Calcutta High Court (Appellete Side)
Biswanath Ghosh vs M/S. Hijal Kanya Co-Operative on 23 June, 2017
Author: Jyotirmay Bhattacharya
Bench: Jyotirmay Bhattacharya
HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
Appellate Side
Present:
The Hon'ble Justice Jyotirmay Bhattacharya
AND
The Hon'ble Justice Samapti Chatterjee
F.M.A.T. 1199 of 2016
(CAN 11635 of 2016)
Biswanath Ghosh
-versus-
M/s. Hijal Kanya Co-Operative
Housing Society Ltd.
For the Appellant : Mr. Supratick Syamal,
Mr. Gourab Ghosh.
For the Respondent : Mr. Arup Kumar Chatterjee,
Mr. Pinaki Brata Ghosh,
Mr. Firoj Uddin Islam,
Ms. Susmita Majumdar.
Heard On : 23rd June, 2017.
Judgement On : 23rd June, 2017.
Jyotirmay Bhattacharya, J.
We are informed by the learned advocate appearing for the appellant that court fees on Vakalatnama have been paid on 10th January, 2017 vide filing no. A-733. The defect in the appeal is, thus, rectified.
This first miscellaneous appeal is directed against an order being No. 17 dated 2nd September 2016 passed by the learned District Judge, North 24- Parganas, Barasat in Misc. Case No. 225 of 2015 (Arbitration) arising out of an application under Section 9 of the Arbitration & Conciliation Act, 1996 filed by the appellant/applicant.
By the impugned order, the appellant's application under Section 9 of the Arbitration & Conciliation Act was dismissed on contest without cost. The appellant/applicant felt aggrieved. Hence, he has filed the instant first miscellaneous appeal before this Court.
Let us now consider the merit of the instant appeal in the facts of the instant case.
The respondent, namely, M/s. Hijal Kanya Co-operative Housing Society Limited is a Housing Co-operative Society. The said Housing Co-operative Society appointed the appellant/applicant as a contractor for constructing multistoried building on the land belonging to the said Co-operative Society. An agreement was entered into between the said Housing Cooperative Society and the appellant/applicant being the contractor crystallising their rights and obligations.
Admittedly, in terms of the said agreement, the appellant/applicant has raised some constructions on the land belonging to the said Co-operative Society and the bills were raised from time to time as per the agreement by the said contractor. Some of such bills raised by the said contractor were paid but other bills raised by the said contractor against the work executed by him have not been paid by the said Housing Co-operative Society. Thus, a dispute arose as to the contractor's monetary claim between the parties.
Admittedly, the agreement which was entered into between the appellant/applicant and the said Housing Co-operative Society contains an arbitration clause wherein it is stated as follows :-
"Both parties have agreed that if any dispute arises during construction of the building and/or after construction of the building by and between the parties, the same will be referred to any arbitration under the Arbitration & Conciliation Act, 1996."
Though initially the appellant/applicant filed a civil suit against the said Housing Co-operative Society seeking declaration of his right to continue with the construction as per the said agreement, but the said title suit was ultimately withdrawn by the appellant/applicant after filing the application under Section 9 of the Arbitration & Conciliation Act before the court below.
In the application under Section 9 of the Arbitration & Conciliation Act, the appellant/applicant prayed for an injunction for restraining the Housing Co- operative Society from appointing and/or engaging any other contractor and/or his men and agents to execute the rest of the construction work of the schedule property and also for passing an interim order in similar term and nature pending disposal of the said application.
The said relief was claimed by the appellant/applicant by alleging that without settling the dispute between the parties regarding the monetary claim of the appellant/applicant arising out of the work executed by him as per the contract, the said Housing Co-operative Society is now taking steps for appointing other contractor for execution of the unfinished work of construction.
The said application under Section 9 of the Arbitration & Conciliation Act filed by the appellant/applicant was contested by the said Housing Co-operative Society by filing objection.
It was contended by the said Housing Cooperative Society that the said application under Section 9 of the Arbitration & Conciliation Act is not maintainable as the appellant/applicant is guilty of suppression of material facts relating to institution of the Title Suit being No. 794 of 2015 in the court of the learned Civil Judge (Junior Division), 1st Court at Barasat which was subsequently withdrawn by the appellant/applicant. It was also alleged that the application under Section 9 of the Arbitration & Conciliation Act is barred by the West Bengal Co-operative Societies Act. As such, the Court has no jurisdiction to entertain this application. The said Co-operative Society, thus, prays for dismissal of the appellant's application under Section 9 of the Arbitration & Conciliation Act.
Learned Trial Judge dismissed the appellant's said application under Section 9 of the Arbitration & Conciliation Act by holding inter alia that in view of the provision contained in Section 4(25) read with Section 102 and Section 145 of the West Bengal Co-operative Societies Act such a dispute between a Co- operative Society and the appellant/applicant is only capable of resolution before the Registrar of the Co-operative Society. As such, no other authority can entertain any such dispute.
