{"id":17972,"date":"2011-07-20T00:00:00","date_gmt":"2011-07-19T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-sms-tea-estates-p-ltd-vs-ms-chandmari-tea-co-p-ltd-on-20-july-2011"},"modified":"2018-11-25T11:09:07","modified_gmt":"2018-11-25T05:39:07","slug":"ms-sms-tea-estates-p-ltd-vs-ms-chandmari-tea-co-p-ltd-on-20-july-2011","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-sms-tea-estates-p-ltd-vs-ms-chandmari-tea-co-p-ltd-on-20-july-2011","title":{"rendered":"M\/S Sms Tea Estates P.Ltd vs M\/S Chandmari Tea Co.P.Ltd on 20 July, 2011"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">M\/S Sms Tea Estates P.Ltd vs M\/S Chandmari Tea Co.P.Ltd on 20 July, 2011<\/div>\n<div class=\"doc_author\">Author: R.V.Raveendran<\/div>\n<div class=\"doc_bench\">Bench: R.V. Raveendran, A.K. Patnaik<\/div>\n<pre>                                                         1\n\n\n\n                                                                                 Reportable\n\n\n                      IN THE SUPREME COURT OF INDIA\n\n\n                       CIVIL APPELLATE JURISDICTION\n\n\n                         CIVIL APPEAL NO. 5820 OF 2011\n\n                      [Arising out of SLP [C] No.24484\/2010]\n\n\n\n\nM\/s. SMS Tea Estates Pvt. Ltd.                                         ... Appellant\n\n\nVs.\n\n\nM\/s. Chandmari Tea Co. Pvt. Ltd.                                       ... Respondent\n\n\n\n\n\n                                    J U D G M E N T\n<\/pre>\n<p>R.V.RAVEENDRAN, J.\n<\/p>\n<p>        Leave granted. Heard.\n<\/p>\n<p>2.      The appellant filed an application under section 11 of the Arbitration <\/p>\n<p>&amp; Conciliation Act, 1996 (`Act&#8217; for short) for appointment of an arbitrator.\n<\/p>\n<p>The averments made in the said application in brief were as under :\n<\/p>\n<p>2.1)    On   7.10.2006  the   appellant     requested     the    respondent   to  grant       a <\/p>\n<p>long   term   lease   in   respect   of   two   Tea   estates   (Chandmari   Tea   Estate   and <\/p>\n<p><span class=\"hidden_text\">                                                2<\/span><\/p>\n<p>Burahapahar   Tea   Estate).   A   lease   deed   dated   21.12.2006   was   executed <\/p>\n<p>between   the   respondent   and   appellant   under   which   respondent   granted   a <\/p>\n<p>lease to the appellant for a term of 30 years in regard to the said two Tea <\/p>\n<p>estates with all appurtenances. Clause 35 of the said lease deed provided for <\/p>\n<p>settlement of disputes between the parties by arbitration. As the estates were <\/p>\n<p>hypothecated   to   United   Bank   of   India,   on   27.12.2006,   the   respondent <\/p>\n<p>requested   the  said  bank   for  issue  of a   no  objection   certificate  for   entering <\/p>\n<p>into a long term lease. The Bank sent a reply dated 17.7.2007, stating that it <\/p>\n<p>would   issue   a   no   objection   certificate   for   the   lease,   if   the   entire   balance <\/p>\n<p>amount due to it was deposited by 14.8.2007.\n<\/p>\n<p>2.2)    Prior   to   the   execution   of   the   said   lease   deed,   on   29.11.2006   the <\/p>\n<p>respondent   had   offered   to   sell   the   two   Tea   estates   to   the   appellant   for   a <\/p>\n<p>consideration of Rupees four crores. The appellant agreed to purchase them <\/p>\n<p>subject to detailed verification. The appellant wrote a letter dated 27.6.2007 <\/p>\n<p>to the respondent agreeing to purchase the said two Tea estates.\n<\/p>\n<p>2.3)    The   appellant   invested   huge   sums   of   money   for   improving   the   tea <\/p>\n<p>estates in the expectation that it would either be purchasing the said estates <\/p>\n<p>or have a lease for 30 years. The respondent however abruptly and illegally <\/p>\n<p>evicted the appellant from the two estates and took over their management in <\/p>\n<p><span class=\"hidden_text\">                                                3<\/span><\/p>\n<p>January 2008. The appellant thereafter wrote a letter dated 28.3.2008 to the <\/p>\n<p>respondent expressing its willingness to purchase the said two estates for a <\/p>\n<p>mutually agreed upon consideration and also discharge the liability towards <\/p>\n<p>the bank.