Dispute Over Land Mutation Arising From Settlement Agreement Can Be Referred To Arbitration: P&H High Court

The Punjab and Haryana High Court bench of Justice Vikram Aggarwal has held that a dispute concerning the mutation of land arising from a Memorandum of Settlement entered into between the parties containing an arbitration clause is considered a dispute in personam especially when it does not affect third-party rights. Such disputes are arbitrable and should be referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996 (Arbitration Act). Brief Facts: The petitioners, owners in possession of ancestral land measuring 3 Bigha 13 Biswa in Khasra No. 446/1/1, village Chakarpur, Gurugram, claim their family has held the land for over 150 years. In 1997, 8 Biswa-8 Biswansi of this land was acquired for road construction, followed by the acquisition of another 2 Bigha 4 Biswa 12 Biswansi. Only 1 Bigha remained with the petitioners. They assert a 27.5% undivided share in 3.25 acres for which M/s Krisam Properties Pvt. Ltd. obtained a license. Despite acquisition, the petitioners claim to remain in possession of the entire land, supported by photographs. On 17.07.2003, HSVP exchanged the subsequently acquired land with the respondent, who was granted a license on 21.07.2004 to develop a commercial colony. The petitioners maintain that actual possession of the acquired land was never taken from them or handed over to the respondent. In 2018, it came to the notice of the petitioners that a mutation bearing No.1588 had been sanctioned on 08.08.2008 in favour of Haryana Shehri Vikas Pradhikaran (HSVP) reflecting HSVP to be the owner of the subsequently acquired land and the petitioners to be the owner of land measuring 1 Bigha. The petitioners filed a suit bearing Civil Suit No.4930 of 2018 challenging the aforesaid revenue entry and accordingly seeking a declaration with consequential relief of permanent injunction. In Civil Suit No. 4930 of 2018, the respondent filed an application under Section 8 of the Arbitration Act seeking reference of the dispute to arbitration. The petitioners opposed it through a reply. However, the application was allowed by the impugned order dated 13.11.2022, prompting the present revision petition. Contentions: The Petitioners submitted that the issue of challenge to a mutation is not arbitrable and, therefore, under the circumstances, the matter cannot be referred for arbitration. It was further submitted that an application under Order 1 Rule 10 CPC moved by the petitioners to implead HSVP as a party was pending before the trial Court and before deciding the same, the application under Section 8 of the Arbitration Act was decided. Without deciding the application for impleadment, the application under Section 8 of the Arbitration Act should not have been decided. Per contra, the Respondent submitted that any matter of which an entry is to be made in any record or register under Chapter 4 of the 1887 Act can also be referred for arbitration. Suits filed under Sections 34 and 35 of the Specific Relief Act, 1963 are rights in personam and not rights in rem. Lastly, it was submitted that under the Memorandum of Settlement, there were only two parties and even in the suit, there were two parties which shows that it was not an action in rem but an action in personam. Observations: The court at the outset noted that section 8 of the Arbitration Act mandates that if a valid arbitration agreement exists, a court must refer parties to arbitration upon application made before the first statement on the dispute. The application must include the original or certified copy of the agreement. Arbitration can proceed even if the application is pending before the court. The Supreme Court in 'Booz Allen and Hamilton Inc. Vs. SBI Home Finance Limited and Others' held that when a suit is filed by a party to an arbitration agreement against the other parties, and an application under Section 8 of the Arbitration Act is filed, the court must consider five key questions: (i) whether an arbitration agreement exists among the parties; (ii) whether all parties to the suit are parties to the arbitration agreement. The Apex Court further held that the third question whether the disputes fall within the scope of the arbitration agreement; (iv) whether the application under Section 8 was filed before submitting the first statement on the substance of the dispute; and (v) whether the reliefs sought in the suit can be granted through arbitration. The Court in the above case also held that where the issue of "arbitrability" arises in a pending suit under Section 8 of the Arbitration Act, the court must decide all aspects of arbitrability. Even if an arbitration agreement exists and the dispute falls within its scope, the court will refuse to refer the matter to arbitration if the subject matter can only be adjudicated by a public forum or if the relief sought requires...

Dispute Over Land Mutation Arising From Settlement Agreement Can Be Referred To Arbitration: P&H High Court

Mohd Malik Chauhan

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