It was also held by the learned Trial Judge that since the application under Section 9 of the Arbitration & Conciliation Act is not entertainable by the court, the appellant/applicant is not entitled to get any order of injunction by way of interim relief in such a proceeding.
Learned Trial Judge also held that even the arbitration agreement which is contained in the agreement relating to construction of the multistoried building on the land belonging to the said Co-operative Society is also unenforceable as the parent agreement which contains such arbitration agreement is not a registered document. Learned Trial Judge, thus, by referring to the provision contained in Section 49 of the Registration Act and also by relying upon a judgement of the Hon'ble Supreme Court in the case of M/s. SMS Tea Estate Pvt. Ltd. Vs. M/s. Chandmari Tea Co. Pvt. Ltd. reported in 2011 (3) SCC 111 held that arbitration agreement is not enforceable. As such, the application under Section 9 of the Arbitration & Conciliation Act filed by the appellant/applicant is liable to be rejected.
Learned Trial Judge also held that the arbitration agreement contained in the agreement for construction is also in derogation of the provision contained in Section 102 of the West Bengal Co-operative Societies Act and as such, the said agreement becomes unenforceable. Holding as such, the learned Trial Judge rejected the appellant's application under Section 9 of the Arbitration & Conciliation Act, 1996.
Let us now consider as to how far the learned Trial Judge was justified in arriving at such a conclusion in the facts of the instant case.
Here is the case where we find that the civil suit which was filed by the appellant/applicant before the civil court was founded on the cause of action different from the cause of action for which the relief is claimed in the application under Section 9 of the Arbitration & Conciliation Act. That apart, the suit was withdrawn by the appellant after filing the application under Section 9 of the Arbitration & Conciliation Act. In our view, filing of the suit and/or withdrawal of the said suit cannot affect the arbitration proceeding in view of the arbitration agreement between the parties which provides for resolution of any of their disputes raised either during the continuation of the construction or even after completion of the construction through arbitration as per the provision of the Arbitration & Conciliation Act, 1996. As such, we cannot agree with the learned Trial Judge that due to suppression of the facts relating to filing of the suit and/or withdrawal thereof subsequently by the appellant/applicant, the application under Section 9 of the Arbitration & Conciliation Act filed by the appellant/applicant is liable to be rejected.
The learned Trial Judge has also held that in view of the provision contained in Section 4(25) read with Section 102 and Section 145 of the West Bengal Co-operative Societies Act, the dispute of such nature can only be resolved through the Arbitrator as per the provision of the West Bengal Co- operative Societies Act, 2006 and not by any other forum and/or authority and/or through arbitration as per the provision of Arbitration & Conciliation Act, 1996.
In this regard, let us now consider the provision contained in Section 4(25), Section 102(1)(d), Section 102(4), Section 145(1) and Section 145(2) of the West Bengal Co-operative Societies Act, 2006. For convenient understanding of those provisions, we set out those provisions from the said Act.
"Section 4(25) "dispute" means any matter capable of being the subject of civil litigation, and includes a claim in respect of any sum payable to or by a co- operative society;"
"Section 102. Disputes to be filed before Registrar.- (1) Any dispute concerning the management or business or affairs of a co-operative society other than the dispute relating to election in a co-operative society as and when such election is conducted by the Co-operative Election Commission and disciplinary action taken by co-operative society against its paid employees regarding the terms and conditions of the service shall be filed before the Registrar for settlement if it arises -
(a) ...................................
(b) ....................................
(c) ..................................
(d) between two co-operative societies or between a co-operative society and a liquidator of another co-operative or between liquidator of two different co-
operatives or between a co-operative society and any person having transaction with it or between a co-operative society and its financing bank. (2) .....................................
(3) .....................................
(4) Any civil court or any Consumers' Dispute Redressal Forum shall not have any jurisdiction to try any dispute as mentioned in sub-section (1). (5) ....................................."
"Section 145. Indemnity and bar to jurisdiction of courts.- (1) No suit, prosecution or other legal proceedings shall lie against the Registrar or any person authorised by him or against a board of directors in respect of anything done or purported to be done in good faith under this Act.
(2) Save as provided in this Act, no Civil Court or Revenue Court or Consumer Disputes Redressal Forum shall have jurisdiction in regard to anything done or any action taken or any order passed under this Act and, in particular, in regard to -
(a) the registration of a co-operative society or its by-laws or an amendment of its by-laws; or
(b) the dissolution of the board of a co-operative society and the management of such co-operative society on such dissolution; or
(c) any matter concerned with dissolution or liquidation of a co-operative society;
(d) any dispute required to be referred to the Registrar under section 102.
