TULSI DASS vs PREM LATA AND ANR

$~18
* IN THE HIGH COURT OF DELHI AT NEW DELHI

+ FAO (COMM) 202/2023 & CM APPL. 51540-51542/2023

TULSI DASS ….. Appellant
Through: Mr. Kuldeep Kumar, Advocate with Mr. Syed Nilofar Akhtar, Advocate.

versus

PREM LATA AND ANR ….. Respondents
Through: None.

% Date of Decision: 05th October, 2023

CORAM:
HON’BLE MR. JUSTICE MANMOHAN
HON’BLE MS. JUSTICE MINI PUSHKARNA
J U D G M E N T
MINI PUSHKARNA, J: (ORAL)
1. The present appeal has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) challenging the judgment dated 28th February, 2023 passed by the learned District Judge, Commercial Court-03, South-East District, Saket Courts, New Delhi in OMP (COMM) No. 28/2021. By way of the impugned judgment, the petition filed on behalf of appellant under Section 34 of the Arbitration Act challenging the Arbitral Award dated 03rd July, 2021 was dismissed.
2. The facts as emerge from the documents on record are that appellant herein claimed himself to be the absolute owner and in exclusive possession of plot no. B-18 (old plot no. 119 & 121) situated at Sanwal Nagar, New Delhi. Since respondents were desirous of purchase of the said plot, an agreement to sell dated 31st October, 2017 was executed between respondent no. 1 and the appellant herein for a total sale consideration of ? 48 lakhs, out of which token money of ? 2 lakhs was given by the respondents at the time of signing the agreement to sell.
3. Subsequently, a further amount of ? 2 lakh in cash was paid to the appellant herein. The respondents paid different sums to the appellant on various occasions, through RTGS paid by respondent no. 2 in the following tranches:
a. Rs. 10,000 on 08th December, 2017
b. Rs. 5 lakh on 11th December, 2017
c. Rs. 9 lakh on 11th December, 2017
d. Rs. 10 lakh on 12th December, 2017

