Case Background
The dispute concerns Hassan Manzil on Frazer Road, Patna, a property of Fazal Imam Public Charitable and Religious Trust, a Shia Waqf. The Trust, through its then Mutawalli, decided to develop the property by constructing a memorial complex.
On 1 June 2000, the then Mutawalli, Mrs. Saiyada Mehdi Imam, wrote to the Bihar State Shia Waqf Board seeking permission to negotiate such a development. The Board, by a resolution dated 2 January 2001, allowed negotiation of an agreement with a developer, but clearly required that any agreement be submitted to the Board for approval.
This led first to an agreement dated 2 September 2002, which was then superseded by a fresh development agreement dated 9 September 2002 between the Trust and M/s Namira Construction Pvt. Ltd., the applicant-builder in this case. Under this 9 September 2002 agreement, 45% of the built-up area was to go to the Waqf and 55% to the developer. The actual demarcation was to be done at the stage of building plan approval. Crucially, this agreement was never submitted to the Waqf Board for approval as the Board had required.
Despite this, the developer started construction based on the 9 September 2002 agreement. In 2005, proceedings under Section 144 of the Code of Criminal Procedure were initiated alleging unauthorised construction on Waqf land, but the Section 144 order was vacated.
When it came to light that the development agreement had not been placed before the Board, the developer submitted it for approval. Meanwhile, the Mutawalli issued a notice cancelling the agreement and proposed a fresh agreement with another builder, M/s Bustana Vision Pvt. Ltd. A title suit was filed by this new builder. Later, the dispute between the Mutawalli and the original developer was said to have been settled, and an amendment to the 9 September 2002 agreement was executed on 16 November 2006, after which construction continued.
The Waqf Board then issued letters, took action, and finally ordered stoppage of the construction, calling it illegal. The developer challenged these actions before the Patna High Court in C.W.J.C. No. 15617 of 2007, which resulted in a detailed judgment dated 5 August 2009, reported as 2009 (4) PLJR 203.
In that 2009 judgment, the High Court held that any alienation or transfer-like arrangement involving Waqf property required prior sanction of the Waqf Board under Section 51 of the Waqf Act, 1995. The Court declared that the Board’s statutory power could not be cut down by any terms in the Waqf deed or otherwise. It ruled that prior sanction was a sine qua non for giving effect to the development agreement, and directed the Board to consider and approve the 9 September 2002 agreement, with power to make reasonable changes in the interest of the Waqf.
The Court also made it clear that the Waqf was entitled to 45% of the total built-up area, not less than 30,000 sq. ft., and that any sale or transfer of the Waqf’s 45% share without following Section 51 of the Waqf Act would be null and void. The Board was asked to ensure that no part of this 45% share was alienated except in strict compliance with the Act and Rules. This judgment became final between the parties.
Years later, a fresh controversy arose about the apportionment and demarcation of built-up area, leading to C.W.J.C. No. 6870 of 2012. In that case, the developer, for the first time, produced a document dated 15 November 2002 and argued that, because Rs. 50 lakhs had been paid as “signing money”, the builder should get an extra 13,800 sq. ft. from the Trust’s commercial share. By order dated 5 October 2012, the High Court clearly declined to alter the earlier agreed 45%–55% apportionment on the basis of this document, noting that it had never been disclosed earlier.
In 2018, the builder returned to the High Court with Request Case No. 70 of 2018, this time seeking appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. The claim was founded on the arbitration clause in the 9 September 2002 agreement, but the substantive dispute was rooted in the alleged rights under the 15 November 2002 document.
What the Court Examined and Decided
The matter came before the Hon’ble the Chief Justice of the Patna High Court as an application for appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.
The developer argued that:
- The 15 November 2002 document was a continuation of the 9 September 2002 development agreement.
- Disputes about the existence and validity of this document were themselves “arbitrable” and should be decided by an arbitral tribunal, not the High Court.
- The Waqf Act, 1995, particularly Sections 6 and 7 and the bar under Section 85, did not oust arbitration in a developer’s agreement containing an arbitration clause.
- Under Section 16 of the Arbitration Act, the arbitral tribunal had jurisdiction to decide even questions about the validity of the underlying agreement.
The Waqf Trust, the Bihar State Shia Waqf Board, and an intervenor claiming to be Mutawalli in succession opposed the request. Their stand was:
- The 15 November 2002 document was non-existent or void, allegedly not even signed by the Mutawalli.
- It purported to create a fresh deal involving alienation of Waqf property without any approval from the Board under Section 51 of the Waqf Act, 1995.
- The entire earlier litigation, including the 2009 judgment and subsequent contempt and demarcation proceedings, never referred to this document, which surfaced only in 2012 almost ten years after its claimed execution.
- The High Court in its 5 October 2012 order had already refused to recognise the document for re-adjusting the 45%–55% share.
