Oral extensions of lease agreements do not sustain arbitration clauses; such clauses require written documentation to remain valid following the lease's expiration.

JUDGMENT :

MANOJ JAIN, J.

1. Appellant has taken exception to order dated 29.04.2024 passed by learned Trial Court whereby his application moved under Section 8 of Arbitration & Conciliation Act, 1996 has been dismissed.

2. For the sake of convenience and as per the nomenclature of the parties in the suit in question, I would be referring appellant herein as "defendant" and respondent herein as "plaintiff" in the present order.

3. Facts lie in a very narrow compass.

4. Plaintiff had filed a suit[Civil Suit No. 523/2022 titled Rahul Chaudhary Vs. Mukesh Khurana ] for possession, recovery of arrears of rent, damages/mesne profits along with interest.

5. In context of the controversy in question, it is imperative to take note of following relevant averments made by the plaintiff in such plaint:-

i. Plaintiff claimed himself to be sole and absolute owner of suit property[Side Portion of Farm No. 10, Ram Mandir Road, Vasant Kunj, New Delhi]

ii. Defendant approached him in the year 2012 and requested him to let out the suit property for residential purpose and accordingly, suit property was let out vide lease deed dated 17.09.2012.

iii. The duration of the lease was from 01.02.2013 to 31.01.2019 and the rate of rent was fixed as Rs. 2,75,000/- per month.

iv. Such unregistered lease deed, admittedly, contained arbitration clause.

v. Lease deed stood terminated on 31.01.2019 due to efflux of time and on the basis of request made by the defendant, the plaintiff agreed to let him occupy the let-out portion of suit property on payment of revised monthly rent of Rs. 3,25,000/-.

vi. Plaintiff requested the defendant to execute a fresh lease agreement to capture their understanding but he did not come forward and, therefore, in the absence of any fresh written contract between the parties, suit property was let out on month-to-month basis w.e.f. 01.02.2019 for a rent of Rs. 3,25,000/- per month.

vii. There was default in payment of rent and when the arrears accumulated to a substantial amount, keeping in mind the dilatory tactics adopted by the defendant in making payment of rent, plaintiff served him with legal notice dated 08.07.2022 directing him to handover peaceful and vacant physical possession of the suit property and asked him to pay arrears of rent.

viii. The arrears are sought w.e.f. 01.02.2019.

6. Defendant filed application under Section 8 of the Arbitration and Conciliation Act, 1996 contending that there was a clause in the "lease agreement" which provided settlement of disputes by an Arbitrator. Contention of the defendant was that after the expiry of the initial term of lease on 31.01.2019, the parties had “orally agreed” to extend the lease deed for another period of three years in terms of Clause 1(a) of the lease deed and thereafter it was further extended, once again, in the similar manner in March, 2022 for a further period of three years till 31.03.2025. Thus, according to the defendant, there were two verbal extensions and since defendant was acknowledged and permitted to continue to use the suit premises as tenant, lease agreement also stood extended and since lease deed did contain arbitration clause in writing, plaintiff ought to have taken steps for appointment of Arbitrator.

7. Learned Trial Court, after hearing both the sides came to the conclusion that there was no subsisting and written arbitration agreement between the parties and dismissed such application.

8. Such order is under challenge.

9. According to Mr. Tanmay Mehta, learned counsel for the defendant (appellant herein), the parties