Vivek Singh Thakur JUDGMENT
Vivek Singh Thakur, J.
1. Plaintiff has filed a suit for recovery of `2,31,34,553/- for payment made to defendant in pursuance to the Commercial Buyers Agreement (herein after referred to as Buyer's Agreement) dated 23.11.2007 on account of failure of defendant to handover the possession of shop in question booked by the plaintiff and execution of the title deed thereof.
2. On receiving notice, defendant, before filing written statement, has moved present application for referring the parties to arbitration on the basis of arbitration clause in terms and conditions for allotment and sale of a shop/showroom/anchor store/multiplex/food court/hotel/restaurant etc. in the proposed shopping-cum-multiplex named as 'Home Land City Mall' at village Kalyanpur, Sai Chakkan Road, Baddi (Himachal Pradesh) (herein after referred as terms and conditions for allotment and sale), annexed to the application form submitted by the applicant at the time of applying for allotment of shop on 10.11.2006, claiming that the said terms and conditions stand incorporated in buyers agreement, as agreed by the parties in the said agreement.
3. Plaintiff has objected referring the dispute to the arbitrator on the ground that Buyer's Agreement is independent of terms and conditions for allotment and sale and there is no arbitration agreement existing between the parties after execution of Buyer's Agreement, as the terms and conditions for allotment and sale has lost their force after allotment of shop, more particularly after execution of Buyer's Agreement, comprehensively dealing with all issues between the parties.
4. I have heard learned counsel for the parties and have also gone through the terms and conditions for allotment and sale and contents of Buyer's Agreement.
5. It is undisputed in present case that the space has been allotted to the applicant and Buyer's Agreement has been executed between the parties on making of payment of earnest money as required according to terms and conditions for allotment and sale. In operative portion of Buyer's Agreement before terms and conditions agreed by and between the parties, it has been agreed as under:-
"And Whereas a Proper Agreement of Sale on standard format of the Promoter, is being executed now incorporating all the details embodied in the application and terms and conditions of sale, which shall form part and parcel of this Commercial Premises Buyer's Agreement."
6. Contention of plaintiff is that the terms and conditions which have been incorporated in Buyer's Agreement are only to be considered as part and parcel of this agreement and it was never intention of the parties to have arbitration clause in this agreement and therefore, deliberately arbitration clause was not incorporated in this agreement and only clause 53 providing the jurisdiction of Himachal Pradesh High Court at Shimla and its subordinate Courts in Himachal Pradesh to resolve the dispute arising out of concerning this transaction and/or touching such transaction, has been incorporated, which reads as under:-
"53. That the Himachal Pradesh High Court at Shimla and Courts in Himachal Pradesh subordinate to it, alone shall have jurisdiction in all matters arising out of, touching and/or concerning this transaction."
7. It is stand of defendant that by virtue of operative part referred herein above, all the details embodied in the application and terms and conditions of allotment and sale are part and parcel of the Buyer's Agreement. Defendant has also relied upon clause 27 of the terms and conditions for allotment and sale, which provides merger of the terms and conditions into the Buyer's Agreement upon the execution of the same.
8. In alternative, it is contended on behalf of plaintiff that even if terms and conditions for allotment and sale are considered to be part and parcel of Buyer's Agreement, then also it was never intention of parties to refer the dispute solely to the arbitration for its resolution, but there was an option available to the parties to refer the dispute either to arbitration or to adjudicate it in the Civil Court, competent to adjudicate, within the territorial jurisdiction of High Court of Himachal Pradesh. Reliance has been put by plaintiff on pronouncement of the Apex Court in case Wellington Associates Ltd. Vs. Kirti Mehta reported in MANU/SC/0232/2000 : (2000) 4 SCC 272, wherein it has been held that where it is not the intention of parties that arbitration is to be sole remedy and it appears that parties agreed that they can also go to arbitration in case the agreed party does not wish to go to Civil Court by way of suit, in that eventuality, fresh consent to go to arbitration is necessary and therefore, it is contended that even if arbitration clause 28 is considered to be part and parcel of the Buyer's Agreement, then also, in view of clause 29, fresh consent of parties to refer the dispute to arbitration is necessary and as the plaintiff has chosen to file Civil Suit, the said clause cannot be invoked.
