JUDGMENT
S. Ravindra Bhat, J.
IA 13646/2006 (Under Section 8 of Arbitration Act)
1. This is an application under Section 8 of the Arbitration and Conciliation Act, 1996 by the defendant who has also invoked the provisions of Order 7 Rule 11 CPC.
2. The plaintiff sued the defendant for decree of possession in respect of premises No. Shanti Villa, Khasra No. 810/2, Main Road, Chattarpur Extension, New Delhi. The plaintiff has inter alia averred that the defendant was given possession of the suit property on 14.8.2003, through a deed executed by both parties. It is alleged that the defendant agreed to pay a monthly rent of Rs. 51,000/-. The plaintiff further alleges that the defendant’s monthly tenancy was terminated by notice dated 17.8.2006 under Section 106 of the Transfer of Property Act and thereafter defendant continued in unauthorized occupation.
3. The defendant, in the application, has accused the plaintiff of not revealing material facts relating to the lease deed and existence of an arbitration clause in it. It has produced a copy of the said lease deed in support of the application and claimed that the disputes in the suit ought to be referred to arbitration in accordance with the said condition, i.e. Clause 11. The said clause reads as follows:
11. All the disputes or differences, whatsoever arising between the parties out of or relating to the construction, meaning, operation or effect to this agreement or the breach thereof, shall be settled by arbitration in accordance with the rules and regulations of the Indian Council of Arbitration and the award made in pursuance thereof shall be binding on both the parties.
4. In support of the application, learned senior counsel contended that once the parties agreed to have their disputes resolved through arbitration and provided for it, through an agreed mechanism like Clause 11, they were bound by it and the Court, consistent with that agreement should not proceed to adjudicate the dispute but refer the parties to arbitration. He also adverted to the averments in the application about a Memorandum of Understanding(MOU) dated 17.11.2003, between the parties. According to counsel, the said document also contains a similar stipulation, which amounted to arbitration clause. That condition has been reproduced in para 6 of the application.
5. The plaintiff in its reply has refuted the contention and submitted that this Court cannot refer the disputes to arbitration since the lease deed upon which the defendant – applicant relies is an unregistered document. In addition, the plaintiff avers and its counsel contends that reliance on the MOU is misplaced as it is a contested document in respect of which a First Information Report (FIR) has been registered and investigations are on. Counsel additionally contended that the defendant’s petition under Section 482 of the Criminal Procedure Code for quashing of that First Information Report, has been dismissed, by this Court.
6. Learned Counsel submitted by placing reliance on the two judgments of this Court reported as Chemicals Sales Agencies v. Smt. Naraini Newar , and Bimla Rani Gupta v. S.R. Sachdeva 2000 (001) ARBLR 0437 DEL that arbitration agreements contained in unregistered lease deeds (which are compulsorily registrable under Section 17 of the Registration Act, 1908), and have to be duly stamped in accordance with the provisions of Stamps Act, cannot be relied upon by the Court; that the Court would be within its rights to reject application under Section 8 of the Arbitration and Conciliation Act.
7. There is no doubt that Clause 11 of the deed relied upon in this case does amount to an arbitration clause. The question, however, is whether this alone is sufficient for the Court to refer the disputes that are subject matter of the present proceedings to arbitration. In Bimla Rani Gupta (supra), this Court stated that a lease deed or rent agreement which requires registration, but is not actually registered, cannot be seen even if it contains an arbitration clause. The Court had noticed an earlier ruling in Smt. Darshan Kapur v. Tilak Raj 1982 RLR 516, and held that similar applications under the old Arbitration Act were not maintainable. Applying the said issue, this Court held that an application under Section 8 of the Arbitration and Conciliation Act, 1996 could not be maintained.
8. In the subsequent judgment in ChemicalS SALES (supra), the Court took into consideration all relevant authorities on the issue and concluded that recourse to Section 8 would be permissible if the Court is empowered to look into the document. If the document purports to be a lease and though compulsorily registrable, in fact is not registered, the Court, regardless of its containing an arbitration clause cannot refer the dispute to arbitration. In view of these decisions, it has to be held that irrespective of Clause 11 of the lease deed, which is unregistered in this case, disputes cannot be referred to arbitration.
9. As regards the applicability of the Clause 11 in the alleged MOU, it would be relevant to notice that the applicant ‘ defendant has already preferred another proceedings, i.e. CS(OS) 8835/2006, which is said to be pending on the file of this Court. Furthermore, at this stage, when the genuineness and veracity of the document is in question, it would be unwise for the Court to assume the binding nature of the arbitration agreement said to be in MOU.
10. In view of the above reasons, the relief claimed in the application cannot be granted.
IA 13646/2006 is accordingly dismissed.
CS(OS) 1987/2006
Defendants shall file their written statement within four weeks.
List on 23rd July, 2008.