2023 (12) TMI 741 - SC - Indian Laws

Appeal dismissed as arbitration clauses in tripartite agreements cover subsequent conveyance deed disputes

SUSHMA SHIVKUMAR DAGA & ANR. Versus MADHURKUMAR RAMKRISHNAJI BAJAJ & ORS.

The SC dismissed an appeal challenging lower courts' referral of a dispute to arbitration. The case involved a declaration seeking nullification of a ... Seeking declaration that the Conveyance Deed dated 17.12.2019 to be declared null and void - tri-partite agreement - whether the Trial Court and the High Court have rightly referred the matter to arbitration or the dispute is of such a nature that it is not liable to be referred to arbitration, as there was no arbitration clause in the Conveyance Deed dated 17.12.2019 or if there was, yet the matter in any case is such that it is not arbitrable? HELD THAT:- In the present case, therefore there is absolutely no ambiguity that both the Tripartite Agreements dated 31.03.2007 and 25.07.2008 contain an arbitration clause, which forms the basis of all subsequent agreements including the agreements sought to be declared as validly terminated by the appellants and the conveyance deed sought to be declared as null and void. Both the trial court as well as the High Court have given a correct finding on facts as well as on law - there are no scope for interference in the matter. Appeal dismissed. Issues Involved:1. Validity of referring the dispute to arbitration.2. Nature of the dispute: arbitrable or non-arbitrable.3. Impact of amendments to the Arbitration and Conciliation Act, 1996.4. Jurisdiction of the Arbitral Tribunal.5. Allegations of fraud and their impact on arbitration.Summary:1. Validity of Referring the Dispute to Arbitration:The appellants sought a declaration that the Conveyance Deed dated 17.12.2019 be declared null and void and that the Development Agreements be validly terminated. The respondents moved an application under Section 8 of the Arbitration & Conciliation Act, 1996, to refer the matter to arbitration based on the arbitration clauses in the Tripartite Agreements dated 31.03.2007 and 25.07.2008. The Trial Court and the High Court referred the matter to arbitration, which the appellants challenged.2. Nature of the Dispute: Arbitrable or Non-Arbitrable:The Supreme Court examined whether the dispute was arbitrable, given the absence of an arbitration clause in the Conveyance Deed. It was held that the broad language of the arbitration clauses in the Tripartite Agreements covered the dispute, making it arbitrable. The Court emphasized that the role of judicial authorities in arbitration matters is extremely limited, as stipulated in Section 5 of the Arbitration Act, which aims to minimize judicial interference.3. Impact of Amendments to the Arbitration and Conciliation Act, 1996:The Court noted the amendments made in 2015 to Sections 8 and 11 of the Arbitration Act, which further restricted judicial intervention. The amendments were based on the Law Commission's recommendations to ensure that courts refer parties to arbitration unless there is prima facie no valid arbitration agreement.4. Jurisdiction of the Arbitral Tribunal:The Court highlighted Section 16 of the Arbitration Act, which grants the Arbitral Tribunal the competence to rule on its own jurisdiction, including the validity of the arbitration agreement. This doctrine of 'kompetenz-kompetenz' minimizes judicial interference, allowing the Arbitral Tribunal to decide jurisdictional issues.5. Allegations of Fraud and Their Impact on Arbitration:The appellants' allegation of fraud was deemed unsubstantiated. The Court reiterated that a plea of fraud must be serious to oust the jurisdiction of an Arbitrator. In this case, the allegations did not meet the criteria established in previous judgments, such as Rashid Raza v. Sadaf Akhtar, where the fraud must permeate the entire contract or have implications in the public domain.Conclusion:The Supreme Court concluded that the Tripartite Agreements contained valid arbitration clauses, forming the basis for all subsequent agreements, including the disputed Conveyance Deed and Development Agreements. The Trial Court and High Court's decisions to refer the matter to arbitration were upheld. The appeal was dismissed with no order as to costs.