The court upheld that an arbitral tribunal's decision to proceed ex parte is valid when a party fails to participate despite being duly notified, maintaining principles of procedural fairness.

JUDGMENT

[Hearing held through video conferencing]

Vibhu Bakhru, J. (Oral)

IA 5024/2021

1. Allowed, subject to all just exceptions.

OMP (COMM.) 141/2021 & I.A. 5023/2021

2. The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter the `A&C Act') impugning an arbitral award dated 24.12.2019 (hereinafter the `impugned award') passed by the Arbitral Tribunal comprising of a Sole Arbitrator.

3. The impugned award has been rendered in the context of disputes that have arisen between the parties in relation to a Lease Agreement dated 11.12.2017.

4. Briefly stated, the relevant facts that are necessary to address the controversy are as under:

5. The petitioner is a company incorporated under the Companies Act, 1956, and is engaged in real estate and other related business activities.

6. The petitioner and respondent no. 1 had entered into a Lease Agreement dated 11.12.2017 (hereafter `the Lease Agreement') in relation to a commercial property bearing Unit No. 302, 3rd Floor, HL Wings, Section XI (MLU), Pkt-4, Plot No. 2 Dwarka, New Delhi-110075. In terms of the said Lease Agreement, respondent No. 1 had agreed to run the said premises as a `Restaurant-Bar Lounge and Services' on behalf of M/s Manitya Hospitality Pvt Ltd (Respondent no. 2 Company), of which respondent no. 1 is a promoter.

7. In terms of the Lease Agreement, respondent no. 1 paid an amount of Rs.9,01,000/- as security deposit along with an additional deposit of Rs.4,86,000/- as an advance, to the petitioner.

8. Respondent No. 1 received possession of the aforesaid premises on 13.01.2018. It is the case of the respondents that soon thereafter, they faced difficulties in obtaining the requisite licenses and clearances for setting up the business despite assurances from the petitioner that all authorizations for running a Restaurant-Bar and Lounge are in place.

9. Respondent no.1 claims that it was impossible for it to run a Restaurant-Bar and Lounge at the leased premises and therefore, it was constrained to terminate the Lease Agreement on 06.07.2018 on account of fraud committed by the petitioner.

10. Thereafter, by a notice dated 06.12.2018, respondent no. 1 invoked the Arbitration Clause and a Sole Arbitrator was appointed by this Court on 22.05.2019 by referring the matter to the Delhi International Arbitration Centre (DIAC).

11. In its Statement of Claims filed before the Arbitral Tribunal on 20.08.2019, the respondents contended that the failure to set up a Restaurant Bar and Lounge at the leased premises was due to the petitioner's inability to make available the requisite licenses and authorizations as assured. The respondents further contended that due to the fraud and misrepresentation on account of the petitioner, it had incurred heavy losses and accordingly, claimed the following: (i) amount incurred towards paying security deposit for the premises amounting to Rs.9,01,000/-; (ii) amount incurred in relation to the extra deposit made by respondent no. 1 as an advance amounting to Rs.4,86,000/-; (iii) amount incurred towards purchasing stamp paper for registration of the Lease Agreement amounting to Rs.95,000/-; (iv) amount incurred towards engaging license consultants for securing the requisite licenses for using the premises amounting to Rs.1,00,000/-; (v) amount incurred on account of hiring a Restaurant Manager amounting to Rs.1,30,000/-; (vi) amount incurred towards hiring a Food Consultant amounting to Rs.1,00,000/-; (vii) amount incurred on account of civil, electrical, plumbing, fire, air