- On these facts, there was no valid agreement for arbitration concerning the 15 November 2002 document, and the application under Section 11(6) should therefore fail.
To decide the matter, the Court first recalled the Supreme Court’s guidance in National Insurance Company Ltd. v. Boghara Polyfab Pvt. Ltd., (2009) 1 SCC 267, which, following SBP & Co. v. Patel Engineering Ltd., (2005) 8 SCC 618, laid down that:
- The Chief Justice (or designate) must decide, at the Section 11 stage, whether there is an arbitration agreement and whether the applicant is a party to it.
- Certain issues may be left to the arbitrator, but the existence of a valid arbitration agreement is a threshold issue for the Court.
Applying this, the Court examined in detail the 9 September 2002 agreement. Clause 1 of the “Special Clauses” recorded that the developer had paid Rs. 25 lakhs as “signing money” and agreed to pay another Rs. 25 lakhs within 45 days, failing which the agreement would lapse and the signing amount be forfeited. The Court noted that this amount was described only as “signing money”, not as consideration for any extra area beyond the agreed 45%–55% apportionment. It stated that such a payment could at best be a kind of premium or tribute, but could not be treated as the price for additional Waqf property.
The Court observed that the 9 September 2002 agreement itself contained an arbitration clause (Clause 4) but that clause was specifically confined to disputes “arising out of or relating to this Development Agreement”. It did not provide any mechanism to alter the agreed apportionment of property. Further, the 2009 judgment had already fixed and protected the 45% share of the Waqf, with a clear prohibition on alienation of that share without Board sanction.
The Court then reproduced the full text of the 15 November 2002 document. That document stated that the Waqifa had received Rs. 50 lakhs from the builder and agreed that this sum would be “adjustable” in the commercial block of the Fazal Imam Complex. It further stated that the builder would be entitled to 13,800 sq. ft. of built-up area “from the Trust share” in the commercial block, on account of this Rs. 50 lakhs, and that the rest of the Trust’s commercial share would remain for Trust purposes. It described itself as being “in continuation/furtherance” of the 9 September 2002 agreement.
The Court held that this was not just a development-related document but amounted to a transfer of a part of the Waqf’s immovable property (13,800 sq. ft. of built-up commercial area) in exchange for Rs. 50 lakhs. Under Section 51 of the Waqf Act, 1995, any lease of Waqf immovable property without prior Board sanction is void, and sub-section (1-A) further declares that any sale, gift, exchange, mortgage or transfer of Waqf property is void ab initio. No Board approval for this document was ever shown.
The Court stressed several factual features:
- The entire earlier litigation leading to the 2009 judgment never mentioned the 15 November 2002 document.
- The document came to light for the first time in 2012 in C.W.J.C. No. 6870 of 2012, a demarcation dispute, almost ten years after its alleged execution.
- When the builder relied on it in 2012 to claim extra share, the High Court refused to disturb the 45%–55% allocation, clearly saying that no change could be made beyond what was already accepted before the Court.
- There was no material to show that the Waqf Board had approved this document, as required by Section 51.
- The then Mutawalli denied knowledge and signature on the document.
On these undisputed facts, the Court concluded that:
- The 15 November 2002 document did not have a valid legal existence because it sought to transfer Waqf property without Board sanction, making it void ab initio under Section 51 of the Waqf Act.
- The conduct of the applicant in suppressing this document for years and producing it only in 2012 strengthened doubts about its legitimacy.
- Since the document itself was not a valid agreement, there could be no arbitration clause to invoke in relation to it. The arbitration clause in the 9 September 2002 agreement could not be indirectly used to enforce rights claimed under a void document that altered the Waqf’s share already settled by court order.
The Court further noted that, while the Waqf Tribunal’s jurisdiction under Sections 6 and 7 of the Waqf Act is specific, the overall scheme of the Act, especially after the 2013 amendments, provides strong control over Waqf properties. Where a party claims that a portion of land is no longer Waqf property because it has allegedly been transferred, that dispute cannot be taken outside the Waqf Act framework through arbitration, particularly when the alleged transfer document is invalid.
In view of Section 85 of the Waqf Act, which bars civil court jurisdiction in matters required to be determined by the Tribunal, and in the absence of a lawful agreement, the Court held that no arbitrator could be appointed to decide such a dispute.
Summarising its conclusions, the Court held that:
- The High Court is indeed the appropriate court for a Section 11(6) application.
- An arbitration clause does exist in the valid development agreement dated 9 September 2002.
- However, there is no valid arbitration agreement connected with the 15 November 2002 document because that document is itself void and unapproved under Section 51 of the Waqf Act.
- Given the binding nature of the 2009 judgment and the 5 October 2012 order, and the lack of Board approval, there was no “fact in issue” requiring trial by an arbitrator on this point.
