Sri Debasish De Bhowmick vs M/s Tirupati Awas Private Limited And Another

Sabyasachi Bhattacharyya, J.

The two revisional applications, bearing C.O. No. 1198 of 2018 and C.O. No. 1199 of 2018, are taken up together for hearing, since both arise from

connected suits.

The facts of C.O. No. 1198 of 2018, in a nutshell, are that the petitioner filed Title Suit No. 202 of 2013 in September, 2013. On November 7, 2013,

the defendants therein, namely, M/s Tirupati Awas Private Limited and Anand Kumar Chokhani, a Director of M/s Tirupati, filed an application under

Section 5, read with Section 8, of the Arbitration and Conciliation Act, 1996 for reference of the dispute to arbitration.

On March 21, 2016 the plaintiff/petitioner, namely Debasish De Bhowmick, filed two applications, under Order I Rule 10 and Order VI Rule 17

respectively of the Code of Civil Procedure.

Vide the impugned order dated December 4, 2017, the Trial Judge allowed the opposite parties’ application under Sections 5 and 8 of the

Arbitration Act, 1996 referring two sides of the suit to arbitration and holding that the suit stood disposed of since the Court became functus officio.

Title Suit No. 202 of 2013 was instituted for the following reliefs:

“i) A decree of declaration that the plaintiff being a bona fide flat owner of the Schedule A Property have absolute proportionate share, rights, title,

interest and possession in the common area and facilities in the suit property as described in the Schedule C of the Suit Property in & under the

Schedule A Property of the plaint here under.

ii) A decree of declaration that the defendants have no right, title, interest to sell or alienating or changing or encumbering or encroaching the common

area and space and facilities, other open and vacant space, car parking space and all the easement rights of the plaintiff in the suit property as

describe hereunder in the Schedule C of the Suit Property in & under the Schedule A Property of the plaint.

iii) A decree of declaration that the defendants by illegal means and methods can’t deprived and expel and/or out the plaintiff from using and

enjoying the Schedule C of the Suit Property in & under the Schedule A Property.

iv) A decree of permanent injunction restraining the defendants and his associates from, in any way, transferring, alienating or encumbering or

changing the nature and character of Schedule C of the Suit Property in & under the Schedule A Property or enjoying the common area and facilities

vacant and open space in the suit property in any manner whatsoever whereby the right or possession and enjoyment of the plaintiffs are in any way

affected and/or disturbed in the Schedule C of the Suit Property in & under the Schedule A Property.v) For a temporary and ad-interim order of

injunction.

vi) Commissioner/Receiver.

vii) Cost.

viii) Other relief/reliefs.â€​

It is relevant to note that, by dint of the application under Order I Rule 10 of the Code, the petitioner sought to add the Regional Manager, West

Bengal State Electricity Distribution Company Limited, the Chairman, Rajpu-rSonarpur Municipality and the Director, Reliance Corporate IT Park

Limited as defendants to the suit.

The amendment application under Order VI Rule 17 of the Code, filed by the petitioner, was intended to incorporate certain facts relating to

defendant no. 1 in the suit having sold a commercial space in the suit property to the Reliance Corporate IT Park Limited by a sale deed executed on

January 21, 2014 on the strength of which, the plaintiff/petitioner alleged, the said company installed a high-tension transformer by encroaching

common area and passage which was granted to the petitioner in commonality with other flat owners.

The facts of C.O. No. 1199 of 2018, in gist, are that Debasish De Bhowmick, with his wife Smt. Chandrani De Bhowmick, instituted Title Suit No.

111 of 2016 in April, 2016 against M/s Tirupati Awas Private Limited, Anand Kumar Chokhani (a Director of M/s Tirupati) and the Director of

Reliance Corporate IT Park Ltd.

On August 19, 2016, the defendants/opposite party nos. 1 and 2 filed an application under Section 5, read with Section 8, of the Arbitration and

Conciliation Act, 1996 in the said suit.

