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2023 Supreme(Bom) 2339

IN THE HIGH COURT OF BOMBAY
Manish Pitale, J.
Allied Digital Services Ltd. - Applicant
Versus
XL Dynamics India Pvt. Ltd. - Respondent
Arbitration Application No. 110 of 2020
Decided On : 28-08-2023

Advocates:
Advocate Appeared:
For the Applicant : Mr. A. J. Rizvi h/f. Mr. B. Palai
For the Respondent: Mr. Induprakash Tripathi i/b. Mr. C. K. Tripathi

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 11 - Application for appointment of arbitrator in disputes arising from a leave and license agreement - The court examined the applicability of arbitration in light of the Supreme Court's decision in Vidya Drolia v. Durga Trading Corporation, which identified landlord-tenant disputes as non-arbitrable. The applicant alleged damages after the respondent vacated premises, but the court found that a prior settlement existed. (Paras 4, 6, 10, 12)

(B) Jurisdiction of courts under Section 11 - The court's role is limited to determining existence and validity of the arbitration agreement, with the arbitral tribunal being the primary authority on arbitrability. The court can reject claims that are manifestly non-arbitrable. (Paras 25-28)

Facts of the case:
The arbitration application was filed after the respondent vacated premises, alleging damages and claiming the right to invoke arbitration based on an agreement clause.

Issues: The main issues involved the existence of an arbitrable dispute in light of previous settlements and the applicable legal principles regarding arbitral jurisdiction.

Findings of Court:
The court determined that the claims appeared settled based on evidence and consequently found no arbitrable dispute.

Ratio Decidendi: The court held that since a settlement existed, the invocation of arbitration after a significant delay constituted an afterthought, thus no arbitrator should be appointed.

Result: Application dismissed.

Table of Content
1. application for appointment of arbitrator. (Para 2 , 3)
2. dispute over jurisdiction and arbitrability. (Para 4 , 5)
3. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13)

JUDGMENT :

Manish Pitale, J.

Heard learned counsel for the parties.

2. This is an application filed under section 11 of the Arbitration and Conciliation Act, 1996, for appointment of arbitrator, in order to resolve disputes between the parties. The arbitration clause in the present case is found in a leave and license agreement dated 28/3/2023, executed between the parties. The applicant was the licensor and the respondent was the licensee under the said agreement.

3. It is submitted that after the respondent vacated the premises, the applicant was constrained to invoke the arbitration clause by notice dated 3/10/2019, for the reason that the damages caused to the premises in question, gave rise to cause of action for the applicant to claim appropriate amount from the respondent, which included damages suffered by the applicant for the reason that after the respondent had vacated the premises, the applicant could not let out the same for a considerable period of time.

4. The learned counsel for the applicant relied upon the arbitration clause in the leave and license agreement and invocation notice dated 3/10/2019, to submit that the nature of reliefs sought by the applicant is relatable to the agreement in question, particularly in the light of specific clause for damages incorporated in the agreement and that the Small Causes Court would not have jurisdiction to grant such relief to the applicant, even if the jurisdiction of the said Court was to be invoked. In that light, it was submitted that even if the arbitration clause is found in a leave and license agreement, the category of non arbitrable disputes identified in judgment of the Supreme Court in the case of Vidya Drolia v. Durga Trading Corporation , (2021) 2 SCC 1 would not apply to the facts of the present case. The learned counsel for the applicant relied upon judgment and order dated 13/7/2016 passed by the Supreme Court in the case of M/s. Wexford Financial Inc. Panama v. Bharat Heavy Electricals Ltd. in Arbitration Petition (Civil) No.19/2015 decided on 13/7/2016.

5. On the other hand, Mr. Tripathi, learned counsel appearing for the respondent submitted that since the arbitration clause is admittedly found in a leave and license agreement, the aforesaid prohibition of such dispute being sent to arbitration recognised in the judgment of the Supreme Court in the case of Vidya Drolia v. Durga Trading Corporation (supra) would apply. Apart from the aforesaid aspect of the matter, the learned counsel appearing for the applicant invited attention of this Court to Exh.M of the application, being an email dated 3/2/2016, sent on behalf of the applicant enumerating the amounts that were deducted from the security deposit of Rs.1,60,00,000/- lying with the applicant. It was submitted that the applicant itself conceded that after deducting amounts under the said head for damage rectification, the applicant was to refund the amount of Rs.9,94,177/- to the respondent on the basis of aforesaid document. It was contended that the disputes between the parties were settled and that therefore, there was no occasion for the applicant to have issued the invocation notice dated 16/10/2019. It was emphasized that the said notice was issued after a period of one year and eight months from the said email dated 3/2/2016, issued by the applicant, thereby indicating that there was no arbitrable dispute existing between the parties, for which an arbitrator could be appointed. Reliance was placed on judgment of the Supreme Court in the case of NTPC Ltd. v. M/s. SPML Infra Ltd , AIR 2023 SC 1974 .

6. Heard learned counsel for the rival parties and perused the material on record. It is undisputed that the arbitration clause in the present case is found in the leave and license agreement, executed between the parties. The

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