\n<\/p>\n<p>2.4)     The   appellant   issued   a   notice   dated   5.5.2008   calling   upon   the <\/p>\n<p>respondent   to   refer   the   matter   to   arbitration   under   section   35   of   the   lease <\/p>\n<p>deed. The respondent failed to comply. According to appellant the dispute <\/p>\n<p>between the parties related to the claim of the appellant that the respondent <\/p>\n<p>should   either   sell   the   estates   to   the   appellant,   or   permit   the   appellant   to <\/p>\n<p>continue in occupation of the estates for 30 years as lessees or reimburse the <\/p>\n<p>amounts   invested   by   it   in   the   two   estates   and   the   payments   made   to   the <\/p>\n<p>Bank.\n<\/p>\n<p>3.       The   respondents   opposed   the   said   application.   The   respondents <\/p>\n<p>contended that the unregistered lease deed dated 21.12.2006 for thirty years <\/p>\n<p>was invalid, unenforceable and not binding upon the parties, having regard <\/p>\n<p>to   section   107   of   Transfer   of   Property   Act   1882   (`TP   Act&#8217;   for   short)   and <\/p>\n<p>section 17 and section 49 of the Registration Act, 1908 (`Registration Act&#8217; <\/p>\n<p>for   short);   that   the   said   lease   deed   was   also   not   duly   stamped   and   was <\/p>\n<p>therefore invalid, unenforceable and not binding, having regard to section 35 <\/p>\n<p><span class=\"hidden_text\">                                                4<\/span><\/p>\n<p>of  Indian   Stamp Act,   1899;  that  clause  35  providing   for  arbitration,  being <\/p>\n<p>part   of   the   said   lease   deed,   was   also   invalid   and   unenforceable.   The <\/p>\n<p>respondent   denied   that   they   had   agreed   to   sell   the   two   tea   estates   to   the <\/p>\n<p>respondent   for   a   consideration   of   Rupees   four   crores.   The   appellant   also <\/p>\n<p>denied   that   the   respondent   had   invested   any   amount   in   the   tea   estates.   It <\/p>\n<p>contended that as the lease deed itself was invalid, the appellant could not <\/p>\n<p>claim appointment of an arbitrator under the arbitration agreement forming <\/p>\n<p>part of the said deed.\n<\/p>\n<p>4.      The   learned   Chief   Justice   of   Guwahati   High   Court   dismissed   the <\/p>\n<p>appellant&#8217;s application by order dated 28.5.2010. He held that the lease deed <\/p>\n<p>was  compulsorily  registrable   under  section  17  of  the  Registration  Act   and <\/p>\n<p>section 106 of the TP Act; and as the lease deed was not registered, no term <\/p>\n<p>in   the  said   lease   deed   could  be   relied   upon   for  any   purpose   and  therefore <\/p>\n<p>clause 35 could not be relied upon for seeking reference to arbitration. The <\/p>\n<p>High Court also held that the arbitration agreement contained in clause 35 <\/p>\n<p>could not be termed as a collateral transaction, and therefore, the proviso to <\/p>\n<p>section 49 of the Registration Act would not assist the appellant. The said <\/p>\n<p>order is challenged in this appeal by special leave.\n<\/p>\n<p><span class=\"hidden_text\">                                              5<\/span><\/p>\n<p>5.       On   the   contentions   urged   the   following   questions   arise   for <\/p>\n<p>consideration :\n<\/p>\n<p>(i)      Whether   an   arbitration   agreement   contained   in   an   unregistered   (but <\/p>\n<p>compulsorily registrable) instrument is valid and enforceable?\n<\/p>\n<p>(ii)     Whether an arbitration agreement in an unregistered instrument which <\/p>\n<p>is not duly stamped, is valid and enforceable?\n<\/p>\n<p>(iii)    Whether there is an arbitration agreement between the appellant and <\/p>\n<p>respondent and whether an Arbitrator should be appointed?\n<\/p>\n<p>Re : Question (i)<\/p>\n<p>6.       Section   17(1)(d)   of   Registration   Act   and   section   107   of   TP   Act <\/p>\n<p>provides   that   leases   of   immovable   property   from   year   to   year,   or   for   any <\/p>\n<p>term exceeding one year or reserving a yearly rent, can be made only by a <\/p>\n<p>registered instrument. Section 49 of the Registration Act, 1908, sets out the <\/p>\n<p>effect  of non-registration  of documents required to be registered.  The  said <\/p>\n<p>section is extracted below :\n<\/p>\n<blockquote><p>         &#8220;49.Effect   of   non-registration   of   documents   required   to   be <\/p>\n<p>         Registered.