Amrish Gupta v. Gurchait Singh Chima (Delhi High Court)
Facts- The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act impugning an arbitral award dated 17.12.2020 delivered by an Arbitral Tribunal constituted by Justice (Retired) Manmohan Sarin, former Chief Justice of Jammu and Kashmir High Court as the Sole Arbitrator.
The impugned award was rendered in the context of disputes that have arisen between the parties in relation to an alleged Agreement to Sell dated 07.08.2014 executed in respect of a property bearing number B-II/6, Mohan Co-operative Industrial Estate, New Delhi for a consideration of ₹11 crores.
The petitioner denies the execution of the Agreement to Sell and states that the said document is a forged document as it does not bear his signatures. This is the principal dispute between the parties. The petitioner contends that the impugned award is liable to be set aside as the Arbitral Tribunal had jurisdiction to adjudicate this dispute.
Conclusion- An arbitration agreement is separable from the main agreement. It is only in cases where the allegation of forgery or fraud are in respect to the existence of arbitration agreement itself, the disputes would not be arbitrable.
As a working rule, it must be accepted that where a challenge is made to an agreement on the ground of fraud, it must be assumed that the challenge is to the main agreement and not specifically to the arbitration agreement. Thus, in such cases, the arbitral tribunal would have the jurisdiction to adjudicate disputes regarding validity of an agreement, which is impeached on the ground of fraud, as it must be assumed that such a challenge is to the main agreement and not to the arbitration agreement.
Once the Arbitral Tribunal had found that the transaction, as recorded in the Agreement to Sell, stands established, there was no ground/reason to refrain from directing specific performance of the same.
Before concluding, it would be relevant to note that Mr. Singhal, learned counsel appearing for the respondent, submitted that the petitioner is a chronic litigant and had also instituted proceedings before the NCLT in respect of M/s R.N. Techno Build Pvt. Ltd. and M/s R.N. Build Prop. Pvt. Ltd. In those cases, the petitioner had challenged transfer of shares on the ground that they were forged. He stated that in those cases as well, the petitioner had contended that the transactions were loan transactions and therefore, it was clear that this is the petitioner’s modus operandi to avoid transactions.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter the ‘A&C Act’) impugning an arbitral award dated 17.12.2020 (hereafter the ‘impugned award’) delivered by an Arbitral Tribunal constituted by Justice (Retired) Manmohan Sarin, former Chief Justice of Jammu and Kashmir High Court as the Sole Arbitrator (hereafter the ‘Arbitral Tribunal’).
2. The impugned award was rendered in the context of disputes that have arisen between the parties in relation to an alleged Agreement to Sell dated 07.08.2014 (hereafter the ‘Agreement to Sell’) executed in respect of a property bearing number B-II/6, Mohan Co-operative Industrial Estate, New Delhi (hereafter the ‘property’) for a consideration of ₹11 crores.
3. The petitioner denies the execution of the Agreement to Sell and states that the said document is a forged document as it does not bear his signatures. This is the principal dispute between the parties. The petitioner contends that the impugned award is liable to be set aside as the Arbitral Tribunal had jurisdiction to adjudicate this dispute.
Factual Context
4. It is stated that the respondent was willing to invest in a plot of land in India and the petitioner had offered to sell the property to the respondent. In the month of May 2014, several discussions took place between the petitioner, respondent (Late Mr Gurchait Singh Chima) and one Mr Surinder Wadhwa (representative of the respondent) for sale of the property.
5. The respondent states that it was agreed between the parties that the property would be sold to the respondent for a total amount of ₹ 11 crores. Accordingly, on 07.08.2014, the petitioner executed the Agreement to Sell in the presence of Mr Surinder Wadhwa, who is the representative of the respondent. The respondent was not present in India at the time of execution of the Agreement to Sell, however, he claimed that he had witnessed the same through an online video call (that is, through FaceTime).
6. The respondent further contended that on the same date, that is 07.08.2014, the respondent paid an amount of ₹3 crores by a cheque bearing no. 016010 drawn on ICICI Bank and agreed to pay the balance amount of ₹8 crores, once the petitioner furnished a Conveyance Deed in his favour after conversion to ‘freehold’.
7. The respondent further stated that an amount of ₹5 crores and ₹5 crores was also transferred to the petitioner in furtherance of the Agreement to Sell; and, on receipt of the original title deeds from the petitioner, the respondent, through his representative (Mr Surinder Wadhwa), transferred the balance amount to the petitioner by the month of August, 2016.
8. Mr Surinder Wadhwa (representative of the respondent), by a letter dated 24.01.2017, called upon the petitioner to execute a Conveyance Deed in respect of the property, in favour of the respondent. However, the petitioner, by a letter dated 07.02.2017, denied that he had sold the property in question, to the respondent.
9. The respondent was aggrieved by the conduct of the petitioner as full consideration for the property was paid in terms of the Agreement to Sell, however, the petitioner had failed to execute a Conveyance Deed in his favour.
10. Thereafter, several communications were exchanged between Mr Surinder Wadhwa (on behalf of the respondent) and the petitioner from the months of February, 2017 to April, 2017. However, the petitioner continued to deny the existence of the Agreement to Sell. On 10.04.2017, the petitioner filed a complaint before the Joint Commissioner of Police (South), Delhi accusing the respondent and Mr Surinder Wadha of forging and fabricating documents.
11. On 14.03.2017, the respondent issued a notice under Section 21 of the A&C Act and invoked the Arbitration Clause as set out in the Agreement to Sell. The petitioner responded by an email dated 20.03.2017. He demanded the relevant documents and further stated that if the arbitration was to proceed, it should be before a former judge of a High Court.
12. The respondent filed a petition before this Court under Section 11 of the A&C Act [being Arb. P 325/2017] for appointment of an arbitrator. The respondent also filed a petition under Section 9 of the A&C Act [being OMP (I) (COMM) 9/2017], praying that the petitioner be retrained from selling, alienating, transferring or creating any third-party rights in respect of the property.
13. By an order dated 23.05.2017 [in OMP(I)(COMM) 9/2017], this Court restrained the petitioner from selling, alienating or transferring the property to any third party. On 12.10.2017, this Court passed an order in Arb. P 325/2017, appointing the learned Arbitrator to adjudicate the disputes between the parties, including the plea of the petitioner that the Agreement to Sell is a forged document.
14. Before the Arbitral Tribunal, the respondent raised the following claims:
