Punjab-Haryana High Court
Anjoo Sharma vs D.L.F. Educational Charitable Trust on 1 June, 1999
Equivalent citations: AIR1999P&H294, (1999)123PLR119, AIR 1999 PUNJAB AND HARYANA 294, 1999 HRR 416, (2000) 1 ARBILR 9, (2000) 1 LANDLR 582, (1999) 3 RECCIVR 536, (1999) 123 PUN LR 119
Author: V.S. Aggarwal
Bench: V.S. Aggarwal
ORDER V.S. Aggarwal, J.
1. Respondent D.L.F. Educational Charitable Trust, Sansad Marg, New Delhi, has filed a civil suit against the petitioner Mrs. Anjoo Sharma for perpetual injunction restraining the petitioner from taking forcible possession of plot No. 2114 situated in DLF Qutab Enclave Complex, Phase II, Gurgaon, and from restraining her from raising any construction over it or changing the nature and character of the same till final disposal of the suit. It was further prayed that in the event of raising construction by the petitioner, a decree be passed directing demolition of the construction.
2. On notice having been issued, the petitioner appeared and submitted an application under section 34 of the Indian Arbitration Act, 1940 (for short "the Act"). She prayed that there is an arbitration agreement between the parties. In terms of the agreement, all disputes have to be referred for arbitration. Therefore, the suit be stayed.
3. In reply to the said application, the respondent-plaintiff pleaded that the matter in dispute cannot be adjudicated upon by the Arbitrator. Complicated questions of law and fact are involved. The same can only be decided by the Civil Court. It was further asserted that the dispute between the parties is not covered by the arbitration clause as the Director, Town and Country Planning, Haryana, Chandigarh, has reduced the area reserved and earmarked for nursery school from 0.29 acres to 0.20 acres. The dispute between the parties has arisen on account of exercise of jurisdiction by a third person who is not a party to the agreement. It has further been asserted that the petitioner has not been ready and willing to get the matter referred to the Arbitrator for adjudication. She has made false and defamatory statements, in order to malign and defame the image of DLF Universal Ltd., and its associate companies. Since the matter is of a serious nature, therefore, the dispute cannot be referred to the Arbitrator.
4. The learned trial Court after hearing the parties counsel held that there is a valid arbitration agreement between the parties. The petitioner is ready and willing to go in for arbitration. There is no other valid reason why matter should not be referred to the Arbitrator. The proceedings accordingly in terms of Section 34 of the Act were stayed.
5. The respondent-plaintiff preferred an appeal. The learned Additional District Judge, Gurgaon, held that in the application filed under section 34 of the Act, the petitioner has not pleaded the exact dispute between the parties and that the same is covered by the arbitration clause. It has further been held that it cannot be termed that the petitioner was ready and willing to refer the matter for arbitration. In any case, the learned Additional District Judge held that the trial Court could decide the application for ad interim injunction. With these findings, the appeal was accepted and the order passed by the trial Court was set aside. Instead, application under section 34 of the Act was dismissed.
6. Aggrieved by the same, present revision petition has been filed.
7. Before proceeding further, some of the salient facts can well be listed. Respondent DLF Qutab Enclave Complex Educational Charitable Trust is alleged to have been created on 3-2-1988. The aims and objects of the same were to raise construction of buildings for running schools and educational institutions. It is stated to be owner in possession of area measuring 0.20 acres in DLF Qutab Enclave Complex. As per the layout plan submitted by the respondent, this area was reserved and earmarked for the nursery school. It was submitted for approval to the Director, Town and Country Planning, Haryana, Chandigarh. The said lay out plan was subsequently revised and duly approved by the Director, Town and Country Planning, Haryana, Chandigarh. The area was reduced from 0.29 acres to 0.20 acres. The respondent claimed that it along with its associates were in possession and that it is the petitioner who was violating the material terms of the agreement. She has threatened to raise unauthorised construction despite repeated requests as a result of which civil suit has to be filed.