- No document required by section 17 or by any provision of <\/p>\n<p>         the Transfer of Property Act, 1882 (4 of 1882)], to be registered shall&#8211;<\/p>\n<blockquote><p>         (a) affect any immovable property comprised therein, or<\/p>\n<\/blockquote>\n<blockquote><p>         (b) confer any power to adopt, or<\/p>\n<p><span class=\"hidden_text\">                                                     6<\/span><\/p>\n<\/blockquote>\n<blockquote><p>       (c) be received as evidence of any transaction affecting such property or <\/p>\n<p>       conferring such power,<\/p>\n<p>       unless it has been registered:\n<\/p><\/blockquote>\n<blockquote><p>\n       provided that an unregistered document affecting immovable property and <\/p>\n<p>       required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to <\/p>\n<p>       be   registered   may   be   received   as   evidence   of   a   contract   in   a   suit   for <\/p>\n<p>       specific performance under Chapter II of the Specific Relief Act, 1877 (3 <\/p>\n<p>       of   1877)   as   evidence   of   any   collateral   transaction   not   required   to   be <\/p>\n<p>       effected by registered instrument.&#8221;\n<\/p><\/blockquote>\n<blockquote>\n<\/blockquote>\n<p>Section 49 makes it clear that a document which is compulsorily registrable, <\/p>\n<p>if not registered, will not affect the immovable property comprised therein in <\/p>\n<p>any   manner.   It   will   also   not   be   received   as   evidence   of   any   transaction <\/p>\n<p>affecting such property, except for two limited purposes. First is as evidence <\/p>\n<p>of a contract in a suit for specific performance. Second is as  evidence of any <\/p>\n<p>collateral   transaction   which   by   itself   is   not   required   to   be   effected   by <\/p>\n<p>registered instrument. A collateral transaction is not the transaction affecting <\/p>\n<p>the   immovable   property,   but   a  transaction   which   is   incidentally   connected <\/p>\n<p>with that transaction. The question is whether a provision for arbitration in <\/p>\n<p>an unregistered document (which is compulsorily registrable) is a collateral <\/p>\n<p>transaction, in respect of which such unregistered document can be received <\/p>\n<p>as evidence under the proviso to section 49 of the Registration Act.\n<\/p>\n<p><span class=\"hidden_text\">                                              7<\/span><\/p>\n<p>7.     When   a   contract   contains   an   arbitration   agreement,   it   is   a   collateral <\/p>\n<p>term relating to the resolution of disputes, unrelated to the performance of <\/p>\n<p>the contract. It is as if two contracts &#8212; one in regard to the substantive terms <\/p>\n<p>of the main contract and the other relating to resolution of disputes &#8212; had <\/p>\n<p>been rolled into one, for purposes of convenience. An arbitration  clause is <\/p>\n<p>therefore an agreement independent of the other terms of the contract or the <\/p>\n<p>instrument. Resultantly, even if the contract or its performance is terminated <\/p>\n<p>or   comes   to   an   end   on   account   of   repudiation,   frustration   or   breach   of <\/p>\n<p>contract,   the   arbitration   agreement   would   survive   for   the   purpose   of <\/p>\n<p>resolution   of   disputes   arising   under   or   in   connection   with   the   contract.\n<\/p>\n<p>Similarly, when an instrument or deed of transfer (or a document affecting <\/p>\n<p>immovable property) contains an arbitration agreement, it is a collateral term <\/p>\n<p>relating   to   resolution   of   disputes,   unrelated   to   the  transfer  or   transaction <\/p>\n<p>affecting the immovable property. It is as if two documents &#8211; one affecting <\/p>\n<p>the   immovable   property   requiring   registration   and   the   other   relating   to <\/p>\n<p>resolution of disputes which is not compulsorily registrable &#8211; are rolled into <\/p>\n<p>a   single   instrument.   Therefore,   even   if   a   deed   of   transfer   of   immovable <\/p>\n<p>property is challenged as not valid or enforceable, the arbitration agreement <\/p>\n<p>would   remain   unaffected   for   the   purpose   of   resolution   of   disputes   arising <\/p>\n<p>with   reference   to   the   deed   of   transfer.   These   principles   have   now   found <\/p>\n<p><span class=\"hidden_text\">                                               8<\/span><\/p>\n<p>statutory recognition in sub-section (1) of section 16 of the Arbitration and <\/p>\n<p>Conciliation Act 1996 (`Act&#8217; for short) which is extracted below :\n<\/p>\n<blockquote><p>       &#8220;16.  