IN THE COURT OF SH. HASAN ANZAR, ADJ-06 WEST DISTRICT,TIS HAZARI COURTS ARBT No.15/19 Sh. [ENTITY] S/o Sh K L Manchanda F-81, First Floor, Naraina New Delhi-110028 Petitioner Versus 1. Sh. [ENTITY] S/o Sh [ENTITY] 2. Smt [ENTITY] W/o Sh [ENTITY] Both R/o F-81, Ground Floor, Naraina, New Delhi-110028 3. Sh [ENTITY] F-46, Naraina Vihar, New Delhi-110028 4. Sh [ENTITY] F-18, Naraina Vihar, New Delhi-110028 5. Sh [ENTITY] F-15, Naraina Vihar, New Delhi-110028 6. Sh [ENTITY] F-109, Naraina Vihar, New Delhi-110028 7. Sh [ENTITY] F-64, Naraina Vihar, New Delhi-110028 8. [ENTITY], Residents Welfare Association (Regd) ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 1 /16 F-22, Naraina Vihar, New Delhi-110028 9. Sh [ENTITY] S/o Sardar Raghubir Singh Oberoi R/o F-81, Ground Floor, Naraina Vihar, New Delhi-110028 Respondents
Date of Institution: 05.12.2007 Date reserved for Order: 16.08.2019 Date of Order :02.11.2019 Judgment
1. Petitioner has challenged the arbitral award dated 30.09.2007 under [SECTION] of [ACT] (hereinafter called as "[ACT]") passed by Five Arbitrators of F Block, Residents Welfare Association, Naraina Vihar, New Delhi.
2. It is the case of petitioner that he is owner of first floor of property bearing No. F-81,Naraina Vihar, New Delhi. Petitioner was engaged in construction of a passage leading to the first floor however same was resisted by respondent No.1 and 2, who are stated to be the residents/owner of ground floor. It is also averred that the said construction and repair work was undertaken by the petitioner for his parents as they were facing difficulty.
3. It is also averred that petitioner has filed a civil suit against respondent no.1 and 2 for restraining them for interfering in the construction made by petitioner. In the aforesaid civil suit of permanent injunction filed by petitioner, an application under [SECTION] of [ACT] was filed by ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 2 /16 few respondents contending that subject matter of the suit filed by present petitioner is a subject matter of an arbitration proceedings.
4. It is also the case of petitioner consequent to filing of application under [SECTION] of [ACT] in the Civil Court (West) in [CASE NUMBER] titled as [ENTITY] Vs [ENTITY], petitioner sent a legal notice to respondent no.3 to 8 (Arbitrators/ Resident Association) not to publish award however arbitral award was passed on 30.09.2007 by Committee of Arbitrators.
5. During the pendency of [CASE NUMBER], vide order dated 25.05.2012, present petition under [SECTION] of [ACT] which was initially numbered as [CASE NUMBER] was "adjourned sine die" on the statement of petitioner and respondent No.1 and 2 that issue pertaining to the existence of arbitration agreement in between petitioner and respondent no.1 and 2 shall have great bearing in the present petition filed by the Petitioner. Vide order dated 25.05.2012, liberty was also granted to petitioner to revive the present petition as and when issue pertaining to an existence of arbitration agreement is decided by the Civil Judge Court (West), Tis Hazari, Delhi in [CASE NUMBER]. Vide Order dated 01.03.2016, present petition was revived.
6. On 12.12.14, Ld.Civil Judge (West District) dismissed the application under [SECTION] of [ACT] filed Respondent No.1, 2 & 9 in [CASE NUMBER]. Ld Civil Judge while dismissing application under [SECTION] of [ACT] noted that Respondent No. 9 (Defendant No.1) is not the owner of the suit property. It was held that the owner of the suit property is Respondent No. 1&2 (Defendant No.3 and 4). It was further observed that arbitration proceedings were in between petitioner and Respondent No.9, whereas ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 3 /16 owner of the ground floor portion of property is Respondent No.1 & 2 ( Defendant No. 3& 4). Since there is no arbitration agreement between the owners of ground floor and first floor of the property and therefore application under [SECTION] of [ACT] is liable to be dismissed. Ld Civil Judge also returned a finding that Respondent No. 1, 2 & 9 (Defendants in the civil suit) failed to prove the existence of any arbitration agreement and hence application under [SECTION] of [ACT] was rejected.