On December 4, 2017, the Trial Judge allowed the application under Sections 5 and 8 of the 1996 Act, referring the parties to arbitration and

holding the suit to stand disposed of accordingly.

The nature of allegations against Reliance Corporate IT Park in Title Suit No. 111 of 2016 was similar to that of Title Suit No. 202 of 2013. The

reliefs claimed in Title Suit No. 111 of 2016 are set out below:

“a) For decree of declaration in favour of the plaintiffs in respect of the common right of the “Câ€​ schedule property described hereunder;

b) For decree of declaration against the defendant no. 2 that the deed described in scheduled “D†hereunder is void and non est and non effective

to the property described in schedule “Aâ€​ hereunder;

c) For decree of permanent injunction against the defendant No 2 from disturbing to the peaceful enjoyment of the plaintiffs in respect of the “Câ€

schedule property and from parking bikes, cars and trucks illegally at the common place of “C†schedule property under “A†schedule

property;

d) For decree of recovery of khas possession in favour of the plaintiffs directing the defendant no. 2 to vacate the possession of the property which

the defendant no. 2 is in possession in the “Aâ€​ schedule property as per the said alleged deed of sale of ‘D’ schedule property;

e) For receiver;

f) For costs;

g) For any other relief or reliefs as the plaintiffs are entitled to get in law as well as in equityâ€​.

In C.O. No. 1198 of 2018, learned counsel for the petitioner argues that the Court below ought to have disposed of the petitioner’s applications

for addition of party and amendment of plaint, prior to disposal of the application of the opposite parties under Sections 5 and 8 of the 1996 Act. Since,

in the event the said applications of the petitioner were allowed, the entire gamut of the suit would change, which would deter the Court below from

referring the matter to arbitration. If, after reference, the said parties and causes of action were sought to be introduced, the arbitrator would, in any

event, have to release the matter for being heard by a regular Civil Court. To avoid such multiplicity, the Court below ought to have postponed the

hearing of the opposite parties’ application for reference to arbitration till after disposal of petitioner’s applications under Order I Rule 10 of

the Code and Order VI Rule 17 of the Code respectively.

The petitioner further argues that in the event the applications for addition of parties and amendment were allowed, the matter could not be

referred to arbitration, since the added parties and causes of action incorporated by amendment would take the dispute outside the purview of the

arbitration clause. Since such added parties would not be parties to the arbitration clause incorporated in the conveyance deed of the petitioner, and

the dispute would be outside the scope of the contemplation of the arbitration clause, the reference to arbitration would then be obviated.

In this context, learned counsel for the petitioner refers to a judgment of the Hon’ble Supreme Court reported at (2011) 1 SCC 320 [S.N.

Prasad, Hitek Industries (Bihar) Limited vs. Monnet Finance Limited and others]. In such judgment, it was held inter alia that there can be reference

to arbitration only if there is an arbitration agreement between the parties. If there is a dispute between a party to an arbitration agreement with other

parties to the arbitration agreement as also non-parties to the said agreement, reference to arbitration or appointment of arbitrator can be only with

respect to the parties to the arbitration agreement and not the non- parties.

The petitioner also cites a judgment reported at (2011) 11 SCC 375 [Deutsche Post Bank Home Finance Limited vs. Taduri Sridhar and another],

in support of the same proposition.

The learned counsel for the petitioner next cites a judgment reported at (2003) 5 SCC 531 [Sukanya Holdings (P) Ltd. vs. Jayesh H. Pandya and

another], where the Hon’ble Supreme Court held inter alia that there is no provision in the Arbitration and Conciliation Act, 1996 that when the

subject â€"matter of the suit includes subject-matter of the arbitration agreement as well as other disputes, the matter is required to be referred to

arbitration. There is also no provision for splitting the cause or parties and referring the subject-matter of the suit to arbitration. It was further held that

the bifurcation of suit in two parts, one to be decided by the Arbitral Tribunal and the other by the Civil Court, would inevitably delay the proceedings.

