Madhya Pradesh High Court
Dr. S.Z. Jafrey vs Modern Industrial Enterprises And Ors. on 6 October, 2005
Equivalent citations: AIR2006MP56, 2006(3)ARBLR424(MP), 2006(1)MPHT419, AIR 2006 MADHYA PRADESH 56, 2006 (3) ALL LJ NOC 601, 2006 (2) AJHAR (NOC) 502 (MP), 2006 (3) AKAR (NOC) 292 (MP), 2006 A I H C 1869, 2006 (3) ARBI LR 424, (2006) 3 ARBILR 424, (2006) 1 MPHT 419
Author: N.K. Mody
Bench: N.K. Mody
ORDER N.K. Mody, J.
1. On 18-9-2001 an application was filed by the petitioner under Section 11(5) of the Arbitration and Conciliation Act, 1996, which shall be referred hereinafter as Act, wherein it was prayed to appoint the arbitrator to settle the dispute between the parties. In the petition it was alleged that on 24-9-1998 respondent executed the sale deed in favour of the petitioner which contains the following Arbitration Clause :-
Any disputes/differences between the vendor or seller and purchaser shall be referred mutually to a arbitrator through arbitration under the prevailing Arbitration Laws.
2. It was submitted that since there was a dispute regarding selling out the covered parking area of Dcvdarshan building situated at South Tukoganj, therefore, notices were issued to the respondents for appointment of arbitrator for resolving the disputes between the parties, in view of the arbitration clause quoted in the sale deed itself, but of no avail. Hence it was prayed to appoint the arbitrator. Application was opposed by the respondents on various grounds including that the petitioner is claiming for appointment of the arbitrator on the basis of recital in the sale deed. It was submitted that as per Section 7(3)(a) of the Act an arbitration agreement is required to be signed by the parties. It was alleged that since the sale deed was signed by only one of the parties, therefore, it can not be treated as arbitration agreement. For the purpose of the convenience Section 7 of the Act is quoted herein below :-
Section 7. Arbitration Agreement.-
(1) In this Part, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in :-
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement oral.
(c) an exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes and arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.
3. Learned Counsel for the petitioner submits that prior to the execution of the sale deed parties entered into an agreement to sale the property vide agreement dated 11-9-1997 wherein there was a clause of arbitration which has been reproduced in the sale deed dated 24-9-1998. It was submitted that sale deed was the consequent of the agreement, therefore, it can not be said that there was no agreement between the parties regarding appointment of arbitrator. It was further submitted that since the sale amount was paid by the petitioner and in lieu of which the sale deed was executed, therefore, implicdly the petitioner was agreed for appointment of the arbitrator. On the strength of this it was argued that in the circumstances the application filed by the petitioner can not be thrown out on the ground that there is no agreement which has been signed by the parties. Further more it was submitted that the objection that there was no arbitration clause in the agreement could have been taken by the petitioner but not the respondents who has agreed in writing while executing the sale deed.
4. Learned Counsel for the petitioner placed reliance in a decision reported in 2002 (1) Arb.LR 174 (Delhi) Unipack Industries v. Subhash ChandJain and Ors. wherein Hon'ble High Court of Delhi has observed that, "As per Section 7 read with Section 2(b) of the Act there has to be an agreement to refer the dispute or certain disputes with respect to defined legal relationship to arbitration. The arbitration agreement has to be in writing but as is apparent from Sub-section (4) of Section 7 even if it is not signed under certain circumstances contemplated under clauses (b) and (c) of Sub-section (4) to Section 7 still there can be an arbitration agreement".
5. Learned Counsel for the respondents placed reliance on a decision reported in the case of Pramod Chimanbai Paid v. Lalit Constructions 2002 (3) Arb.LR 338 (Bombay), wherein Bombay High Court has held that, "Parliament has clearly intended by saying so in clear words that the agreement would be an agreement in writing if it is contained in a document signed by the parties. I am of view that Parliament did not use the words in plural accidentally. It did so deliberately". Therefore, the arbitration agreement must be signed by both the parties.
6. So far as case of Pramod Chimanbai Patel (supra), is concerned, the Bombay High Court has taken the view that the agreement shall be signed by both the parties in all together different circumstances. In this case the arbitrator was sought on the basis of letter dated 28-12-2001, which according to other party was fabricated. For this letter Bombay High Court also observed that there is an unusual long gap between the last sentence of the letter and the signature. The letter was also alleged to have written after two years of original agreement for the purpose of introducing a new clause which the Court found un- natural.
7. In the present case there was an agreement to sale between the parties having a clause of arbitration. Thereafter a sale deed was executed by the respondent which also contained the clause of agreement. On the sale deed no doubt it is the vendor who are respondents herein has signed, but at the time of execution of sale deed the consideration was given by the petitioner, therefore, even if the sale deed do not bear the signature of the petitioner, then too implicdly it can be presumed that there was a clause of arbitration between the parties which has been duly accepted by both the parties. Apart from this as per Sub-clause (4) of Section 7 of the Act it is not the necessary requirement of law to have agreement to be signed by the parties, but even from exchange of letters, telex, telegrams or other means of telecommunications which provide a record of the agreement or an exchange of statement of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other, can be presumed that there was an arbitration agreement between the parties.
8. In the facts and circumstances of the case where in consequence of the agreement to sale which contained the Clause of arbitration the sale deed was executed by the respondent No. 1 in favour of the petitioner which also contained the arbitration clause and for completing the transaction the petitioner parted with money, it has to infer that there was an agreement between the parties to the effect that in case of dispute the matter has to be referred to the arbitration. In the facts and circumstances of the case the objection of the respondent has no force, hence rejected. Both the parties are directed to submit panel of three persons out of which arbitrator can be appointed.