E Aluminium Limited, Indial Limited, Dubai v. Vedanta b) Enercon

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to Stay all further proceedings in O.S.No.603 of 2022 before the Learned lX Additional District Judge, R.R. District at L.B.Nagar. Counsel for the Appellants: Mr. S. VIVEK REDDY, STANDING , COUNSEL REP. FORSRI KAILASH NATH P. S. S. Counsel for the Respondents: Mr. B. CHANDRASEN REDDY, STANDING COUNSEL REP. FOR M/s. CHANDRASEN LAW OFFICES The Court delivered the following: JUDGMENT .t. THE I{( )NOURABLE SRI JUSTICE P.SAM KOSHY AND THE llJ INOURABLE SRr JUSTTCE N.TUKAITAMJT CIVIL TT, ISCEL ANEOUS APP EAL No.692 ot 2023 JUD GMENT ', 'p , ihe Hon'ble Sri lustice P.Sam Koshy) The insta r'. is an appeal under Section 37 of the, Arbitration and Conciliatirtr ,Act, 1996 (briefly the 'A&C Act, hereirafter). The challenge is 1) :r'le order dated 06.1t.2023, in I.A.No.:1.34 of 2OZ2 in O.S.No.603 t12022, passed by the IX Additiona I)ir,trict Judge, R.R. District ,l . . B. Nagar.

2. Heard i'r' r s.Vivek Reddy, learned Senio- counsel, representing \4' Kailash Nath p S S, learned co.Lnsel for the appellants, ard vlr. B.Chandrasen Reddy, learned ljernicr Counsel, representing Nl/ ; Chandrasen Law Offices for the resltorrdents.

3. Vide lhe ir-,1tugned order, the Trial Court dismisseC a petition filed by the app:llants herein under Section B of thr: AgrC Act read with Order V[. i'ule 11 of Civil procedure Code, 19()B (for short, 'CPC') seekir c1 to refer the parties to resolve th,: dispute by resorting to arti . ation clause.

4. The brir:l ;rcts which led to filing of the instarrt appeal are that the resp(r.c.nts herein preferred a suit in o.s.IJc,.603 of 2022 for specific performance seeking relief of a direction to the appellants to execute and register sale deed in favour of the respondents tn respect of the suit schedule 'B' property after receiving balance sale consideration of Rs.1,12,00,000/-.

5. The contention of the respondents in the suit was that the appellants had offered to sell the suit schedule property which was accepted by the respondents and on negotiations the sale consideration was arrived at Rs.1,85,00,000/- inclusive of stamp duty, registration charges, amenities, corpus funds and advance maintenance charges for two years. In terms of the agreement, the respondents paid some amount in advance and the balance was to be paid at the time of registration of the sale deed. However, since the appellants, the owners, were not showing keen interest in executing the sale deed, the respondents have filed the suit for specific performance which was registered as O.S.No.603 of 2022. Notices were issued and the appellants entered appearance and filed a petition under Section 8 of the A&C Act read with Order VII Rule 11 of CPC seeking to refer the dispute to be resolved by way of arbitration.

6. The Trial Court was of the view that whether there was a valid draft sale deed executed between the parties with an arbitration (:la r!e, is a matter which needs to hre cecided after recording ol tl r,:.evidence and after framing of issue:s and, until and unless l.lre same is not decided, the question cf i.eferring the matter to ar:it ation does not arise.

7. It is ttris r:rder passed by the Trial Court rn,hich is under challenge in trr instant appeal.

8. Accord rrc the very b; s ir seeking for ;t agreements :h. respondents e n resolution cl a u Therefore, it ha between the l clause as a rn, Thus, the Secti Trial Court. to the learned Senior Counsel for the appellants, for insistence on the part of the i-espondents ecific performance was based orr vtrrious draft t were sent on e-mail between the ;rppellants and :' invariably these draft agreements; had a dispute : to settle the disputes by way of arbitration. ; to be construed that there was a valid agreement -tres and the agreement also had :n arbitration r,,rns to settle the disputes betweetr the parties. )n B petition ought to have been allowed by the 9 Learned S :'rior Counsel for the appellants ln suprport of his contentions relie :j upon the following decisions: \ a) Trimex International Fz;E Aluminium Limited, Indial Limited, Dubai vs. Vedanta b) Enercon (India) Limited and Others vs. Enercon GMBH and Another2 c) Cox and Kings Limited vs. SAP fndia private Limited and Anothe13

