Madhya Pradesh High Court
Manoj Meena vs Prabhulal on 19 March, 2025
Author: Vishal Mishra
Bench: Vishal Mishra
NEUTRAL CITATION NO. 2025:MPHC-JBP:37470
1 AC-38-2023
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE VISHAL MISHRA
ON THE 19 th OF MARCH, 2025
ARBITRATION CASE No. 38 of 2023
MANOJ MEENA
Versus
PRABHULAL
Appearance:
Shri Bramhadatt Singh - Advocate for the petitioner.
Shri Siddharth Narula - Advocate for the respondent No.1.
ORDER
The present Arbitration Case is being filed seeking the following reliefs :-
"i. Direct the respondent to appoint an arbitrator from amongst the names of the arbitrators proposed by the Applicant in his notice dated 11-11-2022 (Annexure A-3) within a period of 7 days;
ii. Pass any other relief/direction deemed necessary, in the interest of justice."
2. It is the case of the applicant that the non-applicant had entered into an agreement with the applicant in 08.11.2019 for the sale of land owned by the non- applicant bearing Khasra No.169 Village Khedja, Dev Patwari, Halka No.5, Tehsil Huzur, District Bhopal admeasuring 1.48 acres, for consideration of Rs.
25,50,000/-. An advance of Rs.6,00,000/- was paid to the non-applicant by way of two cheques of Rs.2,00,000/- each and Rs.2,00,000/- in cash on the date of said agreement. Remaining amount of Rs.19,50,000/- was agreed to be paid by the applicant by 15.06.2020. The applicant was given the physical possession of the property in question on the date of the agreement itself. The wife, son and daughter of the non-applicant consented to the aforesaid sale agreement by executing the separate consent letter on 10.12.2019. In consonance with the Signature Not Verified Signed by: ANINDYA SUNDAR MUKHOPADHYAY Signing time: 12-08-2025 18:18:02 NEUTRAL CITATION NO. 2025:MPHC-JBP:37470 2 AC-38-2023 explicit terms and conditions of the agreement, the applicant made several requests to the non-applicant to execute the sale deed, but a sale deed dated 10.06.2020 only in respect of 1 acre of land in question was executed by the non- applicant in favour of the applicant for sale consideration of Rs.12,83,000/-. It was assured by the non-applicant that the sale deed with respect to remaining portion shall be executed shortly and the applicant may continue to occupy and cultivate the land i.e. 1.48 acres of the land. Total sale consideration of Rs.16,33,000/- was paid by the applicant to the non-applicant on 10.06.2020 in pursuance to the sale agreement dated 08.11.2019. Thereafter, the non-applicant has taken a somersault and raised a demand of Rs.10,00,000/- in addition to the sale-consideration of Rs.25,50,000/- in order to execute the complete agreement. A legal notice was sent by the applicant on 07.09.2022 requesting to execute the sale deed with respect to the remaining portion of the land. Yet another notice on 11.11.2020 was given, invoking the arbitration clauses contained in the aforesaid agreement proposing the name of two reputed Advocates as Arbitrators to resolve the dispute. It is argued that Clause 12 of the agreement provides that two parties have agreed to resolve their mutual dispute through the mode of arbitration. The same was replied by the non-applicant stating that the agreement dated 08.11.2019 is not binding on him. It is argued that such appointment of an Arbitrator for resolution of the aforesaid dispute could not be done with the consensus of both the parties, therefore, in terms of provisions of Section 11(6) of the Arbitration and Conciliation Act, 1996, the application was filed.