Competence of arbitral tribunal to rule on its jurisdiction.  &#8211; (1) <\/p>\n<p>       The arbitral tribunal may rule on its own jurisdiction, including ruling on <\/p>\n<p>       any objections with respect to the existence or validity of the arbitration <\/p>\n<p>       agreement, and for that purpose,&#8211;\n<\/p><\/blockquote>\n<blockquote><\/blockquote>\n<blockquote><p>       (a) an arbitration clause which forms part of a contract shall be treated as <\/p>\n<p>       an agreement independent of the other terms of the contract; and<\/p>\n<\/blockquote>\n<blockquote><p>       (b) a decision by the arbitral tribunal that the contract is null and void shall <\/p>\n<p>       not entail ipso jure the invalidity of the arbitration clause.&#8221;<\/p>\n<\/blockquote>\n<p>8.     But   where   the   contract   or   instrument   is   voidable   at   the   option   of   a <\/p>\n<p>party (as for example under section 19 of the Indian Contract Act, 1872), the <\/p>\n<p>invalidity that attaches itself to the main agreement may also attach itself to <\/p>\n<p>the   arbitration   agreement,   if   the   reasons   which   make   the   main   agreement <\/p>\n<p>voidable, exist  in relation  to the  making of the arbitration  agreement also.\n<\/p>\n<p>For example, if a person is made to sign an agreement to sell his property <\/p>\n<p>under threat of physical harm or threat to life, and the said person repudiates <\/p>\n<p>the   agreement   on   that   ground,   not   only   the   agreement   for   sale,   but   any <\/p>\n<p>arbitration agreement therein will not be binding.\n<\/p>\n<p>9.     An   arbitration   agreement   does   not   require   registration   under   the <\/p>\n<p>Registration  Act. Even if it is found as one of the clauses in a contract or <\/p>\n<p>instrument, it is an independent agreement to refer the disputes to arbitration, <\/p>\n<p><span class=\"hidden_text\">                                                    9<\/span><\/p>\n<p>which is independent of the main contract or instrument.   Therefore having <\/p>\n<p>regard   to   the   proviso   to   section   49   of   Registration   Act   read   with   section <\/p>\n<p>16(1)(a)   of   the   Act,   an   arbitration   agreement   in   an   unregistered   but <\/p>\n<p>compulsorily registrable document can be acted upon and enforced for the <\/p>\n<p>purpose of dispute resolution by arbitration.\n<\/p>\n<p>Re : Question (ii)<\/p>\n<p>10.     What if an arbitration agreement is contained in an unregistered (but <\/p>\n<p>compulsorily registrable) instrument which is not duly stamped? To find an <\/p>\n<p>answer, it may be necessary to refer to the provisions of the Indian Stamp <\/p>\n<p>Act, 1899 (`Stamp Act&#8217; for short). Section 33  of  the  Stamp   Act    relates <\/p>\n<p>to examination and impounding of instruments. The relevant portion thereof <\/p>\n<p>is extracted below :\n<\/p>\n<blockquote><p>        &#8220;33.Examination   and   impounding   of   instruments.-(1)   Every   person <\/p>\n<p>        having   by   law   or   consent   of   parties   authority   to   receive   evidence,   and <\/p>\n<p>        every person in charge of a pubic office, except an officer of police, before <\/p>\n<p>        whom any instrument, chargeable, in his opinion, with duty, is produced <\/p>\n<p>        or comes  in the performance  of his functions, shall,  if it appears to him <\/p>\n<p>        that such instrument is not dull stamped, impound the same.<\/p>\n<p>        (2) For that purpose every such person shall examine every instrument so <\/p>\n<p>        chargeable   and   so   produced   or   coming   before   him   in   order   to   ascertain <\/p>\n<p>        whether it is stamped with a stamp of the value and description required <\/p>\n<p>        by the law in force in   India when such instrument was executed or first <\/p>\n<p>        executed :\n<\/p><\/blockquote>\n<blockquote><p>\n        x x x x &#8221;\n<\/p><\/blockquote>\n<blockquote><p>\n<span class=\"hidden_text\">                                                    1<\/span><\/p>\n<\/blockquote>\n<p>Section   35   of   Stamp   Act   provides   that   instruments   not   duly   stamped   is <\/p>\n<p>inadmissible in evidence and cannot be acted upon. The relevant portion of <\/p>\n<p>the said section is extracted