In Arb. Case No. 216 of 2021-Court has to rarely interfere, when it is certain that arbitration agreement is non-existent, invalid or dispute is non arbitrable: P&H HC
Justice Avneesh Jhingan [23-01-2023]

Read Order: OM SHREE THAKURJI EDUCATIONAL SOCIETY VS  CAREER INSTITUTE EDUCATIONAL SOCIETY

Mansimran Kaur

Chandigarh, January 25, 2023:  The scope of judicial review and jurisdiction of the court under Section 11 of the Arbitration and Conciliation Act, 1996 is extremely limited, the Punjab and Haryana High Court has observed.

While dealing with the two petitions filed under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator, Justice Avneesh Jhingan disposed of the same by observing that there existed a valid arbitration agreement between the parties. 

The brief facts were that the petitioner by two lease agreements leased out the premises to the respondent. As per the petitioner, the respondent breached the terms and conditions of lease deed and due rent was not paid. A termination notice was issued and the petitioner issued a notice for invoking arbitration and proposing the name of arbitrator.

The respondent filed a suit for permanent injunction in which application under Section 8 was filed by the petitioner. The application was allowed but on appeal, the order was reversed. 

Subsequently, FIR under Sections 120-B, 201, 323, 379, 406, 420, 447, 504 and 506 IPC and FIR  under Section 57 of the Disaster Management Act and 188 IPC were registered against the respondent. 

After considering the rival contentions, the Court stated that the contentions raised by the  senior counsel for the respondent lacks merit. The allegations in FIR were  with regard to illegal running of boys and girls hostels, non-payment of rent and that the cheque issued by the respondent bounced due to insufficient funds. 

Further that the cheque was issued in spite of knowing that sufficient amount was not in the account, hence fraud was committed. The FIR was registered for violating the Standard Operating Procedure of COVID-19 and keeping the students in the institution, the Court noted. 

Reference at this stage was placed on the judmgent in Vidya Drolia and others v. Durga Trading Corporation. In view of the same, the Court noted that in the case at  hand, the allegations in the FIR are of simple fraud and for issuing a cheque having knowledge that there were not sufficient funds in the account. 

The second argument that the dispute between the landlord and the tenant is not arbitrable as the provisions of Transfer of Property Act, 1882 apply was noted to be rejected, the Court stated. 

Noting that the judicial review and jurisdiction of the court under Section 11 of the Act is extremely limited, the Bench said, “The court has to rarely interfere when it is certain that the agreement of arbitration is non-existent, invalid or the dispute is non arbitrable.”  Reference at this stage was placed on the judgment in  Secunderabad Cantonment Board v. B. Ramachandraiah and sons. 

The third contention raised had two limbs. Firstly, the consequences of non-registration of compulsorily registrable documents and secondly the effect of unstamped or under-stamped documents relied upon for appointment of arbitrator. In view of the same, the Court placed a reference to the judgments in SMS Tea Estates Pvt. Ltd. v. M/s Chandmari Tea Co.Pvt. Ltd., and M/s. N.N. Global Mercantile Pvt. Ltd Vs. M/s. Indo Unique Flame Ltd..

In view of the same, the Court noted that  both the parties had admitted the existence of arbitration agreement, the petitions were accordingly  disposed of by appointing Mr. Vimal Bakshi, District & Sessions Judge (Retd.), BDPO Residence near Kali Mata Mandir, Naraingarh, Ambala as an arbitrator.