8. On the contrary, the petitioner has claimed that he is in possession of the said place. Clause 25 of the agreement incorporates arbitration clause and that she has already filed an application under Section 20 of the Indian Arbitration Act in Delhi High Court.
9. The petitioner has appeared in person. She referred to a large number of facts which, indeed, relate to the merits and other co-related proceedings but this Court is not expressing any opinion regarding the same.
10. The first and the foremost question that had been agitated was that the petitioner in her application filed under section 34 of the Indian Arbitration Act has not specifically pleaded the nature of the dispute and that in the absence of the same, proceedings under Section 34 of the Act, indeed, could not be stayed. To appreciate the said contention, reference, can well be made to Clause 25 of the agreement. It reads as under :
"That all the disputes arising between the parties in respect of subject matter of this agreement to lease, shall be referred to arbitration under the Indian Arbitration Act, 1940. The arbitration proceedings shall take place at New Delhi and be subject to jurisdiction of Delhi High Court."
11. In her application submitted under section 34 of the Act, the petitioner has asserted that there is Clause 25 in the agreement between the parties referred to above and as per the said clause any dispute arising between the parties will be subject to decision of arbitration. In addition to that, the petitioner asserted that she has preferred a civil suit before the Delhi High Court for appointment of the arbitrator. Delhi High Court has restrained the respondent from altering or changing in any manner the dimensions of the plot or from disturbing the status quo as regards possession. It was accordingly prayed that the proceedings be stayed.
12. When the respondent took up the abovesaid objection, the petitioner had filed a rejoinder to the application. She denied that any third party has anything to do with the controversy. The petitioner is ready and willing to get the matter in dispute referred to arbitration for adjudication. It was denied that there is any reduction in the size of the plot or the nursery school.
13. Supreme Court has considered this controversy in the case of Gaya Electric Supply Co. Ltd. v. State of Bihar (AIR 1953 SC 182), Supreme Court while interpreting Section 34 of the Act held that the legal proceedings which are sought to be stayed must be in respect of a matter which the parties have agreed to refer and which comes within the ambit of the arbitration agreement. If the matter referred is outside, the Court can refuse a stay. It was further held that the Court is to see whether the claim brought comes within the submission to arbitration or not. In the present case, all disputes between the parties had to be referred to the Arbitrator. It is not shown as to how the dispute as such could not have been referred to for arbitration or that the arbitration clause referred to above does not cover the controversy.
14. Strong reliance was placed on the decision of this Court in the case of Daman Anand v. Hiralal (AIR 1974 P&H 232). This Court held that in an application under section 34 of the Act for stay of the proceedings, the person concerned must allege and state existence of dispute. It was further held that existence of a dispute is a condition precedent in referring the matter to the arbitrator. This Court referred to the earlier precedents on the subject and the findings thereafter arrive at reads as under (at page 235) :
"............... The aforesaid observations of the Divisions Bench were followed by Kapur J. (as he then was) in Chiranjiv Lal v. Tropical Insurance Co. Ltd., AIR 1952 Punj 63. in which it was observed that where there was no point of difference before the filing of the suit, there was nothing to refer to arbitration. In a later Division Bench case Bharat Construction Co. Ltd. v. Union of India, AIR 1954 Cal. 606. similar view was again expressed by the Calcutta High Court. It was observed by the learned Bench that an application under section 34 should make out that a dispute, as understood in the law of arbitration, had arisen before the institution of the suit or before the filing of the application, that such dispute was the subject-matter of the suit and that the dispute was within the arbitration clause of the contract. Again a similar matter came up before the Circuit Bench of this Court at Delhi in Dwarka Nath Kapur v. Rameshwar Nath. (1966) 68 Pun LR 91 (Delhi). Grover, J. (as he then was) observed that where the dispute between the parties was not mentioned in the application under section 34 of the Act, there being no point of difference, on which any reference could be made to arbitration before the filing of the suit, the proceedings in Court could not be stayed. The ratio in the aforementioned cases applies to the present case. Defendant No. 1 failed to state the differences between the parties in the application filed by him under section 34 of the Act, which he ought to have done. In the circumstances, the proceedings could not be referred to the Arbitrator. The trial Court has erroneously held that the dispute exists between the parties under the agreement which for its resolution requires reference to the arbitration. In my view, the approach of the learned trial Court was erroneous. I, therefore, upset the finding of the trial Court."