below :\n<\/p>\n<blockquote><p>        &#8220;35. Instruments not duly stamped inadmissible in evidence, etc. &#8212; No <\/p>\n<p>        instrument   chargeable   with   duty   shall   be   admitted   in   evidence   for   any <\/p>\n<p>        purpose   by  any  person   having   by  law   or  consent   of   parties   authority   to <\/p>\n<p>        receive   evidence,   or   shall   be   acted   upon,   registered   or   authenticated   by <\/p>\n<p>        any such person or by any public officer, unless such instrument is duly <\/p>\n<p>        stamped :\n<\/p><\/blockquote>\n<blockquote><\/blockquote>\n<blockquote><p>            Provided that&#8211;\n<\/p><\/blockquote>\n<blockquote><\/blockquote>\n<blockquote><p>                 (a)   any   such   instrument   shall   be   admitted   in   evidence   on <\/p>\n<p>                 payment of the duty with which the same is chargeable, or, <\/p>\n<p>                 in the case of an instrument insufficiently stamped, of the <\/p>\n<p>                 amount   required   to   make   up   such   duty,   together   with   a <\/p>\n<p>                 penalty of five rupees, or, when ten times the amount of the <\/p>\n<p>                 proper   duty   or   deficient   portion   thereof   exceeds   five <\/p>\n<p>                 rupees, of a sum equal to ten times such duty or portion.&#8221;<\/p><\/blockquote>\n<\/blockquote>\n<blockquote>\n<\/blockquote>\n<blockquote><p>                 x x x x x<\/p>\n<p>Having regard to section 35 of Stamp Act, unless the stamp duty and penalty <\/p>\n<p>due   in   respect   of   the   instrument   is   paid,   the   court   cannot   act   upon   the <\/p>\n<p>instrument,  which  means   that  it  cannot   act   upon  the   arbitration   agreement <\/p>\n<p>also which is part of the instrument. Section 35 of Stamp Act is distinct and <\/p>\n<p>different   from   section   49   of   Registration   Act   in   regard   to   an   unregistered <\/p>\n<p>document.   Section   35   of   Stamp   Act,   does   not   contain   a   proviso   like   to <\/p>\n<p>section 49 of Registration Act enabling the instrument to be used to establish <\/p>\n<p>a collateral transaction.\n<\/p><\/blockquote>\n<blockquote><p>\n<span class=\"hidden_text\">                                                1<\/span><\/p>\n<\/blockquote>\n<p>11.     The   scheme   for   appointment   of   arbitrators   by   the   Chief   Justice   of <\/p>\n<p>Guwahati High Court 1996 requires an application under section 11 of the <\/p>\n<p>Act   to   be   accompanied   by   the   original   arbitration   agreement   or   a   duly <\/p>\n<p>certified   copy   thereof.   In   fact,   such   a   requirement   is   found   in   the <\/p>\n<p>scheme\/rules of almost all the High Courts. If what is produced is a certified <\/p>\n<p>copy of the agreement\/contract\/instrument containing the arbitration clause, <\/p>\n<p>it should disclose the stamp duty that has been paid on the original. Section <\/p>\n<p>33 casts a duty upon every court, that is a person having by law authority to <\/p>\n<p>receive evidence (as also every arbitrator who is a person having by consent <\/p>\n<p>of   parties,   authority   to   receive   evidence)   before   whom   an   unregistered <\/p>\n<p>instrument chargeable with duty is produced, to examine the instrument in <\/p>\n<p>order   to   ascertain   whether   it   is   duly   stamped.   If   the   court   comes   to   the <\/p>\n<p>conclusion   that   the   instrument  is   not   duly   stamped,   it   has   to   impound   the <\/p>\n<p>document and   deal  with  it  as  per  section   38  of the  Stamp Act.  Therefore, <\/p>\n<p>when a lease deed or any other instrument is relied upon as contending the <\/p>\n<p>arbitration   agreement,   the   court   should   consider   at   the   outset,   whether   an <\/p>\n<p>objection  in that behalf is raised or not, whether  the document is properly <\/p>\n<p>stamped.   If   it   comes   to   the   conclusion   that   it   is   not   properly   stamped,   it <\/p>\n<p>should be impounded and dealt with in the manner specified in section 38 of <\/p>\n<p>Stamp  Act.   The   court   cannot   act   upon   such   a   document   or   the   arbitration <\/p>\n<p><span class=\"hidden_text\">                                               1<\/span><\/p>\n<p>clause therein. But if the deficit duty and penalty is paid in the manner set <\/p>\n<p>out in section 35 or section 40 of the Stamp Act, the document can be acted <\/p>\n<p>upon or admitted in evidence.