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Rajasthan High Court · body

2017 DIGILAW 2668 (RAJ)

Binika Mittal v. Neesa Leisure Limited

2017-12-01

MOHAMMAD RAFIQ

body2017
JUDGMENT Mohammad Rafiq, J. - These applications have been separately filed by thirteen petitioners under section 11(6) of the Arbitration and Conciliation Act, 1996, praying for appointment of Arbitrator to adjudicate the disputes and differences between the parties. Since all the applications raise identical question of law and that the facts are also similar, therefore, all are being decided by this common judgment by taking the facts of Arbitration Application No. 20/2017 as the basis. 2. As per the petitioner, the respondent, which is a company incorporated under the Companies Act, 1956, is a builder and township developer engaged in real estate development works and operation of various projects. The respondent came up with its project of a golf resort at Agra Road situated in village Jamdoli. The petitioner purchased two golf studio units no. 1211 and 1408, both ad-measuring 315.79 square feet. Petitioners then leased out said golf units to respondent themselves, upon their representation and accordingly two registered lease and operation deeds dated 08.09.2011 were executed between the petitioner and the respondent. The lease and operation deed was initially executed for a period of twelve years. The respondent was required to pay a sum of Rs. 13000/- per month for initial three years and for next three years the lease amount was to be increased to Rs. 14550/- per month. For next three years, the sum was to be increased to Rs. 16303/- and for last three years the lease amount would be Rs. 18259/- respectively. 3. The respondent, after execution of lease and operation deed dated 08.09.2011, paid the lease amount till July, 2014, however no amount was paid to the petitioner from August, 2014 onward towards lease money to the petitioner till date. The respondent also failed to deposit any TDS. It is contended that a total sum of Rs. 7,59,840/- is outstanding as arrears of lease amount for the period from August, 2014 to September, 2016. Further a sum of Rs. 1,45,555.11 has accrued as interest on the said amount in terms of the said lease and operation deed. Thus, a total sum of Rs. 9,05,395.11 is outstanding and recoverable from the respondent. Similar is the position with regard to other tenant petitioners. 4. Mr. Further a sum of Rs. 1,45,555.11 has accrued as interest on the said amount in terms of the said lease and operation deed. Thus, a total sum of Rs. 9,05,395.11 is outstanding and recoverable from the respondent. Similar is the position with regard to other tenant petitioners. 4. Mr. Jatin Agrawal, learned counsel for the petitioners, contended that the petitioners approached the respondent on various occasions and tried to contact its officials in the office situated at Jaipur and requested them to release the arrears. Though bald assurances were given but actual payment was never made. The CMD of the respondent on 12.04.2015 assured the petitioner that arrears would be paid shortly within a week but no such payment was made. Copy of the minutes of the meeting dated 12.05.2015 has been placed on record. Reference is made to Section X(b) of the lease and operation deed, which provided for resolution of disputes by mechanism of arbitration. It is contended that the petitioner served a notice dated 13.10.2016 invoking arbitration clause, with acknowledgement due, which was duly served on the respondent. Even after lapse of 60 days as provided under the lease and operation deed, the respondent failed to respond to the notice demanding arbitration. Hence these applications. 5. Mr. Peeyush Purohit, learned counsel for the respondent, opposed the application and argued that the dispute in the present case is essentially between landlord and tenant in relation to rented premises and is not an arbitral dispute. Learned counsel referred to and relied on Section 18 of the Rajasthan Rent Control Act, 2001 (for short, ''the Act of 2001'') and argued that according to the aforesaid provision, notwithstanding anything contained in any other law for the time being in force, in the areas to which this Act extends, only the Rent Tribunal and no Civil Court shall have jurisdiction to hear and decide the petitions relating to disputes between landlord and tenant and matters connected therewith and ancillary thereto, filed under the provisions of the Act of 2001. Learned counsel, in support of his argument, has relied on the judgment of the Supreme Court in Vimal Kishor Shah and Others vs. Jayesh Dinesh Shah and Others- (2016) 8 SCC 788 and submitted that in view of the law laid down therein, the dispute in the present case is not liable to be referred for arbitration. Learned counsel, in support of his argument, has relied on the judgment of the Supreme Court in Vimal Kishor Shah and Others vs. Jayesh Dinesh Shah and Others- (2016) 8 SCC 788 and submitted that in view of the law laid down therein, the dispute in the present case is not liable to be referred for arbitration. Such dispute can be brought for adjudication only before the Rent Control Tribunal under the Act of 2001. Heard. Considered. 