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2021 Supreme(Del) 1787

IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Sahai Endlaw, Amit Bansal, JJ.
Frigorifico Allana Private Limited - Appellant
Versus
East Delhi Municipal Corporation - Respondent
F.A.O. (OS) (Comm) No. 34 of 2021, 35 of 2021
Decided On : 24-02-2021

Advocates appeared:
Neeraj Malhotra, Advocate, Mukesh Rana, Advocate, Biji Rajesh, Advocate, A.D.N. Rao, Advocate, Akhil Sibal, Advocate

The main legal point established in the judgment is that the rights and obligations of the parties under the agreements, as well as the principles of law regulating the grant or refusal of interim orders, must be interpreted and applied in accordance with the relevant legal provisions and precedents.

Headnote:

Arbitration Act - License Agreement - Lease Agreement - Section 9 of the Arbitration and Conciliation Act, 1996 - [Ghazipur Slaughter House, License Agreement, Lease Agreement, Section 9 of the Arbitration and Conciliation Act, 1996] - The court discussed the interpretation of the License Agreement and Lease Agreement, and the applicability of Section 9 of the Arbitration and Conciliation Act, 1996. The court highlighted the restrictions on interference in appeals under Section 37 and the scope and power of the Appellate Court in appeals against interim orders. The court also considered the rights and obligations of the parties under the agreements and the principles of law regulating the grant or refusal of interim orders.

Fact of the Case:

The appeals challenged the order of the Commercial Division of the Court in relation to the License Agreement and Lease Agreement between the appellant and the respondent East Delhi Municipal Corporation (EDMC) under Section 9 of the Arbitration and Conciliation Act, 1996. The appellant sought interim measures to restrain the respondent from acting upon its letter directing the appellant to vacate the premises.

Finding of the Court:

The court found that the appellant was aware of the tender process and had participated in it, and that the respondent was entitled to transfer possession as per the terms of the agreements. The court also observed that the appellant's plea for a four-month notice period was not justified under the agreements and legal precedents.

Issues: Interpretation of the License Agreement and Lease Agreement, applicability of Section 9 of the Arbitration and Conciliation Act, 1996, and the rights and obligations of the parties under the agreements.

Ratio Decidendi: The court held that the appellant's plea for a four-month notice period was not justified under the agreements and legal precedents, and that the respondent was entitled to transfer possession as per the terms of the agreements.

Final Decision: The court dismissed the appeals, finding no reason within the confines of law for interfering with the order of the Commercial Division.

JUDGMENT

Rajiv Sahai Endlaw, J. - CMS No.7613/2021 & 7614/2021 in FAO(OS)(COMM) 34/2021 & CMs No.7616/2021 & 7617/2021 in FAO(OS)(COMM) 35/2021 (all for exemption)

    1. Allowed, subject to just exceptions and as per extant rules.

    2. The applications are disposed of.

      FAO(OS) (COMM) 34/2021 & CM No.7612/2021 (for ad-interim relief) & FAO(OS) (COMM) 35/2021 & CM No.7615/2021 (for ad-interim relief)

      3. The appeals impugn the common order dated 16th February, 2021 of the Commercial Division of this Court in O.M.P.(I)(COMM) No.60/2021 and O.M.P.(I)(COMM) No.61/2021, both preferred by the appellant, under Section 9 of the Arbitration and Conciliation Act, 1996, with respect to arbitration clause in the License Agreement dated 4th August, 2009 and Lease Agreement dated 13th August, 2010 between the appellant and the respondent East Delhi Municipal Corporation (EDMC). The appellant, vide the said applications under Section 9 of the Arbitration Act sought interim measure of restraining the respondent EDMC from acting upon its letter/office order dated 2nd February, 2021 directing the appellant to vacate "the subject premises" by 18th February, 2021. Vide the impugned order, the Commercial Division has partly allowed the Section 9 applications by extending "the date for completion of the divestment process" till 4th March, 2021. It is the contention of the appellant that the appellant, in accordance with the Lease Agreement and License Agreement, is entitled to time of four months for vacation and/or for completion of the divestment process and in these appeals seeks the said time of four months.

      4. The counsel for the respondent EDMC appears on advance notice and considering the urgency expressed, we have heard the senior counsels for the appellant and the counsel for the respondent EDMC finally on these appeals.

      5. We may at the outset observe that the scope of interference in appeals under Section 37, the context of Section 37(1)(c), has been held to be much restricted. As far as appeals under Section 37(1)(b), as the present appeals are, are concerned, since the order appealed against is an interim order, which is largely discretionary, the law laid down in Wander Ltd. Vs. Antox India (P) Ltd.,1990 Supp1 SCC 727 relating to scope and power of Appellate Court in appeals against interim order, would apply and interference with the discretion exercised by the Court at the first instance would be permissible only when discretion is shown to have been exercised arbitrarily or capriciously or perversely or where the Court has ignored the settled principles of law regulating the grant or refusal of interim orders. Reference may be made to judgment dated 27th November, 2020 in FAO(OS)(COMM) No.136/2019 titled Sepco Electric Power Construction Corporation Vs. Power Mech Projects Limited.

      6. Under the License Agreement dated 4th August, 2009, the Ghazipur Slaughter House was licensed by the erstwhile Municipal Corporation of Delhi to the appellant, with effect from 4th August, 2009, for a period of ten years. The Carcass Utilization-cum-Rendering Plant was also leased out to the appellant, from 13th August, 2010, initially for a period of five years and which was further extended from 13th August, 2015 upto 3rd August, 2019, to be co-terminus with the lease of the Ghazipur Slaughter House. The lease was extended from 4th August, 2019 to 3rd February, 2020 and thereafter from 4th February, 2020 to 3rd May, 2020 and yet again from 4th May, 2020 to 3rd May, 2022 or till finalisation of tender, whichever is earlier. Tenders were invited by the respondent EDMC and the appellant also made a bid. The financial bids were opened on 17th December, 2020 and tender was finalized and the respondent EDMC, on 19th January, 2021, signed a lease with respect to Ghazipur Slaughter House and Carcass Utilization-cumRendering Plant and other facilities, with Qureshi International DS-MaxFresh N Frozen Consortium. The respondent EDMC, vide communication dated 2nd February,

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