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2022 DIGILAW 233 (ALL)

Life Insurance Corporation of India Through Authorized Signatory v. Uttar Pradesh Metro Rail Corporation Ltd. Thru M. D.

2022-02-22

SANGEETA CHANDRA

body2022
JUDGMENT : 1. Heard Sri Sanjeev Singh, learned counsel for the appellant and Sri Pritish Kumar, Advocate assisted by Sri Kumar Ayush, Advocate appearing for the respondent. 2. This appeal has been filed under Section 37 (1) (b) of the Arbitration and Conciliation Act 1996 against the judgement and order dated 10.08.2021 passed by the Additional District Judge, Court No. 17, Lucknow in Arbitration Case No. 02 of 2020 re: Life Insurance Corporation of India Versus U. P. Metro Rail Corporation of India filed by the appellant under Section 9 of the Arbitration and Conciliation Act (hereinafter the Act of 1996). 3. It has been submitted by Sri Sanjay Singh, Advocate that a lease agreement had been entered into between the appellant and the respondent, Corporation on 30.11.2018 for 348 square meters of land in front of its building Jeevan Bhawan-I, Plot No. 43, Hazrat Ganj, Lucknow, which was earlier being used by the petitioner, Corporation for parking of vehicles by its employees. The lease was for a period of 90 years for the purpose of laying the metro rail line in the city of Lucknow at a premium of Rs. 82,000/-per square meter, and as per the terms of the lease agreement more specifically Clause 9 and 11 thereof, the lessee was in no case to assign, relinquish, sublet, transfer or part with possession of the demised premises for any activity without prior written permission of the lessor, except activity as per the provisions of the Metro Railways (Operation and Maintenance) Act, 2002 as amended from time to time (hereinafter referred to Act of 2002), or any other direction/guidelines/statutory regulations issued by the Government or any Court of Law in this regard. 4. In Clause 11 of the said lease agreement the demise premises could not be assigned, relinquished, mortgaged, sublet, transferred either as a whole or in part, for any activity without written consent of the lessor except the activities as per the Act of 2002 or any other directions/guidelines/statutory regulations issued by the Government or any court of law in this regard. 5. However, the Uttar Pradesh Metro Rail Corporation (hereinafter referred to as U.P.M.R.C.L. entered into a license agreement with M/s Mr. Brown (a bakery) for commercial purposes for some gain. 5. However, the Uttar Pradesh Metro Rail Corporation (hereinafter referred to as U.P.M.R.C.L. entered into a license agreement with M/s Mr. Brown (a bakery) for commercial purposes for some gain. This fact came into the knowledge of the officers of the appellant on 25.10.2019, and on 07.11.2019, the then Manager (Estate) of the appellant wrote a letter to the respondent Corporation to explain about the activities done on the lease property for opening of an outlet of Mr. Brown. In reply to the said notice/letter the U.P.M.R.C.L. admitted that it had entered into a license agreement with Mr. Brown to open its outlet. On 23.11.2019, the appellant found that on the demised property construction was going on in full swing and the respondent had opened a door towards the parking of the petitioner and constructed a platform by encroaching upon the land of the petitioner. On 01.01.2020, the petitioner, Corporation again wrote to the respondent asking them to stop all construction activity but the respondent failed to comply. There being a Clause in the Lease Agreement for referring of the dispute to the Arbitrator under the Arbitration and Conciliation Act, 1996, the appellant repeatedly requested the respondent for reference of the dispute to arbitration. The respondent refused to act on the same. Later on, it was learned by the appellant that the agreement for opening of outlet of M/s Mr. Brown had fallen through, and one M/s Hazelnut Factory, also a Bakery, had been licensed the demised property. After invoking the arbitration clause the appellant approached the court of Additional District Judge under Section 9 of the Act of 1996for grant of interim stay of all construction activity on the demised property by the licensee/third party till finalization of arbitration proceedings. 6. The Respondent, Corporation filed its written statement saying that act of the Respondent was within the ambit of the terms of the lease agreement as it had only granted license to M/s Mr. Brown for opening its outlet within the area under the possession of U.P.M.R.C.L. It is a space within the building of Metro Station and such license does not create any interest or right in favour of third party over the lease property, and in no way compromised the interest of the LIC. The action of the U.P.M.R.C.L. was within the ambit of Section 6 of the Act of 2002. 7. The action of the U.P.M.R.C.L. was within the ambit of Section 6 of the Act of 2002. 