Disputes regarding the refund of security deposits are arbitrable and do not fall under the exclusive jurisdiction of the Small Causes Court as per the relevant legislation.

ORDER:

1. By virtue of this application under section 11 of the Arbitration and Conciliation Act, 1996 (the Act, 1996), the petitioner seeks appointment of an Arbitrator to arbitrate all the disputes and differences that have arisen between the parties in relation to the Leave and License Agreement dated 2nd July, 2012. 2. The application arises in the backdrop of the following facts:-

a] The applicant is a company incorporated under the Companies Act, 1956. It is engaged in the business of dealership of commercial vehicles. The applicant was looking for a premises to operate a workshop. The respondent who is the holder of a leasehold land being Survey No. 193, CTS No. 416 of village Kurla, admeasuring 4664.46 sq.ft having a workshop shed at S.K. Compound, Kurla village at Kurla (the subject premises) offered the subject premises to the applicant on leave and license basis.

3. Pursuant to the negotiations a Leave and License Agreement came to be executed between the parties on 2nd July, 2012. The principal terms of the agreement were that the term of license was five years from 1st July, 2012 to 30th June, 2017, there was to be lock-in period for two years i.e. upto 30th June, 2024; thereafter either parties was entitled to revoke/terminate/determine the agreement by giving three months notice in writing to the other party; for the initial period of two years, the license fee was fixed at two lakh with gradual increase in the lincese fee at a fixed percentage; a sum of Rs. 12 lakh was to be deposited by the licensee as a security deposit to enforce due compliance of the said agreement and the said deposit of Rs. 12 lakhs was be returned to the licensee upon delivery of peaceful and vacant possession of the subject premises, after deductions, if any, on account of the arrears of license fee charges or expenses of repair or damages caused by licensee to the subject premises. The agreement also provided for a dispute resolution mechanism whereunder the parties agreed to refer any dispute in connection with the said License Agreement to an Arbitrator to be appointed by mutual consent.

4. As the license was about to expire by the end of June, 2017, by efflux of time, the applicant gave a notice to the respondent on 19th May, 2017 intimating the respondent that the applicant would be vacating the subject premises on or before 30th June, 2017. A demand for refund of security deposit of Rs. 12 lakhs simultaneously with the delivery of the subject premises was also made. On 9th June, 2017, in response to the aforesaid communication, the respondent took a stand that in terms of clause 18 of the Leave and License Agreement it was incumbent upon the applicant to give three months prior notice of termination and, thus, the respondent was not agreeable to the termination of the agreement. Additionally, it was contended that, on a visual inspection of the subject premises, it was noticed that a number of equipments, tools, gadgets and furnitures were either missing or severely damaged. A claim of Rs. 14,57,000/- was made towards the damages on the aforesaid count.

5. There was a prolonged exchange of correspondence. Ultimately, vide notice dated 1st May , 2019 the applicant called upon the respondent to make the refund of security deposit along with interest @ 18% p.a. and, in default, give consent for the appointment of an Arbitrator, as suggested by the applicant in the letter dated 17th July, 2018. The respondent neither conveyed the consent for the appointment of the Arbitrator nor gave reply to the said notice invoking arbitration. Hence,