15. In the said suit, plaintiffs had filed a suit for rendition of accounts. The pleadings did not disclose the nature of the dispute. Therefore, the application under section 34 of the Arbitration Act had been dismissed.
16. Delhi High Court in the case of M/s. Pearl Hosiery Mills, Ludhiana v. Union of India (AIR 1979 Delhi 64), dealt with a similar situation. It was held that it must be stated as to what is the dispute between the parties before proceedings under section 34, of the Act have to be stayed. Necessarily, a dispute would be when a person alleges a fact which is denied by the other. The findings arrived at were as under (at page 66) :
"........... Now how is the Court to deal with an application of this type when it comes for decision ? The Court has naturally to see what is the dispute and what is the difference and then look at the arbitration clause to find out if it falls within its scope. Therefore, the Court has necessarily to look both at the arbitration clause as well as the particular dispute or difference which is specified in the application under section 34. Normally, when the case is very obvious, the dispute or difference is also obvious and there is no difficulty in such cases. Whenever there is a conflict regarding the very existence of the dispute or difference, then the objector filing the said application has to specify what is the dispute and what is the difference and what is the arbitration clause. In this particular application neither the dispute or difference nor indeed the reason for the matter being referred to arbitration is set out in the application for stay."
17. There is no controversy that the pleadings must spell out the dispute. The existence of a dispute is a condition precedent before any application under section 34 of the Act can be considered. But while construing the same, indeed, common sense cannot be left in cold storage. The pleadings have to be read out as a whole. The respondent-plaintiff specifically pleaded the controversy that has arisen and the threat of the petitioner. Though in the application filed under section 34 of the Act certain salient facts relating to the dispute were not mentioned. Yet in the rejoinder the assertions of the respondent-plaintiff were controverted. The disputes are obviously drawn between the parties about the plot, its possession and the area which, as per respondent-plaintiff, is stated to have been reduced by the higher authority. The same conclusion can be arrived at by the fact that the petitioner herself has filed an application under Section 20 of the Act before the Delhi High Court. She has asserted in her application that the respondent threatened to dispossess her from the plot in question. The factum of litigation pending in the Delhi High Court have been brought to the notice of the trial Court at Gurgaon. Thus, existence of dispute has to be read while seeing the facts as a whole and taking stock of the same it must follow that there were assertions about the dispute which are patent and this contention of the respondent, therefore, must fail.
18. In that event, it had been pointed out that the petitioner was not ready and willing to get the matter referred for arbitration. In the absence of the same, no arbitration proceedings under section 34 of the Act could be stayed. In this regard, reliance was placed on the Division Bench decision of the Rajasthan High Court in the case of State Bank of Bikaner & Jaipur v. Devaki Narain Bhatia (AIR 1977 Raj. 76). A civil suit had been filed for recovery of a certain sum. Devaki Narain had entered into an agreement with the Bank for construction of a building. Under Clause 16 it was agreed that all the disputes arising under the agreement would be referred to arbitration. There was some correspondence. From that it was inferred that the defendant was not ready and willing to refer the dispute. The application under section 34 of the Act was rejected and in paragraph 17 of the judgment the Court held as under :
"That is true that in the reply dated May 10, 1972 the plaintiff-respondent has not referred about the dispute being referred to arbitration, but in the letter dated July 5, 1972, the defendant appellant did not insist on the dispute being referred to arbitration. It appears that the defendant-appellant was always been to get the matter decided in terms of recommendations of their architect. The arbitration Clause 16 of the agreement refers to the arbitration of the Chief Executive Engineer, or his nominee. The matter was never referred to him, or to his nominee. Apart from this, the plaint also contains averments to certain construction works which were executed by the plaintiff besides the terms of the agreement. The suit was also filed when the period of limitation for filing this suit was about to expire. From the conduct of the parties right from the beginning when the dispute arose upto the date of the filing of the application under section 34 of the Arbitration Act, it appears that none of them was ready and willing to refer the matter to the arbitration and to do all that was necessary for that purpose. Under these circumstances, it cannot be said that the learned Court has erred in rejecting the application for stay filed by the defendant-appellant."
