RAJESH VERMA Vs ASHWANI KUMAR KHANNA
Bench: J. CHELAMESWAR,ABHAY MANOHAR SAPRE
Case number: C.A. No.-004095-004095 / 2016
Diary number: 8352 / 2016
Advocates: PRAVEEN CHATURVEDI Vs
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Non-Reportable
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.4095 OF 2016 (ARISING OUT OF SLP(C) NO.10868/2016)
(@ SLP(C)…..CC 6652/2016)
Rajesh Verma Appellant(s)
VERSUS
Ashwani Kumar Khanna Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1) Delay in filing special leave petition is condoned.
Leave granted.
2) This appeal is filed against the final judgment
and order of the High Court of Delhi at New Delhi
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dated 03.12.2015 and 19.02.2016 in Arbitration
Petition No. 434 of 2015 and I.A. No. 754 of 2016 in
Arbitration Petition No. 434 of 2015 respectively
whereby the learned Single Judge of the High Court
allowed Arbitration Petition No. 434 of 2015 and
dismissed I.A. No. 754 of 2016 in Arbitration Petition
No. 434 of 2015 seeking change of the named
arbitrator.
3) In order to appreciate the short issue involved in
the appeal, it is necessary to state few relevant facts.
4) The appellant is an owner/landlord of the shop
measuring 153.58 sq. feet situated at 1729, Gali No.
5, Govind Puri Extension, Kalkaji, New Delhi-110019
whereas the respondent was the appellant's tenant of
the shop in question at a monthly rent of Rs.175/-
since July 1977.
5) On 31.10.2014, the appellant and the respondent
claimed to have entered into an agreement whereby it
was inter alia agreed that the appellant on
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respondent's vacating the shop would demolish the
shop and construct the new one in its place on or
before 31.03.2015 and then sell the new shop to the
respondent for a total consideration of Rs.42,00,000/-.
The agreement further stipulated that the respondent
has paid a sum of Rs.32,00,000/- by way of advance
to the appellant in cash towards the sale consideration
and balance amount of Rs.10,00,000/- was to be paid
by the respondent to the appellant at the time of
execution of the sale deed. Clause 14 of the agreement
contained arbitration clause for making reference to
the sole arbitrator in the event of any dispute arising
between the parties in relation to the agreement in
question.
6) The disputes arose between the parties in
relation to implementation of the terms of the
agreement, which led to exchange of notices between
them by making allegations and counter allegations by
both against each other regarding committing of
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breaches of the agreement. Eventually, the respondent
(tenant) filed an arbitration petition being Arbitration
Petition No. 434 of 2015 under Section 11 of the
Arbitration and Conciliation Act, 1996 (hereinafter
referred to as “the Act”) before the Delhi High Court
(Single Judge) out of which this appeal arises praying
therein for appointment of sole arbitrator for resolving
the disputes which had arisen between them. It was
inter alia alleged that since Clause 14 of the agreement
provided for appointment of sole arbitrator for deciding
the disputes arising out of the agreement between the
parties and when disputes have arisen between them,
the matter should be referred to the sole arbitrator for
his decision as provided in the agreement. The
arbitration petition was contested by the appellant
(owner/landlord) as non-applicant by denying the
allegations made in the petition. However, the learned
Single Judge by order dated 03.12.2015 allowed the
petition and appointed one Shri Ashok Chhabra,
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Advocate as sole arbitrator to decide the disputes. It is
against this order of the learned Single Judge, the
owner/landlord has filed this special leave to appeal.
7) Heard Mr. Praveen Chaturvedi, learned counsel
for the appellant and Mr. Vivek Sharma, learned
counsel for the respondent.
8) Mr. Praveen Chaturvedi, learned counsel for the
appellant, urged two points in support of his
submission. In the first place, he urged that the
learned Single Judge while allowing the petition
exceeded his jurisdiction under Section 11 of the Act
because he virtually proceeded to decide the main
disputes itself by recording findings on such issues in
Paras 9 and 10 of the impugned order. It was his
submission that the findings recorded in Paras 9 and
10 and all such observations made in the impugned
order, which touched the merits of the controversy,
should, therefore, be set aside leaving the arbitrator to
decide all such disputes in accordance with law in
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arbitration proceedings on its merits depending upon
the stand taken by the parties before the arbitrator.
9) His second submission was that the learned
Single Judge having allowed the petition should have
sought party’s consent for nominating the arbitrator
and in any case, according to learned counsel, any
retired judge would have been more preferable for
appointment to act as an arbitrator in place of any
lawyer.
10) Learned counsel for the respondent, however,
supported the impugned order and urged that no
interference is called for in the impugned order.
11) Having heard the learned counsel for the parties
and on perusal of the record of the case, we find some
force in the submissions urged by learned counsel for
the appellant.
12) We have perused the impugned order and find
that in Paras 9 and 10, the learned Single Judge has
elaborately discussed the issues touching the merits of
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the controversy relating to the agreement. In our
considered opinion, a discussion much less with such
elaboration on factual issues was wholly uncalled for
and should not have been made. Indeed, it was not
necessary for the learned Single Judge to have
recorded any finding on merits while making reference
to the arbitrator under Section 11 of the Act.
13) It is a settled principle of law that jurisdiction of
Court under Section 11 of the Act is limited and
confine to examine as to whether there is an
arbitration agreement between the contracting parties
and, if so, whether any dispute has arisen between
them out of such agreement which may call for
appointment of arbitrator to decide such disputes.
14) Once it is held that disputes had arisen between
the parties in relation to agreement which contained
an arbitration clause for resolving such disputes, the
Court should have made reference to the arbitrator
leaving the parties to approach the arbitrator with
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their claim and counter-claim to enable the arbitrator
to decide all such disputes on the basis of case set up
by the parties before him. In this case, we find that the
learned Single Judge did exceed his jurisdiction on
this issue and hence interference to this extent is
called for.
15) We, accordingly, observe that the arbitrator while
deciding the disputes between the parties in
arbitration proceedings would not, in any manner, be
influenced by any finding, observations made by the
learned Single Judge in the impugned order and nor
would make any reference of the findings while
deciding the case.
16) Now so far as the appointment of sole arbitrator
made by the learned Single Judge is concerned, in
view of the reservation expressed by the appellant
regarding the choice of an advocate arbitrator by the
High Court, we feel that it is just and proper that a
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retired Judge should be appointed in his place as an
arbitrator to resolve the disputes.
17) We, accordingly, appoint Shri Justice M.L. Mehta
(Rtd.) as the sole arbitrator to decide the disputes,
which have arisen between the parties in relation to
the agreement in question. The arbitrator would be at
liberty to settle the terms for deciding the dispute such
as fees and expenses etc.
18) Needless to say, the arbitration proceedings be
completed expeditiously.
19) In the light of foregoing discussion, the appeal
succeeds and is allowed in part. Impugned order is
modified to the extent indicated above.
.……...................................J. [J. CHELAMESWAR]
………..................................J. [ABHAY MANOHAR SAPRE]
New Delhi, April 19, 2016.
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