An arbitration agreement within a lease deed remains enforceable even if the deed is unregistered, reflecting the separability doctrine.

JUDGMENT

[VIA VIDEO CONFERENCING]

Sanjeev Narula, J. (Oral):--The background facts of the case are that the Petitioner executed a Lease Deed dated 15th December, 2017 in favour of the Respondent in respect of a property situated at Plot No. 44, Sector 44, Gurugram, Haryana-122001, for a period of 9 years with a lock-in period of 36 months, beginning from 01st November, 2017 to 31st October, 2020. The relevant clause under the said Deed, containing the arbitration agreement between the parties, reads as follows:

"All disputes and difference of whatsoever nature arising between the parties with relation to this Agreement, shall be referred to the arbitration of mutually agreed sole arbitrator. If the parties hereto fails to agree on the name of sole arbitrator, then both parties shall be entitled to appoint one arbitrator each and the two arbitrators so appointed, shall appoint the third presiding arbitrator. The seat/venue of the arbitration shall be at New Delhi and same shall be governed by the provision of the Arbitration and Conciliation Act, 1996 or any statutory modification or re-enactment thereof the time being in force. Decision of such Arbitral Tribunal shall be final and binding an language of arbitration shall be English."

2. It is contended that the Respondent did not pay the fixed monthly rent for the period of 16th March, 2020 to 06th June, 2020 and unilaterally decided to vacate the premises on 06th June, 2020, which is before the expiry of the lock-in period. In such circumstances, Petitioner contends that the Respondent is in breach of the terms of the Lease Deed and is inter-alia liable to pay: (i) the rent for the unexpired lock-in period including arrears of rent; (ii) TDS for Financial Year 2020-21; (iii) unpaid electricity and diesel bills; and (iv) interest on the late payment of monthly rent. The aforesaid disputes were raised by the Petitioner in a legal notice issued to the Respondent on 16th June, 2020. Respondent replied on 01st July, 2017 stating that the lease was a month-on-month tenancy without a lock-in period on account of non-registration of the Lease Deed by the Petitioner.

3. Petitioner invoked the Arbitration Clause contained in the Lease Deed vide notice dated 23rd December, 2020 and nominated the name of a retired Additional District Judge for appointment as a Sole arbitrator. The Respondent vide letter dated 07th January, 2021 declined reference of disputes to arbitration.

4. In the circumstances noted above, the instant petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of a Sole Arbitrator. Although there is no reply on behalf of the Respondent, Mr. Bakshi, counsel for the Respondent, has been heard extensively on the objections to the present petition. He does not deny the existence of the Lease Deed, but contends that the present petition is not maintainable as the Lease Deed is an unregistered and unstamped document. Elaborating this contention, Mr. Bakshi submits that since the agreement is not in compliance with statutory provisions of the Indian Stamp Act, 1899 and the Registration Act, 1908, the agreement is unenforceable. These prerequisites have to be necessarily complied with before the court can proceed to appoint an arbitrator, and as such the Court should impound the Lease Deed and send the same to the Collector of Stamps for the purpose of adjudication and collection of deficient stamp duty. Only once that exercise is complete, should the Court look into the document and grant appropriate relief. He further contends that the Lease Deed is inadmissible for want of registration, and therefore, all the terms therein, including the arbitration agreement, are inadmissible and unenforceable. Thus, the Petitioner cannot rely upon the Lease Deed in question for seeking appointment of an Arbitrator. In support of his submission, he relies upon the judgment of the Supreme Court in M/S. Dharmaratnakara Rai Bahadur v. M/S