IN THE HIGH COURT OF DELHI AT NEW DELHI
Sachin Datta, J.
Smt. Sunita Garg – Appellant
Versus
M/s Scraft Product P. Ltd. – Respondent
Arb.P. 997 of 2022
Decided On : 23-02-2023
Arbitration and Conciliation Act - Appointment of Arbitrator - Clause-25 - Summary of Acts and Sections: Arbitration and Conciliation Act, 1996, Section 11 - The court discussed the interpretation and implementation of terms and conditions of the lease deed and the validity of the arbitration clause contained in the lease deed dated 15.12.2019. The court highlighted the mandatory nature of the arbitration clause and its applicability to both parties' claims. The court also referred to the legal position settled in Vidya Drolia vs. Durga Trading Corporation, (2021) 2 SCC 1, and Suresh Shah Vs. Hipad Technology (India) (P) Ltd., (2021) 1 SCC 529, to support its decision.
Fact of the Case:
The petitioner filed a petition seeking appointment of an Arbitrator to adjudicate disputes arising from a lease deed. The respondent opposed the petition, arguing that the arbitration clause in the lease deed did not constitute a valid arbitration agreement.
Finding of the Court:
The court found that the arbitration clause in the lease deed was mandatory and applicable to both parties' claims. It held that the respondent's contention regarding the classification of claims was without merit.
Issues: Interpretation and validity of the arbitration clause in the lease deed, classification of claims under Clause 25 and Clause 27.
Ratio Decidendi: The court emphasized the mandatory nature of the arbitration clause and its applicability to both parties' claims. It also highlighted the legal position settled in Vidya Drolia vs. Durga Trading Corporation, (2021) 2 SCC 1, and Suresh Shah Vs. Hipad Technology (India) (P) Ltd., (2021) 1 SCC 529, to support its decision.
Final Decision: The court appointed an Arbitral Tribunal to adjudicate the disputes between the parties, and clarified that the respondent could raise objections as to jurisdiction/existence/validity of the arbitration agreement before the Sole Arbitrator.
JUDGMENT
Sachin Datta, J. The present petition under Section 11 of the Arbitration and Conciliation Act, 1996 has been filed seeking appointment of an Arbitrator to adjudicate the disputes between the parties. The disputes between the parties have arisen in the context of a lease deed dated 15.12.2019 in respect of property bearing No. 26/7 (7-5), 8 (3-12), 13 (2-16), 14 (8-0) total measuring area 21 Kanal Marlekhewat No. 384, 387, Khata No. 422, 425 in Village Joshi Chauhan, District Sonepat, Haryana.
2. The petitioner is stated to be the owner of the aforesaid property by virtue of a registered sale deed dated 10.12.2019. The said sale deed has been placed on record by the petitioner. The respondent is stated to have been inducted as a tenant by virtue of the aforesaid lease deed dated 15.12.2019 in respect of area admeasuring approx. 25000 sq. feet on ground floor, 25000 sq. feet on first floor, total area 50000 sq. feet which also includes the mezzanine floor sides, washroom and rooms at the back, genset panel and the sundry assets area etc. at a monthly rent of Rs.8,00,000/- (Eight Lakhs only) exclusive of all other charges.
3. It is submitted by the petitioner/lessor that the respondent/lessee is a habitual defaulter in payment of rent. It is further submitted that the petitioner/lessor terminated the tenancy vide legal notice dated 04.05.2022 and also claimed arrears of rent amounting to Rs.29,49,350/-.
4. By way of another legal notice dated 24.05.2022, the petitioner invoked the Arbitration Clause contained in the lease deed dated 15.12.2019, and sought appointment of an arbitrator. The Arbitration Clause, as contained in the said lease deed is as under:
"Clause-25
That if any dispute may arise in regard to interpretation and/or implementation of terms and conditions of thisdeed the same shall be referred to the Arbitrator underArbitration & Conciliation Act, 1996, whose decision shallbe final and binding on both the parties and/or the same may be defended subject to Delhi Court Jurisdictions only."
5. Learned counsel for the respondent opposes the present petition on the ground that the aforesaid Clause-25 of the lease deed dated 15.12.2019 does not constitute a valid arbitration agreement between the parties inasmuch as it is not in nature of a firm or mandatory stipulation and instead gives an option to the parties to either seek adjudication by way of an arbitration or, alternatively, to approach the civil courts in Delhi.
6. Attention is also drawn by learned counsel for the respondent to the following stipulation contained in the lease deed:
"Clause-27
That if the lessee violates and infringes the term and conditions of this agreement then the lessor is fully entitled to get the said demised premises vacated through court of law under the suit for specific performance/possession at the costs and expenses of the lessee."
7. It is contended by learned counsel for the respondent that a conjoint reading of the aforesaid Clauses 25 and 27, results in classification of claims inasmuch as the petitioner has been given the option to either invoke arbitration or to approach a civil court for getting the leased premises vacated in the event of any violation or infringement on the part of the lessee, whereas, for the purpose of the claims of the respondent, no such option has been given.
8. Learned counsel for the respondent relies upon the judgment of the Supreme Court in the case of Wellington Associates Ltd. vs. Kirti Mehta, AIR 2000 SC 1379 and Shri Chand Construction and Apartments Pvt. Ltd and Ors. Vs. Tata Capital Housing Finance Ltd., 2020 SCC OnLine Del 472.
9. Having heard respective counsel for the parties, no merit is found in the contentions raised on behalf of the respondent.
10. The first contention of learned counsel for the respondent that Clause-25 in the said lease deed gives an option to the petitioner/lessor to either take recourse to the arbitration or pursue her remedies in a court of law, is mis
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