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2012 Supreme(Del) 3011
DELHI HIGH COURT
S.Muralidhar, J.
Amrit Pal Ahuja & Ors. - Appellant
Versus
Mahanagar Telephone Nigam Limited - Resopndent
O.M.P. 409 of 2006
Decided On : 25-09-2012
For the Respondent:Mr. Sukumar Pattjoshi, Advocate.
The court established that the arbitration clause survives the termination of the contract and that the enforcement of a lease deed clause does not violate public policy.
Headnote:
Arbitration - Lease Deeds - Arbitration and Conciliation Act, 1996 - Section 34
Fact of the Case:
The Petitioners, owners of a property, entered into lease deeds with MTNL. Dispute arose when MTNL failed to reimburse the property tax paid by the Petitioners. The property was later sold to Mr. Saxena, who gave an undertaking acknowledging the tax payment.
Finding of the Court:
The court found that MTNL was liable to reimburse the property tax paid by the Petitioners, and the arbitration clause survived the sale of the property to Mr. Saxena.
Issues: The issues included the liability of MTNL to reimburse property tax, the existence of the arbitration agreement, and the relief sought by the Petitioners.
Ratio Decidendi: The court held that the enforcement of the lease deed clause for property tax reimbursement did not violate public policy. It also ruled that the arbitration clause survived the sale of the property.
Final Decision: The court upheld the Petitioners' claim for property tax reimbursement and set aside the decision that MTNL was not legally bound to reimburse the tax. The Petitioners were awarded the reimbursement amount with interest.
S. Muralidhar, J.
1. The challenge in this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (‘Act’) is to an impugned Award dated 22nd May 2006 of the learned sole Arbitrator in the dispute between the Petitioners, Mr. Amrit Pal Ahuja, Mr. Parmod Ojha, Mr. Vijay Kumar Ojha, Mr. Rajesh Kumar Jain, Mr. Raj Kumar Jain and Mr. Ravinder Kumar Jain, and the Respondent Mahanagar Telephone Nigam Limited (‘MTNL’), arising out of four lease deeds all dated 14th May 1999 executed by the Petitioners in favour of MTNL.
Background facts
2. The Petitioners were the owners of the basement, ground, first and second floor of the property No. S-5, Green Park, New Delhi (hereinafter referred to ‘the property in question’). The four lease deeds dated 14th May 1999 executed by each of the Petitioners in favour of MTNL contained identical clauses. The lease deeds were duly registered and executed for a period of five years, with monthly rent varying from floor to floor. Clause 1.3.1 of each of the lease deeds read as under:
“1.3.1 All municipal taxes in respect of the demised premises will be paid by the lessee or the lessors will make the necessary payments to the Municipal Authority as per their demand and the lessee will reimburse the same to the lessor for the demised premises on the production or the receipt by the lessors and the lessee shall pay the such demand within one month on the receipt of such demand.”
3. Clause 2.4 which is relevant for the present dispute, reads as under:
“2.4 If during this period, the lessors transfers/sells whole or part of the premises to any person/persons, the lessee shall accept the said person/persons as its lawful lessors and will start paying the rent to the new lessor/lessors from the date as intimated by the old Lessors to the Lessee in writing and the other terms and conditions of the agreement shall remain the same.”
4. According to the Petitioners, despite several reminders, MTNL failed to reimburse the amount of house tax paid by the Petitioners in respect of the leased premises. On 6th March 2003 the Petitioners wrote to MTNL stating that they had deposited Rs. 10 lakhs towards tax payable to the Municipal Corporation of Delhi (‘MCD’) as against a demand of Rs. 72,37,309. The original receipts and the bill of the MCD were enclosed with the said letter. The Petitioners requested MTNL to “kindly reimburse the same to us to enable us to again deposit the part payment to MCD and there on till the final payment.” This was followed by a legal notice dated 6th May 2003 issued on behalf of the Petitioners to MTNL requesting reimbursement of the house tax.
5. The Petitioners sent MTNL a third reminder on 28th January 2004. In the said letter it was reiterated that the property tax assessment had been finalized by MCD by an assessment order dated 31st January 2003 for the period 1st April 1999 onwards and that the Petitioners received a bill in the sum of Rs. 69,63,109 for the period 15th May 1999 to 31st March 2003 payable by 31st March 2003. Since MTNL had not paid the demand, the Petitioners had made the part payments of Rs. 10 lakhs to MCD and a further sum of Rs. 20 lakhs on 31st March 2003. Since MTNL, despite the reminders, had failed to reimburse the tax paid, the Petitioners on 26th December 2003 were constrained to make a further payment of Rs. 39,07,243. Consequently, it was stated in the said letter dated 28th January 2004 that the following amounts were due from MTNL to the Petitioners:
“Rs. 69,07,243 - paid by my clients to MCD towards House Tax as per break-ups given hereinabove.
Rs. 18,43,654 - rebate amount to which you are not entitled.
Total amount due Rs. 87,50,897 (Rs. 69,63,109 as per the Bill for the period up to year 2002-2003 and Rs. 17,87,788 towards House Tax Bill for 2003-04).”
6. Accordingly, the Petitioners asked MTNL to pay the aforesaid amount along with interest @ 18% per annum failing which the Petitioners would proceed against it in accordance with law. B