6. Even though the respondents have opposed the present application but they do not dispute the execution of the lease and operation deed and also existence of arbitration clause therein, which reads as under:- "Section X Arbitration And Dispute Resolution (a) In the event of any dispute or difference between the Parties in connection with this deed, the Parties shall use all reasonable endeavours to resolve the matter amicably. If one party serves a written Notice on the other Party that a dispute or difference has arisen and the Parties are unable to resolve the dispute or difference within a period of 60 days from the service of such notice, the dispute or difference shall be referred to arbitration as per the provisions of clause (b). (b) Subject to the provisions of Clause (a) above, each of the Party hereto agrees to resolve any dispute or difference arising out of or relating to the interpretation, rights, obligations, liabilities, breach or termination of this deed, through arbitration, in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996 or any statutory modification or re enactment thereof ("Arbitration Act"). The arbitration matter shall be referred to a sole arbitrator whose appointment shall be mutually agreed to between the parties hereto. In the absence of a mutual agreement with regard to the appointment of the sole arbitrator, the appointment shall be made under the provisions of the Arbitration Act. The place of conducting the arbitration shall be Jaipur, India. The language of the arbitration proceedings shall be English language. The arbitration award shall be final and binding upon the Parties. The cost of Arbitration shall be borne equally by the parties to the Arbitration. If not otherwise decided by the sole arbitrator." 7. The respondent also does not dispute the factum of existence of dispute inasmuch as the arrears of Rs. The arbitration award shall be final and binding upon the Parties. The cost of Arbitration shall be borne equally by the parties to the Arbitration. If not otherwise decided by the sole arbitrator." 7. The respondent also does not dispute the factum of existence of dispute inasmuch as the arrears of Rs. 7,59,840/- for the period from August, 2014 to September, 2016 and interest on the said amount in the first application and other due amount in other application. The respondent thus does not deny the fact that they are in default in making payment of arrears of rent to the petitioners. Such arrears would also attract interest, is the case of the petitioners. The Supreme Court in Booz Allen & Hamilton Inc. vs. SBI Home Finance Ltd.,- (2011) 5 SCC 532 , which was again relied by the Supreme Court in Vimal Kishor Shah, supra, examined the question as to meaning of term ''arbitrability'' and following three questions were formulated by the Court:- "(i) Whether the disputes are capable of adjudication and settlement by arbitration? That is, whether the disputes, having regard to their nature, could be resolved by a private forum chosen by the parties (the Arbitral Tribunal) or whether they would exclusively fall within the domain of public fora (courts). (ii) Whether the disputes are covered by the arbitration agreement? and (iii) Whether the parties have referred the disputes to arbitration? 8. In answering the aforementioned questions, the Supreme Court carved out six categories of cases, which were not capable of being decided by private arbitration under the Arbitration and Conciliation Act even if the parties had agreed for settlement through private Arbitrator. Relevant discussion is found in Para 35 and 36 of the report, which read as under:- "35. Arbitral tribunals are private fora chosen voluntarily by the parties to the dispute, to adjudicate their disputes in place of courts and tribunals which are public fora constituted under the laws of the country. Every civil or commercial dispute, either contractual or non-contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of arbitral tribunals is excluded either expressly or by necessary implication. Adjudication of certain categories of proceedings are reserved by the Legislature exclusively for public fora as a matter of public policy. Adjudication of certain categories of proceedings are reserved by the Legislature exclusively for public fora as a matter of public policy. Certain other categories of cases, though not expressly reserved for adjudication by a public fora (courts and Tribunals), may by necessary implication stand excluded from the purview of private fora. Consequently, where the cause/dispute is inarbitrable, the court where a suit is pending, will refuse to refer the parties to arbitration, under Section 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such disputes. 