4. Thus, total amount of ? 28,10,000/- was paid by respondents to the appellant. The balance amount of ? 19,90,000/- was to be paid at the time of execution of the sale deed. In terms of the agreement to sell, appellant herein handed over vacant physical possession to the respondent on 12th December, 2017.
5. The time period for making payment of the balance amount was 6 months from the date of the execution of the agreement to sell dated 31st October, 2017. Thus, the respondents arranged the balance amount and purchased the stamp papers for execution of the sale deed. However, on the date agreed by the appellant for registration of sale deed i.e. 25th January, 2018, the appellant did not appear at the Sub-Registrar Office. The respondents tried to contact the appellant, but he intentionally avoided to meet the respondents.
6. The respondents came to know on 09th February, 2018 that a false complaint of house trespass and threat in respect of the property in question had been filed against the respondents by one Desh Raj claiming to be tenant in the said property. Thus, respondent no. 2 made a complaint for cheating and threat to life and property against the appellant to the SHO P.S. Defence Colony.
7. Thereafter, respondents filed a suit for specific performance of the agreement to sell against the appellant before the District Court, Saket. However, the said suit was dismissed vide order dated 26th April, 2018 on the ground of being barred by law, in view of the application filed under Section 8 of the Arbitration Act on behalf of appellant herein. Subsequently, respondents filed petition before this Court being Arb. P. No. 907/2018, pursuant to which the matter was referred to sole Arbitrator.
8. The respondents raised their claims before the learned Arbitrator for specific performance of the agreement to sell dated 311st October, 2017. By Award dated 3rd July, 2021 the learned Arbitrator held that the respondents herein had established that they had been performing their part of the obligations under the agreement to sell as they had duly made payment of substantial amount in furtherance of the same to the appellant herein. Thus, it was held by the learned Arbitrator that the respondents herein are to pay the balance amount of ? 19,90,000/- to the appellant within 45 days of the Award after which a sale deed was to be duly executed by appellant herein in favour of respondents. Further, an amount of ? 2 lakh was awarded as costs in favour of the respondents herein. Thus, the learned Arbitrator granted specific performance of the agreement to sell dated 31st October, 2017 in favour of the respondents herein and directed the appellant to execute a sale deed qua the property in question in favour of the respondents.
9. Aggrieved by the aforesaid Award dated 3rd July, 2021 passed by the learned Arbitrator, the appellant herein filed petition under Section 34 of the Arbitration Act. However, by the impugned judgment dated 28th February, 2023, the learned District Judge dismissed the said petition. Thus, the present appeal has been filed.
10. On behalf of the appellant, following contentions have been raised:
10.1 The agreement to sell was between the appellant and respondent no. 1 only. There were clear directions of this Court to the effect that the issue whether respondent no.2 herein was a necessary and proper party, was to be decided by the learned Arbitrator. However, the said issue has not been considered or decided.
10.2 There is no privity of contract between the appellant and respondent no. 2. Therefore, respondent no.2 has no right for specific performance of the contract, as the agreement to sell dated 31st October, 2017 was only between the appellant and respondent no. 1.
10.3 Except for ? 2 lakhs, no other amount has been paid by respondent no.1. Any payment made by respondent no. 2 in pursuance of the agreement to sell is clearly hit by The Benami Transactions (Prohibition) Act, 1988 (“Benami Act”) and the same cannot be termed as payment made by respondent no. 1. There is no exemption in law that son can give the payment on behalf of the mother, when he is not a party to the agreement to sell.
10.4 Learned District Judge has committed a grave error while not considering the patent illegality committed by the sole Arbitrator. The fact that respondent no.2 was only an attesting witness to the agreement to sell was not considered by the learned Arbitrator. An attesting witness can never be a party to agreement to sell and the same is completely against the provisions of Transfer of Property Act, 1882 and Indian Contract Act, 1872. Thus, no relief can be granted in favour of respondent no.2 under the Specific Relief Act, 1963.
10.5 It is an admitted fact that the respondent no. 2 had forcibly attempted to take possession of the property in question on 9th February, 2018 along with his associates and an FIR was lodged against him. This fact was concealed while filing the statement of claim, which amounts to concealment of facts, resulting in fraud.
10.6 No appearance has ever been put by the respondent no.1 and no evidence was ever led by respondent no. 1 in support of her claim. Since no evidence was filed by respondent no. 1, the claim filed on her behalf was liable to be dismissed. The evidence led by respondent no. 2 in support of the claim was no evidence, as respondent no. 2 was not representing respondent no. 1, though he is the son, as there was no documentary evidence on record to show proper authorization by respondent no. 1 in favour of respondent no. 2. Evidence led by respondent no. 2 cannot be read as evidence on behalf of respondent no. 1.
11. Having heard learned counsel for the appellant and having perused the record, this Court finds that the appellant has been changing his stand time and again. On the one hand, the appellant has put forth that he has not received any amount other than a sum of ? 2 lakh from the respondents in furtherance of the agreement to sell. On the other hand, as noted by the learned Arbitrator, the appellant duly admitted the receipt of substantial amount of ? 26,10,000/- from the respondents. Further, appellant admitted to deposit of ? 24 lakh in his account by respondent no. 2 herein. Thus, the learned Arbitrator has categorically held that the wavering stand of the appellant herein makes it amply evident that he was in receipt of amount of ? 28,10,000/- from the respondents herein. The learned Arbitrator has held as follows:

“48.Further, the Respondent even in his Statement of Defence himself pleaded that he offered to return the Claimant’s advance earnest amount which was forfeited by him vide notice dated 05.06.2019. The Respondent in his application under Order VII Rule 11, Code of Civil Procedure, 1908 as filed by him in the suit “Prem Lata vs Tulsi Das” has duly admitted to receipt of a substantial amount of.Rs.26,10,000.00 from the Claimants. Also, in his cross examination dated 28.01.2019 the Respondent admits deposit of Rs.24,00,000.00 in his account by the Claimant No.2 further used by him to repay one Shri Sonu and one Shri Desh Raj.

49.The wavering stand of the Respondent makes it amply evident that he was in receipt of the amount of Rs.28,10,000.00. As such it stands duly established that the Claimants have been performing their part of the obligations under the said Agreement to Sell as they have duly made payment of substantial amount of Rs. 28,10,000.00 furtherance of the same to the Respondent.”