The whole purpose ofspeedy disposal of dispute and decreasing the cost of litigation would be frustrated by such procedure. It would also increase the

cost of litigation and harassment to the parties and on occasions there is possibility of conflicting judgments and orders by two different forums.

Learned counsel for the petitioner next refers to the judgment reported at (2018) 6 SCC 287 [Board of Control for Cricket in India vs. Kochi

Cricket Pvt. Ltd.], where the Hon’ble Supreme Court, while interpreting Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015,

held inter alia that the said section has two parts. The first part refers to the Amendment Act not applying to certain proceedings, whereas the second

part affirmatively applies the Amendment Act to certain proceedings. The question is what exactly is contained in both parts. The two parts are

separated by the word ‘but’, which also shows that the two parts are separate and distinct. It was further held that so far as the first part is

concerned, the expression “the arbitral proceedingsâ€, commencing as contemplated in Section 21 of the Principal Act, has been mentioned. In the

first part, as opposed to the second part, the expression “toâ€​ and not “in relation toâ€​ has been used.

On the other hand, in the second part of Section 26 of the Amendment Act, the said Act has been applied “in relation to arbitral proceedingsâ€,

but the commencement of proceedings has not been fixed to Section 21 of the Principal Act.

Ultimately, it was held by the Hon’ble Supreme Court that the scheme of Section 26 is thus clear: that the Amendment Act is prospective in

nature, and will apply to those arbitral proceedings that are commenced, as understood by Section 21 of the Principal Act, on or after the Amendment

Act, and to court proceedings which have commenced on or after the Amendment Act came into force.

In the light of such judgment, learned counsel for the petitioner argues that the introduction of persons claiming through or under a party to an

arbitration agreement, within the contemplation of Section 8 of the 1996 Act, as brought in by the 2016 Amendment, does not apply to suits filed prior

to the said amendment taking effect, that is October 23, 2015. As such, since the suit, from which C.O. No. 1198 of 2018 arises, was filed in

September, 2013, Section 8 of the 1996 Act has to be read to include only parties to an arbitration agreement and cannot include any other person

claiming through or under such a party. In such circumstances, it is submitted on behalf of the petitioner that the addition of the proposed added parties

would take the suit completely out of the purview of the arbitral clause.

Learned counsel for the petitioner lastly argues that the dispute in issue is not arbitrable for the additional reason that the same was in the nature of

an action in rem, since the same would determine title to property and rights of the parties as well as of persons claiming an interest to the property at

a future point of time. In this context, learned counsel refers to a judgment reported at (2011) 5 SCC 532 [Booz Allen and Hamilton Inc vs. SBI Home

Finance Limited and others].

On the other hand, learned counsel for the opposite parties, while controverting such arguments, points out that vide Order No. 27 dated March 8,

2017 passed in Title Suit No. 202 of 2013, learned advocate for the plaintiff himself was recorded to have submitted that he had no objection if the

application under Sections 5 and 8 of the 1996 Act was taken up for hearing prior to the hearing of the applications under Order I Rule 10 and Order

VI Rule 17 of the Code of Civil Procedure respectively. As such, it is argued that the Court below committed no error at all in taking up the

application under Sections 5 and 8 of the 1996 Act earlier. Moreover, it was argued, since the applications for addition of party and amendment of

plaint were filed by the plaintiff much later than the opposite parties’ application for reference to arbitration, the Trial Court was justified in taking

up the opposite parties’ application first.It was further argued on behalf of the opposite parties that although various Courts have held that

applications for amendment, intended to rectify technical errors on which a prayer under Order VII Rule 11 of the Code was made, had been taken up

prior to hearing ofthe latter application, the said principle only applied to demurrer applications, where, even after rejection of plaint a fresh suit could

be filed on the same cause of action. However, such principle was not applicable in case of applications under Sections 5 and 8 of the 1996 Act, since

arbitrability could not be conferred by amendment, more so if such amendment was sought subsequent to filing of the applications under Sections 5

and 8 of the 1996 Act.