\n<\/p>\n<p>12.      We   may   therefore   sum   up   the   procedure   to   be   adopted   where   the <\/p>\n<p>arbitration   clause   is   contained   in   a   document   which   is   not   registered   (but <\/p>\n<p>compulsorily registrable) and which is not duly stamped :\n<\/p>\n<p>(i)      The   court   should,   before   admitting   any   document   into   evidence   or <\/p>\n<p>acting   upon   such   document,   examine   whether   the   instrument\/document   is <\/p>\n<p>duly   stamped   and   whether   it   is   an   instrument   which   is   compulsorily <\/p>\n<p>registrable.\n<\/p>\n<p>(ii)     If the document is found to be not duly stamped, Section 35 of Stamp <\/p>\n<p>Act   bars   the   said   document   being   acted   upon.   Consequently,   even   the <\/p>\n<p>arbitration   clause   therein   cannot   be   acted   upon.   The   court   should   then <\/p>\n<p>proceed  to impound  the document  under section  33  of  the Stamp  Act and <\/p>\n<p>follow the procedure under section 35 and 38 of the Stamp Act.\n<\/p>\n<p>(iii)    If the document is found to be duly stamped, or if the deficit stamp <\/p>\n<p>duty and penalty is paid, either before the Court or before the Collector (as <\/p>\n<p>contemplated   in   section   35   or   40   of   the   Stamp   Act),   and   the   defect   with <\/p>\n<p>reference to deficit stamp is cured, the court may treat the document as duly <\/p>\n<p>stamped.\n<\/p>\n<p><span class=\"hidden_text\">                                               1<\/span><\/p>\n<p>(iv)    Once   the   document   is   found   to   be   duly   stamped,   the   court   shall <\/p>\n<p>proceed to consider whether the document is compulsorily registrable. If the <\/p>\n<p>document is found to be not compulsorily registrable, the court can act upon <\/p>\n<p>the arbitration agreement, without any impediment.\n<\/p>\n<p>(v)     If   the   document   is   not   registered,   but   is   compulsorily   registrable, <\/p>\n<p>having   regard   to   section   16(1)(a)   of   the   Act,   the   court   can   de-link   the <\/p>\n<p>arbitration agreement from the main document, as an agreement independent <\/p>\n<p>of the other terms of the document, even if the document itself cannot in any <\/p>\n<p>way affect the property or cannot be received as evidence of any transaction <\/p>\n<p>affecting such property. The only exception is where the respondent in the <\/p>\n<p>application   demonstrates   that   the   arbitration   agreement   is   also   void   and <\/p>\n<p>unenforceable, as pointed out in para 8 above. If the respondent raises any <\/p>\n<p>objection that the arbitration agreement was invalid, the court will consider <\/p>\n<p>the said objection before proceeding to appoint an arbitrator.\n<\/p>\n<p>(vi)    Where the document is compulsorily registrable, but is not registered, <\/p>\n<p>but the arbitration agreement is valid and separable, what is required to be <\/p>\n<p>borne in mind is that the Arbitrator appointed in such a matter cannot rely <\/p>\n<p>upon   the   unregistered   instrument   except   for   two   purposes,   that   is   (a)   as <\/p>\n<p>evidence of contract in a claim for specific performance and (b) as evidence <\/p>\n<p>of any collateral transaction which does not require registration.\n<\/p>\n<p>Re : Question (iii)<\/p>\n<p>13.     Where a lease deed is for a term of thirty years and is unregistered, the <\/p>\n<p>terms   of  such   a   deed   cannot   be   relied   upon   to   claim  or   enforce   any   right <\/p>\n<p><span class=\"hidden_text\">                                                   1<\/span><\/p>\n<p>under   or   in   respect   of   such   lease.   It   can   be   relied   upon   for   the   limited <\/p>\n<p>purposes of showing that the possession of the lessee is lawful possession or <\/p>\n<p>as evidence of some collateral transaction. Even if an arbitrator is appointed, <\/p>\n<p>he   cannot   rely   upon   or   enforce   any   term   of   the   unregistered   lease   deed.\n<\/p>\n<p>Where   the   arbitration   agreement   is   not   wide   and   does   not   provide   for <\/p>\n<p>arbitration   in   regard   to   all   and   whatsoever   disputes,   but   provides   only   for <\/p>\n<p>settlement of disputes and differences  arising in relation to the lease deed, <\/p>\n<p>the   arbitration   clause   though   available   in   theory   is   of   little   practical <\/p>\n<p>assistance, as it cannot be used for deciding any dispute or difference with <\/p>\n<p>reference to the unregistered deed.