19. Calcutta High Court in the case of Srish Chandra Guha v. The Food Corporation of India (AIR 1975 Cal. 215), was concerned with a similar situation. Herein also, before the commencement of the legal proceedings, there was silence on the part of the defendant-applicant. The Court held that he was not ready and willing to refer the dispute for arbitration. The said person could not take advantage of Section 34 of the Arbitration Act. It was held as under :
"That being the position, I hold that the application should be dismissed on the ground that there is no sufficient averment in the petition wherefrom the Court can be satisfied that the applicant was ready and willing to go to arbitration at the date of the commencement of the legal proceeding. I further hold that even if the applicant for stay remains silent prior to the commencement of the legal proceeding by not replying to the letter of demand threatening to institute legal proceedings the said conduct on the part of the applicant would not be a material consideration for the Court to hold that the applicant for stay was not ready and willing at the date of the commencement of the legal proceedings. Of course, the question as to what would be the effect on the question of readiness and willingness if the applicant would express his definite intention not to go to arbitration in the correspondence prior to the commencement of the legal proceedings has not been considered by me in this application and I do not propose to express my opinion thereon."
20. Calcutta High Court once again in the decision rendered in the case of Brij Gopal Binani v. Sreelal Binani (AIR 1978 Cal. 520), was dealing with a case where a civil suit was filed for dissolution of partnership and rendition of accounts. The defendant had himself suggested arbitration but the plaintiff without any reply filed the civil suit. The defendant had stated that he is ready any willing to go for arbitration. It was held that such a statement should be accepted. The Court in paragraph 5 of the judgment concluded as under :
"It is also not possible to accepted the submission that the defendants were not ready or willing to go to arbitration. Indeed it appears that in a letter dated 10th May, 1975 the defendants had written to the plaintiff's Solicitor that if there be any real grievance the same should be referred to arbitration. The plaintiff did not proceed to take any steps for arbitration thereafter. The defendant-applicants to this application under section 34 have stated that they are ready and willing and were always ready and willing to go to arbitration. No facts have been indicated not to accept this statement of the applicant. In that view of the matter, the observations of the Supreme Court in the case of Food Corporation of India v. M/s. Thakur Shipping Co., AIR 1975 SC 469. would not be applicable to the facts and circumstances of this case. Here there was not any question of maintaining a silence in the face of any request by the other party to go to the arbitration. On the other hand, the defendants had themselves suggested arbitration to which it seems the plaintiff paid no heed. I am, therefore, unable to accept this contention also."
21. Similar was view of the Delhi High Court in the case of M/s. Haryana Breweries Ltd. v. M/s. Bombay Ammonia (P) Ltd. (AIR 1995 Delhi 288 = 1995 (1) Arb. LR 81). In the said case, an application under section 34 of the Arbitration Act had been filed. There was no averment that the defendant was ready and willing to submit to arbitration. Pleading of such a fact was held to be sine qua non before such an application could be entertained. It was held that in such circumstances the proceedings are not liable to be stayed.
22. Let us revert back to the facts of the case. It has already been pointed out that petitioner has filed an application under section 20 of the Act before the Delhi High Court for making a reference of the dispute to the arbitration. On 9-8-1995 Delhi High Court had granted ex forte injunction and the order reads as under :
"In the facts and circumstances particularly the documents appended with the plaint, I am satisfied that the petitioner is entitled to an ex parte order of injunction which if not granted will result in making the prayers in the application infructuous. Accordingly, respondents are restrained from altering or changing in any manner the dimensions of plot in question bearing No. 2114 DLF Qutab Enclave, Phase-II, Gurgaon, as shows in red in the plan attached to the lease agreement and from disturbing the status quo as regards possession over the disputed plot.