7. Pursuant to the disposal of application under [SECTION] of [ACT], an application u/[SECTION] [ACT] for revival was moved on behalf of petitioner and thereafter notice was issued to respondents and present petition was revived on 01.03.2016.
8. Initially matter was heard on 20.07.2018 and opportunity was given to respondent to file written submission but respondents did not file any written submission and a clarification was sought from petitioner on certain aspect. On 20.11.2018, an application under [SECTION] [ACT] was filed on behalf of petitioner for impleading [ENTITY]. Notice was served on the son of [ENTITY] however no reply was filed by [ENTITY] and vide order dated 11.03.2019, [ENTITY] was impleaded as party respondent no.9 in the case by noting that arbitration proceedings were initiated at the instance of [ENTITY] and therefore, impleadment of Shri [ENTITY] is necessary for the just adjudication of the case.
9. I have heard Mr [ENTITY], Ld counsel for petitioner and also perused the written submission filed by petitioner and perused the record of the present case. However no arguments were advanced on behalf of respondents despite sufficient opportunities.
ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 4 /16
10. Before proceedings to decide the issues raised in the petition filed by the petitioner, it will be apposite to reproduce [SECTION] of the [ACT] which provides the ground for setting aside an Arbitral award. The relevant provisions reads as under: -
2(a) the party making the application furnishes proof that-
(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 5 /16 from which the parties cannot derogate, or failing such agreement, was not in accordance with this Part.
11. Grounds/objections raised in a petition should be limited to grounds provided in [SECTION] of [ACT] and Court cannot consider grounds which are beyond the statutory mandate as provided under [SECTION] of [ACT]. Parameters by which a court could decide a petition under [SECTION] of [ACT], was subject matter of number of decisions of Hon'ble Supreme Court and Delhi High Court. Excerpts of Few judgments are being reproduced as below;
In [PRECEDENT] at para 10, it was held:
A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with.
In [PRECEDENT] it was held:
"21. A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or reappreciating the evidence. An award can be challenged only under the grounds mentioned in [SECTION] of the Act. The Arbitral Tribunal has examined the facts and held that both the second respondent and the appellant are liable. The case as put forward by the first respondent has been accepted. Even the minority view was that the second respondent was liable as claimed by the first respondent, but the appellant was not liable only on the ground that the arbitrators appointed by the Stock Exchange under [SECTION], in a claim against a non-member, had no jurisdiction to decide a claim against another member. The ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 6 /16 finding of the majority is that the appellant did the transaction in the name of the second respondent and is therefore, liable along with the second respondent. Therefore, in the absence of any ground under [SECTION] of the Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at."
In [PRECEDENT], the Court summarized the law thus:
"21. From the above decisions, the following principles emerge:
(a) An award, which is
(i) contrary to substantive provisions of law; or
(ii) the provisions of the [ACT]; or
(iii) against the terms of the respective contract; or
(iv) patently illegal; or
(v) prejudicial to the rights of the parties; is open to interference by the court under [SECTION] of the Act.
(b) The award could be set aside if it is contrary to:
(a) fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality.
(c) The award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court.
(d) It is open to the court to consider whether the award is against the specific terms of contract and if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India.
12. Principles that are culled from the above referred judgments are that unless and until the award is arbitrary and beyond the terms of agreement and falls foul with ground [SECTION] of [ACT], it shall not be upset by Court exercising its jurisdiction under [SECTION] of [ACT]. The decision of Arbitrator has to be accepted unless there is a gross flaw in the award passed by Arbitrator and while considering an objection under [SECTION] of [ACT], the court does not sit like an appellate court. However, that does not prevent the court from considering the legality of award passed by an arbitrator.
ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 7 /16
13. The first point of consideration in this appeal as to whether findings recorded by a Civil Judge, to the effect that there was no arbitration agreement in between the parties due to which application under [SECTION] of [ACT] was dismissed and since it was held by Ld Civil Judge that there was no arbitration agreement so the present appeal is liable to be allowed and since there is no arbitration agreement hence, the very foundation of award goes and therefore appeal is liable to be allowed. It is pertinent to mention that application under [SECTION] of [ACT] was moved before Ld Civil Judge on 1.10.2007 i.e. after passing of arbitral award dated 30.9.2007.