Learned senior counsel appearing for the opposite parties next argues that even if the added parties were impleaded and the amendment as sought

for was allowed, the cause of action incorporated by such amendment would also be covered by the arbitration clause, since such cause of action

would also be within the ambit of the disputes covered by the arbitration clause, having arisen out of the deed of conveyance executed by opposite

party no. 1 in favour of the petitioner.

In C.O. No. 1199 of 2018, learned counsel for the petitioner submits that since Reliance Corporate IT Park Limited was impleaded through its

Director in the suit, bearing Title Suit No. 111 of 2016, and an independent cause of action was pleaded against the said company, the dispute was

altogether beyond the scope of arbitration clause.

Moreover, it was argued that even if the amended Section 8 of the 1996 Act was applicable and persons claiming through or under parties to the

arbitration agreement were also brought within the ambit of the dispute, Reliance IT Park was not such a person, since it claimed through an

independent deed of conveyance, executed after the deed of conveyance between the petitioner and the opposite party no. 1 was concluded. Such

independent cause of action in respect of Reliance IT Park, which had no connection with the deed of conveyance of the petitioner could not confer

on Reliance IT Park the status of a person claiming through or under opposite party no. 1. Accordingly, the matter could not, in any event, be referred

to arbitration.

This apart, the arguments made in connection with C.O. No. 1198 of 2018, are adopted by the petitioner in respect of C.O. No. 1199 of 2018 as

well.

In controverting such arguments, learned senior counsel for the opposite parties argues that an appropriate interpretation of Section 26 of the

Arbitration and Conciliation (Amendment) Act, 2016 would indicate that the said amendment (in this case in respect of Section 8 of the Principal Act),

would also be applicable to pending suits. Since the language of Section 26 of the Amendment Act referred to arbitral proceedings having commenced

after the 2016 Amendment, the said amendment would be applicable to the instant case also in view of the reference to arbitration having taken place

after coming into force of the Amendment Act.

According to learned senior counsel appearing for the opposite parties, Reliance IT Park claimed title to the suit property by virtue of a deed of

conveyance executed by opposite party no. 1 and as such, came within the definition of “any person claiming through or under†the opposite party

no. 1, who was a party to the arbitration agreement.

In such circumstances, it is argued that the Trial Court acted within jurisdiction in referring the matter to arbitration. Learned senior counsel for the

opposite parties also adopts his arguments made in C.O. No. 1198 of 2018.

As far as C.O. No. 1198 of 2018 is concerned, it is seen that, whereas the application under Sections 5 and 8 of the 1996 Act was filed as far

back as on November 7, 2013, the applications under Order I Rule 10 and Order VI Rule 17 of the Code of Civil Procedure were filed only on March

21, 2016, in a clear attempt to take the dispute outside the purview of the arbitration clause. Such an attempt was obviously to frustrate the application

for reference to arbitration.

In such circumstances, there could not be any reason for the Court below to adjudicate upon the applications for addition of party and amendment,

which were clearly filed mala fide, prior to deciding the applications under Sections 5 and 8 of the 1996 Act.

This apart, the argument of the petitioner in C.O. No. 1199 of 2018 was based on the premise that Reliance IT Park was not a person claiming

through or under opposite party no. 1. If such be the contention of the petitioner, the joinder of the said company, that is, Reliance IT Park and other

entities would, in any event, amount to misjoinder of causes of action. As per the petitioner’s own argument, the installation of a transformer and

acquisition and purported title by Reliance IT Park in respect of common areas were the product of an independent deed of conveyance in favour of

the Reliance IT Park by opposite party no. 1, which had no nexus with the deed of conveyance in favour of the petitioner. Hence, the attempt to join

such strangers to the cause of action as well as amend the plaint to incorporate such cause of action, foreign to the suits as per the petitioner himself,

was only for the purpose of taking the matter outside the pale of arbitration.

