Delhi High CourtBharat Lal Maurya vs M/S. Godrej & Boyce Mfg. Co. Ltd on 13 March, 2014Author:Sanjeev SachdevaBench:Sanjeev SachdevaIN THE HIGH COURT OF DELHI AT NEW DELHI

%                  Judgment Reserved on: 19 th February, 2014
                   Judgment Pronounced on: 13 th March, 2014


                              OMP 132/2014

B HARAT LA L M AURYA                                ..... P E TITIONER

                              Through:   Ms. Sneh Lata Srivastava,
                                         Advocate

                                  versus

M/S . GODREJ & B OYCE M FG . C O . L TD           ...... R ESPONDEN T

                              Through:   Mr. Vikas Tiwari, Advocate
                                         with Mr. Raji Abraham, AR
                                         of the Respondent.

                                 *********

                              OMP. 133/2014

M/S . S ANGUINE E NTERPR ISES P V T. L TD            .... P ETITIONER

                              Through:   Ms. Sneh Lata Srivastava,
                                         Advocate

                              versus

M/S . GODREJ & B OYCE M FG . C O . L TD           ...... R ESPONDEN T

                              Through:   Mr. Vikas Tiwari, Advocate
                                         with Mr. Raji Abraham, AR
                                         of the Respondent.

=======================================================================

OMP 132/2014 & OMP 133/2014                                 Page 1 of 21
       CORAM:

       HON'BLE MR. JUSTICE SANJEEV SACHDEVA

SANJEEV SACHDEVA, J.1.    These petitions underSection 34of the Arbitration and

      Conciliation Act, 1996      (hereinafter referred to as the

      'Act') are objections to two separate but identical

      arbitral awards both dated 04.10.2013 . Since the

      awards are identical and the facts are similar the

      objects are being disposed of by a common judgment.2.    The disputes relate to two separate tenanted premises

      taken on rent by the Respondent. The terms and

      conditions of letting are identical, identical pleas were

      raised and evidence led by the parties and both

      petitions were argued together.3.    The two tenanted premises being shop/space No.G -03

      (in OMP No.132/2014) & shop/space No.G -02 (in

      OMP No.133/2014) situated in Pa rsavnath Arcadia

=======================================================================OMP 132/2014 & OMP 133/2014                                 Page 2 of 21Complex, 1, Gurgaon Mehrauli Road, near Sector 14

      Gurgaon were taken on lease on 16.02.2007 by the

      Respondent from M/s. Parsavnath Developers Ltd. for

      a period of 12 years.4.    Lease Agreements dated 16.02.2007 were executed

      between M/s. Parsa vnath Developers Ltd. and the

      Respondent. The said lease agreements stipulated

      that the term of the lease to be 12 years and initial

      monthly      rent       to   be   Rs.1,24,000/-.   The      lease

      agreements were executed on a Rs. 100/- Stamp

      paper each and were unregistered.5.    Subsequent to the creation of the tenancy of the

      Respondent, the respective spaces were sold to the

      Petitioners/objectors by M/s. Parsavnath Developers

      Ltd.    Subsequent to the purchase of the said space s

      by the Petitioners, the           Respondent attorned their

      tenancy in favour of the Petitioners.=======================================================================OMP 132/2014 & OMP 133/2014                                    Page 3 of 216.    As per the Petitioners, the lease agreements also

      stipulated that there would be a 36 month lock -in-

      period     w.e.f.   16.04.2007    to   15.04.2010   in      which

      neither of the parties could terminate the lease.               As

      per the Petitioners, the Respondent in violation of the

      terms and co nditions of the lease agreement, by letter

      dated 20.01.2009, terminated the lease agreement ,

      paid rent only upto 31.01.2009 and abandoned the

      shops on 30.03.2009.          The Petitioners demanded the

      rent from the Respondent for the month of February

      and March, 2009 and also for the unexpired period of

      the lock-in-period.     The Petitioners further contended

      that the Respondent had never handed over physical

      possession of the shops to the Petitioners and had

      failed    to   remove   the    fittings and   fixtures affixed

      therein.7.    The Petitioners filed a suit for recovery against the

      Respondent in the Court of Additional District Judge,
=======================================================================OMP 132/2014 & OMP 133/2014                                    Page 4 of 21Saket on 01.08.2011.       The said suit was disposed of

      with a direction to the parties to settle the dispute

      through arbitration. The present Arbitral Tribunal was

      constituted by this Court underSection 11of the Act.

