdue amount of `15,88,030.00 as on 31.05.2014 against maintenance charges/maintenance security deposit for the shop/space No.SF- 28 on second floor in Viva Collage Mall, Village Paragpur, G.T. Road, Jalandhar. In the said demand notice, it was stated that the plaintiff-petitioners had failed to deposit the maintenance security deposit and monthly maintenance charges, which was a cause of inconvenience in maintaining the common services and facilities of the Mall.
Aggrieved by the demand notice, the plaintiff- petitioners filed a civil suit challenging the demand notice 2 of 10 ::: Downloaded on - 29-02-2020 02:37:55 ::: CR-2644-2018 - 3 -
dated 17.06.2014 on the basis of the maintenance agreement dated 25.04.2011 and the Assignment Agreement dated 31.05.2011 being illegal, unilateral, unconstitutional and not binding on the plaintiff-petitioners. In the said suit, an application was filed by defendant-respondent Nos.1 and 2 under Section 8 read with Section 5 of the Act of 1996 stating therein that according to the terms and conditions of the agreement/MoU all matters, questions, disputes, differences and/or claims arising out of the said memorandum were firstly to be settled through negotiations between the parties and, in case the negotiations fail, the matter shall be referred to arbitration.
A reply was filed denying the fact that there was any arbitration clause between the parties. The stand taken by the plaintiff-petitioners was that the present suit was a tripartite suit and there was no arbitration agreement clause between the parties and, hence, prayed for dismissal of the application. Vide order dated 30.08.2017, the Trial Court allowed the application filed by the defendant-respondent Nos.1 and 2 and held that the Court had no jurisdiction to decide the matter and the matter should be decided by an Arbitrator. Aggrieved by the said order, the present revision petition has been preferred.
I have heard the learned counsel for the parties.
It has been contended by Mr. Amit Jhanji, learned counsel for the plaintiff-petitioners, that there is no clause governing the said dispute which could be referred to arbitration. He further contended that in the MoU dated 04.08.2010 there was no mention regarding the payment of 3 of 10 ::: Downloaded on - 29-02-2020 02:37:55 ::: CR-2644-2018 - 4 -
maintenance charges, hence, Clause-9, which refers to arbitration of the dispute, would have no applicability. He further contended that the sale deed, which was between the plaintiff-petitioners and defendant-respondent No.1, had a reference to maintenance in Clause-4 and the said sale deed in Clause 4(C) states that the maintenance charges of `20/- per square feet plus service tax (if applicable) of the super area of the premises were to be paid by the vendee to the vendor. However, there was no arbitration clause in the said sale deed. He further drew the attention of this Court to the lease deed, which was entered into between defendant-respondent No.1 and defendant-respondent No.3. It is contended that the plaintiff-petitioners were not a party to the said lease deed. He further drew the attention of this Court to the Tripartite Operation/Maintenance Agreement dated 25.04.2011 which was executed between the plaintiff-petitioners, defendant- respondent No.1 and defendant-respondent No.3. It was further the contention of the learned counsel for the plaintiff- petitioners that arbitration clause 17 in the said tripartite agreement was not applicable to the plaintiff-petitioners. The Assignment Agreement also did not contain an arbitration clause and, hence, the order dated 30.08.2017 was illegal and was contrary to law and deserved to be set aside.
Mr. Amit Jhanji, learned counsel for the plaintiff- petitioners, in support of his contention, has relied upon (2009) 1 SCC 372 (Yogi Agarwal vs. Inspiration Clothes & U and others) to contend that when the defendant-respondents invoked Section 8 of the Act of 1996 by alleging the existence of an arbitration agreement they had to establish that the 4 of 10 ::: Downloaded on - 29-02-2020 02:37:55 ::: CR-2644-2018 - 5 -
arbitration agreement related to or was applicable to the dispute.
Per contra, learned counsel for defendant-respondent Nos.1 and 2 Mr. Arun Kaundal contended that the present dispute was squarely covered by clause 9 of the MoU dated 04.08.2010 and, hence, the matter had correctly been referred to the Arbitrator.
