Landlord-tenant disputes are arbitrable, and the appointment of an arbitrator cannot be done unilaterally by one party.

JUDGMENT

Raj Mohan Singh, J. (Oral) - The petitioner has preferred this petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator to resolve the dispute between the parties arising out of lease agreement dated 30.09.2014.

2. Learned counsel for the petitioners submits that the petitioner No.1 is a partnership firm carrying on the business of hatchery, poultry and trading of cattle feed etc. The respondent No.1 is a company registered under the Companies Act, 1956 and is also engaged in the business of hatchery and poultry. The respondent No.2 is a bank from where petitioner No.1 has availed loan. All the assets of the petitioner No.1 in the premises are mortgaged in favour of the respondent No.2 by way of hypothecation. The infrastructure belonging to the petitioners was leased out in favour of the respondent No.1 for a period of seven years w.e.f. 20.10.2014. The date of expiry of the lease was 19.10.2021. During the initial period of five years from the date of agreement, there was a 'lock in period', whereby the first party was not entitled to terminate the lease agreement. The respondent No.1 did not adhere to the conditions of the lease deed and allegedly terminated the lease agreement on 01.01.2016 by taking away assets lying in the premises and without making payment of the dues/arrears of rent etc, which according to the learned counsel for the petitioners, had accumulated to the tune of Rs.1,75,00,000/- as on the relevant date. The said amount has now further swallowed in terms of payable interest thereon. The petitioners have already invoked the arbitration clause.

3. Notice of motion was issued on 26.08.2016. As per office report, the respondent No.1 was served way back in December 2017, but none has appeared on behalf of the respondent No.1 since then. This is evident from the interlocutory order dated 30.01.2020 passed in this case. Vide order dated 08.08.2022, the respondent No.1 was proceeded against ex parte and the case was fixed for arguments.

4. Learned counsel for the petitioners submits that even in terms of para No.49 of Vidya Drolia and others Vs. Durga Trading Corporation, (2021) 2 SCC 1, the Hon'ble Apex Court has held that the landlord-tenant disputes are arbitrable as the Transfer of Property Act does not forbid or foreclose arbitration. However, landlord-tenant disputes covered and governed by rent control legislation would not be arbitrable where specific Court or Forum has been given exclusive jurisdiction to apply and decide special rights and obligations. According to the learned counsel for the petitioners, the very nature of claim made by the petitioners (in terms of arrears of rent and damage caused to the property) the same would not be covered under the rent control legislation. The arbitration clause has already been invoked.

5. Learned counsel also refers to Sunil Kumar Sharma Vs. M/s Perfexa Solutions Pvt. Ltd., 2009 SCC Online P&H 889 to submit that the proceedings in the designated rent Court would be an independent cause of action and has nothing to do with the non-payment of lease agreement in pursuance of lease deed executed between the parties. Since the petitioners have claimed arrears of rent and amount payable towards the damage caused by the respondents in the premises, therefore, the dispute is to be adjudicated upon in terms of Clause 20 of the lease agreement. According to the aforesaid clause, sole Arbitrator is to be jointly appointed by the Zonal Manager, Bank of India, Chandigarh Zone and venue of Arbitration shall be at Panipat.

6. The objection raised by the petitioner was in the context of incompetence of the departmental person to conduct any arbitral proceedings in view of ratio laid down in TRF Limited vs. Energo Engineering Projects Limited, (2017) 8 SCC 377; Bharat Broadband Network Limited vs. United Telecoms Limited, (2019) 5 SCC 755; Perkins Eastman Architects DPC and another vs. HSCC (India) Limited, (2020) 20 SCC 7