      The Arbitral Tribunal has published the Award s dated

      04.10.2013 that are impugned herein .8.    The Petitioners before the Arbitral Tribunal claimed the

      rent for the month of February 2009 and March 2009

      and further rent from 01.04.2009 to 15.04.2010 being

      the rent for the balance of the lock-in-period.9.    The Respondent contested the claim of the Petitioners

      on the ground that the premises were vacated by the

      Respondent on 30.03.2009 after two months notice to

      the Petitioners and as such, the ir liability to pay rent

      after they vacated the premises ceased. Further, with

      respect to the lock-in-period, the Respondent set up a

      defence that the lease agreements were neither duly


=======================================================================OMP 132/2014 & OMP 133/2014                                 Page 5 of 21stamped nor registered and as such, no term of the

      lease agreement could be enforced. The Respondent

      further took a plea that as the lease agreements were

      not registered , the tenancy was a month to month

      tenancy terminable by 15 days' notice and no clause

      of the lease agreements could be relied upon or

      enforced. The Respondent further claimed adjustment

      of the security deposited that was admittedly being

      held by the Petitioners.10.   The      following issues were framed by the Arbitral

      Tribunal:"1)    Whether the claimant has no locus standi
             to file the present claim petition? OPR.2)     Whether the claim petition is time barred
             as alleged in Para 2 of the preliminary
             objections of the reply to the statement of
             claim? OPR.3)     Whether the claim petition is hit by
=======================================================================OMP 132/2014 & OMP 133/2014                                 Page 6 of 21section 17(1)(d)r/wsection 49of Indian
             Registration Act and also hit bysection 35of the Indian Stamps Act. If so, its effect?OPR.This issue No.3 was amended with the
             consent of parties on 15-07-2013 as under:Whether the lease deed dated 16-02-2007
             is hit bysection 17(1)(d)r/wsection 49of
             Indian Registration Act and also hit bysection 35of Indian Stamps Act. If so, its
             effect? OPR.4)     Whether the claimant is owner of the suit
             premises? OPC.5)     To what amount, if any, is the claimant
             entitled to recover from the Respondent?OPC.6)     To what rate of interest, if any, is the
             claimant entitled and if so, for what period
             and on which amount? OPC.7)     Relief."=======================================================================OMP 132/2014 & OMP 133/2014                                 Page 7 of 2111.   The Arbitral Tribunal after considering the evidence

      and the submissions of the parties on issue s No. 1 & 4

      returned a finding that the Petitioners were the owners

      and landlord of the suit premises and, as such, w ere

      entitled to maintain the claim petition. This finding has

      not been assailed by the Respondent. On issue No.2

      pertaining     to   limitation,   the   Arbitral   Tribunal   has

      returned a finding that as the premises was vacated

      on 01.04.2009, the suit for recovery , in which the

      parties were referred to arbitration,              was filed on

      15.04.2010 well within limitation. This finding has not

      been impugned by the Respondent. The Respondent

      has not impugned the awards.12.   With regard to issue No.3 i.e. issue pertaining to the

      objection of the Respondent that the claim of the

      petitioner for payment for the unexpired lock- in period

      was hit by the provisions of the Indian Stamp Act and

      the Indian Registration Act, the Arbitral Tribunal has
=======================================================================OMP 132/2014 & OMP 133/2014                                   Page 8 of 21held that the Lease Deed was insufficiently stamped

      and it compulsorily required registration and as it was

      unregistered, it was inadmissible in evidence and the

      clause of lock- in period could not be enforced.13.   The Supreme Court in the case of K.B. S AHA                   AND