10. Per contra, the learned Senior Counsel for the respondents opposing the appeal contended that there was firstly no valid agreement between the pafties, much less an arbitration agreemenu therefore, at the threshord itself the Section B petition has rightly been dismissed. It was also contended that until and unless there is a written agreement entered into between the two sides and both of them having accepted the agreement and the conditions referred thereto and having signed the said document, any agreement, in the absence of these aforementioned essential ingredients cannot be said to be an enforceabre agreement under the A&C Act. l1zoto; 3 supreme court cases 1 '?120t4;5 supreme court Cases 1 31202a1 + Supreme Court Cases 1

11. According c the learned Senior Counsel for the rel;pondents, the Section B p l::ition filed by the appellants does rrol meet the requirement as i ; envlsaged under Section 7 of the A8C Act.

12. Learned lle lior Counsel for the respondents, in s'upport of his contentions, r3lir',1 Llpe. the following decisions: a) Union c,f I ndia vs. Kishorilal Gupta & Bros.a b) Interplay Between Arbitration Agreements under Arbitratio I and Conciliation Act, 1996 and Stamp Act, 1899, Ifl ,lEs

13. Havingrr:i rd the contentions put forth on eithe's;ide and on perusal of rer:or is, the relevant factual matrix whir:l' gloes to the core of the is:;tre rrvolved in the instant case are as t'ollo'rus: a) The appell rnts admittedly are the owners of the surit schedule propert),, b) The ap6r<ll :rnts offered to sell the suit schedulr: l)roperty to the resJrr>r rients and the sale consideration c)n negotiations arrived at nias Rs.1,85,00,000/-; o nta rgsg sc tgr,:t scurative Petition {C) No. in Civil Appeal No 11,-c9 decided on Dec,l'n b,.r 1 'r of 2023 in Review Petition (C) No.704 of 2021 i :1020 with Arbitration Petition No.25 of 2023, ?.023 c) The respondents also paid some advance money to the appellants. However, it is contended that the appellants thereafter were not showing keen interest to sell the property to the respondents and, therefore, the respondents had no other option but to file a civil suit for specific performance of contract; d) There was no written agreement entered into between the parties; e) The so-called offer and acceptance of the sale of property was oral; f) Though there appears to be certain draft agreements exchanged between the parties, none were signed by either of the parties and none could be termed as a final agreement between the parties; and g) The so-called draft agreements did not bear the signatures of either sides. L4. Now to better understand the objection raisef by the appellant under Section 8 of the A&C Act, it would bu nJurrury to under the provisions of Section B(1) of the A&C Act, which for ready reference is being reproduced hereunder: ,/ PaBe 7 of 11 "8. Power t. refer parties to arbitration where there' is an a rb itratio t, i: q reement. - I authority, before which an action is bro tg'\t in a ,:; the subject of an arbitration agreement shall, if te arbitration agreement or any perscn claiming t,der him, so applies not later than t'ne ctate of I first statement on the substance of tne d'spute, ],;tanding any iudgment, decree or order of the !'.t or any Court, refer the parties to arb"tration ': that prima facie no valid arbitration aJreement [( 1) A jucic;i matter wt ict a part\/ t) t through cr t submittin(t t1 then, not^ it Supreme ('':, unless !t fln' exists. l "