3. On notice being issued, a reply has been filed by the respondents denying all the applicant's averments. It is contended that the property in question was alienated by the respondent, prior to institution of the present proceedings. The Signature Not Verified Signed by: ANINDYA SUNDAR MUKHOPADHYAY Signing time: 12-08-2025 18:18:02 NEUTRAL CITATION NO. 2025:MPHC-JBP:37470 3 AC-38-2023 respondent does not hold any share of the immovable property which is subject matter of the agreement. It is pointed out that the respondent faithfully transferred a portion of the property to the applicant on 10.06.2020. Subsequent thereto, the respondent executed another sale deed on 24.07.2020 in favour of Mrs. Leela Bai, wife of Mr. Kamal Singh, thereby transferring remaining portion of the land, her name has been recorded in the revenue records. The applicant cannot now legally enforce the agreement, until and unless the sale deed executed in favour of Mrs. Leela Bai is declared void by the competent civil courts. The sale deeds cannot be challenged in arbitral proceedings, initiated on the strength of the agreement, for which he has placed reliance upon the judgment passed by the Hon'ble Supreme Court in the case of NTPC Limited Vs. SPML Infra Limited reported in (2023) 9 SCC 385 . Therefore, it is submitted that the clause mentioned in the agreement does not fall under the category of Section 11 of the agreement and now the subsequent sale deed executed by the non-applicant requires to be challenged before the competent Civil Courts. The applicant could have filed a civil suit for specific performance of agreement to sale under the specific clauses of the Specific Relief Act, but he has chosen not to do so and then in the meanwhile, the property was sold to Mrs Leela Bai. Under these circumstances, no relief can be extended. He has prayed for dismissal of the arbitration case.
4. Heard the learned counsel for the parties and perused the record.
5. On the perusal of the record, it is clear that there was an agreement between the parties for sale of a property in question admeasuring 1.48 acres, out of which the sale deed was executed for 1 acre for a consideration amount of more than Rs.12,00,000/-. The remaining land was sold by the non-applicant to Mrs Leela Bai even prior to initiation of proceedings regarding invoking arbitration clause by the applicant. The sale deed dated 24.07.2020 was executed in favour of Mrs Signature Not Verified Signed by: ANINDYA SUNDAR MUKHOPADHYAY Signing time: 12-08-2025 18:18:02 NEUTRAL CITATION NO. 2025:MPHC-JBP:37470 4 AC-38-2023 Leela Bai and the possession was handed over. Her name has also been recorded as a Bhumiswami in the revenue records. Therefore, until and unless the sale deed executed in favour of Mrs Leela Bai is put to challenge before the competent civil court, claiming a relief of setting aside the sale agreement, no relief can be extended to the petitioner. As on date, the non-applicant is not in possession of the property in question. The Hon'ble Supreme Court in the case of NTPC Limited (supra) has considered the aforesaid proposition and has categorically held as under :-
"Eye of the needle
25. The above referred precedents crystallize the position of law that the pre-referral jurisdiction of the Courts under Section 11(6) of the Act is very narrow and inheres two inquiries. The primary inquiry is about the existence and the validity of an arbitration agreement, which also includes an inquiry as to the parties to the agreement and the applicant's privity to the said agreement. These are matters which require a thorough examination by the Referral Court. The secondary inquiry that may arise at the reference stage itself is with respect to the non- arbitrability of the dispute.
26. As a general rule and a principle, the Arbitral Tribunal is the preferred first authority to determine and decide all questions of non-arbitrability. As an exception to the rule, and rarely as a demurrer, the Referral Court may reject claims which are manifestly and ex facie non-arbitrable [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1, para 154.4 :
(2021) 1 SCC (Civ) 549] . Explaining this position, flowing from the principles laid down in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] , this Court in a subsequent decision in Nortel Networks [BSNL v. Nortel Networks (India) (P) Ltd., (2021) 5 SCC 738 : (2021) 3 SCC (Civ) 352] held [BSNL v. Nortel Networks (India) (P) Ltd., (2021) 5 SCC 738, para 45.1 : (2021) 3 SCC (Civ) 352] : (Nortel Networks case [BSNL v. Nortel Networks (India) (P) Ltd., (2021) 5 SCC 738 : (2021) 3 SCC (Civ) 352] , SCC p. 764, para 45) "45. ... 45.1. ... While exercising jurisdiction under Section 11 as the judicial forum, the Court may exercise the prima facie test to screen and knockdown ex facie meritless, frivolous, and dishonest litigation. Limited jurisdiction of the Courts would ensure expeditious and efficient disposal at the referral stage. At the referral stage, the Court can interfere "only" when it is "manifest" that the claims are ex facie time-barred and dead, or there is no Signature Not Verified Signed by: ANINDYA SUNDAR MUKHOPADHYAY Signing time: 12-08-2025 18:18:02 NEUTRAL CITATION NO. 2025:MPHC-JBP:37470