14. In order to appreciate this issue, it would be apt to refer unamended [SECTION] of [ACT], which provides that a judicial authority before which an action is brought in a matter which is the subject matter of arbitration and upon application by a party shall refer the parties to arbitration. As per [SECTION] of [ACT], if an application has been made under [SECTION] of [ACT] then arbitral proceedings may be commenced or continued and even an arbitral award can be made.
15. Hence, [SECTION] & [SECTION] of [ACT], does not prohibit the continuance of [ACT] Proceedings and even an arbitral award can be passed. Therefore, order dated 12.12.2014 passed by Civil Judge(West) , holding that there was no arbitration agreement is not binding on a court exercising its jurisdiction under [SECTION] of [ACT]. In the present case, arbitral award was already passed.
16. It is pertinent to mention that [SECTION] of [ACT] has used the expression "judicial authority" both in [SECTION] and [SECTION] of [ACT].
ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 8 /16 Therefore, any order by a "judicial authority" would not have bearing on any proceedings under [ACT], if such a proceeding has been conducted independently and proceeded to pass an arbitral award. Arbitral Award is to be tested on the touchstone of grounds as enumerated under [SECTION] of [ACT]. Therefore, for the purpose of adjudication of the present appeal, order dated 12.12.14 passed by Ld Civil Judge dismissing application under [SECTION] of [ACT] will have no bearing in a petition under [SECTION] of [ACT] while considering the merits of arbitral award dated 30.09.2007.
17. Initially Respondent No. 1 and 2 filed reply to the petition and it was stated that petitioner and father of respondent No.1 (i.e. Respondent No.9) agreed to settle all the dispute which is bone of contention between petitioner and residents of ground floor. It is also stated that it was on the insistence of petitioner that committee was constituted to give its decision based upon the document of sale and purchase and after considering the same, the arbitral award dated 30.09.2007 was passed by the Committee of Arbitrators.
18. Reply was also filed on behalf of respondent no.3 to 7 (Arbitrators) and reference was made to certain annexures by which the arbitral proceedings as stated to have commenced in between the parties. Respondent no 3-7 (arbitrators) have submitted that it was on the request of the parties that arbitration proceedings commenced.
19. It was vehemently argued by the Ld Counsel for the petitioner that there was no arbitration agreement in between the parties i.e. Petitioner and Respondent No.1 &2/ Respondent No.9 in respect of the fact that any dispute between the parties could be referred for an arbitration. Argument as advanced by Counsel for the petitioner stands contradicted from the narration of facts and ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 9 /16 grounds as raised in the petition by petitioner himself. In paragraph 14 Ground B at page 7 of petition it was stated that petitioner was forced to sign the agreement under duress. Once the petitioner admits his signature on documents on the basis of which dispute was attempted to be resolved by the committee and therefore, petitioner cannot be permitted to deny the fact that there was no understanding between the petitioner and Respondent No.9 for referring the disputes to a committee. Question that arises for consideration whether minutes of meeting in which the petitioner and Respondent No. 9 have agreed to resolve the dispute have all the trappings of a valid arbitration agreement or not. Whether it provides that dispute in between the parties could be resolved by way taking recourse to [ACT] proceedings.
20. [SECTION] of [ACT] defines and sets up as to what is an [ACT] Agreement. [ACT] agreement means an agreement by which parties agree to submit all or certain disputes for arbitration. [ACT] agreement could be an independent agreement or an arbitration clause could be part of an agreement. [SECTION] of [ACT] also provides that arbitration is in writing if it is contained in exchange of letters, or other means of telecommunication in which it was recorded. [ACT] Agreement/Clause also refers to exchange of statement of claims and defence in which the existence of agreement is alleged by one party and not denied by the other.
