Arbitration Clause In An Unregistered But Compulsorily Registrable Document Can Be Enforced: Uttarakhand High Court Reiterates

Relying on the Supreme Court's findings in SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited, (2011) 14 SCC 66, a bench comprising Chief Justice Vipin Sanghi reiterated:

"Even if it is found as one of the clauses in a contract or instrument, it is an independent agreement to refer the disputes to arbitration, which is independent of the main contract or instrument. Therefore having regard to the proviso to Section 49 of Registration Act read with Section 16(1)(a) of the Act, an arbitration agreement in an unregistered but compulsorily registrable document can be acted upon and enforced for the purpose of dispute resolution by arbitration."

The applicant had preferred the present application under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of a sole arbitrator in terms of an agreement to sell immovable property entered into between the parties. The applicant was the purchaser and the respondents were the seller.

The applicant had claimed that dispute has arisen between the parties, as the respondents have failed to adhere to, and comply with the terms and conditions of the agreement. Consequently, the applicant invoked the arbitration agreement. Since the parties could not mutually agree upon the arbitrator, the present application was preferred.

The respondents had raised two issues: a) agreement was alleged to not be duly stamped; and b) agreement was said to be not being registered, even though, the same is compulsorily registrable.

With regard to the first objection, the court was of opinion that the applicant has filed a supplementary affidavit disclosing that he had already deposited Rs. 8,00,000/- in the Government Treasury vide Challan dated 23.09.2019. Thus, the aforesaid objection does not survive.

With regard to the second issue, the Court cited SMS Tea Estates (supra) and dismissed respondent's contention. Finally, it appointed a sole Arbitrator to adjudicate all the disputes between the parties.

Case Title: Yukti Construction Pvt. Ltd v. Mrs. Asha and Ors.

Citation: 2022 LiveLaw (Utt) 35 

Click Here To Read/Download Judgment