In order to appreciate the controversy in dispute, it is essential to reproduce the relevant clauses of the agreements. On 04.08.2010, the MoU entered into between the plaintiff-petitioners and the defendant-respondent No.1 contains an arbitration clause, namely, Clause-9, which reads as under:-
"9. Any dispute or differences arising out of or relating to this MOU shall be at the first instance settled expeditiously and fairly by way of negotiations between the parties. In the event the negotiations between the parties fail, the matter shall be referred for arbitration. It is agreed that each party shall appoint one arbitrator and the two nominated and appointed arbitrators shall appoint the third arbitrator who shall act as the presiding arbitrator. The arbitration shall be in accordance with the provisions of Arbitration & Conciliation Act, 1996 or any amendments thereto. The venue of arbitration shall be at Delhi and its verdict shall be final and binding on the parties hereto. The language of arbitration shall be English."
The said MoU does not make any reference to maintenance charges.
The second document entered into between the parties was the sale deed dated 04.08.2010. A perusal of the sale deed 5 of 10 ::: Downloaded on - 29-02-2020 02:37:55 ::: CR-2644-2018 - 6 -
reveals that Clause-4 of the sale deed pertains to maintenance and lays down the maintenance charges to be paid and the maintenance security deposit to be made. However, there is no arbitration clause in the said sale deed.
The third document entered into between the parties was lease deed, which was entered into between defendant- respondent No.1 and defendant-respondent No.3. The said lease deed would have no relevance as far as the present lis is concerned, since the plaintiff-petitioners were not a party to the said agreement.
The fourth agreement entered into on 25.04.2011 was the Tripartite Operation/Maintenance Agreement entered into between the plaintiff-petitioners, defendant-respondent No.1 and defendant-respondent No.3. A perusal of the said agreement reveals that Clause 17 thereof reads as under:-
"17. Arbitration: Excepting the cases of theft/pilferage of energy or interference with the meter etc. (which are inter-alia offences) and only after the charges payable are paid to CEPL; in the event of any differences or disputes arising between CEPL and the Lessee in respect of any matter connected with the accuracy of charges, supply of services or interpretation of any of these terms and conditions which cannot be determined amicably, or settled through an agreement between CEPL and the Lessee, the matter shall be referred to arbitration of a Sole Arbitrator appointed by CEPL. Reference to arbitration shall be without prejudice to the right of CEPL to effect recovery of arrears of dues (through disconnection of supply or otherwise). The decision of the arbitrator shall be final and binding on the parties."
A perusal of the above-reproduced clause reveals that the same states that in the event of any difference or dispute between 6 of 10 ::: Downloaded on - 29-02-2020 02:37:55 ::: CR-2644-2018 - 7 -
CEPL i.e. defendant-respondent No.1 and the lessee, which is defendant-respondent No.3, the matter would be referred to arbitration of a sole Arbitrator. The fifth agreement was the Assignment Agreement, which also does not contain any arbitration clause.
A conjoint reading of the five documents entered into between the plaintiff-petitioners and defendant- respondent No.1 reveals that as far as the MoU is concerned the said MoU makes no reference to maintenance charges and, hence, the same would have no relevance in the present case. The sale deed though refers to maintenance charges has no arbitration clause. The lease deed does not relate to the plaintiff-petitioners and, hence, would be of no significance. The Tripartite Agreement/Maintenance Agreement clearly states that in case of any difference or dispute arising between CEPL (defendant-respondent No.1) and lessee (defendant-respondent No.3), would be referred to arbitration of a sole Arbitrator. The Assignment Agreement contains no arbitration clause. The defendant-respondent No.1 in the application filed under Section 8 read with Section 5 of the Act of 1996 has relied upon the MoU for reference of the matter to arbitration. Para- 5 of the application, wherein a reference has been made to MoU dated 04.08.2010 and the tripartite agreement dated 25.04.2011, reads as under:-
"5. That bare perusal of the plaint would clearly reveal that the issues agitated by the plaintiff relates to the payment of maintenance charges applicable over the premises and the said dispute is to be decided by way of arbitration as per the terms and conditions of the MOU dated 04.08.2010 and Tripartite agreement dated 25.04.2011 are the subject matter of the 7 of 10 ::: Downloaded on - 29-02-2020 02:37:55 ::: CR-2644-2018 - 8 -
arbitration. Certified copy of the above said agreements are attached herewith."