7. The appellant filled a replication refuting such claim of the Respondent and saying that the demised property was not on the land occupied by the metro railway line as it was leased to the respondent for a specific purpose under the terms and conditions of the lease agreement, which had been violated. After exchange of pleadings the Additional District Judge, who was assigned Arbitration Case No. 02 of 2020 as refused to grant interim injunction for protection of the rights of the parties. The Addl. District Judge in his order impugned in this petition has in detail gone into language of Section 5 and Section 6 of the Act of 2002 and into various clauses/terms and conditions of the leasedeed and has incorporated the clauses of the lease agreement and also the clauses of the Act of 2002 far exceeding its jurisdiction and holding that “any activity” that has been carried out by the U.P.M.R.C.L. by licensing the property in question to a third party would come within its ambit of activities permissible under the Act of 2002. He has interpreted the phrase "any activity" to say that it cannot be given a restricted sense of laying the Metro Railway lines only. It would also include developing the metro railway land for the commercial use and to execute lease or grant any license in respect of property “held” by U.P.M.R.C.L. Having defined what is "land' and having defined and discussed in detail "any activity", the Additional District Judge has given findings in paragraph 21 and 22, which will go against the appellant when the dispute is referred to the Arbitrator. 8. Learned counsel for the appellant has also pointed out the observations made in paragraph 23 of the order impugned wherein the Additional District Judge has ignored paragraph 4 and 5 of the very same order, where a reference was made to various correspondence exchanged between the parties for appointment of Arbitrator. 9. 8. Learned counsel for the appellant has also pointed out the observations made in paragraph 23 of the order impugned wherein the Additional District Judge has ignored paragraph 4 and 5 of the very same order, where a reference was made to various correspondence exchanged between the parties for appointment of Arbitrator. 9. It has been submitted by Sri Sanjeev Singh, Advocate for the appellant that in the order impugned dated 10.08.2021, learned Additional District Judge has far exceeded its jurisdiction and has also recorded findings which are perverse to the material on record, which would seriously prejudice its case before the Arbitrator, when such an Arbitrator is appointed under Section 11(6) of the Act of 1996 by this Court. It has been pointed out that after filing the Section 9 application, the appellant has also filed an application under Section 11 (6) of the Act of 1996 before this Court. 10. Sri Pritish Kumar, Advocate alongwith Sri Kumar Ayush, Advocate has referred to the lease agreement entered into between the Appellant Corporation and the Respondent Corporation and has also referred to the provisions of the Act of 2002 and Sections 5 and 6 thereof to argue that the Additional District Judge has rightly considered, the said Sections and the clauses of the lease agreement to find out whether the prima facie case has been made out by the Appellant for it to exercise its jurisdiction under Section 9 of the Act of 1996. 11. According to Sri Pritish Kumar, Advocate, learned Additional District Judge could not have given any interim injunction without considering a prima facie case and for considering a prima facie case having been made out by the applicant it was necessary to refer to various clauses/phrases of the lease agreement, between the LIC and the U.P.M.R.C.L. and the license agreement between the U.P.M.R.C.L. and the licensee/third party i.e. M/s Hazelnut Factory Limited. 12. This Court having heard the learned counsel for the parties finds on a careful perusal of the order impugned that indeed the learned Additional District Judge has far exceeded its jurisdiction and given findings on the merits of the case. He ought to have given only prima facie consideration to the question whether there was any prior correspondence between the parties before granting of such license to a third party. He ought to have given only prima facie consideration to the question whether there was any prior correspondence between the parties before granting of such license to a third party. He could have only seen the lease agreement for this purpose and not for the purpose of determining whether the “activity” which was being permitted by the Respondent Corporation on the demised land came within the ambit of the Metro Act of 2002. There were letters on record had also been referred to in paragraph 4, 5 and 6 of the impugned order, which clearly indicated the attempt made by the Life Insurance Corporation for invocation of the Arbitration Clause and the steadfast refusal of U.P.M.R.C.L. for appointment of Arbitrator saying that there was no dispute, although It did admit that it had entered into the license agreement and it had handed over the part of the demised property to the licensee. 13. Accordingly, the appeal is allowed, the impugned order dated 10.08.2021 is set aside and the matter is remanded to the Additional District Judge, Lucknow to consider afresh the application of the petitioner under Section 9 of the Arbitration and Conciliation Act, 1996 within a period of three weeks from the date of a copy of this order produced before him. 14. In the meantime, status quo as it exists on today shall be maintained by the parties.