Arbitration agreement does not need registration: SC

AN arbitration agreement in an unregistered deed can be enforced and acted upon for dispute resolution, the Supreme Court has stated in the case, SMS Tea Estates Ltd vs Chandmari Tea Co. Even if the deed is compulsorily registrable, this principle will apply, the court said. The dispute in this case arose over a 30-year lease of two tea estates between the parties. When disagreement arose, Chandmari company evicted SMS estates. So the latter applied for arbitration. It was opposed by Chandmari arguing that having regard to Section 107 of Transfer of Property Act and Sections 17 and 49 of the Registration Act, which made registration of the deed compulsory, the arbitration clause was not enforceable. The Gauhati high court agreed with this and rejected arbitration plea. However, on appeal, the Supreme Court stated that even if the deed was not registered, the arbitration clause could be enforced. An arbitration agreement does not require registration under the Registration Act. “Even if it is found as one of the clauses in a contract, it is an independent agreement to refer the disputes to arbitration,” the judgment emphasized.

Source : Business Standard