15. When w,: r )ird the aforesaid clause pertaining to r<:ference to arbitration, it i; :lso necessary to understand what e n arbitration agreement is. ,1,1 bitration agreement is one which is c ef ned under Section 7 of .:tre A&C Act. For ready reference, Section 7 is also reproduced h<:r r: tnder: "7. Arbitr,zl 'an agreement.- (1) In th s I art, arbitration agreement means an aqre er,rent by the partic:: '- submit to arbitration all or certain dispt'te:; which have ar[:e rt t)r which may arise between them in re:;Dt'ct of a defined lcgr'z 'elationship, whether contractual or not (2) An art i'ration arbitraticn tituse in agreement maY be in the to;m of an a contract or in the form of e s?parate agreeme 1' (3) An ar blt ittion agreement shall be in writing' n (4) An arbitration aEreement is in writing if it is contained in- (a) a document signed by the parties; (b)an exchange of letters, telex, telegrams or other means of telecommunication Iincluding communication through electronic meansl which provide a reconl. of the agreement; (c) an exchange of statements of claim and defence in which the existence of the agreement is alteged by one party and not denied by the other. (5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.,,

16. Plain reading with reference and of the aforesaid statutory provisions dealing also the definition of arbitration agreement makes it amply clear that, to constitute an arbitration agreement, what is required is an existence of a varid agreement between the parties and one of the parties to the arbitration agreement raising a statement of claim flowing from the said agreement. In other words, whether there is an arbitration agreement or not, can be best gathered from the terms of the agreement.

17. In the instant case, the Section B petition filed by the appellants was on the so-called draft agreements exchanged : between the 11,:r:ies in respect of the sale and purchase of the suit schedule prot€ r ','. Undoubtedly, the draft agreement:; r(lmained at the draft stage \,'th there being no finality to it, and un|,:ss there is a finatity to th: agreement, it is difficult to presLme that the parties had ertre-::d into an agreement with an arbitl'ati(n clause in it so as to cal rt irn arbitration agreement.

18. To mak,: t tngs worse for the appellants, it is alsc: necessary to take into :or:;ideration the averment made in the f irst line of paragraph Nc..1 ,rf their Section B petition, which agair for ready reference is r:lr oduced hereunder: "we state L ')t the draft agreements filed by the Plt'lniiffs are not valid tL I and void."

19. The very rrading of the aforesaid averment ir the affidavit filed in sup[)()r . of Section B petition would revea I that the appellants th,lr;olves have in very categorical terms d,3nied of an agreement e rrt :-ed into between the parties. -l-he appellants themselves l^e',r: stated on oath that the draft agr:ernents filed along with tl- <, :'laint are not valid and are rather null and void This by itself :l :arly indicates that the stand of the aopellants IS that they have 'rot entered into any agreement at erll with the i i l i I I I a Page 10 of U respondents. Therefore, there cannot be an arbitration agreement at all for allowing of Section g petition. 20- It is arso necessary to take note of the fact that even otherwise the requirement for a valid arbitration agreement as is envisaged under Section 7 of the A&C Act is also missing in the instant case, more particularly with the averments that the apperrants have raised in their affidavit in section B petition where there is a categoricar deniar. In the said circumstances, we are of the considered opinion that the impugned order passed by the Trial Court does not warrant any interference. 2l' The judgments referred to by the rearned senior counser for the appellants would not be applicable in the instant case for the reason that those judgments have been decided under entirely different contextuar backdrop where the facts and the documents and correspondences exchanged between the parties does reveal of an accepted contract between the parties, unrike in the instant case. Therefore, those judgments are distinguishabre on facts itself.

22. Accordingry, the instant appear being devoid of merit, deserves to be and is accordingly dismissed.

23. As a s€cu rl, miscellaneous applications pendin3 if any, shall stand closed. llr,r'/€V€r, there shall be no order as tc (:o{its //TRUE COPY// SD/- T.TIRUMALA DEVI .\ DbPUT\. REGISTRAR "6ECTION OFFICER To, '1 . The lX Additic,n r District Judge, Ranga Reddy District at L B Nagar 2. One CC to Sr I ailash Nath P. S. S., Advocate [OPUC] 3. One CC 1o S r ( I andrasen Law Offices, [OPUC] 4. Two CD ()o6 ir:s Plp/gh I Vl\Cr\TION COURT /"1 ' .\1 .)T z'^( ^rr€ ) C l1 li. LIL 286 t) ?,, irr'\..1-',r rr".' {, L i.! HIGH COURI DATED:21rcs 2025 JUDGMENT CMA.No.692 ('f 2023 -'HE DISMISSING WITHOUT C () iTS. APPEAL 6 6 a.6 \