Therefore, the Court rejected the application under Section 11(6), holding that the applicant was incapacitated from invoking the arbitration clause for this dispute.
Why This Judgment Matters
This judgment is important for anyone dealing with Waqf properties, especially builders, developers, and trustees.
First, it sends a clear message: without prior written sanction of the Waqf Board under Section 51 of the Waqf Act, any transfer or adjustment of Waqf immovable property is void from the very beginning. Even if money has been paid and documents signed, courts will not recognise such dealings.
Second, the Patna High Court makes it clear that you cannot use an arbitration clause to bypass statutory protections around Waqf property. If the underlying agreement itself is void under the Waqf Act, the arbitration clause in any related document cannot be used to claim rights flowing from that void agreement.
Third, the case shows the risk of hiding or delaying disclosure of important documents. The builder’s failure to place the 15 November 2002 document before the Court in the earlier round and its late production in 2012 weighed heavily against it. Courts will look closely at such conduct while deciding whether a document is genuine and legally effective.
For Waqf Boards and Mutawallis, the judgment reinforces that their statutory duty to protect Waqf assets takes priority over private understandings with developers. For developers, it is a reminder that any development of Waqf land must strictly follow the Waqf Act, including Board approval, and that side-deals or “adjustment” documents will not stand up in court.
Legal Issues and Answers
Issue: Can an arbitrator be appointed under Section 11(6) of the Arbitration and Conciliation Act, 1996, to decide disputes based on the document dated 15.11.2002 concerning Waqf property?
Answer: No. The Court held that the 15.11.2002 document had no valid legal existence, as it involved transfer of Waqf property without Board sanction and was void ab initio under Section 51 of the Waqf Act. Without a valid agreement, there was no arbitration agreement to invoke.
Issue: Does the Waqf Act, 1995 bar recourse to arbitration in a dispute effectively concerning transfer of Waqf property?
Answer: Yes, in the circumstances here. Given the statutory control over Waqf property and the bar of Section 85, and since the builder was effectively seeking enforcement of a transfer of 13,800 sq. ft. of Waqf property, the Court held that such matters could not be decided by an arbitrator, particularly in the absence of a lawful, Board-approved agreement.
Issue: Could the arbitration clause in the 9.9.2002 development agreement be used to enforce alleged rights under the 15.11.2002 document?
Answer: No. The arbitration clause in the 9.9.2002 agreement was confined to disputes arising out of that agreement alone. It could not be stretched to cover a later, unapproved and void document that altered the Waqf’s share, especially when previous judgments had already settled the apportionment.
Cases Cited by the Court
- (2009) 1 SCC 267, National Insurance Company Limited v. Boghara Polyfab Private Limited.
- (2005) 8 SCC 618, SBP & Co. v. Patel Engineering Ltd. and another.
- (2000) 4 SCC 406, Allahabad Bank v. Canara Bank and another.
- AIR 2009 Rajasthan 150, Anjuman A. Burhani v. Daudi Bohra Jamaet, Registered Society and another.
- AIR 2009 Allahabad 62, Maulvi Abdul Rahman Siyai v. Sardar Maqbool Hasan and others.
- 2009 (4) PLJR 203, M/s Namira Construction Private Limited v. The State of Bihar and others.
- AIR 2010 (7) SC 1059, Board of Wakf, West Bengal v. Anis Fatma Begum and another.
- (2015) 17 SCC 65, Lal Shah Baba Dargah Trust v. Magnum Developers and others.
- (2016) 8 SCC 788, Vimal Kishor Shah and others v. Jayesh Dinesh Shah and others.
- (2016) 10 SCC 386, A. Ayyasamy v. A. Paramasivam and others.
- (2017) 14 SCC 561, Rajasthan Wakf Board v. Devki Nandan Pathak and others.
Case Details
Case Number: Request Case No. 70 of 2018
Case Title: M/s Namira Construction Pvt. Ltd. v. M/s Fazal Imam Public Charitable and Religious Trust & Bihar State Shia Waqf Board
Coram: Hon’ble The Chief Justice Amreshwar Pratap Sahi
Citation: 2019 (3) PLJR 223
Date of Judgment: 01.04.2019
Advocates:
- For the Petitioner (builder/developer): Mr. P.K. Shahi, Senior Advocate; Mr. Sanjeev Kumar Singh, Advocate.
- For Respondent No. 1 (Fazal Imam Public Charitable and Religious Trust / Mutawalli): Mr. Sandeep Kumar Shahi, Advocate.
- For Respondent No. 2 (Bihar State Shia Waqf Board): Mr. Y.V. Giri, Senior Advocate; Mr. S.A. Najmi, Advocate.
- For Intervenor Syed Akabir: Mr. Daya Shankar Prasad, Advocate.
Nature of the Case: Application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator (request case).
Link to Judgment: Full text of judgment on Patna High Court website
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