21. What is an arbitration agreement was considered by Hon'ble Supreme Court. In [PRECEDENT], held as to would be an arbitration agreement in between the parties, the relevant paragraph 8(iii) &(iv) is reproduced as under ;
8 (iii) Where the clause provides that in the event of disputes ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 10 /16 arising between the parties, the disputes shall be referred to [ACT], it is an arbitration agreement. Where there is a specific and direct expression of intent to have the disputes settled by arbitration, it is not necessary to set out the attributes of an arbitration agreement to make it an arbitration agreement. But where the clause relating to settlement of disputes, contains words which specifically excludes any of the attributes of an arbitration agreement or contains anything that detracts from an arbitration agreement, it will not be an arbitration agreement. For example, where an agreement requires or permits an authority to decide a claim or dispute without hearing, or requires the authority to act in the interests of only one of the parties, or provides that the decision of the Authority will not be final and binding on the parties, or that if either party is not satisfied with the decision of the Authority, he may file a civil suit seeking relief, it cannot be termed as an arbitration agreement.
(iv) But mere use of the word 'arbitration' or 'arbitrator' in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration. For example, use of words such as "parties can, if they so desire, refer their disputes to arbitration" or "in the event of any dispute, the parties may also agree to refer the same to arbitration" or "if any disputes arise between the parties, they should consider settlement by arbitration" in a clause relating to settlement of disputes, indicate that the clause is not intended to be an arbitration agreement. Similarly, a clause which states that "if the parties so decide, the disputes shall be referred to arbitration"
or "any disputes between parties, if they so agree, shall be referred to arbitration" is not an arbitration agreement. Such clauses merely indicate a desire or hope to have the disputes settled by arbitration, or a tentative arrangement to explore arbitration as a mode of settlement if and when a dispute arises. Such clauses require the parties to arrive at a further agreement to go to arbitration, as and when the disputes arise. Any agreement or clause in an agreement requiring or contemplating a further consent or consensus before a reference to arbitration, is not an arbitration agreement, but an agreement to enter into an arbitration agreement in future.
22. Upon reading [SECTION] of the [ACT] and Jagdish ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 11 /16 Chandra (Supra) and if one reads the of minutes dated 21.5.2007 would reveal that it speaks of the constitution of a committee concerning the dispute between the owners of the first floor and Ground Floor. Second page of minutes dated 21.5.2007 just top of F-81: Dispute between owners of Ground floor and First Floor, it is clear that said writing as signed by petitioner and respondent no.9, would show that they have agreed that disputes would be referred to Committee, whose decision would be final and binding on both the parties. Hence, petitioner and respondent no. 9 have agreed to submit themselves for [ACT] proceedings. Hence, contention of the petitioner that there is no arbitration agreement/clause is rejected.
23. Award dated 30.09.2007, was also challenged on other grounds too. The said challenge is also being considered.
24. It is relevant to mention that on 12.1.2011, it was noted that a joint secretary of Respondent No. 8 submitted that complete record of arbitral proceedings has been filed and it was directed that arbitral record be checked and case was fixed for final arguments. On 2.6.2011, it was noted that certain documents were filed but there is no register as it was submitted by Counsel for Respondent i.e. Resident Welfare Association that alongwith arbitral award a register was filed. It was noted that there is no order to the effect that any register is to be taken into record and later on the basis of noting of [ENTITY] it was recorded, no such register was found available on record.
25. Perusal of Arbitral record filed with the reply (on behalf of respondent No. 3 to 8) would reveal that certain documents were filed which are basically photocopy of sale deed and the photocopy of minutes dated 03.02.2008 and a photocopy of notice dated 18.05.2007.
ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 12 /16
26. As per the photocopy of minute dated 21.05.2007, it was noted that a 5 committee would look into the merits of the case concerning the disputes between the owner of first floor and ground floor. It was also noted in the minutes that committee (arbitrators) will also examine all persons in the case before arriving decision. The original minutes of said meeting has not been placed on record. Minutes of meeting which were signed by petitioner and respondent no. 9 has also agreed for semblance of procedure that is to be carried out by arbitrators. However, question that need to be considered as to what is the dispute that needs to be decided in between the parties? Whether it pertains to construction or to any encroachment? Whether it involves determination of some provision of sale deed? Unfortunately, neither minutes dated 21.5.2007, nor any proceedings has been filed by arbitrators that any statement of claim was filed or even dispute that is going to be decided by the arbitrators were stated in the arbitral proceedings in the form of any statement of any party. Last page of Arbitral Award notes that inspection was made, however date of inspection was neither mentioned nor it was recorded anywhere in arbitral record (except for photocopy of minutes and sale deed, no other document has been filed)
27. Once arbitration agreement is arrived in between petitioner and respondent no. 9, it was required on the part of Arbitral Committee to issue notice for conducting the arbitration proceedings. No notice has been placed on record to show that any of the parties have ever attended any arbitration proceedings conducted by committee of five arbitrators. It was noted in the minutes that witness would be examined but no witness was examined. The version of the petitioner with regard to the dispute was missing in the present case. It is also not evident from the record whether arbitration tribunal has conducted any meeting in this regard or any of the parties have been called for the conduct of the arbitration ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 13 /16 proceedings.
