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2016 Supreme(Del) 4425
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
STORE ONE RETAIL INDIA LIMITED - Petitioner
Versus
ANNAPURNA INFRASTRUTURE PVT LTD & ORS. - Respondents
O.M.P. (COMM) 570 of 2016
Decided On : 19-12-2016
For the Petitioner:Mr. Rajiv Nayar, Senior Advocate with Mr. Sudhir Sharma, Mr. Sanjeev Kumar Sharma, Mr. Abhishek Swaroop, Mr. Abhishek and Mr. Ritesh Kumar, Advocates.
For the Respondent:Mr. Manish Sharma, Ms. Chandni Mehra, Mr. Abhishek Agarwal, Advocates.
The court emphasized the limited scope of judicial review under Section 34 of the Arbitration and Conciliation Act, 1996, and clarified the criteria for an award to be considered in conflict with the public policy of India.
Headnote:
Arbitration - Lease Dispute - Arbitration and Conciliation Act, 1996 - Section 34
Fact of the Case:
Dispute arose over lease rent and facility management fees for premises leased by Store One in a commercial complex. Store One terminated the lease, resulting in claims for rent/damages. Arbitrator awarded rent, damages, and interest in favor of the respondents. Store One challenged the award under Section 34 of the Act, claiming it was opposed to public policy.
Finding of the Court:
The court upheld the Arbitrator's decision, finding that the notice of termination issued by Store One was vague and invalid, as it did not specify the breaches and was not served on all relevant parties. The court also rejected Store One's argument that the award was opposed to public policy, stating that it did not violate fundamental principles of Indian law.
Issues: Validity of termination notice, entitlement to rent and damages, and whether the award was opposed to public policy.
Ratio Decidendi: The court held that the termination notice was vague and invalid, and the award did not violate fundamental principles of Indian law, thus rejecting Store One's challenge.
Final Decision: The petition was dismissed, and the pending application was disposed of with no order as to costs.
VIBHU BAKHRU, J.
IA No.15671/2016
1. Allowed, subject to all just exceptions.
CAV. No.1065/2016
2. The learned counsel for the respondent no.3/caveator has entered appearance. The caveat stands discharged.
O.M.P. (COMM) 570/2016 and IA No. 15670/2016
3. Store One Retail India Limited (hereafter ‘Store One’) has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter ‘the Act’) impugning an arbitral award dated 09.09.2016 (hereafter ‘the impugned award’) made and published by the Sole Arbitrator, Justice Dr. Mukundakam Sharma (Retired), a former Judge of the Supreme Court of India.
4. The disputes between the parties relate to the payment of lease rent and fees for facility management, in respect of the premises (hereafter 'the said premises'), which were taken on lease by Store One in a commercial complex known as “Shop in Park (North)”. The lease for the said premises was terminated by Store One prior to the expiry of the lock-in period and that had resulted in claims, inter alia, for rent/damages being made against Store One.
5. The Arbitrator considered the disputes and awarded rent for the period 01.04.2008 to 22.03.2010 alongwith interest at the rate of 12% per annum up to the date of the award in favour of M/s Annapurna Infrastructure Pvt. Ltd. (hereafter ‘Annapurna’) and M/s Paliwal Overseas Pvt. Ltd. (hereafter ‘Paliwal’). Further, the Arbitrator also awarded damages equivalent to the rent for a period of six months from 22.03.2010 in favour of Annapurna and Paliwal along with future interest at the rate of 12% per annum. In addition, the Arbitrator also made an award in favour of M/s Pragya Products Pvt. Ltd. (hereafter ‘Pragya’) for facility management services and electricity charges alongwith interest at the rate of 12% per annum.
6. Store One asserts that the impugned award is opposed to the Public Policy of India and, therefore, is liable to be set aside under Section 34(2)(b)(ii) of the Act; it, inter alia, claims that the Arbitrator has erred in holding that the termination of lease of the said premises was invalid and consequently awarding rentals in favour of parties even for the period it was not in occupation of the said premises.
7. Briefly stated, the necessary facts to consider the aforesaid controversy are as under :-
7.1 Pragya and Store One (then known as Piramyd Retail and Merchandising Pvt. Ltd.) entered into a Memorandum of Understanding (MoU) dated 23.03.2004 whereby Pragya agreed to participate in a public auction of a commercial plot admeasuring 8710 square meters situated at Plot No.2, Block B, Community Centre, Shalimar Bagh, Delhi to be conducted by the Delhi Development Authority (DDA). Store One agreed that if Pragya was declared as a successful bidder, it would lease a covered area admeasuring approximately 70,000 square feet at a rent calculated at the rate of Rs.55 per sq. ft. per month.
7.2 The said auction was conducted by the DDA on 26.03.2004; Pragya was declared as the successful bidder and a perpetual lease deed dated 08.10.2004 was executed in its favour. Thereafter, Pragya commenced construction of a commercial complex on the said plot of land. Pragya also approached Annapurna and Paliwal to sell the said plot on the representation that it had already entered into an arrangement (MOU dated 23.03.2004) for leasing out 70,000 square feet of covered area to Store One. Accordingly, an Agreement to Sell dated 09.12.2004 was executed between Pragya on one part, and Annapurna and Paliwal on the other part whereby Pragya agreed to sell and Annapurna and Paliwal agreed to purchase the plot in question. Thereafter, a lease deed (hereafter ‘the Lease Deed’) was also executed between Pragya and Store One on 23.11.2005 whereby Store One agreed to lease approximately 52,000 square feet of space in the Shopping Mall Arcade, Shop in Park (North) - which at the relevant time was under construction for an initial period of 10 years with an option for extensi
