The termination notice must specify the deficiencies, and the compensation awarded for the post-handover period should be reasonable.

S. RAVINDRA BHAT, J.

1. The appellant – M/s. Soril Infra Resources Limited [formerly known as “Store One Retail India Limited” and hereafter referred to as “Store One”] challenges an order of a learned Single Judge rejecting its objection under Section 34 of the Arbitration and Conciliation Act, 1996 [hereafter referred to as “the Act”].

2. The brief facts are that M/s. Pragya Products Pvt. Ltd. [hereafter referred to as “Pragya”] entered into a Memorandum of Understanding (MoU) with Store One on 23.03.2004. Under the MoU, Pragya agreed to participate in a public auction by the Delhi Development Authority (DDA) of a commercial plot measuring 8710 sq. meters at Shalimar Bagh. On its part, Store One agreed that if Pragya became the successful bidder it would lease about 70,000 square feet at a rent of Rs.55/- per sq. ft. per month. In the auction, Pragya was declared successful and was the lessee under the Perpetual lease deed dated 08.10.2004 with the DDA. It proceeded to construct a commercial complex on the plot. On 09.12.2004, Pragya entered into an agreement to sell with M/s. Annapurna Infrastructure Pvt. Ltd. [hereafter referred to as “Annapurna”] and M/s. Paliwal Overseas Pvt. Ltd. [hereafter referred to as “Paliwal”]. After this agreement, Pragya entered into a deed with Store One, leasing 52,000 sq. ft. of the space in the shopping mall for an initial term of 10 years with the option of extending by two further terms of 10 and 5 years respectively. Store One deposited Rs.1,43,00,000/- with Pragya as interest free security deposit. After construction of the mall, Store One was given possession of 67,613 sq. ft. for its outlet. Store One started to pay the monthly rent of Rs.41,78,348.18/- with effect from 20.09.2007 to Pragya.

3. Acting in furtherance of the agreements to sell, Pragya executed 16 sale deeds, conveying the property to Annapurna and Paliwal on 08.08.2008. Despite change of ownership and title, Pragya continued to be the service provider in respect of the facilities and maintenance etc. Store One, alleging deficiencies in service provided, stopped payment of Common Area Maintenance (CAM) from July, 2008. It thereafter issued a notice on 05.08.2008 under clause 7.2 of the Lease Deed to Pragya highlighting alleged deficiencies and calling upon Pragya to rectify them. Since Annapurna and Paliwal had become owners, they sent notices on 01.09.2008 and 04.09.2008 to the tenant Store One, claiming rent from 01.04.2008. On 08.09.2008, Store One sent notice to Pragya alleging that it had failed to cure the deficiencies stated in its earlier letter. It accordingly proceeded to terminate the lease of the premises. Store One filed a petition under Section 9 of the Act before this Court. Annapurna and Paliwal applied for impleadment. The impleadment application was later withdrawn and the transferees – Annapurna and Paliwal filed CS(OS) 493/2009 seeking recovery of outstanding rents for the period 01.04.2008 onwards.

4. In these proceedings, Store One eventually handed over the keys to the premises to Annapurna on 22.03.2010. Later Pragya filed suit against Store One, seeking recovery of Rs. 2,62,36,672/- due to unpaid CAM and electricity charges. Store One thereafter moved this Court under Section 11 of the Act (Arb. Pet.86/2012) for appointment of an arbitrator. This led to the appointment of a sole arbitrator with consent of parties. Annapurna and Paliwal claimed rent for the period April 2008 to September 2012. Pragya further claimed CAM charges for the period 08.08.2008 to 19.03.2012 from Store One and Annapurna as well as Paliwal and electricity charges upto 08.08.2008 from Store One. The latter, Store One filed counter claim for refund of security deposit of Rs.1.43 crores.

5. The arbitrator first ruled in his award that the notice alleging deficiencies, by Store One served upon Pragya was vague and untenable. The Tribunal also ruled that the notice of termination of lease was not sent to the owners/Annapurn