Haryana State Cooperative Supply And Marketing Federation Limited (hafed) v. Indo Arya Logistics
2022-01-19
SANJEEV NARULA
body2022
DigiLaw.ai
ORDER 1. The present petitions have been filed under Sections 11(3) and (4) of the Arbitration and Conciliation Act, 1996 [hereinafter, "the Act"] seeking appointment of an Arbitrator for adjudication of disputes, arising out of a Registered Lease Deed dated 5th May, 2015 [hereinafter, "Registered Lease Deeds"] executed between the lessor/Petitioner herein - Haryana State Cooperative Supply And Marketing Federation Limited [hereinafter, "HAFED"], and lessee/Respondent No. 1 - Indo Arya Logistics [hereinafter, "IAL"] in relation to HAFED Warehouse, Inner Ring Road, Near Wazirpur, DTC Depot, Delhi [hereinafter, "Leased Premises"]. The Registered Lease Deed contains an arbitration clause, which reads as under: "4. ARBITRATION All disputes and difference arising out of or in any way touching upon or concerning this agreement of lease whatsoever shall be referred to the sole arbitration of Managing Director, Hafed or his nominee whose decision shall be final and binding on both the parties. 2. Before proceeding, it must be noted that though HAFED and Indo Arya Logistics are common parties to all the petitions, Respondents No. 2 in each of the petitions are separate and distinct entities, which have apparently entered into separate, unregistered Lease Deeds with Indo Arya Logistics [hereinafter, "Unregistered Lease Deeds"] and are presently in occupation of certain portion of the Leased Premises. For clarity's sake, a tabulation setting out such details of each petition is given below: Arb. Petition No. Petitioner Respondent No. 1 Respondent No. 2 [hereinafter, collectively, "Sub-Lessees "J Date of Registered Lease Deed between Petitioner and Respondent No. 1 Date of Unregistered Lease Deed between Respondent No. 1 and Respondent No. 2 792/2021 HAFED M/s Indo Arya Logistics Focus Combine Marketing Pvt. Ltd. 5th May, 2015 20th July, 2016 794/2021 HAFED M/s Indo Arya Logistics Syscom Packaging Company 5th May, 2015 13th May, 2015 795/2021 HAFED M/s Indo Arya Logistics Syscom Consumer Products Pvt. Ltd. 5th May, 2015 13th April, 2015 3. At the outset, Mr. Bharat Bhushan Gupta, counsel for IAL, states that he has no objection to the prayer made in the petitions, while reserving IAL's liberty to raise claims against HAFED as well as the Sub-Lessees. In fact, he supports HAFED's request seeking appointment of an Arbitrator to adjudicate disputes also against the Sub-Lessees in all the petitions. This statement made by Mr. Gupta is taken on record. 4. On the other hand, Mr.
In fact, he supports HAFED's request seeking appointment of an Arbitrator to adjudicate disputes also against the Sub-Lessees in all the petitions. This statement made by Mr. Gupta is taken on record. 4. On the other hand, Mr. Sidhant Bhatia, counsel for all the Sub-Lessees, contests the maintainability of the present petitions qua them. In this view of the matter, the only aspect that requires to be adjudicated is whether Sub-Lessees, who are non-signatory to the Registered Lease Deed, should also be referred to arbitration. 5. On this aspect, the Court has heard the counsel for the parties at length. HAFED's case is that the Registered Lease Deed executed with IAL categorically prohibited any sub-letting, assignment or parting with the possession of the Leased Premises. In this regard, reliance is placed on Clause 4, which reads as under: "4. To use the demised premises by the lessee as its warehouse and shall in no case whatsoever sub-let, assign or otherwise part with possession of a part or whole of the premises hereby demised and also not to avail the loan facility by way of mortgage/pledge of the above premises against the lease from any person, bank, financial institution under any circumstances. However, The Lessee shall be free to do business of warehousing, Cold Storage/Logistics/Transport/ C&F work and allied service like grading, sorting, mechanized packing of staples/ agro products etc. for their various customers. Indo Arya Logistics shall apply for packing License at their own cost and shall be required to ensure compliance of labour Jaws and other statutory requirements at their end. " [Emphasis supplied] 6. However, it appears that in contravention to the above, IAL executed the three Unregistered Lease Deeds with each of the Sub-Lessees whereby a certain portion of the Leased Premises was sub-let. Be that as it may, when HAFED called upon IAL to hand over the vacant physical possession of the property, IAL complied to the extent possible. However, since certain portions were being occupied by the Sub-Lessees, vacant possession of the entire Leased Premises could not be handed over, and resultantly, such portions continue be occupied by the Sub-Lessees. 7. At this juncture, it must also be noted that inter se the parties, there are pending litigations initiated by Sub-Lessees against HAFED as well as IAL, before the District Courts.