As to the argument that the amended provisions of Section 8 of the 1996 Act are not applicable to Title Suit No. 202 of 2013, the said contention has

to be upheld, particularly in view of the judgment reported at (2018) 6 SCC 287 [Board of Control for Cricket in India vs. Kochi Cricket Pvt. Ltd.],

cited by the petitioner. However, the suit, bearing Title Suit No. 202 of 2013, as originally filed, was clearly between the parties to the arbitration

agreement and as such had to be referred to arbitration. The applications for addition of party and amendment of plaint were entirely extraneous to the

dispute contemplated in the said suit and could not be taken up first, only to frustrate the arbitration clause.

Even if the said strangers to the suit were sought to be impleaded, along with connected causes of action in an arbitral proceedings between the

parties, the legally sanctioned approach of the arbitrator would, in all probability, be to refuse such addition and such incorporation of extraneous

causes of action, as contemplated in S.N. Prasad Hitek Industries (supra).

In such circumstances, the order impugned in C.O. No. 1198 of 2018 has to be sustained and the said revisional application merits rejection.

Coming to C.O. No. 1199 of 2018, it is seen that Reliance Corporate IT Park Limited claims through the opposite party no. 1, namely, M/s Tirupati

Awas Private Limited, by virtue of a deed of conveyance admittedly executed by opposite party no. 1 in favour of the Reliance. For the purpose of

the present dispute in Title Suit No. 111 of 2016, opposite party no. 3 (the Director of Reliance Corporate IT Park Ltd) has to be construed as a

person claiming through or under the opposite party no. 1, as contemplated in the amended Section 8 of the 1996 Act. Although the transfer in favour

of Reliance IT Park and installation of transformer were events subsequent to the conveyance in favour of the petitioners being concluded, the

grievance of the petitioners was entirely based on their title based on a transfer by M/s Tirupati Awas which, in turn was also the vendor of Reliance

IT Park. As such, also superficially disjunctive transactions, there was a nodal connection between the transfer to the petitioners and to Reliance IT

Park, the common node being the common vendor of the two. As such, the scenario had a closer resemblance to a ‘series’ connection in a

closed electrical circuit, with all the nodes having superficially different branches but in reality inter-connected, than a ‘parallel’ connection in a

similar circuit, where the branches were actually separate, discrete and independent of each other.

The 1996 Act, with the 2016 amendment, is squarely applicable to the suit of 2016 by virtue of Section 26 of the 2016 Amendment Act, as discussed

earlier. Upon application of such amended provision, opposite party no. 3 in C.O. No. 1199 of 2018, having claimed through or under the vendor, who

was a party to the arbitration agreement, thus also comes within the ambit of the arbitration clause. Hence, the impugned order referring such dispute

to arbitration was justified.

The “actions in rem†argument advanced by the petitioner stands on very fluid ground, being not applicable at all to the present lis. The

present litigation, in both the revisions, concerns entirely private disputes between private parties, having no ingredient of an action in rem. In every

litigation between private parties, the decree passed ultimately has to affect the heirs and legal representatives of the parties. Such condition, by itself,

cannot be an indicator of the matter having universal effect, sufficient to merit being elevated to the status of an action in rem. The present suit is

absolutely an action in personam and the petitioner’s argument to the contrary cannot be accepted.

In such circumstances, C.O. No. 1199 of 2018 also has to be dismissed, thereby sustaining the order of the Trial Court.

In the light of the aforesaid observations, C.O. No. 1198 of 2018 and C.O. No. 1199 of 2018 are both dismissed, thereby affirming the orders

impugned respectively therein.

There will be no order as to costs in either of the matters.

Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance with the requisite formalities.