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IN THE HIGH COURT OF DELHI
Rajiv Sahai Endlaw, Amit Bansal, JJ.
Indiana Travels Pvt. Ltd. - Appellant
Versus
Insion Private Limited - Respondent
FAO (COMM) 63 of 2021
Decided On : 08-03-2021
Courts cannot grant final relief as interim measures during arbitration proceedings, emphasizing the necessity to respect arbitration agreements between parties.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 37(2) and 9 - Commercial Courts Act, 2015 - Appeal against non-grant of Receiver appointment under the Arbitration Act amid ongoing arbitration proceedings. (Paras 3, 4, 6, 11, 12, 14)
(B) Interim Measures - Court cannot grant final relief under the guise of interim measures; the dispute must be resolved by the Arbitral Tribunal. (Paras 11-15)
(C) Objections to Court Jurisdiction - Parties must pursue agreed arbitration clauses for dispute resolution rather than seek court intervention unless justified. (Paras 12, 14, 18)
Facts of the case:
Appellant sought reliefs under the Arbitration Act due to tenant's failure to pay rent amid lockdowns, including appointment of Receiver and payment of arrears. (Paras 5-7)
Findings of Court:
The Commercial Court could not grant a final relief in the guise of interim measures and emphasized arbitration for resolution. (Paras 11, 15, 18)
Issues: Whether the court could appoint a Receiver when arbitration was in place and whether there was justification for seeking interim measures.
Ratio Decidendi: The court held that interim measures cannot equate to a final resolution and that parties must utilize the Arbitral Tribunal as per their agreement. (Paras 11-15)
Result: Appeal dismissed.
| Table of Content |
|---|
| 1. interim measures and reliefs in rental disputes (Para 3 , 5 , 6 , 7 , 8) |
| 2. default in payment leads to appointment of receiver (Para 9 , 10) |
| 3. court's power over interim measures under arbitration act (Para 11 , 12 , 13 , 14 , 15) |
| 4. purpose of receiver's appointment questioned (Para 16 , 17) |
JUDGMENT
[VIA VIDEO CONFERENCING]
Rajiv Sahai Endlaw, J.
CM APPL. 9203/2021 (of the appellant for exemption)
1. Allowed, subject to all just exceptions and as per extant Rules.
2. The application is disposed of.
FAO (COMM) 63/2021 and CM APPL. 9202/2021 (of the appellant for interim relief)
3. This appeal, under Section 37 (2) of the Arbitration and Conciliation Act, 1996 read with Section 13 of the COMMERCIAL COURTS ACT , 2015, impugns the order dated 11th February, 2021 of the Commercial Court on an application for interim measures, under Section 9 of the Arbitration Act, being OMP (COMM) No. 611/2020 preferred by the appellant.
4. We have heard the counsel for the appellant at length.
5. The Arbitration Agreement between the appellant and the respondent is contained in a registered Lease Deed dated 7th March, 2019, for a period of 9 years, executed by the appellant as landlord in favour of the respondent tenant with respect to Flat No. 11, 1st and 2nd Floor, Khan Market, New Delhi. The application under Section 9 of the Arbitration and Conciliation Act, from the order wherein this appeal arises, was filed by the appellant, complaining of non-payment of agreed rent by the respondent tenant and seeking reliefs of, (i) directing the respondent tenant to pay arrears of rent and to continue to pay future rent to the appellant; (ii) appointment of a Receiver to take over possession of the tenanted premises; (iii) direction to the respondent tenant and its directors to file a list of their movable and immovable assets; and, (v) restraining the respondent tenant from alienating, transferring and in any manner creating third party interest in movable and immovable assets including the tenanted premises.
6. The Commercial Court, vide the impugned order, though has granted the reliefs of directing the respondent tenant to pay Rs.25,00,000/- to the appellant landlord and though has restrained the respondent tenant from creating third party rights in the tenanted premises, but has not granted the other reliefs.
7. The appellant, in this appeal, is aggrieved from non-grant of the relief of appointment of Receiver with respect to the premises.
8. The Commercial Court has declined appointment of Receiver, reasoning (i) that there was a dispute between the parties with respect to payment of rent during the national and local lock down owing to the prevalent pandemic; (ii) that the term of tenancy had not expired by efflux of time; (iii) that on opening of the lock down, the restaurant business being carried on by the respondent tenant in the tenanted premises had started picking up; (iv) that the respondent tenant had shown intention to clear the arrears and pay reasonable rent; (v) Arbitrator had already been appointed to adjudicate the disputes between the parties; and, (vi) that there was nothing to indicate that the respondent tenant was acting in a manner so as to defeat the realisation of the monetary award/decree which may be passed by the Arbitrator in favour of the appellant.
9. The contention of the counsel for the appellant is, that once the respondent tenant was in default of payment of rent and had not complied with the directions for payment of rent, appointment of Receiver of the property should have axiomatically followed. Strong reliance is placed on S.C. Mehta Vs. Aviral Kaushik, 2007(93) DRJ 769: followed in order dated 4th April, 2014 of this Court in OMP 146/2014 titled Asha Dass Vs. Fiorano Motors LLP, both of Single Judges of this Court.
10. In S.C. Mehta supra, the tenant did not comply with the direction for payment of rent issued in exercise of powers under Section 9 of the Arbitration Ac