9. After giving thoughtful consideration to the contention of parties and having gone through the record, for the reasons embodied hereinafter, I am of the considered opinion that in the present case arbitration agreement does not exist between the parties and therefore, for want of pre-requisite conditions for invoking Section 8 of the Arbitration and Conciliation Act, 1996 (in short the Act, 1996) application of defendant must fail.
10. Section 7 of the Act says that arbitration agreement means an agreement by the parties to submit all or certain dispute to arbitration which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not and the said agreement shall be in writing and may be in the form of arbitration clause in a contract or in the form of a separate agreement signed by the parties.
11. Section 8 of the Act 1996 reads as under:-
"Power to refer parties to arbitration where there is an arbitration agreement.-(1) A judicial authority, before which an action is brought in a matter which is the subject of a arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds the prima facie no valid arbitration agreement exists.
(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof:
Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.
(3) Notwithstanding that an application has been made under subsection (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made."
12. There is no quarrel on the settled position of law that where arbitration clause exists in the agreement, therefore, Court has a mandatory duty to refer dispute arising between the contacting parties to arbitration and Civil Court has no jurisdiction to continue with the suit, once an application under Section 8 of the Act, 1996 has been filed. (See Hindustan Petroleum Corporation Ltd. Vs. Pinkcity Midway Petroleums, MANU/SC/0482/2003 : (2003) 6 SCC 503).
13. The Apex Court in case Branch Manager, M/s. Magma Leasing & Finance Ltd. & Anr. Vs. Potluri Madhavilata & Another reported in MANU/SC/1672/2009 : AIR 2010 SC 488 has held that Section 8 of the Act is in the form of legislative command to the Court and once the prerequisite conditions are satisfied, the Court must refer the parties to arbitration and as a matter of fact on fulfillment of conditions of Section 8 of the Act, no option is left to the Court and the Court has to refer the parties to arbitration. In this judgment, the Apex Court has enumerated the prerequisite conditions in para 22 as under:-
"22. An analysis of Section 8 would show that for its applicability, the following conditions must be satisfied: (a) that there exists an arbitration agreement; (b) that action has been brought to the court by one party to the arbitration agreement against the other party; (c) that the subject-matter of the suit is same as the subject-matter of the arbitration agreement; (d) that the other party before he submits his first statement of the substance of the dispute, moves the court for referring the parties to arbitration; and (e) that along with the application the other party tenders the original arbitration agreement or duly certified copy thereof."
14. In present case, clauses 28 and 29 of terms and conditions for allotment and sale, providing forum for resolution of dispute, read as under:-
"28. In case of any dispute the matter shall be referred to Arbitration. Arbitrator shall be appointed by Promoter. Arbitration proceedings shall be conducted at Panchkula and English shall be the language.
29. Any dispute arising out between the Applicant and the Promoter regarding the said allotment, the Himachal Pradesh High Court of Shimla or any court in Himachal Pradesh subordinate to it alone shall have jurisdiction to adjudicate the same."
15. Clause 27 provides merger of terms in terms and conditions of allotment and sale in the Buyer Agreement upon execution of Commercial Premises Buyer's Agreement, which reads as under:-
"27. The term herein shall merge into the Buyer Agreement upon the execution of Commercial Premises Buyer's Agreement."
16. Clauses 1 and 2 of these terms and conditions indicate that it is an application for allotment of space, allotment whereof is entirely at the discretion of Promoter with right to the Promoter to reject any offer without assigning any reason therefor. According to clause 5, applicant shall have to sign and execute the letter of allotment of space or the Commercial Premises Buyer's Agreement, as and when desired by the Promoter, sent to the applicant for his signature after making full payment of earnest money by the applicant to the extent of 25% of total sale consideration, as may be due from the applicant to the Promoter as provided therein and failure to sign and execute the Commercial Premises Buyer's Agreement within the stipulated period shall entail cancellation of allotment.
17. Bare reading of operative portion reproduced supra wherein incorporation of all details embodied in the application and terms and conditions of sale in Buyer's Agreement has been referred, indicates that on execution of Buyer's Agreement, all the details embodied in the application and terms and conditions for allotment and sale, which are being incorporated now in Buyer's agreement, shall form part and parcel of this Commercial Premises Buyer's Agreement.
