HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH ?Court No. - 6 Case :- ARBITRATION APPEAL No. - 18 of 2019 Appellant :- M/S [ENTITY] Thru. Director & Another Respondent :- [ENTITY] Thru. [ENTITY] Counsel for Appellant :- [ENTITY],[ENTITY] Counsel for Respondent :- [ENTITY] Hon'ble [ENTITY],J.
The instant appeal has been preferred against the order dated 01.08.2019 passed by Special Judge (E.C. Act)-I, Lucknow acting as Judge Small Causes Courts in [CASE NUMBER], whereby the application of the appellants under [SECTION] of the [ACT] has been rejected.
The submission of the learned counsel for the appellants is that the court below has entered into the merits of the case while dealing with the application under [SECTION] of the [ACT], whereas it ought to have confined itself only to the fact whether there was an arbitration clause in between the parties and once it found that there is an arbitration clause in between the parties then in terms of the judgment rendered by the Apex Court in the case of [PRECEDENT], the Court was only required to refer the parties to arbitration. However, in the present case, the trial court has entered into the merits and has held that the dispute in between the parties is not arbitral and, therefore, it has rejected the application.
Shri [ENTITY], learned counsel for the respondents has submitted that first and foremost, the appellants had waived their rights inasmuch as it had filed his detailed written statement and thereafter in order to delay the proceedings, the application under [SECTION] of the [ACT] was filed. He has submitted that the language of [SECTION] of the [ACT] in itself provides that the application has to be moved at the first instance and in any case before the filing of the written statement. Moreover, it has further been submitted that the agreement which contained the arbitration clause is neither registered nor properly stamped and accordingly in light of the decision of the Hon'ble Apex Court in the case of [PRECEDENT], the Court while looking into the fact whether the matter can be referred for arbitration has to first ascertain whether the agreement itself is required to be stamped and registered or not. In case, if the required stamp duty and registration and if the agreement is not registered or is under stamped then it is not open for the court to appoint an arbitrator and rather it requires to impound the agreement at the first instance.
In view thereof, it has been submitted that the trial court has not committed any error in rejecting the aforesaid application.
The Court has considered the submission of the learned counsel for the parties and also perused the record.
From the record, it would indicate that the respondents had instituted a suit for eviction based on a lease agreement dated 04.03.2013, a copy which has been annexed as Annexure No.2. From the perusal thereof, it indicates that though the agreement was for a period of nine years, however, the same is neither registered and is executed on Rs.100/- stamp paper. The arbitration clause contained in Clause 16 states that the dispute of any type be solved by arbitration duly appointed by both the parties.
Learned counsel for the appellants could not dispute the fact that the aforesaid agreement which was for a period of nine years and related to lease of immovable property was required to be stamped as well as registered in terms of the [ACT] and [SECTION] of the [ACT].
Since, the Apex Court in the case of [PRECEDENT] (supra) has categorically held that before appointing of an Arbitrator, it is necessary to see whether the agreement requires stamp duty and registration. Accordingly, it was the material consideration before the court below. It is also relevant to mention that this aspect of the matter has also been considered by the Hon'ble Apex Court in the case of [PRECEDENT]. Once, this is the categoric position and it is undisputed that the agreement is neither registered nor properly stamped, accordingly, the first submission of the learned counsel for the appellants does not have any legs to stand. Moreover, the language of [SECTION] of the Act of 1996 is also very clear which mandates that the parties before filling its first statement of defence must make an application under [SECTION] of the Act of 1996.
In the present case, the written statement was filed on 13.05.2019 whereas the application under [SECTION] of the Act of 1996 was filed on 24.05.2019. Accordingly, it is clear that the aforesaid application was also filed after the filing of the written statement and, therefore, the appellants by necessary implication appears to have waived their rights of invoking the arbitration clause.
It has also been brought to the notice of the Court that the appellants had made an application under [SECTION] [ACT] on the ground of the arbitration clause and that the matter be referred for arbitration in terms of [SECTION] of the Act of 1996 itself, which was rejected by the court below by means of the impugned order dated 01.08.2019 and it appears that same issue has been raised by the appellants both by making an application under [SECTION] of the Act of 1996 as well as an application under [SECTION] [ACT]. It has also been brought to the notice that the impugned order dated 01.08.2019 by which the application under [SECTION] [ACT] was rejected was assailed by the appellants who preferred a [CASE NUMBER] before this Court which was rejected by means of the order dated 07.11.2019.
Considering the aforesaid undisputed facts coupled with the reasoning given by the court below in its impugned order dated 01.08.2019, this Court finds that there is no error committed by the court below. Accordingly, the appeal is devoid of merit and is dismissed.
Order Date :- 11.12.2019 Rakesh/-