7. At this juncture, it must also be noted that inter se the parties, there are pending litigations initiated by Sub-Lessees against HAFED as well as IAL, before the District Courts. In the said suits be CS 403/2017 (and other connected matters) dated 24th December 2018, an Order was passed by the ADJ, Rohini Courts under Order XXXIX Rule 1 and 2 of the Code of Civil Procedure, 1908 [hereinafter, "CPC"], making certain observations on a prima facie basis - that IAL had no authority to sub-let the said premises or part with possession thereof in terms of the Registered Lease Deed, and accordingly, declined the injunction sought by Sub-Lessees. When the said Order was challenged in an appeal, this Court vide a common order dated 13th September, 2019 passed in FAO No. 9/2019 (and other connected matters), confirmed the Order of dismissal of the application under Order XXXIX Rules 1 and 2 of the CPC, and further, made the following observations: "8. It is not disputed that the second respondent is not the owner of the property. It had come in use, occupation and enjoyment of the subject property only as a lessee under the first respondent (owner-cum- lessor). The second respondent cannot admittedly have unbridled or unrestricted right to use or deal with the- property beyond the circumspection of the discipline created by the lease deed under which it came in possession. The creation of lease in respect of the parts of the subject property by the lessee (second respondent) in favour of the third parties was clearly and indisputably without authorization from or approval of the superior lessor- and prima facie impermissible and illegal. No such right as did not vest in the lessee could have been passed on in favour of the third party (i.e. the appellants). In these circumstances, the lease agreements executed by the second respondent in favour of appellants in respect of the parts of the subject property are prima facie unenforceable and of no consequence, not the least against the owner or superior lessor. 9. On the foregoing facts and in the circumstances, the view taken by the trial court holding the appellants to have failed to bring home a prima facie case cannot be faulted. The said view does not suffer from any error or infirmity.
9. On the foregoing facts and in the circumstances, the view taken by the trial court holding the appellants to have failed to bring home a prima facie case cannot be faulted. The said view does not suffer from any error or infirmity. In this view of the matter, there is no need for any scrutiny on the touchstone of the other factors such as balance of convenience or irreparable loss. 10. The appeals are thus found to be wholly devoid of substance. They are dismissed with costs of Rs.50,000/- each to be payable to the first respondent. " 8. Though the aforenoted observations of the Court were undoubtedly made on & prima facie basis, however, it clearly emerges that Sub-Lessees were claiming their rights under the Unregistered Lease Deeds executed with IAL - which was found to be prima facie is in conflict with the Registered Lease Deed executed between HAFED and IAL. 9. That said, the question before the Court today is whether Sub-Lessees- who are non-signatories to the Lease Deeds - can be referred to arbitration. On this issue, counsel for Sub-Lessees has argued that the Sub-Lessees are neither agents nor representatives of IAL. They are also not connected in any manner to IAL, and are separate legal entities, and have independent, subsisting contracts with IAL. They also do not have privity of contract with HAFED. Therefore, in the absence of an arbitration agreement with HAFED, these entities cannot be referred to arbitration. 10. However, in the opinion of the Court, in view of several judgments of this Court as well as of the Supreme Court, the afore-noted objections of the Sub-Lessees are without merit. Although the Court is always cautious to refer non-signatories to arbitration, there can be no quarrel that non-signatories or third-parties to arbitral agreements can be referred to arbitration, without their prior consent, in exceptional cases which fall within the touchstone of Court-laid precedents. One such principle under which Courts have referred non-signatories to arbitration is when the Courts have commonality of subject-matter and the circumstances indicate that the adjudication of a dispute in arbitration cannot be possible without the presence of such non-signatory. [See: Cheran Properties Limited v. Kasturi and Sons Limited, (2018) 16 SCC 413 . Chloro Controls India Private Limited v. Severn Trent Water Purification Inc., (2013) 1 SCC 641 .
