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2021 Supreme(P&H) 1741

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Sudhir Mittal, J.
Innovative Facility Solutions Pvt. Ltd. – Appellant
Versus
M/s AEC Digitial Studio Private Limited & Anr. – Respondents
F.A.O. No. 2917 of 2020
Decided On : 10-01-2021

Advocates appeared:
For the Parties : Mr. Himesh Thakur, Mr. Akhil Sachar, Mr. Nakul Gandhi, Mr. Rubina Virmani, Mr. Karan Valecha

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 9 - Petition for interim relief - Appeal against the order impugning the rejection of reference to arbitration based on unregistered sub-lease agreement - Not sustainable as the applicant failed to show intent to arbitrate - Court highlighted that interim relief under Section 9 necessitates an intention to commence arbitration proceedings - Interim orders under Section 9 cease if no arbitration takes place within a reasonable time - Previous judgments referenced include Sundaram Finance Ltd. vs. NEPC India Ltd., Firm Ashok Traders and Minochar @ Minoo Aspandyar Irani. (Paras 5, 10, and 12)

(B) The applicant may seek interim relief only if there is a manifest intention to refer disputes to arbitration; failure to show such intent negates entitlement to relief. (Paras 10-11)

(C) Legal stance established that a party cannot approbate and reprobate concerning the same matter. (Para 5)

Facts of the case:
The appellant challenged the refusal to refer disputes related to an unregistered sub-lease agreement for office space amidst COVID-19 lockdown and associated rent disputes. The sub-lessee claimed Force Majeure against rental payments while seeking interim relief.

Findings of Court:
The impugned order is set aside for being unsustainable due to failure to examine the intent of arbitration, leaving other issues open for future consideration.

Issues: Whether the impugned order correctly assessed the intention to refer the dispute to arbitration despite objections regarding the registration of the sub-lease.

Ratio Decidendi: The court ruled that without clear intent or action towards arbitration proceedings, relief under Section 9 of the Arbitration Act cannot be maintained.

Result: The appeal is allowed, and the impugned order is set aside.

Table of Content
1. dispute arising from lease agreement due to covid-19. (Para 1 , 2 , 3)
2. arguments regarding the validity of agreements and arbitration intentions. (Para 4 , 5 , 6)
3. court's analysis of the intention to arbitrate. (Para 7 , 10 , 11)
4. legal precedents on arbitration and interim measures. (Para 8 , 9)
5. order set aside; sub-lessee's option for interim relief. (Para 12 , 13)

Judgment

Mr. Sudhir Mittal, J.:- This appeal has been filed against order dated 08.10.2020 passed by the learned Additional District Judge, Gurugram in a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’). The appellant is the Maintenance Agency (hereinafter referred to as ‘MA’). Respondent No.1 is the sub-lessee under sub-lease dated 06.02.2018 (hereinafter referred to as ‘the sub-lessee’) and respondent No.2 is the sub-lessor under said sublease deed (hereinafter referred to as ‘the sub-lessor’). The sub-lease dated 06.02.2018 is in respect of area measuring 7045 square feet on the fourth floor of a building known as AIHP Horizon and was let out for the purpose of office use of IT/ITES.

2. The aforementioned sub-lease deed is an unregistered document. Lock in period of three years has been provided in terms thereof. Interest free refundable deposit payable thereunder was Rs. 20,00,780/- i.e. four months rent in terms of Clause 5.1. The sub-lessee was bound to execute a separate maintenance agreement with the appointed maintenance agency on the terms and conditions stipulated by the said maintenance agency. Thus, maintenance agreement dated 01.06.2018 was executed between the sub-lessee and the MA and the same is also on registered document.

3. Difficulties arose amongst the parties on account of order dated 23.03.2020 issued by the State of Haryana ordering closure of all commercial establishments due to the outbreak of COVID-19 pandemic. Vide order dated 24.03.2020, Ministry of Home Affairs ordered a country wide lock down. Thus, rent could not be paid for March 2020. Some maintenance charges were also in arrears. The sub-lessee issued notice dated 15.04.2020 invoking Clause 12.1 of the sub-lease agreement which gives a right to sub-lessee not to pay rent for the period the area under the sub-lease could not be used on account of Force Majeure. This was responded too by the sub-lessor vide its letter dated 16.04.2020 objecting to invocation of the said clause on the ground that the COVID-19 pandemic was not included in the definition of Force Majeure. Ultimately, the sub-lessor issued notice dated 14.06.2020 terminating the sub-lease followed by notice dated 27.06.2020 invoking Clause 9.1 of sub-lease for referring the dispute to arbitration. The sub-lessee responded vide letter dated 17.07.2020 and inter alia submitted that no action could be taken under the sub-lease as the same was insufficiently stanked and unregistered. Instead refund of Rs. 15,00,195/- was demanded, after deduction of rent for the month of March 2020 from the security amount. I have been informed that on refusal to refer the dispute to arbitration, a petition under Section 11 of the Act has been filed in the High Court and the same is pending. The sub-lessee is hotly contesting the said petition on the ground of sub-lease deed being unregistered, apart from other grounds. Meanwhile on account of the dispute, the sub-lessee was not permitted to enter its office space or to remove its belongings/equipments/movable property therefrom. Thus, a petition under Section 9 of the Act was filed for grant of interim relief and the same has been allowed.

4. This appeal has been filed by MA and along therewith, e-mails dated 12.08.2019, 19.08.2019, 26.08.2019, 02.09.2019, 24.09.2019, 30.09.2019 and 01.10.2019 have been annexed to establish that the sub-lessor had all along been requesting the sub-lessee to come forward to pay its share of stamp duty and registration charges so that the sub-lease deed may be r

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