18. Clause 27 of terms and conditions for allotment and sale provides merger of these terms into Buyer's Agreement upon execution of the same and as noticed supra, Buyer's Agreement provides that terms and conditions for allotment and sale, incorporated in Buyer's Agreement shall be part and parcel of it. There are certain clauses of terms and conditions for allotment and sale, which have been reproduced, rewritten or redrafted and have been incorporated in the Buyer's Agreement and there are others which have not been incorporated. The said fact coupled with clause 27 of terms and conditions for allotment and sale indicates that after execution of Buyer's Agreement, terms and conditions for allotment and sale will lost their separate entity and the Buyer's Agreement shall replace these terms and conditions for allotment and sale. Had the intention of parties been to keep terms and conditions for allotment and sale alive in addition to Buyer's Agreement, there would have no repetition or reproduction or reconstruction and incorporation of large number of terms and conditions for allotment and sale in the Buyer's Agreement and in such eventuality, there was no occasion for specific clause 53 of the Buyer's Agreement providing the High Court of Himachal Pradesh or subordinate Courts to it as a forum having jurisdiction for resolution of dispute and omitting to incorporate arbitration clause in this Agreement, in contrast to clauses 28 and 29 of the terms and conditions for allotment and sale.
19. In view of above discussion in preceding para, contention of defendant to consider clause 28 of terms and conditions for allotment and sale as part and parcel of Buyer's Agreement on the basis of clause 27 of the terms and conditions for allotment and sale, is also misconceived for the reasons that operative portion of Buyer's Agreement, as discussed above, specifically provides that details of terms and conditions for allotment and sale, being incorporated now, shall form part and parcel of Buyer's Agreement and therefore, non-incorporation of terms of clause 28 in Buyer's agreement amounts exclusion of the said clause. Merger clause 27 denotes that after execution of Buyer's Agreement, the terms and conditions for allotment and sale shall lose its entity and relevance and the terms and conditions of Buyer's Agreement shall prevail and such interpretation of clause 27 find support from the various clauses of Buyer's Agreement, wherein terms and conditions for allotment and sale which have been intended to be part and parcel of Buyer's Agreement, have been rewritten or re-iterated specifically.
20. In Buyer's Agreement, it is specifically stated that proper agreement of sale on standard format of Promoter is being executed now incorporating all the details embodied in the application and terms and conditions for allotment and sale which shall form part and parcel of this Commercial Premises Buyer's Agreement and thereafter terms and conditions agreed by and between the parties have been embodied. Contention of defendant that by virtue of this operative clause, all terms and conditions for allotment and sale have automatically become the part of the Buyer's Agreement, even without having specific reference a formal incorporation is not sustainable as language of relevant operative part of Buyer's agreement is unambiguously making it clear that only those details, embodied in the application and terms and conditions of sale, shall form part and parcel of the Buyer's Agreement, which are now being incorporated by executing this proper agreement of sale on standard format of promoter. For this interpretation of this clause, I find support on comparison of terms and conditions of Buyer's Agreement and terms and conditions for allotment and sale. Had it been intention of parties to make all terms and conditions for allotment and sale as part and parcel of Buyer's Agreement, there would have no necessity to reiterate the terms and conditions for allotment and sale again in Buyer's Agreement. Certain terms and conditions for allotment and sale have been incorporated specifically by rewriting or reproducing those terms and conditions in the Buyer's Agreement.
21. Clause 29 of terms and conditions for allotment and sale provides jurisdiction of High Court of Himachal Pradesh or Courts subordinate to it, a forum for resolution of dispute. Same terms and conditions have been provided in clause 53 of the Buyer's Agreement, whereas arbitration clause 28 of terms and conditions for allotment and sale has not been re-iterated in the Buyer's Agreement.
22. Apart from specific incorporation of clause 29 of terms and conditions of allotment and sale, providing High Court of Himachal Pradesh and its subordinate Courts as forum to resolve dispute, in clause 53 of Buyer's Agreement, clause 6 of terms and conditions for allotment and sale which provides that rates charged are for the area which is commonly known as Super Area including the area of the Space being sold plus proportionate share of area under common passages, staircase, wares services, open areas etc. i.e. super area basis has been incorporated in Buyer's Agreement and corresponding clause is 3(a), which reads as under:-
"3(a) That the Allottee agrees that for the purpose of calculating the sale price in respect of the said Space, the super area shall be the covered area, inclusive of the area under the periphery walls, area under columns and walls within the said Space, half of the area of the wall common with other Space adjoining the said Space plus proportionate share of the service areas to be utilized for common use and facilities viz areas under staircases, circulation areas, walls, lifts, shafts, passage, corridors, lobbies, refuge areas, stilts and the like."
