Case Note & Summary
The applicant, Rajesh V. Choudhary, filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator. The applicant claimed that the parties had entered into an agreement dated 20th September 1995 for the sale of a larger property, and he had filed Suit No. 1163 of 1999 for specific performance of that agreement. The respondents, Kshitij R. Torak and others, filed a Notice of Motion under Section 8 of the Act, contending that the parties had actually entered into a different agreement also dated 20th September 1995, for the sale of only a 1/5th undivided share in the property, and that this agreement contained an arbitration clause in Clause 15. The applicant, in his reply affidavit, denied the existence of the agreement relied upon by the respondents, stating that the only agreement executed between the parties was the one annexed to his plaint. The court noted that the applicant was now seeking to enforce the arbitration clause in the very agreement whose existence he denied. The court held that a party cannot enforce an arbitration clause in an agreement whose existence it denies, as the arbitration clause is part of the agreement and cannot be severed for enforcement when the agreement itself is repudiated. The court dismissed the application, answering the question in the negative.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11 Arbitration and Conciliation Act, 1996 - Enforceability of Arbitration Clause - The applicant sought appointment of an arbitrator under an arbitration clause in an agreement dated 20th September 1995, but the applicant consistently denied the existence of that very agreement, claiming instead a different agreement of the same date. The court held that a party cannot enforce an arbitration clause in an agreement whose existence it denies, as the arbitration clause is part of the agreement and cannot be severed for enforcement when the agreement itself is repudiated. (Paras 1-5)
Issue of Consideration
Whether a party is entitled to enforce an arbitration agreement contained in a clause in an agreement the very existence of which it denies, which it claims the parties had never entered into and was never acted upon by the parties thereto.
Final Decision
The court dismissed the application, holding that a party cannot enforce an arbitration clause in an agreement whose existence it denies. The question was answered in the negative.
Law Points
- Arbitration agreement
- existence of contract
- denial of agreement
- Section 11 Arbitration and Conciliation Act
- 1996
- enforceability of arbitration clause
Case Details
2010 LawText (BOM) (08) 55
Arbitration Application No.135 of 2007
Mr. Zal Andhyrujina i/b Mr. G.B. Kedia for the Applicant, Mr. Bakul Bhosale i/b Mr. B.H. Vyas for the Respondents
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Nature of Litigation
Application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator.
Remedy Sought
The applicant sought appointment of an arbitrator to resolve disputes under an arbitration clause in an agreement dated 20th September 1995.
Filing Reason
The applicant claimed that the parties had entered into an agreement dated 20th September 1995 for sale of a larger property, but the respondents denied that agreement and relied on a different agreement of the same date containing an arbitration clause. The applicant sought to enforce that arbitration clause despite denying the existence of the agreement containing it.
Previous Decisions
The applicant had filed Suit No. 1163 of 1999 for specific performance of the agreement he claimed existed. The respondents filed Notice of Motion No. 1925 of 2001 under Section 8 of the Act, which was pending.
Issues
Whether a party can enforce an arbitration clause in an agreement whose existence it denies.
Submissions/Arguments
The applicant argued that the parties had entered into an agreement dated 20th September 1995 for sale of a larger property and sought specific performance. He later invoked the arbitration clause in a different agreement of the same date relied upon by the respondents.
The respondents contended that the only agreement was for sale of a 1/5th undivided share, containing an arbitration clause, and that the applicant's denial of that agreement precluded him from enforcing the arbitration clause.
Ratio Decidendi
A party cannot enforce an arbitration clause contained in an agreement whose existence it denies, as the arbitration clause is part of the agreement and cannot be severed for enforcement when the agreement itself is repudiated.
Judgment Excerpts
The question that arises for consideration in this application is whether a party is entitled to enforce an arbitration agreement contained in a clause in an agreement the very existence of which it denies, which it claims the parties had never entered into and was never acted upon by the parties thereto. I have answered the question in the negative.
Procedural History
The applicant filed Arbitration Application No.135 of 2007 under Section 11 of the Arbitration and Conciliation Act, 1996. Previously, the applicant had filed Suit No. 1163 of 1999 for specific performance of an agreement dated 20th September 1995. The respondents filed Notice of Motion No. 1925 of 2001 under Section 8 of the Act, relying on a different agreement of the same date containing an arbitration clause. The applicant denied the existence of that agreement in his reply affidavit. The court heard the arbitration application and dismissed it.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 11, Section 8