The MoU entered into between plaintiff-petitioners and defendant-respondent No.1 nowhere refers to the maintenance charges. That being so, a dispute qua the maintenance charges would not be covered under the said MoU and, hence, the reliance of defendant-respondent No.1 on the arbitration clause i.e. clause 9 of the MoU would be of no avail. The second document, which has been relied upon, is the tripartite agreement dated 25.04.2011. A perusal of Clause 17 of the said agreement reproduced above, clearly reveals that in the said agreement it is defendant-respondent No.1 who is being referred to as "CEPL" and defendant-respondent No.3 has been referred to as the "lessee". Clause 17 of the said tripartite agreement clearly states that in the event of any difference or dispute between CEPL, i.e., defendant-respondent No.1 and the lessee i.e. defendant-respondent No.3 in respect of any matter connected with the accuracy of charges, supply of services or interpretation of any of the terms and conditions which cannot be determined amicably or through an agreement between the CEPL and the lessee, the matter would be referred to arbitration of a sole Arbitrator. There is no reference to the plaintiff-petitioners in the said clause. That being so, there exists no arbitration agreement between the plaintiff- petitioners and the defendant-respondents which could have been invoked to settle a dispute through arbitration.
Their Lordships of the Supreme Court in the case of Yogi Agarwal (supra), have held as under:-
"9. When a defendant invokes Section 8 of the Act by alleging existence of an arbitration agreement, he should establish that such arbitration agreement related to, or is 8 of 10 ::: Downloaded on - 29-02-2020 02:37:55 ::: CR-2644-2018 - 9 -
applicable to, the suit transaction/contract. The parties may enter into different contracts at different points of time or may enter into a series of unrelated transactions. It is possible that in regard to some, they may provide for arbitration and in regard to others, may not provide for arbitration. Obviously, the existence of an arbitration agreement with reference to some other transaction/contract to which the plaintiff was or is a party, unconnected with the transactions or contracts to which a suit relates, cannot be considered as existence of an "arbitration agreement" in regard to the suit transactions/contracts.
10. When Sections 7 and 8 of the Act refer to the existence of an arbitration agreement between the parties, they necessarily refer to an arbitration agreement in regard to the current dispute between the parties or the subject-matter of the suit. It is fundamental that a provision for arbitration, to constitute an arbitration agreement for the purposes of Sections 7 and 8 of the Act, should satisfy two conditions. Firstly, it should be between the parties to the dispute. Secondly, it should relate to or be applicable to the dispute."
In the present case, there is no arbitration agreement between the plaintiff-petitioners and the defendant- respondent Nos.1 and 2 covering the maintenance charges. Further, the arbitration clause in the documents executed by the parties do not relate to maintenance charges, which is the core of the dispute in the suit filed by the plaintiff- petitioners.
In view of the law laid down by the Supreme Court and the aforementioned facts, this Court is of the considered view that there exists no arbitration agreement qua the disputes raised in the suit and, hence, the disputes could not have been referred to an Arbitrator. That being so, the impugned order dated 30.08.2017 is hereby set aside.
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The parties to appear before the Trial Court on 26.03.2020.
The revision petition is allowed accordingly.
(ALKA SARIN) JUDGE 27.02.2020 parkash NOTE:
Whether speaking/non-speaking: Speaking Whether reportable: YES/NO 10 of 10 ::: Downloaded on - 29-02-2020 02:37:55 :::