12. The contention of the appellant that the payment made by respondent no. 2 is hit by Benami Act is totally erroneous and is liable to be rejected. The respondent no. 2 being the son of respondent no. 1 had made payments to the appellant in pursuance of the agreement to sell, which payments were duly accepted by the appellant. Payment to the appellant by respondent no. 2 pursuant to the agreement to sell is a matter between respondent no. 1 and respondent no. 2 being mother and son. The appellant after having received substantial amount pursuant to agreement to sell cannot seek to avoid his liability to execute the sale deed by raising the plea of Benami Act. Such plea of Benami Act is not attracted in the present case as no conflicting claims have been raised on behalf of the respondents against one another.
13. Similarly, the contention raised on behalf of appellant that respondent no. 2 was not a proper and necessary party as there was no privity of contract between appellant and respondent no. 2, is without any substance and is also liable to be rejected. The learned Arbitrator has given a clear finding that it is clearly established that the transaction between the appellant and respondents is closely inter connected and formed part of one principal understanding pertaining to the sale of the property. Thus, learned Arbitrator has held as follows:

“63. The primary contention of the Respondent is qua the misjoinder of parties in the present arbitral disputes as Shri Dileep Kumar has been arrayed as Claimant No.2 in the arbitral proceedings. As already noted, it is a fact that Shri Dileep Kumar is not a signatory to the Agreement to Sell which contains the arbitration clause. This is explained in Section 8 of the Arbitration and Conciliation Act, 1996 which is reproduced hereinunder;

“Section 8

(I) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.”
The said provision was interpreted by the Hon’ble Supreme Court in ”Ameet Lal Chand Shah & Other vs Rishabh Enterprises and Another AIR2018SC3041″ wherein the enforceability of the arbitration clause even on the non-signatories when the transactions were interconnected was upheld.

64. After a combined reading of the provisions and the case law, the Tribunal is of the opinion that on the basis of the averments made in the claim petition it is clearly established that the transaction between the Respondent and both the Claimants are closely interconnected and form part of one principal understanding pertaining to sale of the suit property

65. Applying the test laid down in the Ameet Lalchand Shah Case (Supra), this Tribunal is of the considered opinion that the presence of Claimant No.2 is necessary for adjudication of present dispute.”

14. This Court further notes that it has been established that the respondents herein were always ready to make payment of the balance amount to the appellant herein. Statement of account of respondent no. 2 was placed before the learned Arbitrator which clearly reflected the financial capacity of the respondents to make payment of the balance amount. Thus, in this regard the learned Arbitrator has held as follows:
“82. The Claimants in their pleadings have time and again mentioned that they were and are still ready to make payment of the balance amount to the Respondent and in support of the same alongwith their Statement of Claim they have filed a Statement of Account of the Claimant No.2 as an evidence which blatantly on the face of it shows that they had the financial capacity for making the balance payment in terms of the said Agreement to Sell to Respondent. It is to be noted that admittedly payment of Rs.28,10,000.00 was already made by the Claimants to the Respondent and for making the balance payment of Rs. 19,90,000.00 the Respondent was called by the Claimants to the office of the Sub-registrar on 20.11.2017 but the Respondent refused to come to the Sub-registrar office and the same has been admitted by the Respondent in his cross examination dated 20.04.2019.

…….

84.The Claimants are still ready and willing to make payment of the balance amount of Rs.19,90,000.00 to the Respondent and hence Issue No.7 is accordingly decided in favour of the Claimants and against the Respondent.”

15. While dealing with the petition filed on behalf of the appellant herein, the learned District Court has clearly held that the Award of the learned Arbitrator was passed after a detailed scrutiny of facts and appreciation of evidence. The learned District Court has held that the Arbitral Award has been passed after due analysis of the evidence led by the parties and has been rendered after due application of mind. Hence, the learned District Court upheld the Award passed by the learned Arbitrator thereby holding that there was nothing to suggest that the findings and conclusions rendered by the learned Arbitrator were per se perverse or illegal.
16. It is no longer res integra that the extent of judicial scrutiny and scope of interference under Section 37 of the Arbitration Act is extremely limited and narrow. The learned District Court has given detailed reasons while upholding the Award passed by the learned Arbitrator. When there are concurrent findings, firstly by the learned Arbitrator and thereafter confirmed by the Court while dealing with the objections under Section 34 of the Arbitration Act, this Court will not sit as a Court of appeal to reassess and re-examine the evidence led before the learned Arbitrator.
17. With regard to scope of interference by the Court under Section 37 of the Arbitration Act where there are concurrent findings, the Supreme Court in the case of MMTC Limited Vs. Vedanta Limited, 2019 SCC OnLine SC 220 has held as follows:
“14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.”

18. Consequently, in view of the detailed discussion hereinabove, this Court finds no merit in the present appeal. The same is accordingly dismissed along with the pending applications.

MINI PUSHKARNA, J

MANMOHAN, J

OCTOBER 5, 2023
AK

FAO (COMM) 202/2023 Page 1 of 10