      S ONS P VT. LTD . V ERSUS . D EVELOPMEN T C ONSU LTAN T

      LTD . 2008 (8) SCC 564 has laid down as under:"21. From the principles laid down in the
             various decisions of this Court and the High
             Courts, as referred to hereinabove, it is evident
             that:1.      A document required to be registered, if
                     unregistered   is   not   admissible    into
                     evidence   underSection   49of   the
                     Registration Act.2.      Such     unregistered     document      can
                     however be used as an evidence of
                     collateral purpose as provided in the
                     Proviso toSection 49of the Registration

=======================================================================OMP 132/2014 & OMP 133/2014                                   Page 9 of 21Act.3.    A     collateral      transaction     must       be
                      independent of, or divisible from, the
                      transaction to effect which the              law
                      required registration.4.   A     collateral     transaction     must   be     a
                      transaction not itself required to be
                      effected by a registered document, that
                      is, a transaction creating, etc. any right,
                      title or interest in Immovable property of
                      the value of one hundred rupees and
                      upwards.5.       If a document is inadmissible in evidence
                      for want of registration, none of its terms
                      can be admitted in evidence and that to
                      use a document for the purpose of
                      proving an important clause would not
                      be using it as a collateral purpose."14.   A    document          that is   compulsorily     required      to    be

      registered and is not registered is inadm issible in

=======================================================================OMP 132/2014 & OMP 133/2014                                        Page 10 of 21evidence.       A document compulsorily required to be

      registered but not being so registered cannot be used

      as evidence except for any collateral purpose. A

      collateral transaction must be independent of and

      divisible from the transaction to effect which the law

      requires registration. A collateral transaction must be

      a transaction not itself required to be effected by a

      registered transaction. Some examples of collateral

      transaction      in     transaction s   pertaining   to   landlord -

      tenant would be the relationship between the parties,

      nature of premises, purpose of letting, rate of rent. An

      unregistered lease deed can be looked into for the

      purposes of ascertaining any of the above collateral

      purposes but not for enforcing a term of the lease .15.   A clause in a lease deed fixing or stipulating a term of

      the lease or a fixed term of lock-in-period is not a

      collateral purpose. The said clause would be one of

      the main clauses of the lease which in the absence of
=======================================================================OMP 132/2014 & OMP 133/2014                                     Page 11 of 21registration would be inadmissible in evid ence and

      unenforceable in law. The Arbitral Tribunal has rightly

      held that the clause vis-a-vis the lock-in-period cannot

      be    called    a   collateral   purpose   and   the   tenancy

      between the parties was not a fixed term tenancy but a

      month to month tenancy terminabl e by a notice on

      either side.16.   The Arbitral Tribunal has further rightly held that the

      document was insufficiently stamped and as s uch,

      inadmissible in evidence. If the document is found to

      be not duly stamped,Section 35of Stamp Act bars the

      said document being acted upon. (SMS TEA E STATES

      P VT. LTD . V ERSUS C HANDMARI TEA C OMPANY P VT. L TD .

      2011 (14) SCC 66).17.   The finding of the Arbitral Tribunal, that the Lease

      agreement compulsorily required registration and in

      the absence of registration and being insufficiently


=======================================================================OMP 132/2014 & OMP 133/2014                                  Page 12 of 21stamped        was      inadmissible     in     evidence      and

      unenforceable and further that the clause stipulating a

      lock-in period was one of the main clauses of the

      lease and in the absence of registration could neither

      be relied upon nor enforced, cannot be faulted with.18.   The Arbitral Tribunal has, on the appraisal of the

