ARB.P. 349/2020

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$~21

*

IN THE HIGH COURT OF DELHI AT NEW DELHI

+

ARB.P. 349/2020 & I.A. 7711/2020

SH. B. R. SETHI

..... Petitioner

Through

Mr. Rajesh Bhatia, Adv.

versus

SH. RAJAT KAPOOR

..... Respondent

Through:

Mr. Rajat Wadhwa, Adv. with

Mr. Devanshu Chauhan, Adv.

CORAM:

HON'BLE MR. JUSTICE C. HARI SHANKAR

J U D G M E N T (ORAL)

%

22.03.2021

1.

This is a petition under Section 11 of the Arbitration and

Conciliation Act, 1996 (“the 1996 Act”).

2.

Vide the unregistered licence agreement dated 22^nd October,

1998, the respondent was inducted by the petitioner as a licensee in

respect of three shops located at 24, Patel Road, West Patel Nagar,

Market Side, New Delhi.

3.

The petition asserts that the petitioner, as licensor, was entitled

to terminate the license agreement at his absolute option.

4.

On 21^st October, 2019, the petitioner served a legal notice to the

respondent, revoking the license in respect of the aforesaid three shops

and calling on the respondent to hand over peaceful and vacant

Digitally Signed

By:SUNIL SINGH NEGI

Signing Date:24.03.2021

18:22:18

Signature Not Verified

 

ARB.P. 349/2020

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possession thereof, or to pay user or occupation charges in default.

This was followed by a notice dated 21^st December, 2019, whereby

the petitioner invoked clause xiv in the license agreement, which reads

thus:

“xiv) xxx

It is hereby further declared that every or any dispute,

difference or question which, may at any time arise between

the parties hereto, touching or arising out or in respect of this

agreement, or the subject matter thereof whether during the

continuance of the Agreement or after is determination in any

manner, shall be referred to the Arbitration of any person

mutually agreed by the Licensor and the Licensee and the

decision of the Arbitrator shall be binding on both the

parties.”

5.

The petitioner submits that despite having invoked the

arbitration clause vide notice dated 21^st December, 2019, the

respondent did not participate in the exercise of appointing the

arbitrator, resulting in the petitioner having to approach this Court.

6.

The respondent has filed a reply to the petition.

7.

Though the respondent does not dispute the existence of the

arbitration clause or the arbitrability of the dispute per se, it is asserted

that the licence agreement is an unregistered document and that,

therefore, no rights could be claimed by the petitioner thereunder and

that, therefore, it could neither be enforced nor could any right be

claimed by the petitioner thereunder. As such, it is submitted that,

even if an arbitrator were to be appointed, the arbitral exercise would

be abortive.

Digitally Signed

By:SUNIL SINGH NEGI

Signing Date:24.03.2021

18:22:18

Signature Not Verified

 

ARB.P. 349/2020

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8.

Learned counsel for the respondent relies, in this context, on the

judgment of the Supreme Court in SMS Tea Estates Pvt. Ltd. v.M/s

Chandmari Tea Co. Pvt. Ltd¹.

9.

Mr. Wadhwa, learned counsel for the respondent, very fairly

acknowledges that, even in this case, the Supreme Court had held that

the arbitration agreement, being in the nature of a separate agreement

though ensconced within the “main” agreement, existed separately

and that, therefore, any infirmities attaching to the main agreement

would not invalidate the arbitration agreement or impact its

enforceability. Even so, he points out, the Supreme Court went on to

notice that, as the agreement was unregistered, no rights could have

been claimed thereunder.

10.

As such, learned counsel submits that even if this petition were

to be allowed, the learned arbitrator could not rely on the licence

agreement as a basis to award any claim to the petitioner.

11.

The issue raised by Mr. Wadhwa falls entirely outside the

periphery of consideration of this Court exercising jurisdiction under

Section 11(6) of the 1996 A