28. Even the substance of dispute that would be decided by Arbitrator is also missing and in the absence of the specific terms with regard to the adjudication of dispute, it would be difficult to adjudicate on the dispute between the parties. Although disputes between petitioner and respondent no.9 were sent for adjudication but it is not clear from the minutes dated 21.5.2007 as to what are the terms of dispute as opening word of minutes dated 21.5.2007, which records that a committee has been constituted to look into the merits of dispute between the owner of first floor and Ground Floor and even what was the dispute has not even been referred in this minutes dated 21.5.2007. It is also not clear what was the term of committee and what was the scope of this committee. Pertinently, it notes that it was dispute between the owner of ground floor portion and first floor portion and one part of this so called minute/purported agreement was signed by [ENTITY] (Respondent No.9), who is father of Respondent No.1. Shri [ENTITY], is not the owner of ground floor portion of F-81,Naraina Vihar, New Delhi N-81 and in the absence of any impleadment of Respondent No. 1 and 2 as party to the arbitration agreement, the dispute in between the parties cannot be adjudicated by arbitrators.
29. Passing of an award under the provisions of [ACT] has definite consequences for the parties involved in the arbitration. Thus, nature of dispute has to be stated in precise manner or to indicate substance of dispute that is to be adjudicated. Even otherwise, there is no reference to any dispute or even a background as to what is to be adjudicated. Thus, so called award clearly falls foul of [SECTION] of [ACT] as the award has dealt with the dispute not contemplated by it and more precisely it does fall not fall with the terms of arbitration and the award was passed beyond the scope of arbitration agreement. .
ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 14 /16
30. [ACT] agreement dated 21.5.2007 provides that documents will be examined and furthermore persons would be examined, in the record of arbitral proceedings, there is not even a single shred of piece of paper, wherein it could be said any notice was sent to the petitioner for this so called arbitral proceedings. I find sufficient merit in the submission of the Ld. Counsel for petitioner that award is in complete conflict with [SECTION] of [ACT] as no notice was given to the parties and petitioner was unable to present his case.
31. The arbitral award passed by committee of 5 arbitrators failed to specify the term of reference on the basis of which arbitral award was passed and neither record of arbitral proceedings nor award dated 30.9.2007 mentions any meeting was conducted by arbitral tribunal prior to passing the arbitral award dated 30.09.2007.
32. Arbitrators have committed serious error when it went to adjudicate on the sale deed dated 12.11.2001 and 17.01.2007 as there is no terms of reference by which the sale deed dated 17.01.2007 could have been invalidated. The so called arbitral tribunal went beyond jurisdiction to hold that the sale deed dated 17.01.2007 as invalid.
33. Entire proceedings were conducted in total violation of principle of natural justice as no opportunity of heard was provided to petitioner.
34. It is apparent that [ENTITY] No.9), who is father of respondent no 1 is not the owner of property of ground floor and therefore, if there is any dispute in between the ground floor and first floor, the same has to be filed by [ENTITY] i.e. respondent no 1 in the present case. Respondent no 1 was ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 15 /16 never the party in the arbitration proceedings and in the absence of [ENTITY] i.e Respondent no 1, the present arbitration proceedings could not have been continued or even the disputes could not have been adjudicated.
35. In view of the above mentioned discussion, the petition filed by petitioner is allowed. The arbitral award dated 30.9.2007 passed by committee of 5 Arbitrators, of F Block, Resident Welfare Association, Narain Vihar, Delhi is set aside.
Parties are left to bear their own cost.
File be consigned to record room after necessary formalities.
Announced in the Open Court on 02.11.2019 ([ENTITY]) Additional District Judge-06 West District, THC ARBT No. 15/19 [ENTITY] vs [ENTITY] and Ors. Page no. 16 /16