36. The well recognized examples of non-arbitrable disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes. 9. The learned counsel for the respondent has laid much stress on clause (vi) of the ''excepted categories'', in para 36 referred to above. That clause covers eviction or tenancy matters governed by special statutes where the tenant enjoys certain statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes. 10. One or more of golf studios, which the petitioners bought from the respondent, have now leased them out to the respondents themselves, in an arrangement under the "lease and operation deed", authorizing them to operate them. As would be evident from Section VIII of the Lease and Operation Deed executed between the parties, the lessee provided representation warantees to the lessor to pay regular rent on every 10th business day of every month and also to pay to authorities concerned all charges for electricity, water etc. As would be evident from Section VIII of the Lease and Operation Deed executed between the parties, the lessee provided representation warantees to the lessor to pay regular rent on every 10th business day of every month and also to pay to authorities concerned all charges for electricity, water etc. and to keep the interior of the ''Golf Studio Unit'' in good and tenantable repair/condition, not to make any structural alternations and to use the ''Golf Studio Unit'' as a guest house for the guests availing the facilities of the Golf Course and Academy, and to provide additional benefits to the lessor in addition to the monthly assured returns and to grant a complementary stay of 20 days to lessor during each year and to provide TDS certificates to lessor. Apparently, the purpose for which the ''lease and operation deed'' was executed was commercial in nature. As would be seen from preamble of the Act of 2001, the Act has been enacted "to provide for control for eviction from, letting of, and rents for, certain premises in the State of Rajasthan and matters incidental thereto." Premises to which the Act has been made applicable has been defined in the Act. But the Gold Studio leased out to respondents with the authority to rent them out further to guests, cannot fall within the purview of ''premises'' defined in Section 2(f) of the Act of 2001, which is reproduced hereunder:- "2(f) "premises" means - (a) any land not being used for agricultural purposes; and (b) any building or part of a building (other than a farm building) let or intended to be let for use as a residence or for commercial use or for any other purpose, including,- (I) the gardens, grounds, godowns, garages and outhouses, if any, appurtenant to such building or part, (ii) any furniture supplied by the landlord for use in such building or part, (iii) any fittings affixed to, and amenities provided in, such building or part for the more beneficial enjoyment thereof, and (iv) any land appurtenant to and let with any such building or part, but does not include a room or other accommodation in a hotel, dharamshala, inn, sarai, lodging house, boarding house or hostel; (emphasis supplied) Explanation:-In absence of a contract to the contrary, the top of the roof shall not form part of the premises let out to a tenant;" 11. In view of the fact that the cluster of Golf Studios leased out to the respondents for being run as guest house or resort is not a ''premises'' under Section 2(f), supra, and thus the Act of 2001 would not be applicable to them. As a logical corollary thereto, the statutory protection provided under Section 9 of the Act of 2001 would not be available to the respondent. Dispute between the parties would therefore lie before the ordinary Civil Court. Clause (vi) of the ''excepted categories'' in para 36 of the cited judgment of the Supreme Court in Booz Allen & Hamilton Inc., supra, which refers to exclusion of the tenants having statutory protection under a particular State, would therefore not apply to the present matter. It cannot therefore be said that the dispute between the parties is not arbitrable. No doubt, Section 18 of the Act of 2001, which starts with non-obstante clause, provides that in the areas to which the Rent Control Act, 2001 extends, only the Rent Tribunal and no Civil Court shall have jurisdiction to hear and decide the petitions relating to disputes between landlord and tenant and matters connected therewith and ancillary thereto, but this provision is subject to two provisos given thereunder. We are in the present case concerned with the first proviso, which inter-alia stipulates that the Rent Tribunal shall in deciding such petitions to which provisions contained in Chapter II and III of the Act of 2001 do not apply, have due regard to the provisions of Transfer of Properties Act, 1882, and the Indian Contract Act, 1872 or any