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2020 Supreme(Kar) 1572
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
S.R. Krishna Kumar, J.
Royal Orchid Hotels Limited - Appellant
Versus
Rock Reality Private Limited - Respondent
Civil Miscellaneous Petition No. 88 of 2018
Decided On : 13-10-2020
M.V. Sundararaman, Advocate, Crestlaw Partners, Advocate, Aruna Shyam M, Advocate
The main legal principle established is that the dispute for specific performance arising from the lease and tripartite agreements is arbitrable and warrants reference to arbitration.
Headnote:
Arbitration and Conciliation Act - Appointment of Sole Arbitrator - Clause-7 of Lease Agreement - Clause-V of Tripartite Agreement - [Section 11(4)]
Fact of the Case:
The petitioner seeks appointment of a Sole Arbitrator to resolve disputes between the petitioner and the respondent in terms of Clause-7 of the Lease Agreement and Clause-V of the Tripartite Agreement. The respondent contested the petition, leading to a legal battle.
Finding of the Court:
The court found that there exists a valid and binding arbitration agreement between the petitioner and respondent. The dispute for specific performance arising from the lease agreement and tripartite agreement is arbitrable and warrants reference to arbitration.
Issues: The court considered the scope of adjudication under Section 11(6-A) of the Arbitration and Conciliation Act, the existence of a valid and binding arbitration agreement, and the arbitrability of the dispute in relation to specific performance.
Ratio Decidendi: The court's decision was influenced by the provisions of the Arbitration and Conciliation Act, 1996, and the specific terms of the lease and tripartite agreements. It emphasized the validity of the arbitration agreement and the arbitrability of the specific performance dispute.
Final Decision: The court allowed the petition, appointed a Sole Arbitrator, and left all claims and contentions to be decided by the Arbitral Tribunal.
JUDGMENT
S.R.Krishna Kumar, J. - In this petition filed under Section 11(4) of the Arbitration and Conciliation Act, 1996, (for short 'the Act') petitioner seeks appointment of a Sole Arbitrator to resolve the disputes between the petitioner and the respondent in terms of Clause-7 of the Agreement at Annexure-A dated 17.07.2006 and Clause-V of the Agreement at Annexure-B dated 26.10.2012. The respondent has filed its Statement of Objections and has contested the petition.
2. Briefly stated, the facts giving rise to this petition are as follows:
The Petitioner-Lessee entered into a lease agreement at Annexure-A dated 17.07.2006 with the Lessor-Just Homes Associates in respect of the schedule property. Clause-7 of the said agreement provides for resolution of disputes between the parties by reference to arbitration with the venue for arbitration and jurisdiction of the Courts being both at Pune as well as Bengaluru. Clause 2.2 stipulated that the period of lease was 10 years with a renewal for a further period of 10 years. No.4.3 of the said agreement provided for renewal of the lease.
Under a registered sale deed dated 26.09.2012, the aforesaid Just Homes Associates sold the entire property of which the schedule property was a portion in favour of the respondent herein. Pursuant thereto, a tripartite agreement at Annexure-B dated 26.10.2012 was entered into between the petitioner, respondent and M/s. Just Home Associates. Clause IV of the said agreement dated 26.10.2012 while providing that the leasehold rights of the petitioner in respect of the schedule property stood attorned under the respondent herein, made certain minor modifications to clause No.4.3 of the agreement dated 17.07.2006. However, even the modified renewal clause No.4.3 of the agreement dated 17.07.2006 as modified by the said Clause IV of the agreement dated 26.10.2012 also provided for renewal of lease for a further period of 10 years in favour of the petitioner.
Clause V of the agreement dated 26.10.2012 stipulated that except the modified renewal Clause IV, the rest of the contents of the said agreement dated 17.07.2006 would stand unvaried and unaltered. Clauses VI and VII also stipulated that the terms and conditions of the agreement dated 26.10.2012 shall form an integral part of the agreement dated 17.07.2006, that the agreement dated 26.10.2012 shall be read and construed along with the agreement dated 17.07.2006 and that the respondent herein would be bound by the terms and conditions of the agreement dated 17.07.2006.
On 05.02.2018, petitioner issued a Letter at Annexure-C to the respondent expressing its intention to get the lease renewed for a further period of 10 years in terms of the aforesaid agreements. The said Letter having been received by the respondent, no reply was sent by it. Instead a Lawyer's Notice dated 20.02.2018 at Annexure-D was issued on behalf of respondent calling upon the petitioner to vacate the schedule property as well as pay arrears of rent to the respondent. Subsequently, respondent has also instituted a suit in C.S.No.99/2018 against the petitioner before the Small Causes Judge at Pune seeking eviction of the petitioner, injunction and other relief's.
It is the contention of the petitioner that it is entitled to renewal of the lease in respect of the schedule property for a further period of 10 years by virtue of Clause 4.3 of the agreement dated 17.07.2006 as modified by Clause IV of the agreement dated 26.10.2012 and since the said claim of the petitioner was repudiated by the respondent, petitioner was entitled to specific performance of contract of the said renewal clause. It is contended that the arbitration agreement at Clause 7 of the agreement dated 17.07.2006 was made part and parcel of the agreement dated 26.10.2012 executed between petitioner and respondent by virtue of Clauses V, VI and VII of the subsequent agreement dated 26.10.2012 and consequently, any dispute between petitioner and respondent would have
