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IN THE HIGH COURT OF JHARKHAND AT RANCHI
SUJIT NARAYAN PRASAD, J.
The Vegetable Growers Cooperative Society Ltd. – Appellant
Versus
The Managing Director, the Jharkhand State Adivasi Cooperative Marketing Federation Ltd. - Respondent
Arbitration Application No.29 of 2020
Decided on : 04-05-2022
Arbitration - Lease Dispute - Arbitration & Conciliation Act, 1996, Section 11(6)
Fact of the Case:
The petitioner-applicant entered into a lease deed with the respondent for a cold storage. Dispute arose when the respondent refused to grant exemption from paying lease rent due to the COVID-19 pandemic. The petitioner invoked the arbitration clause under Clause 21 of the lease deed for appointment of an independent Arbitrator.
Finding of the Court:
The court found that the petitioner-applicant failed to follow the procedure stipulated in the lease deed for appointment of an Arbitrator. The court dismissed the Arbitration Application but allowed the petitioner to make an appropriate application in accordance with the lease deed.
Issues: Failure to follow the procedure for appointment of Arbitrator under the lease deed, independence and impartiality of the named Arbitrator.
Ratio Decidendi: The court emphasized adherence to the terms of the agreement and the need to exhaust agreed procedures before resorting to court intervention. The court also highlighted that mere employment status of the Arbitrator does not ipso facto raise presumption of bias or partiality.
Final Decision: The Arbitration Application was dismissed, but the petitioner was given the option to make a new application in accordance with the lease deed.
JUDGMENT :
The matter has been heard through video conferencing.
2. The matter has been listed under the heading “Orders (with defect)” as the office has pointed out six defects. The defect No.1 pertains to filing of Court fee.
3. Learned counsel for the applicant-petitioner undertakes to deposit the Court fee within a week.
4. So far as other defects are concerned, the said defects are ignored.
5. With the consent of the learned counsel for the petitioner-applicant, this matter has been heard on merit.
6. Office is directed to supply the certified copy of this order subject to deposit of the Court fee as undertaken to be deposited within a week from today.
7. The instant application is under Section 11(6) of the Arbitration & Conciliation Act, 1996 for appointment of an independent and impartial Sole Arbitrator in pursuance of Clause 21 of the Lease Deed executed between the parties in order to adjudicate the dispute.
8. The facts of the case, as per the pleading made in the instant Arbitration Application, read hereunder as:-
The petitioner-applicant Society entered into a lease deed with the respondent for the cold storage at Bero on lease for a period of nine months for a sum of Rs.1,50,000/- from March, 2011 to November, 2011 and security deposit of Rs.3,00,000/-.
It is the case of the applicant that though the agreement was for a period of nine months, the same was extended from time to time for a period upto March, 2014. Thereafter, again the cold storage was leased out to the petitioner-applicant for a further period of five years from 01.01.2014 to 20.11.2018 on payment of security amount of Rs.6,00,000/- and annual rent of Rs.6,15,000/-.
After expiry of the aforesaid lease agreement, another lease deed was executed between the parties in the year 2018 for a further period of five years.
It is the case of the petitioner-applicant that right from 17.05.2020, the applicant had been making requests to the respondent to grant exemption from paying lease rent for the financial year 2019-20 on account of the fact that it is the prime season of potato procurement and due to outbreak of pandemic COVID-19, against the capacity of 2000 MT only 25 MT of agricultural products have been kept in the cold storage. Again vide letter dated 16.06.2020 and 01.07.2020 request was made to grant exemption from paying rent for the financial year 2019-20. Similar request was also made vide letter dated 11.09.2020 and 16.09.2020.
On 23.09.2020, the Managing Director of the respondent Society issued a letter to the petitioner-applicant informing that there is no provision in the agreement regarding grant of exemption from paying rent and, as such, the request for exemption made by the applicant cannot be granted. The Managing Director, informed the applicant that he is liable to pay arrears of rent to the tune of Rs.14,47,785/- and accordingly the applicant was directed to pay the aforesaid amount within seven days from the date of receipt of copy of the letter.
The petitioner-applicant, thereafter, sent a notice on 19.10.2020 by email and on 20.10.2020 by registered post to the respondent showing its intention of invoking the arbitration clause as provided under Clause 21 of the lease deed and for appointment of Arbitrator even naming a retired Hon’ble Judge of the High Court.
The applicant, having no other option but to invoke Clause 21 of the lease deed which contains a condition for arbitration for settlement of dispute between the parties.
The petitioner-applicant gave notice as per the condition stipulated under the agreement but when no response was given to the aforesaid notice, the instant application under Section 11(6) of the Arbitration and Conciliation Act, 1996 has been filed.
9. Mr. M.K.Roy, learned counsel appearing for the petitioner-applicant, has submitted though the request for appointment of sole arbitrator, in view of the arbitration clause as contained in Clause 21 of the lease deed, has been made but after expiry of reasonable period, s
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