23. Without reproducing other terms and conditions reiterated specifically in Buyer's Agreement, it would be suffice to refer some of corresponding clauses of both i.e. application for allotment and sale and Buyer's Agreement summarily. Clause 7 and some part of Clause 8 of terms and conditions for allotment and sale has been rewritten in clause 4 of the Buyer's Agreement. Clause 9 of terms and conditions for allotment and sale has been rewritten in clause 2(b), 12, 13 and 14 of the Buyer's Agreement. Clause 11 of terms and conditions for allotment and sale has been referred in clause 41 of the Buyer's Agreement. Contents of clause 12 of terms and conditions for allotment and sale have been reiterated in clause 38 of Buyer's Agreement and clauses 14 and 15 of terms and conditions for allotment and sale have been rewritten in clauses 22 and 40 of Buyer's Agreement. Contents corresponding to clause 17 of terms and conditions for allotment and sale find mention in clauses 31 and 33 of Buyer's Agreement. Provisions of clauses 18 and 19 of terms and conditions for allotment and sale have been dealt with in clauses 26 and 6 of Buyer's Agreement, respectively. Perusal of terms and conditions for allotment and sale and Buyer's Agreement reflects that there are several other clauses which have been incorporated by rewriting or redrafting in the Buyer's Agreement.
24. In the facts and circumstances of the case, terms and conditions for allotment and sale were alive and applicable till the allotment made by the promoter/defendant and execution of Buyer's Agreement between the parties, thereafter it is the Buyer's Agreement which is in existence after merging the terms and conditions for allotment and sale in it, as agreed upon between the parties in the Buyer's Agreement. Therefore, arbitration clause of terms and conditions for allotment and sale shall not become part and parcel of the Buyer's Agreement automatically. I also draw support from the pronouncement of High Court of Calcutta in AP No. 9 of 2015, titled Ambuja Neotia Holdings Private Limited Vs. M/s. Planet M Retail Limited, decided on 7th August, 2015, relied upon by the plaintiff, wherein it has been observed as under:-
"22..... Except in certain specified cases, like a charter-party, when an agreement refers to a previous agreement and incorporates the clauses thereof in the subsequent agreement by the mere reference, only the commercial clauses get incorporated and an arbitration clause cannot be deemed to have been incorporated by implication in the subsequent agreement unless it is specifically referred to and included. Similarly, when two parties enter into an agreement and the same is governed by an arbitration clause, the arbitration clause has to be regarded as personal to the parties and the assignees of the rights of the parties to the matrix contract do not necessarily inherit the arbitration clause unless it is demonstrated that they had agreed to adhere to the same in addition to the substantive terms of the matrix contract."
25. Judgment of Madras High Court in M/s. Chaitanya Builders & Leasing (P) Ltd., Chennai Vs. Dr. Tulsi Ram and another, reported in MANU/TN/2440/2013 : 2014 (11) R.C.R. (Civil) 2680, relied upon by defendant, is not applicable in the facts and circumstances of the present case, as in the said case it was admitted fact between the parties that arbitration clause mentioned in the earlier agreement dated 27.3.2006 stood specifically incorporated by virtue of clause 11 of the supplementary agreement dated 17.2.2009, which is not the case in the matter in hand at present.
26. The effect of pronouncement of the Apex Court in Kirti Mehta's case supra is not necessary to be discussed, as in that case there were two options available to the parties for resolution of their dispute, either approaching the Civil Court or referring the matter to the arbitration with consent. In present case before execution of Buyer's Agreement, similar two options were available to the parties, however, as discussed herein before after execution of Buyer's Agreement, there is only one clause in existence providing High Court or its subordinate Courts as a forum for adjudication of dispute, omitting the arbitration clause in subsequent Buyer's Agreement which was there in earlier terms and conditions for allotment and sale.
27. Therefore, I find that in the Buyer's Agreement, arbitration clause, which is prerequisite condition for invoking the provisions of Section 8 of the Act, does not exist, therefore, present application filed by defendant is devoid of merit. In any case, if plea of incorporation of arbitration clause 28 of terms and conditions for allotment and sale is accepted, then also on applying ratio of law propounded in Kirti Mehta's case, as there will be two options available for resolution of dispute, unless consented by another party (herein plaintiff), the dispute cannot be referred for arbitration.
28. In view of above discussion, this application is dismissed.
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