other substantive law applicable to such matter in the same manner in which such law would have been applied, had the dispute been brought before a Civil Court by way of suit. Even if it is conceded that dispute being between the landlord and tenant, the remedy of the petitioners would lie before the Rent Tribunal, there is no reason why "any other substantive law" in this case could not be Arbitration and Conciliation Act, 1996, which would still apply to the matter, had this matter been brought before the civil court by way of a suit. In other words, the defendant in that suit could still raise objection about the remedy of arbitration provided in the lease deed. In other words, the defendant in that suit could still raise objection about the remedy of arbitration provided in the lease deed. Thus, there is no reason to hold that the dispute in the present case is not arbitrable. 12. The Supreme Court in A. Ayyasamy vs. A. Paramasivam and Others- (2016) 10 SCC 386 , while relying on its earlier judgments in Vimal Kishor Shah, supra, and Booz Allen & Hamilton Inc., supra, observed that "in addition to various classes of disputes, which are generally considered by the courts as appropriate for decision by public fora, there are classes of disputes which fall within the exclusive domain of special fora under legislation which confers exclusive jurisdiction to the exclusion of an ordinarily civil court. That such disputes are not arbitrable dovetails with the general principle that a dispute which is capable of adjudication by an ordinary civil court is also capable of being resolved by arbitration. However, if the jurisdiction of an ordinary civil court is excluded by the conferment of exclusive jurisdiction on a specified court or tribunal as a matter of public policy such a dispute would not then be capable of resolution by arbitration." It was further held that "the parties who enter into commercial dealings and agree to a resolution of disputes by an arbitral forum exercise an option and express a choice of a preferred mode for the resolution of their disputes. Parties in choosing arbitration place priority upon the speed, flexibility and expertise inherent in arbitral adjudication. Once parties have agreed to refer disputes to arbitration, the court must plainly discourage and discountenance litigative strategies designed to avoid recourse to arbitration. Any other approach would seriously place in uncertainty the institutional efficacy of arbitration. Such a consequence must be eschewed." In para 48 of the report, the Supreme Court held as under:- "48. The basic principle which must guide judicial decision-making is that arbitration is essentially a voluntary assumption of an obligation by contracting parties to resolve their disputes through a private tribunal. The intent of the parties is expressed in the terms of their agreement. Where commercial entities and persons of business enter into such dealings, they do so with a knowledge of the efficacy of the arbitral process. The commercial understanding is reflected in the terms of the agreement between the parties. The intent of the parties is expressed in the terms of their agreement. Where commercial entities and persons of business enter into such dealings, they do so with a knowledge of the efficacy of the arbitral process. The commercial understanding is reflected in the terms of the agreement between the parties. The duty of the court is to impart to that commercial understanding a sense of business efficacy." 13. In view of the above analysis and the arguments of the parties and material on record, this court finds that there does exist a dispute between the parties and there is also an arbitration clause in the lease deed. However, this court does not deem it appropriate to go into the merits of the claims and counter-claims, but holds that the petitioner has certainly made out a case for reference to arbitration. Since the respondents have failed to refer the dispute to arbitration in accordance with the agreed procedure, their right to make appointment of an arbitrator now stands forfeited. Consequently, all the applications deserve to succeed and are allowed. Mr. J.P. Bansal, retired District Judge, R/o 34-A, Hathroi Fort, Hari Kishan Somani Marg, Jaipur (cell no. 9413969478 and landline no. 0141-2363484) is hereby appointed as an independent sole arbitrator to separately arbitrate and resolve the disputes in each case. Payment of the cost of arbitration proceedings and the arbitration fees in each case shall be made as per the Fourth Schedule of the Arbitration and Conciliation (Amendment) Act, 2015 read with Manual of Procedure for Alternative Dispute Resolution, 2009 of this Court, as amended from time to time. 14. A copy of this order be placed in the connected files and be also sent to Mr. J.P. Bansal, retired District Judge, for needful. 15. Application allowed-Fees and costs as per fourth scheme of act.