\n<\/p>\n<p>14.     In this case, clause 35 of the lease deed reads as under :\n<\/p>\n<blockquote><p>        &#8220;That any dispute or difference arising between the parties in relation to or <\/p>\n<p>        in any manner touching upon this deed shall be settled by Arbitration in <\/p>\n<p>        accordance   with   the   provisions   of   the   Arbitration   and   Conciliation   Act, <\/p>\n<p>        1996   which   shall   be   final   and   binding   on   the   parties   hereto.   The <\/p>\n<p>        Government   law   will   be   Indian.   The   venue   of   Arbitration   shall   be   at <\/p>\n<p>        Assam and Court at Assam alone shall have jurisdiction for disputes and <\/p>\n<p>        litigations arising between the lessor\/first party and the lessee\/second party <\/p>\n<p>        in context with the above mentioned scheduled property.&#8221;  <\/p>\n<\/blockquote>\n<p>Having   regard   to   the   limited   scope   of   the   said   arbitration   agreement <\/p>\n<p>(restricting it to disputes in relation to or in any manner touching upon the <\/p>\n<p>lease   deed),   the   arbitrator   will   have   no   jurisdiction   to   decide   any   dispute <\/p>\n<p>which   does   not   relate   to   the   lease   deed.   Though   the   Arbitrator   will   have <\/p>\n<p><span class=\"hidden_text\">                                                      1<\/span><\/p>\n<p>jurisdiction to decide any dispute touching upon or relating to the lease deed, <\/p>\n<p>as   the   lease   deed   is   unregistered,   the   arbitration   will   virtually   be   a   non-\n<\/p>\n<p>starter.   A   party   under   such   a   deed   may   have   the   luxury   of   having   an <\/p>\n<p>arbitrator appointed, but little else. Be that as it may.\n<\/p>\n<p>15.     Before an Arbitrator can be appointed under section 11 of the Act, the <\/p>\n<p>applicant   should   satisfy   the   learned   Chief   Justice   or  his   designate   that  the <\/p>\n<p>arbitration   agreement   is   available   in   regard   to   the   contract\/document   in <\/p>\n<p>regard to which the dispute has arisen. For example if the parties had entered <\/p>\n<p>into   two   agreements   and   arbitration   clause   is   found   only   in   the   first <\/p>\n<p>agreement and not in the second agreement, necessarily an arbitrator can be <\/p>\n<p>appointed only in regard to disputes relating to the first agreement and not in <\/p>\n<p>regard to any dispute relating to the second agreement. This court in  <a href=\"\/doc\/1538559\/\">Yogi  <\/p>\n<p>Agarwal vs. Inspiration Clothes &amp; U<\/a> &#8211; (2009) 1 SCC 372 held :\n<\/p>\n<blockquote><p>        &#8220;When Sections 7 and 8 of the Act refer to the existence of an arbitration <\/p>\n<p>        agreement   in   regard   to   the   current   dispute   between   the   parties,   they <\/p>\n<p>        necessarily   refer   to   an   arbitration   agreement   in   regard   to   the   current <\/p>\n<p>        dispute   between   the   parties   or   the   subject-matter   of   the   suit.   It   is <\/p>\n<p>        fundamental   that   a   provision   for   arbitration,   to   constitute   an   arbitration <\/p>\n<p>        agreement for the purposes of Sections 7 and 8 of the Act, should satisfy <\/p>\n<p>        two   conditions.   Firstly,   it   should   be   between   the   parties   to   the   dispute. <\/p>\n<p>        Secondly, it should relate to or be applicable to the dispute.&#8221; <\/p>\n<p><span class=\"hidden_text\">                                              1<\/span><\/p>\n<\/blockquote>\n<p> 16.    In this case, the appellant seeks arbitration in regard to the following <\/p>\n<p>three distinct disputes: (a) for enforcing an alleged agreement of sale of two <\/p>\n<p>tea estates, (b) for enforcing the lease for thirty years; and (c) for recovery of <\/p>\n<p>amounts  spent  by  it  in  regard   to  the   estates   on  the  assumption   that  it  was <\/p>\n<p>entitled to purchase the property or at least have a lease of 30 years.\n<\/p>\n<p>17.     