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IN THE HIGH COURT OF DELHI
V. KAMESWAR RAO, J.
OYO Hotels & Homes Pvt. Ltd. – Petitioner
Versus
Rajan Tewari & Another – Respondent
ARB.P. No. 424 of 2020
Decided On : 09-02-2021
Arbitration - Appointment of Sole Arbitrator - Section 11(6) of the Arbitration and Conciliation Act, 1996 - [Arbitration] - [Appointment of Sole Arbitrator] - [Section 11(6) of the Arbitration and Conciliation Act, 1996] - The court discussed the appointment of the sole arbitrator, the arbitration clause in the contract, and the validity of the appointment. The court referred to previous judgments and held that the appointment made by the respondent was non-est and needed to be ignored. The court allowed the petition and appointed a new sole arbitrator to adjudicate the disputes and differences between the parties arising out of the Lease Deed.
Fact of the Case:
The petitioner, a company, entered into a Lease Deed with the respondents for a property. The petitioner alleged that the respondents breached the Lease Deed and invoked the force majeure clause due to the financial setback caused by the pandemic. The respondents then invoked the arbitration clause and appointed a sole arbitrator. The petitioner objected to the appointment and filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking the appointment of a new arbitrator.
Finding of the Court:
The court found that the appointment made by the respondent as the sole arbitrator was non-est and needed to be ignored as it was not in accordance with the agreed procedure. The court allowed the petition and appointed a new sole arbitrator to adjudicate the disputes between the parties.
Issues: The main issue was whether the appointment of the learned arbitrator was at variance with the stipulation in the contract and as such non-est for the court to grant the relief to the petitioner by appointing a new arbitrator.
Ratio Decidendi: The court held that the appointment made by the respondent as the sole arbitrator was non-est and needed to be ignored, as it was not in accordance with the agreed procedure. The court referred to previous judgments and established that the petitioner was within its right to approach the court for the appointment of an arbitrator under Section 11 of the Act.
Final Decision: The court allowed the petition and appointed a new sole arbitrator to adjudicate the disputes and differences between the parties arising out of the Lease Deed.
JUDGMENT :
1. This present petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (‘Act’, for short) with the following prayers:
“It is most respectfully prayed that this Hon’ble Court may be pleased to:
(i) appoint a Sole Arbitrator to adjudicate the claims of the Petitioner in accordance with the Arbitration and Conciliation Act, 1996 as amended;
(ii) declare that Hon’ble Justice Aruna Suresh (retired) has no jurisdiction to adjudicate the disputes between the parties;
(iii) Award costs of this Petition in favour of the Petitioner and against the Respondent;
(iv) Pass such other and further order(s) as this Hon’ble Court may deem fit and proper in the facts and circumstances of the present case.”
2. The petitioner herein is a company incorporated under the Companies Act, 2013 and having its registered office at Ground Floor-001, Mauryansh Elanza, Shyamai Cross Road, Nr. Parekh Hospital, Satellite Ahmedabad, Gujarat-380015 (formerly known as Alcott Town Planners Pvt. Ltd.).
3. The respondents herein are the joint owners of the premises / property situated at 3/16, Main Shankar Road, Old Rajinder Nagar, New Delhi (‘Premises’, for short).
4. It is the case of the petitioner and so contended by Mr. Jeevan Ballav Panda, learned counsel appearing for the petitioner that the petitioner and respondents entered into a Lease Deed dated May 27, 2019 (‘Lease Deed’, for short) in respect of the Premises.
5. Pursuant to the execution of the Lease Deed, petitioner started fulfilling the obligations contained thereunder on the assumption that the respondents will also do the same and even disbursed an amount of Rs.3,32,000/- to the respondents in order to expedite the refurbishment and upgradation of the Premises to make it at par with the petitioner’s benchmark.
6. Thereafter it took over the Premises and started using the same for the purposes of its commercial activities as laid down in the Lease Deed. In the wake of the corona virus pandemic, the entire hospitality sector faced huge financial setback and on account of the same, the petitioner sought to invoke the force majeure clause in the Lease Deed vide email dated March 27, 2020.
7. He stated that after detailed discussion with the representatives of the petitioner, the respondents while agreeing to the invocation of the force majeure clause agreed to amend the commercial understanding between the parties in the interim.
8. Mr. Panda submitted that the respondents were in breach in terms of Clause 11.2.1 of the Lease Deed, which obligated the respondents to obtain as well as maintain all requisite building approvals required for running the Premises as a commercial establishment for the purposes as laid down in the Lease Deed. It is submitted by him that even after repeated communications and grant of time as sought by the respondents, the respondents failed to furnish the complete set of documents as mandated under Clause 11.2.1 of the Lease Deed.
9. That while attempts were being made to get the breach of Clause 11.2.1 cured, the respondents suddenly and to the complete shock and dismay of the petitioner, issued a letter date June 03, 2020 demanding a sum of money by misrepresenting the clauses of the Lease Deed.
10. Thereafter, the respondents, vide notice dated June 23, 2020, invoked arbitration clause citing the existence of disputes between the parties arising under the Lease Deed and nominated a learned Retd. Judge of this Court as the sole Arbitrator to adjudicate the disputes between the parties in terms of the dispute resolution clause contained in the Lease Deed. It is also stated by him that the petitioner, however, could not respond to the said notice owing to various logistical constraints on account of the corona virus pandemic. Therefore, it is his submission that the recommendation of the respondents was not confirmed by the petitioner.
11. Mr. Panda stated that despite there being no confirmation from the petitioner or mutual agreement, the respo
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