      evidence of the parties, returned a finding of fact that

      the tenancy was terminated by the Respondent by the

      legal    notice dated     20.01.2009, which         notice    also

      intimated the intention of the Respondent to vacate the

      premises w.e.f 01.04.2009. The Arbitral Tribunal has

      further returned a finding of fact that the premises

      were vacated w.e.f 01.04.2009. The Arbitral Tribunal

      has held the Respondent liable to pay rent for the

      months of February and March 2009 at the agreed

      rate    of    Rs.1,24,000/-    besides        service   tax    and

      maintenance char ges.=======================================================================OMP 132/2014 & OMP 133/2014                                   Page 13 of 2119.   The Arbitral Tribunal has held that the Respondent is

      entitled to the balance of the security deposit after

      adjustment of the amount held to be payable by the

      Petitioners alongwith interest @ 18% per annum.20.   The Petitioners have impugned the findings of fact by

      the Arbitral Tribunal.21.   A perusal of the claim petition filed by the Petitioners

      shows that the Petitioners had claimed rent under two

      heads, rent for the month of February and March,

      2009 and rent from 01.04.2009 to 15.04.2009 as rent

      from the lock-in-period separately. This segregation by

      the Petitioners is an indication of the fact that the

      Petitioners were themselves treating the two periods

      as distinct. The rental for the said two periods was

      same and thus the only purpose for showing the said

      two periods separately appears to be the fact that the

      Petitioners were aware that the premises had bee n


=======================================================================OMP 132/2014 & OMP 133/2014                                Page 14 of 21vacated on 01.04.2009 . Further in the legal notice

      dated 27.04.2009 (Ex.CW1/10) issued on beha lf of the

      Petitioners, the Petitioners have themselves admitted

      that the Respondent had vacated the premises on

      30.03.2009.        However, have disputed, the handing

      over of physical possession. The finding by the Arbitral

      Tribunal is that the Respondent had vacated the

      premises w.e.f 01.04.2009. This finding is purely

      factual.22.   The powers exercised by the Court while deciding

      objections underSection   34of   the   Act   are    not

      appellate powers. The Court does not sit as a Court of

      appeal.     If the Arbitral Tribunal has taken a plausible

      view, the Court while dealing with objections underSection 34would not substitute its view for the view of

      the Arbitral Tribunal even in a case where the Court

      were to come to a conclusion that a different view is

      possible from the view taken by the Arbitral Tribunal,
=======================================================================OMP 132/2014 & OMP 133/2014                                   Page 15 of 21provided the view taken by the Arbitral Tribunal was a

      plausible view.           The Court entertaining objections

      underSection 34is not to appreciate or re-appreciate

      the evidence for the purposes of returning a finding of

      fact.    The findings of fact returned by the Arbitral

      Tribunal are not to be interfered with unless they are

      perverse or erroneous on the face of the record . No

      such perversity or error apparent has been pointed out

      in the present case. The finding s of the Arbitral

      Tribunal that the agreement being unregistered and

      insufficiently     stamped         and     thus          inadmissible       in

      evidence and            further   that no    clause of the              said

      agreement        can     be   enforced, are              the   finding s    in

      accordance with the settled judicial principles.23.   The     Supreme          Court    of     India      in     the   case      of

      M C D ERMOTT       IN TERNA TIONA L         INC .        VERSUS       B URN

      S TANDARD C O . LTD . :           2006 (11) SCC 181 has laid

      down as under:=======================================================================OMP 132/2014 & OMP 133/2014                                             Page 16 of 21"35. The 1996 Act makes provision for the
             supervisory role of courts, for the review of the
             arbitral    award    only   to    ensure    fairness.Intervention of the court is envisaged in few
             circumstances only, like, in case of fraud or bias
             by the arbitrators, violation of natural justice,
             etc. The court cannot correct errors of the
             arbitrators. It can only quash the award leaving
             the parties free to begin the arbitration again if
             it is desired. So, scheme of the provision aims
             at keeping the supervisory role of the court at
             minimum level and this can be justified as
             parties to the agreement make a conscious
             decision to exclude the court's jurisdiction by
             opting for arbitration as they prefer the
             expediency and finality offered by it."24.   The Supreme Court of India in the case of ONGC L TD .VERSUS     S AW P IPES LTD ., (2003) 5 SCC 705 has laid