On or before the next date the defendants to show cause as to why the injunction order be not made absolute."
23. Subsequently, same application came up before the Delhi High Court and therein the counsel on behalf of the respondents had submitted that they were trying to redress the grievance of the petitioner by moving an application for sanction of the zonal plant so that the petitioner is able to retain plot of the same size or in the alternative have an equivalent plot. The said order reads as under :
"Learned Senior Advocate Bawa Shiv Charan Singh submits that the respondents are trying to redress the grievance of the petitioner by moving an appropriate application for sanction of the zonal plan which would enable the petitioner to retain plot of the same size or in the alternative have an equivalent plot. Learned counsel for the petitioner states that the petitioner would consider the proposal as and when made by the respondent.
In case the respondents are unable to obtain sanction within a period of three weeks, they would file written statement on or before the next date. Relist the matter on 20th May, 1996."
24. On 20-5-1996 Delhi High Court again passed the following order :
"Learned Senior Advocate Bawa Shiv Charan Singh submits that pursuant to his submission on 9-4-1996, the Zonal plan has since then been sanctioned. He further submits that the petitioner has also met the respondent's director, who has been similarly apprised. The petitioner would now be able to retain plot of the same size or in the alternative have an equivalent plot."
25. These facts clearly show that not only the disputes had arisen, the petitioner was ready and willing to submit to the proceedings of arbitration. She has already moved Delhi High Court. Certain disputes pertaining to the dispute of the present plot in controversy were made on behalf of the respondent-plaintiff. When such is the situation and certain facts are on the record to state that there is absence of pleadings that the petitioner is willing to submit to the arbitration proceedings would be perversity of justice. Pleadings are necessary. They must be specific. But when co-related with other facts, a controversy is established and it is known that the petitioner is willing to submit to the arbitration proceedings, in that event, rejection of application on such a technically in the peculiar facts of the present case would be improper.
26. Yet another fact taken note of has been that certain defamatory allegations have been made against the petitioner, therefore the proceedings under section 34 of the Act should not be stayed. The news report item had been produced. A perusal of the same reveals that it is usual assertion of the press for which the respondent should take appropriate action but it cannot be termed that simply on that account proceedings under section 34 of the Act should be refused to be stayed.
27. The last submission in this regard, indeed, could not be ignored. When the application under section 34 of the Act is filed, the Court, indeed, considers if any temporary or interim stay is to be granted or not. This Court in the case of M/s. Sir Ganga Ram & Sons v. Punjab State Electricity Board, Patiala ((1973) 75 Pun LR 652.), has considered this controversy and returned the finding that the Court is empowered under Section 41 of the Arbitration Act to pass interim orders irrespective of the fact whether one of the parties had already made an application under section 34 of the Act or not. Indeed, this is the correct position in law. But when the civil suit is already pending in the Delhi High Court and the respondents have been restrained from altering the dimensions of the plot, it becomes unnecessary for the Court to pass fresh order. The learned trial Court has already recorded that the parties are required to maintain status quo regarding possession. The respondent would be well advised to move an appropriate application before the Delhi High Court for any other relief in this regard to restrain the petitioner from setting up any structure therein because the question about possession is very much alive before the Delhi High Court. But passing a fresh order or a parallel order or a parallel order would be inappropriate when proceedings of almost similar nature are pending in the Delhi High Court.
28. For reasons, the revision petition is allowed. The judgment of the learned Additional District Judge is set aside. Instead, application under Section 34 of the Act is allowed. The proceedings in the trial Court are stayed. But keeping in view the observations made above, it is directed that the respondent, if so advised, may submit an application before the Delhi High Court to restrain the petitioner from raising any construction therein or changing the character of the said plot.
29. Revision allowed.