[See: Cheran Properties Limited v. Kasturi and Sons Limited, (2018) 16 SCC 413 . Chloro Controls India Private Limited v. Severn Trent Water Purification Inc., (2013) 1 SCC 641 . Ameet Lalchand Lalchand Shah and Others v. Rishabh Enterprises and Anr, 2018 (15) SCC 678 . and Shapoorji Pallonji & Co. Pvt. Ltd. v. Rattan Power Ltd. & Anr.[4]] [4] In ARB. P. 716/2019 dated 7th April, 2021. 11. Keeping in mind the principles enunciated in the aforenoted decisions, the Court finds a clear commonality of subject matter - being the Leased Premises - between the two agreements i.e., the Lease Deeds (executed between HAFED and IAL) and the unregistered Lease Deeds (executed between IAL and Sub-Lessees). Indisputability, the disputes sought to be adjudicated in arbitration concern the Leased Premises, and as the Sub-Lessees are claiming to be lessees under IAL, albeit under separate agreements, their presence would certainly be necessary for the adjudication of any dispute between HAFED and IAL. In fact, from HAFED's standpoint, the Sub-lessees are unauthorised occupants/sub-lessees. Thus, for effective adjudication of disputes, recovery of vacant possession of the Leased Premises, it would not only be proper, but necessary that all the Sub-Lessees are also referred to the arbitration. In such circumstances, the Court is inclined to accept HAFED's request qua Sub-Lessees. 12. At this juncture it must also be noted that even the Unregistered Lease Deeds contain an arbitration clause even. Although, the ambit under that clause would be limited to governing the disputes between IAL and the Sub-Lessees only, it is surely indicative of the Sub-Lessees' intention to opt for alternate dispute resolution mechanism for adjudication of disputes with IAL concerning the Leased Premises. 13. In view of the above, the petitions are allowed, and accordingly, Hon'ble Mr. Justice S. P. Garg, retired Judge of this Court [Contact: 9910384627] is appointed as the common Sole Arbitrator to adjudicate the disputes between: (i) HAFED, (ii) IAF, (iii) Focus Combine Marketing Pvt. Ltd., (iv) Syscorn Packaging Company, (v) Syscom Consumer Products Pvt. Ltd. 14. The Court further observes that all the disputes urged in the three petitions are arising from the same Lease Deed, nevertheless, since separate petitions have been filed, it is clarified that the appointment of the Arbitrator is common with respect to all the three petitions. 15.
The Court further observes that all the disputes urged in the three petitions are arising from the same Lease Deed, nevertheless, since separate petitions have been filed, it is clarified that the appointment of the Arbitrator is common with respect to all the three petitions. 15. It is also clarified that all rights and contentions of the parties on the merits of the claim are left open. The observations made by this Court hereinabove are only for the purpose of deciding the present petitions. The Respondents would be free to raise the question of maintainability / existence of arbitration agreement qua them, and file their claims / counterclaims before the Arbitral Tribunal in accordance with law. 16. The parties are directed to appear before the learned Arbitrator, as and when notified. This is subject to the learned Arbitrator making necessary disclosure(s) under Section 12(1) of the Act and not being ineligible under Section 12(5) of the Act. 17. The learned Arbitrator appointed by the Court shall fix their fee in consultation with counsel for the parties. 18. Before parting, it must be mentioned that in this batch of petitions, there is another related petition viz. ARB.P. 793/2021. However, due to an issue regarding the service of Respondent No. 2 therein - being Talent 4 Assure Consulting Services Pvt. Ltd., the Court is proceeding to decide only these three petitions. ARB.P. 793/2021 would be decided as and when the service of the said Respondent is complete. 19. In view of the above, the present petitions are allowed and stands disposed of.