      down as under:"54. It is true that if the Arbitral Tribunal has
             committed mere error of fact or law in
             reaching     its   conclusion    on   the   disputed
=======================================================================OMP 132/2014 & OMP 133/2014                                   Page 17 of 21question submitted to it for adjudication then
             the   court      would    have    no jurisdiction    to
             interfere with the award. But this would
             depend upon reference made to the arbitrator:(a) if there is a general reference for deciding
             the contractual dispute between the parties
             and if the award is based on erroneous legal
             proposition, the court could interfere; (b) it is
             also settled law that in a case of reasoned
             award, the court can set aside the same if it is,
             on the face of it, erroneous on the proposition
             of law or its application; and (c) if a specific
             question of law is submitted to the arbitrator,
             erroneous decision in point of law does not
             make the award bad, so as to permit its being
             set aside, unless the court is satisfied that the
             arbitrator had proceeded illegally."25.   The     Supreme         Court    of     India   in   the   case     of

      M AHARASHTRA SEB            V.   S TERILITE INDUSTR IES (INDIA )

      2001 (8) SCC 482 has laid down as under:"9. The position in law has been noticed by this
             Court inUnion of India v. A.L. Rallia Ram[AIR
=======================================================================OMP 132/2014 & OMP 133/2014                                      Page 18 of 211963 SC 1685 : (1964) 3 SCR 164] and Madanlal
             Roshanlal Mahajan v. Hukumchand Mills Ltd.[AIR 1967 SC 1030 : (1967) 1 SCR 105] to the
             effect that the arbitrator's award both on facts
             and law is final; that there is no appeal from his
             verdict; that the court cannot review his award
             and correct any mistake in his adjudication,
             unless the objection to the legality of the
             award is apparent on the face of it. In
             understanding what would be an error of law
             on the face of the award, the following
             observations inChampsey Bhara & Co. v. Jivraj
             Balloo Spg. and Wvg. Co. Ltd.[(1922-23) 50 IA
             324 : AIR 1923 PC 66] , a decision of the Privy
             Council, are relevant (IA p. 331)
                    'An error in law on the face of the award
                    means, in Their Lordships' view, that you
                    can find in the award or a document
                    actually   incorporated thereto, as for
                    instance   a   note   appended    by   the
                    arbitrator stating the reasons for his
                    judgment, some legal proposition which
                    is the basis of the award and which you
=======================================================================OMP 132/2014 & OMP 133/2014                                Page 19 of 21can then say is erroneous.'10.InArosan Enterprises Ltd. v. Union of India[(1999) 9 SCC 449] this Court again examined
             this matter and stated that where the error of
             finding of fact having a bearing on the award is
             patent and is easily demonstrable without the
             necessity of carefully weighing the various
             possible viewpoints, the interference in the
             award based on an erroneous finding of fact is
             permissible and similarly, if an award is based
             by applying a principle of law which is patently
             erroneous,       and   but   for   such   erroneous
             application of legal principle, the award could
             not have been made, such award is liable to be
             set aside by holding that there has been a legal
             misconduct on the part of the arbitrator."26.   The Arbitral Tribunal has returned a finding and rightly

      so, that as the Lease Agreement was unregistered and

      insufficiently stamped, the clause stipulating a lock -in-

      period could not be enforced. The Petitioners were

      rightly held not entitled to seek any amount for the
=======================================================================OMP 132/2014 & OMP 133/2014                                  Page 20 of 21unexpired lock-in-period. As regards the finding by the

      Arbitral Tribunal that the premises were vacated w.e.f.

      01.04.2009, the findings are factual and not an error

      apparent on the face of the record. The same are not

      perverse and cannot be interfered with.27.   In view of the above, I find no merit in the petition s.The petitions are accordingly dismissed. No costs.SANJEEV SACHDEVA, J


March 13, 2014
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=======================================================================OMP 132/2014 & OMP 133/2014                                Page 21 of 21