M/S Bharati Airtel Limited, v. Wri Jiten A.Savaria,

THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN AND THE HON'BLE SRI JUSTICE M.SATYANARAYANA MURTHY CIVIL REVISION PETITION NO.2945 OF 2013 ORDER: (per Hon'ble Sri Justice Ramesh Ranganathan) The petitioners herein are the petitioners in I.A. No.1382 of 2010 in O No.220 of 2010 before the Court of the III Senior Civil Judge, City Civil Co Hyderabad and the defendants in O.S. No.220 of 2010. I.A. No.1382 of 2010 was filed, under Section 8(1) of the Arbitration Conciliation Act, requesting the Court below to refer the matter to arbitration per the clause mentioned in the lease deed dated 01.03.2005. By the o under revision, the Court below dismissed the I.A.

on the ground that respondent was not a party to the lease; as the lease deed was unregistere was inadmissible in evidence; and as the lease agreement does not contain signature of the respondent, against whom the arbitration reference was sou there is no document, as contemplated under Section 7(4) of the Arbitration Conciliation Act, from which it may be spelt out that the petitioner and respondents were parties to the said clause. The I.A. was dismiss Aggrieved thereby the present Revision.

Smt. Manjiri S. Ganu, Learned Counsel for the petitioners, would pl reliance on the judgment of the Supreme Court, in SMS Tea Estates Pvt. v. Chandmari Tea Company Pvt. Ltd[1], in support of her submission tha arbitration agreement does not require registration under the Registration A She would also place reliance on the judgment of the Delhi High Cour Bestech India Private Limited v. MGF Developments Ltd[2] and M/s. Hic India Properties Pvt. Ltd v. M/s. Adidas India Marketing[3], in support of submission that, as the lease was assigned to the respondent by way attornment, the arbitration clause therein is binding on him. On the other h Sri C.N. Murthy, Learned Counsel for the respondent, would rely on judgment of the Supreme Court, in Naina Thakkar v. Annapurna Builders in support of his submission that, as the lease deed is insufficiently stamp

the arbitration clause mentioned therein cannot even be looked into. The respondent herein purchased the subject property, by way registered sale deed dated 15.12.2009, from Ketan Parek with whom petitioners in this revision had earlier entered into a lease agreement. Cla 11 of the lease deed, entered into between Sri Ketan Parek and the petition herein on 01.03.2005, specifically provides that, in the event of the les selling the schedule property to a third party, the lessor shall ensure that tenancy is duly attorned by the new owner/third party; the sale shall be sub to such a condition only; and the lessee shall continue to pay the agreed ren the new owner/third party.

The sale deed dated 15.12.2009 executed by Sri Ketan Parek favour of the respondent herein, contains various conditions. Clause records that the vendor has delivered possession of the property to the ven by way of attornment of the tenancy of the tenant i.e., M/s. Bharathi Cell Limited; the vendee shall be entitled to receive all rents from the said ten with effect from the date of the sale deed; and the vendee hereby confirms the vendor has delivered all the related documents, in connection with the le transaction, to him along with the refundable deposit of an amount Rs.63,000/-.

The respondent had himself filed a copy of the original lease deed al with the plaint. In view of the law declared by the Supreme Court, in SMS Estates Pvt. Ltd1, the arbitration clause, even in an unregistered lease de would remain in force and continue to operate. In Bestech India Pvt Ltd2 , M/s. Hicare India Properties Pvt Ltd3, the Delhi High Court, relied on judgment of the Supreme Court in Khardah Company Ltd v. Raymon Company (India) Private Ltd[5], to hold that assignment of a lease wo render the arbitration clause mentioned therein applicable even to assignee. The conclusion of the Court below, to the extent it held that the le deed was inadmissible in evidence, and it was not a document in the eye of as it did not contain the signature of the respondent, is erroneous and mus set aside.

The question which would still necessitate examination is whether

lease deed is adequately stamped. In the counter-affidavit filed by them in No.1382 of 2010, the respondent specifically stated that, as the lease dee improperly stamped, it has no legal existence. In Naina Thakkar4 the Supre Court held:

".................It is true that the consequences provided in the Stamp Act, 1899 must follow where sufficient stamp duty has not been paid on an instrument irrespective of the willingness of a party to the instrument to pay deficit stamp duty but the procedure where the arbitration clause is contained in a document which is not registered although compulsorily registerable and which is not duly stamped as summed up by this Court in SMS Tea Estates (P) Ltd. case shall not be applicable to the proceedings under Section 8 of the Act where the party making such application does not express his/her readiness and willingness to pay the deficit stamp duty and the penalty. It is not the duty of the Court to adjourn the suit indefinitely until the defect with reference to deficit stamp duty concerning the arbitration agreement is cured.

Accordingly, we are of the opinion that no fault can be found in the order of the trial court in rejecting the application made under Section 8 of the Act as the document on which the petitioner relied upon was admittedly unregistered and insufficiently stamped........." (emphasis supplied) The question, whether the lease deed is adequately or insufficie stamped, necessitates consideration by the Court below and, in case inadequately stamped, it is only if the petitioners express their readiness willingness to pay the deficit stamp duty and penalty within the time stipula can the defect, with regard to deficit stamp duty concerning the arbitra agreement, be said to have been cured.

As the Court below has not conside this aspect, we consider it appropriate to set aside the order under revision remand the matter to the Court below to examine whether the lease dee inadequately stamped and, if so, the consequences which would fo therefrom.

The Civil Revision Petition is disposed of accordingly. miscellaneous petitions pending, if any, shall also stand disposed of. No cos RAMESH RANGANATHAN, J M.SATYANARAYANA MURTHY,J Date: 09.03.2015 MRKR [1] (2009) 1 SCC 392

[2] 161 (2009) DLT 282 [3] Judgment in Arbitration Petition No.370 of 2009 dated 27.04.2010 [4] (2013) 14 SCC 354 [5] 1962 SC 1810