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2023 Supreme(Del) 1415

IN THE HIGH COURT OF DELHI AT NEW DELHI
Yashwant Varma, J.
S. S. Con-build Pvt. Ltd. – Appellant
Versus
Delhi Development Authority – Respondent
Arb.P. 567 of 2022, I.A. 16339 of 2022 (Delay in Rej.), I.A. 21040 of 2022 (E.H.), I.A. 409 of 2023 (Direction) & O.M.P.(I) 6 of 2022, I.A. 12690 of 2022 (E.H. Disposal of Pet)
Decided On : 09-05-2023

Advocates appeared:
Mr. Kunal Tandon, Mr. Saurabh Dev, Ms. Madhavi Khare, Advocates, for the Petitioner.
Mr. Dayan Krishnan, Senior Advocate with Mr. Sanjay Katyal, SC with Ms. Chand Chopra, Mr. Anish Dhingra, Mr. Nakul Ahuja, Mr. Sukhrit Seth, Mr. Nihal Singh and Mr. Gautam Yadav, Advocates, for DDA.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 9 and 11 - Public Premises (Eviction of Unauthorised Occupants) Act, 1971 - Section 15 - Non-arbitrability of disputes concerning unauthorized occupation of public premises - Disputes regarding lease determination and ground rent claims are non-arbitrable under the PP Act - The Court held that the Estate Officer has exclusive jurisdiction over such matters and parties cannot contract out of statutory provisions - Disputes relating to public premises must be adjudicated by the Estate Officer as per the PP Act, thus rendering arbitration requests void. (Paras 1-52)

Facts of the case:
The petitioner, a lessee, challenged the DDA’s demand for arrears of ground rent and the determination of the lease, seeking arbitration. The DDA maintained that the disputes were non-arbitrable as per the PP Act, which governs public premises.

Findings of Court:
The Court ruled that issues of eviction, ground rent, and lease determination are exclusively governed by PP Act, which prohibits arbitration, confirming the Estate Officer’s sole jurisdiction over these issues.

Issues: Whether disputes emerging from unauthorized occupation of public premises and issues related to lease termination are subject to arbitration.

Ratio Decidendi: The Court concluded that the PP Act provides a complete adjudicatory mechanism that must be followed, with exclusive jurisdiction given to the Estate Officer for related disputes, thus excluding arbitration clauses. The illegitimacy of the attorney's role in these circumstances further restricts arbitration.

Result: The petition seeking arbitration was dismissed, affirming that disputes fell under the PP Act and were thus non-arbitrable.

Table of Content
1. petition history and facts of lease (Para 1 , 2 , 3 , 4 , 5)
2. objections against arbitrability raised (Para 6 , 12 , 16 , 18 , 20)
3. nature of estate officer's jurisdiction (Para 7 , 10 , 11 , 19 , 21 , 37 , 39 , 41 , 44 , 47)
4. judicial precedents on non-arbitrability (Para 13 , 14 , 15 , 22 , 25 , 26 , 33 , 34)
5. court's final ruling on arbitration requests (Para 49 , 51)

ORDER

1. Since these two petitions under Sections 9 and 11 of the Arbitration and Conciliation Act, 19961[The Act] between the parties emanate from a common dispute and were heard together, they are being disposed of by this common judgment.

2. In the Section 9 petition, the petitioner had sought reliefs in respect of a notice dated 29 May 2018 issued by the Delhi Development Authority2[DDA] raising a demand of Rs.25,41,16,487/- towards purported arrears of ground rent. Additionally, an interim order of protection was sought in respect of the communication dated 25 February 2020 issued by the DDA determining the Lease Deed dated 10 May 20073[Lease Deed] . The petition under Section 11 of the Act seeks constitution of an Arbitral Tribunal in terms of the provisions contained in the Lease Deed and which contemplates the resolution of disputes by way of arbitration.

3. For the purposes of disposal of the present petitions, the following essential facts may be noticed. On 10 May 2007, a plot admeasuring 6085 sq. meters bearing Plot No.-1, BG-I and BG-II, Paschim Puri, New Delhi, came to be leased to the petitioner. Undisputedly, the grant was by way of a perpetual lease. In terms of the provisions of the Lease Deed, the petitioner was liable to pay ground rent @ 2.5% of the premium and which roughly translated to Rs.2.50 crores annually. During the tenure of the lease, the petitioner on 12 January 2015 applied for the conversion of the leased premises from leasehold to freehold. The aforesaid application is stated to have been made in terms of an order dated 14 February 1992 read with a Circular dated 21 January 1993 issued by the Ministry of Urban Development (Lands Division) in the Union Government. Along with the said application, the petitioner also deposited Rs.3,46,08,283/- as conversion charges. The petitioner is also stated to have been informed of being in arrears in the sum of Rs. 5,32,09,406/- towards ground rent and interest accrued thereon. According to the petitioner, while the application for conversion was pending, it had deposited a further sum of Rs. 7 crores towards outstanding ground rent along with interest accrued thereon by 29 August 2016.

4. It was the case of the petitioner that in terms of a Circular dated 07 September 2005, the petitioner was liable to pay ground rent only till the submission of the conversion application. In the course of consideration of the said conversion application, DDA appears to have undertaken a computation exercise with respect to the total monies which according to it was liable to be paid for the purposes of conversion from leasehold to freehold. In terms of a Demand Notice of 29 May 2018, DDA found that the petitioner was liable to pay Rs. 25,41,16,487/- towards balance conversion charges, ground rent and interest accrued thereon. The said demand notice was followed by a Show Cause Notice dated 26 October 2018 calling upon the petitioner to explain why its application for conversion be not rejected since it had failed to clear outstanding dues. The petitioner in response to the same, questioned the computation exercise as undertaken by DDA on various grounds. Thereafter, DDA came to issue yet another Show Cause Notice to the petitioner on 29 July 2019 calling upon the petitioner to show cause why its lease be not determined consequent to its failure to clear all outstanding liabilities. Upon receipt of the said notice, the petitioner in terms of its letter dated 08 August 2019 reiterated its objection to the computation of arrears by DDA. On 11 November 2019, DDA proceeded to issu

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