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SUPREME COURT OF INDIA
S.A. BOBDE, CJI., A.S. BOPANNA, V. RAMASUBRAMANIAN, JJ.
SURESH SHAH – APPELLANTS
VERSUS
HIPAD TECHNOLOGY INDIA PRIVATE LIMITED – RESPONDENT
ARBITRATION PETITION (CIVIL) NO(S).08 of 2020
Decided on : 18-12-2020
(A) Arbitration and Conciliation Act, 1996 – Section 11(5) – Transfer of Property Act, 1882 – Sections 111, 114 and 114A – Appointment of Sole Arbitrator – Tenancy dispute – When disputes arise between landlord and tenant with regard to determination of lease under TP Act, landlord to secure possession of leased property in a normal circumstance is required to institute a suit in Court which has jurisdiction – However, if parties in contract of lease or in such other manner have agreed upon alternate mode of dispute resolution through arbitration landlord would be entitled to invoke arbitration clause and make a claim before Arbitrator – Even in such proceedings, if circumstances as contained in Section 114 and 114A of TP Act arise, it could be brought up before Arbitrator who would take note of same and act in accordance with law qua passing award – If in arbitration proceedings landlord has sought for an award of ejectment on ground that lease has been forfeited since tenant has failed to pay rent and breached express condition for payment of rent or such other breach and in such proceedings tenant pays or tenders rent to lessor or remedies such other breach, it would be open for Arbitrator to take note of Section 114, 114A of TP Act and pass appropriate award in nature as a Court would have considered that aspect while exercising discretion. (Para 16)
(B) Rent and Eviction – Tenancy dispute – Scope of arbitration – Insofar as eviction or tenancy relating to matters governed by special statutes where tenant enjoys statutory protection against eviction whereunder Court/Forum is specified and conferred jurisdiction under statute alone can adjudicate such matters – In such cases the dispute is non-arbitrable – If special statutes do not apply to premises/property and lease/tenancy created thereunder as on date when cause of action arises to seek for eviction or such other relief and in such transaction if parties are governed by Arbitration Clause; dispute between parties is arbitrable and there shall be no impediment whatsoever to invoke Arbitration Clause – Disputes arising under Rent Acts will have to be looked at from a different view point and therefore not arbitrable in those cases – This is for reason that notwithstanding terms and conditions entered into between landlord and tenant to regulate tenancy, if eviction or tenancy is governed by a special statute (Rent Act), premises being amenable to provisions of the Act would also provide statutory protection against eviction and courts specified in the Act alone will be conferred jurisdiction to order eviction or to resolve such other disputes – Same is not the position in matters relating to lease/tenancy which are not governed under special statutes but under TP Act. (Paras 17 and 18)
Facts of the case:
Petitioner has instituted this petition under Section 11(5) of the Arbitration and Conciliation Act, 1996 seeking appointment of a Sole Arbitrator for resolving the disputes that have arisen between the parties in relation to the Sub-lease deed dated 14.11.2018.
Findings of Court:
If in the arbitration proceedings landlord has sought for an award of ejectment on the ground that the lease has been forfeited since the tenant has failed to pay the rent and breached express condition for payment of rent or such other breach and in such proceedings the tenant pays or tenders the rent to lessor or remedies such other breach, it would be open for Arbitrator to take note of Section 114, 114A of TP Act and pass appropriate award in the nature as a Court would have considered that aspect while exercising the discretion.
Result : Petition allowed.
JUDGMENT :
A.S. Bopanna, J.
1. The petitioner has instituted this petition under Section 11(5) of the Arbitration and Conciliation Act, 1996 (‘Act, 1996’ for short) seeking appointment of a Sole Arbitrator for resolving the disputes that have arisen between the parties in relation to the Sub-Lease deed dated 14.11.2018.
2. The property bearing No.154B, Block ‘A’ Sector 63, Phase-III, NOIDA, Gautam Budh Nagar, U.P. having been initially allotted and leased by New Okhla Industrial Development Authority (‘NOIDA’ for short) under a Lease dated 26.03.2003 had changed hands and the lease was ultimately transferred in favour of the petitioner under a Transfer Memorandum dated 13.04.2011.
3. The petitioner thus having acquired absolute long-term leasehold right of the land and building referred supra has Sub-Leased the same to the respondent under the Sub-Lease Deed dated 14.11.2018. In respect of the Sub-Lease entered into between the parties, certain disputes are stated to have arisen which is to be resolved. Since the Sub-Lease Deed provides for resolution of the disputes through arbitration vide Clause 12 thereof the petitioner invoked the same by issuing a notice dated 11.12.2019, nominated the Sole Arbitrator and sought concurrence from the respondent. The respondent did not respond to the same. The petitioner is, therefore, before this Court seeking appointment of the Arbitrator.
4. Notice of this petition was ordered to the respondent on 02.03.2020. Despite service, the respondent has not chosen to appear and oppose this petition. In that light we have heard Mr. Vikas Dhawan, learned counsel for the petitioner and perused the petition papers.
5. The parties to the petition have entered into a Sub-Lease Deed dated 14.11.2018 whereunder the terms of lease have been agreed to between the parties. In respect of the terms and conditions agreed under the Sub-Lease Deed certain disputes have arisen between the parties. In the Deed the parties have agreed that the disputes arising out of the same shall be resolved through Arbitration. The clause thereto reads as hereunder:
“12.1 All disputes, differences or disagreements arising out of, in connection with or in relation to this Sub-Lease Deed, including w.r.t. its interpretation, performance, termination, in the first instance shall be endeavored to be settled through good faith mutual discussions between the officials of the Sub-Lessor and the Sub-Lessee.
12.2 If no settlement can be reached through such discussions between the Parties within a period of 21 (twenty one)days, then all such unresolved disputes, differences or disagreements shall be finally decided through arbitration, to be held in accordance with the provisions of the Arbitration & Conciliation Act, 1996. The venue of arbitration shall be New Delhi and the language of such arbitration shall be English.
12.3 The Arbitral Tribunal shall consist of a sole arbitrator to be mutually agreed by the Parties. In the event of any disagreement regarding the appointment of the sole arbitrator, the same shall only and exclusively be appointed by the Hon’ble High Court of Delhi at New Delhi. The arbitral award shall be final and binding.”
6. The petitioner, therefore, got issued a Notice dated 11.12.2019 detailing the default committed by the respondent which gave rise to the dispute between the parties and also invoked the Arbitration Clause. The petitioner proposed the name of Justice (Retired) Mukul Mudgal as the Sole Arbitrator and indicated that if the respondent does not agree to the same the petitioner would seek appointment of Sole Arbitrator through Court. It is in that view the petitioner is before this Court.
7. At the outset, a perusal of the above extracted Clause indicates that the disputes between the parties is to be resolved through Arbitration. A further perusal of the Clause indicates that the parties have agreed to secure appointment of the Arbitrator through the High Court of Delhi at New Delhi. It is in that view an i
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