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IN THE HIGH COURT OF DELHI
Sanjeev Narula, J.
Pelican Grand Motels Private Limited - Appellant
Versus
Pelican Grand Motels - Respondent
O.M.P. (COMM) 478 of 2020
Decided On : 02-08-2021
The court upheld that lease-hold rights remain with the original owners unless a valid transfer occurs, emphasizing the importance of documented agreements in property disputes.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34(3) - The court condoned a delay in filing the petition by 28 days in relation to an arbitral award - The sole arbitrator found that the claimant partnership firm maintained leasehold rights to a property and the respondent had no ownership rights. (Paras 1, 8, 10)
(B) Lease Agreements - The lease-hold rights of a property remain with the original holders unless explicitly transferred - The court held that the alleged unanimous resolution purportedly transferring rights was invalid as it lacked lawful execution. (Paras 12 - 16)
Facts of the case:
The dispute arose over leasehold rights between the parties regarding land leased for hotel construction, with the arbitrator ruling in favor of the claimant firm.
Findings of Court:
The arbitrator declared the claimant as the sole lessee and that the respondent company had no valid leasehold or ownership rights over the disputed property.
Issues: The main issues include the validity of the resolution transferring the lease-hold rights and the parties’ respective ownership claims to the property.
Ratio Decidendi: The court found that without documented and lawful transfer, leasehold rights remain with the original party and that findings based on evidence cannot be disturbed lightly.
Result: Petition dismissed.
| Table of Content |
|---|
| 1. delay condoned in filing the petition. (Para 1 , 2) |
| 2. dispute regarding lease-hold rights. (Para 3 , 4 , 5 , 6) |
| 3. arguments on lease-hold transfers and resolutions. (Para 7 , 8 , 9) |
| 4. court's analysis of property rights. (Para 10 , 11) |
JUDGMENT
[VIA VIDEO CONFERENCING]
Sanjeev Narula, J. (Oral):
I.A. 8332/2020(under Section 34 (3) of the Arbitration And Conciliation Act, 1996 for condonation of delay in filing the petition)
1. The impugned Arbitral Award is dated 31st October, 2019. The filing of the petition is delayed by 28 days beyond three months stipulated under Section 34 (3) of the Arbitration and Conciliation Act, 1996 [hereinafter `the Act']. Petitioner has filed an affidavit explaining the delay. For the grounds and reasons stated therein, the application is allowed; delay of 28 days is condoned.
2. Accordingly, the application stands disposed of.
O.M.P. (COMM) 478/2020 &I.A. 8333/2020(for stay of impugned award)
3. The present petition under Section 34 of the Act has been filed by the Petitioner seeking setting aside of the impugned Arbitral Award dated 31st October, 2019 [hereinafter, `Award'] passed by the Sole Arbitrator wherein the Respondent (Claimant therein) was declared as the sole and absolute lease holder of the subject-property under the Lease Deed dated 7th July. The Petitioner (Respondent therein) was found to have no lease-hold right/ ownership over the subject-property.
THE PARTIES
4. The Petitioner- Pelican Grand Motels Private Limited, is a private limited company incorporated on 7th December, 2010 under the Companies Act, 1956 with the Registrar of Companies [hereinafter, `PGMPL'] and the Respondent- Pelican Grand Motels is a partnership firm registered on 29th April, 2008 with the Registrar of Firms, initially comprising of two partners, Sh. Yogesh Kumar Gupta and Smt. Vijay Laxmi, later, five more partners were inducted on 1st October, 2010 [hereinafter, `PGM/ the Firm'].
THE DISPUTE
5. In the arbitration, the dispute between the parties pertained to a parcel of land situated at Karnal, Haryana which was owned by Sh. Yogesh Kumar Gupta and Smt. Vijay Laxmi who were the original partners of PGM, in their individual capacity. They executed a Lease Deed dated 7th July, 2008 [w.e.f. 6th July, 2005] in favour of PGM for a period of 30 years. The Firm permitted PGMPL, to construct a hotel on the said land.
6. Subsequently, when PGM (Claimant therein) realized that the directors of PGMPL were misleading people with regard to the lease-hold rights of the property, they filed a civil suit for injunction and declaration against PGMPL [C.S. No. 954/2019 before Sh. Pawan Kumar, Court of Civil Judge, Senior Division, Karnal]. During the pendency of the suit, parties agreed to go for arbitration for adjudication of their disputes regarding the lease-hold rights relating to the afore-said property. In arbitration, the case of PGM (Claimant therein), inter-alia, was that the permission granted to PGMPL for construction of a hotel was subject to the condition that PGM alone shall continue to have the lease-hold rights over the land during the lease period, in terms of Lease Deed dated 7th July, 2008. Lease-hold rights of the property continue with PGM. The reliefs sought in the arbitration read as follows: -
"i. to pass an award declaring that the claimant partnership firm is lessee of the suit property as per lease deed, dated 07.07.2008 for a period of 30 years w.e.f. 06.07.2005; and
ii. to pass an award for permanent injunction restraining the respondent company, its directors, employees, agents, servants etc. from transferring possession or creating any third party rights/interests the property in question in respect of the leasehold rights in the property in question, and
iii. to pass an award declaring that third party right/interest, if any, created by the respondent company to prejudice and affect the leasehold rights of the claimant partnership firm in the property in ques
