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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
R.D. Dhanuka, J.
A.S. Patel Trust – Appellant
Versus
Wall Street Finance Limited – Respondent
Commercial Arbitration Petition No. 452 of 2019; Notice of Motion No. 911 of 2019
Decided On : 23-07-2019
Presidency Small Cause Courts Act, 1882 – Section 41 – Arbitration and Conciliation Act, 1996 – Sections 34, 16 – Arbitration – By this petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 Petitioners have impugned the arbitral award passed by the sole Arbitrator, directing the Petitioners to jointly/severally pay to the Respondent a sum of Rs.1,67,72,446 with interest thereon at the rate of 9 per cent per annum from the date of the award till payment/realization. – Held, Arbitrator after interpreting the terms of the leave and licence agreement in paragraph (20)(f) held that it was an inevitable conclusion that the parties understood and proceeded to act on the said agreement on the basis that Rs.2,25,00,000/- was lying in deposit with the petitioners as an interest free refundable security deposit, to be refunded against surrender of the possession of the said premises. – The petitioners did not make any monetary claim under the said agreement. – Arbitrator accordingly held that it could be reasonably inferred that they have no claim against the respondent. – Learned Senior Counsel for the petitioners could not point out any inconsistency in the pleadings in Summary Suit and statement of claim. – In court view these findings of fact rendered by the learned arbitrator based on the pleadings, documents and the evidence does not show any patent illegality and thus cannot be interfered with by this court. – The interpretation of the leave and licence agreement by the learned arbitrator is not only the possible interpretation but is correct interpretation. – Even if such interpretation of the learned arbitrator is considered as a possible interpretation, such possible interpretation of the learned arbitrator cannot be substituted by another possible interpretation by this court under section 34 of the Arbitration Act. – There is no substance in the submission of the learned Senior Counsel for the petitioners that a perusal of statement claim would itself show that learned Arbitrator had no jurisdiction to try and entertain the dispute. – Arbitrator rightly rejected the plea of the petitioners that the said amount of Rs.2,25,00,000/- was not a refundable security deposit. – The petitioners themselves pleaded in the written statement that the respondent was in breach of the said leave and licence agreement and thus the petitioners had right to forfeit the security deposit. – It is held by the learned arbitrator that the petitioners received the vacant possession of the said premises – However, the petitioners did not make any claim against the respondent nor filed any counter claim in the arbitral proceedings. – The witnesses examined by the respondent had clearly proved that the petitioners had committed the breach of the said leave and licence agreement by not refunding the balance amount of refundable security deposit inspite of the respondent handing-over vacant possession of the said premises to the petitioners. – It is an admitted position that the respondent had produced its statement of accounts, the financial documents and the annual report to prove its case before the learned arbitrator. – Though the respondent had called upon the petitioners to produce their books of account to show that no security deposit was received by the petitioners from the respondents as alleged by the petitioners or to show that no amount of licence fees was recovered from the respondent arising out of the said leave and licence agreement, the petitioners deliberately withheld such documents. – Court do not find any infirmity in the impugned award or the impugned order passed by the learned arbitrator. Commercial Arbitration Petition is devoid of merits. – Commercial Arbitration Petition Dismissed
JUDGMENT :
R.D. Dhanuka, J.
By this petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (in short "Arbitration Act"), the Petitioners have impugned the arbitral award dated 12 October 2018 passed by the sole Arbitrator, directing the Petitioners to jointly/severally pay to the Respondent a sum of Rs.1,67,72,446 with interest thereon at the rate of 9 per cent per annum from the date of the award till payment/realization.
2. The facts leading to file this commercial arbitration petition are as under :
3. The Respondent was the original claimant, whereas the Petitioners herein were the original Respondents in the arbitral proceedings. Petitioner No.1 is the owner of the premises admeasuring 2000 sq.ft. at 301-302, 3rd Floor, Natasha, 52, Hill Road, Bandra (West), Mumbai-400 050 (herein after referred to as "the said premises"). Petitioner Nos.2 and 3 are the trustees of Petitioner No.1.
4. It was the case of the Respondent that it was involved in the financial transactions with the Petitioners since a long time and during such transactions, Respondent had deposited the amounts to the tune of Rs.3,00,00,000 sometime in the year 2005 vide various cheques. The said amount of Rs.3,00,00,000 remained deposited with Petitioner No.1 trust for a considerable period of time. It is the case of the Respondent that after a period of time, the Petitioners refunded the amount of Rs.75,00,000 in the year 2007 out of the said deposit of Rs.3,00,00,000 to the Respondent. The Petitioners had retained Rs.2,25,00,000 as refundable security deposit. Sometime in the year 2008, the Respondent proposed to take the said premises on leave and licence basis from Petitioner No.1 trust for the purpose of using the said premises for the period of thirty six months commencing from 1 April 2008. Prior to the date of execution of the said leave and licence agreement dated 1 April 2008, the Petitioners and Respondent had earlier entered into a similar leave and licence agreement dated 1 April 2004 for a period of thirty six months which ended on 31 March 2007 in respect of the said premises.
5. In Clause-2 of the leave and licence agreement dated 7 June 2008, it was provided that the Respondent-licensee shall continue to deposit with Petitioner No.1-licensor an amount of Rs.2,25,00,000 towards interest free refundable security deposit for the due performance of the terms of the said agreement. Clause-3 of the said agreement provided that the licensee shall pay monthly license fees of Rs.3,75,000/- to the licensor during the term of the said agreement in advance within the first five days of each calendar month. The monthly licensee fees payable to the licensor shall be enhanced by 5 per cent after lapse of every twelve months during the term of the said agreement.
6. Clause-5 of the said agreement provided that the licensee shall occupy the said premises and shall at the end of expiry of premises of the agreement shall hand over peaceful and vacant possession of the said premises or the earlier determination of the said agreement. In Clause-14 of the said agreement, it was provided that the licensor shall refund the security deposit to the licensee on the expiry of the said agreement against the licensee handing over the peaceful and vacant possession of the said premises. Clause-15 provided that the agreement can be terminated by the licensor without assigning any reason by issuing three months advance notice. At the end of the three months from the date of issuance of the notice, the agreement shall stand automatically terminated and any dues shall be adjusted against the security deposit.
7. The said agreement was registered on 7 June 2008 with the Sub-Registrar of Assurance. It is the case of the Respondent that license fees for the month of May 2008 till October 2009 remained to be paid at the time when the Respondent handed over peaceful and vacant possession of the licensed premises to the Petitioners on 14 December 2009. The Respondent r
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