It is clear from the petition averments (Para 11 of the application) that <\/p>\n<p>the   alleged   agreement   of   sale   was   entered   prior   to   the   lease   deed   dated <\/p>\n<p>21.12.2006   and   there   was   no   arbitration   agreement   in   regard   to   such <\/p>\n<p>agreement   of   sale.     When   admittedly   there   is   no   arbitration   agreement   in <\/p>\n<p>regard to the alleged agreement of sale, the appellant cannot seek arbitration <\/p>\n<p>with reference to any dispute regarding such agreement of sale, whether it is <\/p>\n<p>for performance or for damages for breach or any other relief arising out of <\/p>\n<p>or with reference to the agreement of sale.\n<\/p>\n<p>18.     An   Arbitrator   can   no   doubt   be   appointed   in   regard   to   any   disputes <\/p>\n<p>relating to the lease deed. But as noticed above, as the lease deed was not <\/p>\n<p>registered,   the   Arbitrator   can   not   rely   upon   the   lease   deed   or   any   term <\/p>\n<p>thereof and the lease deed cannot affect the immovable property which is the <\/p>\n<p>subject   matter   of  the  lease   nor   be  received   as   evidence   of  any   transaction <\/p>\n<p><span class=\"hidden_text\">                                                1<\/span><\/p>\n<p>affecting   such   property.   Therefore,   the   Arbitrator   will   not   be   able   to <\/p>\n<p>entertain any claim for enforcement of the lease.\n<\/p>\n<p>19.     Lastly   we   may   consider   the   claim   for   recovery   of   the   amounts <\/p>\n<p>allegedly spent towards the tea estates, as a consequence of respondents not <\/p>\n<p>selling the estates or not permitting the appellant to enjoy the lease for 30 <\/p>\n<p>years.   If   this   claim   is   treated   as   a   claim   for   damages   for   breach   in   not <\/p>\n<p>granting the lease for 30 years then it would be for enforcement of the terms <\/p>\n<p>of the lease deed which is impermissible under section 49 of the Registration <\/p>\n<p>Act. If it is treated as claim de hors the lease deed then the arbitrator may not <\/p>\n<p>have jurisdiction to decide the dispute as the arbitration agreement (clause <\/p>\n<p>35) is available only to settle any dispute or difference arising between the <\/p>\n<p>parties in relation to or in any manner touching upon the lease deed and not <\/p>\n<p>in regard to disputes in general.\n<\/p>\n<p>20.     In paras 18 and 19 above, we have considered and stated the general <\/p>\n<p>legal  position   for  guidance  in  arbitrations,   even  though  the  same  does   not <\/p>\n<p>directly arise for consideration within the limited scope of the proceedings <\/p>\n<p>under section 11 of the Act.\n<\/p>\n<p><span class=\"hidden_text\">                                                1<\/span><\/p>\n<p>Conclusion <\/p>\n<p>21.     In   view   of   the   above   this   appeal   is   allowed,   the   order   of   the   High <\/p>\n<p>Court is set aside and the matter is remitted to the learned Chief Justice of <\/p>\n<p>Guwahati   High   Court   to   first   decide   the   issue   of   stamp   duty,   and   if   the <\/p>\n<p>document is duly stamped, then appoint an arbitrator in accordance with law.\n<\/p>\n<p>                                                          &#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;J.<\/p>\n<pre>\n\n                                                          (R V Raveendran)\n\n\n\n\n\nNew Delhi;                                                .............................J.\n\nJuly 20, 2011.                                            (A K Patnaik)\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India M\/S Sms Tea Estates P.Ltd vs M\/S Chandmari Tea Co.P.Ltd on 20 July, 2011 Author: R.V.Raveendran Bench: R.V. Raveendran, A.K. Patnaik 1 Reportable IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 5820 OF 2011 [Arising out of SLP [C] No.24484\/2010] M\/s. SMS Tea Estates Pvt. Ltd. &#8230; [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-17972","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>M\/S Sms Tea Estates P.Ltd vs M\/S Chandmari Tea Co.P.Ltd on 20 July, 2011 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/ms-sms-tea-estates-p-ltd-vs-ms-chandmari-tea-co-p-ltd-on-20-july-2011\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"M\/S Sms Tea Estates P.Ltd vs M\/S Chandmari Tea Co.P.Ltd on 20 July, 2011 - Free Judgements of Supreme Court &amp; 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