5 AC-38-2023 subsisting dispute."
27. The standard of scrutiny to examine the non-arbitrability of a claim is only prima facie. Referral Courts must not undertake a full review of the contested facts; they must only be confined to a primary first review [Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, para 134 : (2021) 1 SCC (Civ) 549] and let facts speak for themselves. This also requires the Courts to examine whether the assertion on arbitrability is bona fide or not. [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1 :
(2021) 1 SCC (Civ) 549] The prima facie scrutiny of the facts must lead to a clear conclusion that there is not even a vestige of doubt that the claim is non-arbitrable. [BSNL v. Nortel Networks (India) (P) Ltd., (2021) 5 SCC 738, para 47 : (2021) 3 SCC (Civ) 352] On the other hand, even if there is the slightest doubt, the rule is to refer the dispute to arbitration [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1, para 154.4 :
(2021) 1 SCC (Civ) 549].
28. The limited scrutiny, through the eye of the needle, is necessary and compelling. It is intertwined with the duty of the Referral Court to protect the parties from being forced to arbitrate when the matter is demonstrably non-arbitrable [Ibid.] . It has been termed as a legitimate interference by Courts to refuse reference in order to prevent wastage of public and private resources [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1, para 139 : (2021) 1 SCC (Civ) 549] . Further, as noted in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] , if this duty within the limited compass is not exercised, and the Court becomes too reluctant to intervene, it may undermine the effectiveness of both, arbitration and the Court [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1, para 139 :
(2021) 1 SCC (Civ) 549] . Therefore, this Court or a High Court, as the case may be, while exercising jurisdiction under Section 11(6) of the Act, is not expected to act mechanically merely to deliver a purported dispute raised by an applicant at the doors of the chosen arbitrator, as explained in DLF Home Developers Ltd. v. Rajapura Homes (P) Ltd. [DLF Home Developers Ltd. v. Rajapura Homes (P) Ltd., (2021) 16 SCC 743, paras 22, 26 : 2021 SCC OnLine SC 781, paras 18, 20].
50. Accordingly, we have no hesitation in holding that the High Court has committed an error in allowing the application under Section 11(6) of the Act. The High Court ought to have examined the issue of the final settlement of disputes in the context of the principles laid down in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn. , (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549]."
6. If the aforesaid principles laid down by the Hon'ble Supreme Court is taken note of then it is apparently clear that limited scrutiny is required to be done in the matter. Each and every case cannot be referred invoking Section 11(6) of the Signature Not Verified Signed by: ANINDYA SUNDAR MUKHOPADHYAY Signing time: 12-08-2025 18:18:02 NEUTRAL CITATION NO. 2025:MPHC-JBP:37470 6 AC-38-2023 Arbitration Conciliation Act. In the present case, there is a specific averment regarding settlement of a dispute by way of an arbitration but the fact remains that the non-applicant is not even in possession of the property in question. The same has already been sold out prior to invoking the said clause by the non-applicant to one Mrs. Leela Bai by registered sale deed dated 24.07.2020. The applicant has also not filed any civil suit seeking a specific performance on agreement to sale. It is the jurisdiction of the competent civil court to set aside a sale deed which is executed in favour of Mrs Leela Bai by the non-applicant. Under these circumstances, this Court refrains from entertaining this arbitration case.
7. Accordingly, the arbitration case is dismissed. No order as to costs.
(VISHAL MISHRA) JUDGE AM Signature Not Verified Signed by: ANINDYA SUNDAR MUKHOPADHYAY Signing time: 12-08-2025 18:18:02