...................................................." If the provisions, as mentioned above, are considered, then we have no hesitation to hold that the dispute which has been raised between the parties relating to the monetary claim of the appellant/applicant against the said Housing Co-operative Society can no doubt be resolved in the manner as prescribed under the West Bengal Co-operative Societies Act, 2006; inasmuch as, such dispute does not fall within any of the exceptions as contemplated under Section 102(1) of the West Bengal Co-operative Societies Act, 2006.
Now the question is as to whether notwithstanding the fact that such dispute is capable of resolution in the manner as prescribed under the West Bengal Co-operative Societies Act, 2006, dispute of such nature between the parties can be referred to the Arbitrator for resolution of such dispute as per the provision of the Arbitration & Conciliation Act, 1996 or not. In this regard, we are required to refer to the provisions contained in Section 5 and Section 8(1) of the Arbitration & Conciliation Act, 1996 which are set out hereunder :-
"Section 5.Extent of judicial intervention. - Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part."
"Section 8. Power to refer parties to arbitration where there is an arbitration agreement. - (1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.
(2) .........................................."
Section 5 of the Arbitration and Conciliation Act, 1996 starts with a non- obstante clause. As such, notwithstanding the dispute of such nature is capable of resolution by following the provisions of the West Bengal Co-operative Societies Act, 2006, the dispute of such nature, in our view, is capable of resolution through arbitration under the provision of the Arbitration and Conciliation Act, 1996 as we find that there is a valid arbitration agreement admittedly entered into between the parties as contained in the construction contract.
Before we part with, we are also required to consider the legality and/or enforceability of the arbitration agreement.
The learned Trial Judge held that such arbitration agreement is unenforceable as it is contained in an agreement to construct the building which according to the learned Trial Judge is compulsorily registrable as per the Registration Act, 1908.
We disagree with such findings of the learned Trial Judge in view of the provision contained in Section 17(1)(b) of the Registration Act, 1908 which runs as follows :-
"Section 17. Documents of which registration is compulsory. (1) ...................................
(a) ...................................
(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;"
The agreement to construct the building which was entered into between the parties is not such a non-testamentary instrument which purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent in immovable property. By raising such construction by the appellant/applicant on the land belonging to the said Co-operative Society as per the said construction agreement neither any right and/or title will be created in favour of the appellant/applicant nor any right of the said Housing Co-operative Society in the land over which such construction is raised will be extinguished. As per the said agreement, the appellant/applicant was engaged to raise such construction and for raising such construction, the said Housing Co-operative Society will be liable to pay the cost of such construction to the appellant/applicant as per the construction agreement. As such, raising such construction and/or for realisation of the monetary claim for the work executed by the appellant/applicant over the land belonging to the Co-operative Society as per the agreement can in no way alter the right, title and interest of the said Housing Co-operative Society in the immovable property.
Thus, we hold that the agreement for construction which was entered into between the parties does not come within any of the documents as mentioned in Section 17 of the Registration Act which deals with documents which are compulsorily registrable as per the said Act. Thus, we also hold that non- registration of the agreement for construction cannot make the arbitration agreement unenforceable.
We, thus, hold that such arbitration agreement entered into between the parties is very much enforceable and the dispute arising out of the claim for realisation of money by the appellant/applicant against the said Housing Co- operative Society is also capable of resolution through arbitration as per the provision of the Arbitration and Conciliation Act, 1996. As such, Section 9 of the Arbitration and Conciliation Act, 1996 can very much be invoked by the learned Trial Judge in the facts of the instant case.
In the instant case, the appellant has made a positive averment in the application that the said Housing Co-operative Society is going to appoint another contractor for completing the incomplete work in the said project. If the incomplete work is allowed to be completed by engagement of another contractor pending resolution of the dispute between the parties arising out of such monetary claim of the appellant/applicant, then the appellant/applicant will not be able to substantiate his claim before any authority and/or forum, inasmuch as the extent of construction already executed by the appellant/applicant on the said property has not yet been measured and/or verified by the parties and/or by any independent agency appointed by them. As such, we feel that this is a fit case where injunction should have been passed by the learned District Judge restraining the said Housing Co-operative Society from engaging any other contractor for completing the incomplete construction therein and/or by raising further construction by itself until the extent of construction executed by the appellant/applicant is measured and verified either by the parties or by any independent agency to be appointed by the parties to their satisfaction. Accordingly, we set aside the impugned order and allow this appeal.
We pass an order of injunction restraining the said Housing Co-operative Society viz., the respondent herein from appointing and/or engaging any other contractor and/or its men and agents to execute the rest of the construction work on the schedule property until the work executed by the appellant/applicant is measured and verified either by the parties themselves or through their appointed agency to their satisfaction or through the intervention of the appropriate forum.
Both the appeal and the application filed in connection therewith are, thus, disposed of.
(Jyotirmay Bhattacharya, J.) (Samapti Chatterjee, J.) ac/dc.