M/S Sustainable Luxury Gravity Global Pvt. Ltd. v. Estate Officer India Tourism Development Corporation & Anr.

16. It is submitted that the petitioner has already invested an amount to the extent of Rs. 60 crores as on March, 2023. The petitioner has till date paid a sum of Rs.8,65,63,974/- towards licence fees w.e.f. 18.06.2019 till March, 2020. It is further submitted that the petitioner has already started paying the licence fees to the respondent from October, 2022 onwards, since the petitioner obtained licence for health and running eatery in the month of September, 2022.

17. In support of his contentions, learned Senior Counsel for the petitioner has relied upon the following judgments:-

(i) ANZ Grindlays Bank, PLC Vs Union of India, judgment dated

(ii) Sukanya Holding (P) Ltd Vs Jayesh H. Pandya and Another,

(iii) ITDC Ltd. Vs Bougainvillea Multiplex and Entertainment

18. On the other hand on behalf of the respondent, it is contended that as per Clause V (1) of the licence agreement, the provisions of PP Act can be invoked by the licensor in respect of the licensed premises. So, it cannot be said that proceedings under the PP Act cannot be resorted to by respondent no. 2/licensor for recovery of licence fees.

19. It is further submitted that according to Clause V (2) of the licence agreement, only in respect of any other dispute or difference relating to the terms of the licence agreement between the licensor and licensee, the matter shall be referred to the sole arbitrator. Thus, it is contended that the intention of the parties is very clear that whenever and wherever the provisions of the PP Act are applicable, the same would apply.

20. It is further submitted on behalf of the respondent that Sections 5 and 7 of the PP Act empowers an Estate Officer to deal with applications for eviction of unauthorised occupants and applications for payment of rent and damages in respect of the public premises. The jurisdiction exercised by the Estate Officer cannot be taken away by the arbitration clause.

21. In support of his submissions, learned counsel appearing for the respondent has relied upon the following judgments.

(i) M/s Fortune Grand Management Pvt. Ltd vs. Delhi Tourism &

(ii) Maruti Suzuki India Ltd vs. ITDC, 2011 (4) ARBLR 384 (Delhi)

(iii) India Trade Promotion Organisation Vs. International

(iv) International Amusement Limited v. India Trade Promotion

22. I have heard learned counsels for the parties and perused the record.

23. In order to adjudicate upon the issue in hand, it would be fruitful to refer to the relevant clauses of the licence agreement dated 18.06.2019 entered between the parties. Clause V(1) of the licence agreement clearly stipulates that any dispute arising between the parties with respect to the licensed premises where provisions of PP Act can be invoked, the same will be adjudicated under the PP Act. Clause V(2) of the licence agreement further stipulates that all other disputes or differences relating to the term of the licence deed, shall be referred to arbitration. Clause V (1) and (2) of the licence agreement is reproduced hereunder:-

1. In respect where provisions or Public Premises (Eviction of unauthorized Occupants) Act, 1971 can be invoked by the Licensor in respect of the Licensed Space the provisions of the said Act shall apply.

2. In respect of any other dispute or difference relating to the terms of his License Deed, the matter shall be referred to the sole arbitration of the Chairman & Managing Director of ITDC or any other person appointed by him in this behalf. The award given by the Arbitrator shall be binding upon the parties. It is specifically agreed by the Licensee that it will have no objection to any such appointment that the arbitrator so appointed is an employee of the Licensor or he has already expressed view on, for or any of the matters in dispute or difference. The arbitrator so appointed shall have power to extend the time for making an award. The said Arbitrator shall act under provisions of the Arbitration and Conciliation Act,

1996. Except as above, only Delhi Courts will have jurisdiction.”

24. Perusal of the aforesaid manifests clearly that any question with respect to payment of rent/licence fees and damages in respect of public premises can only be decided by the competent authority under the PP Act and not by an Arbitral Tribunal. Needless to say, only the concerned Estate Officer has jurisdiction to adjudicate upon matters of recovery of arrears of licence fees/rent and process of eviction.

25. This Court in the case of M/s Fortune Grand Management Private Limited Vs Delhi Tourism & Transport Development Corporation[1], held that a claim for recovery of arrears of rent or damages or interest payable under Section 7 of the PP Act, or any dispute in so far as it relates to eviction from the public premises, has to be decided by the statutory authority under the PP Act. The same cannot be subject matter of arbitration. Thus, it has been held as follows:-

held Clause 28 aforesaid to be not an arbitration clause but a clause of expert determination...........

14. Supreme Court in Natraj Studios (P) Ltd. supra held that since under the Bombay Rents, Hotel and Lodging House Control Act, 1947 exclusive jurisdiction had been conferred on the small cause court to decide dispute between landlord and tenant, the jurisdiction of the Arbitrator under the Arbitration Clause in the agreement between the landlord and tenant to decide such disputes stands excluded. Similarly in Ranjit Kumar Bose supra the arbitration clause in the tenancy agreement providing for any dispute arising out of tenancy agreement to be settled by Arbitrator in accordance with provisions of Arbitration and Conciliation Act, 1996 was held to be of no avail in the light of the bar contained in Section 6 of the State Tenancy Act, 1997 which prescribed that notwithstanding anything to the contrary contained in any contract, the dispute as to recovery of possession of premises by landlord from tenant has to be decided only by the Civil Judge having jurisdiction under the Tenancy Act. The Full Bench of the Bombay High Court in Central Warehousing Corporation, Mumbai supra was concerned with the question whether in view of Section 5 of the Arbitration Act, the jurisdiction of the small cause court under the Presidency Small Cause Courts Act, 1882 would be ousted by the arbitration clause in the Agreement between the licensor and the licensee. On an interpretation of Section 41 of the Presidency Small Cause Courts Act and Section 5 and Section 2(3) of the Arbitration Act, it was held that even if the license agreement contains arbitration agreement, the exclusive jurisdiction of the court of small causes under Section 41 of the Presidency Small Cause Courts Act is not effected in any manner and that the arbitration agreement in such case would be invalid and inoperative on the principle that it would be against public policy to allow the parties to contract out of the exclusive jurisdiction of the small causes court by virtue of Section 41 of the Presidency Small Cause Court Act.

15. I may however state that the question as far as this Court is concerned is not res integra. A Division Bench of this Court in Fabiroo Gift House Vs. India Tourism Development Corp. MANU/DE/1712/2002 referring to Section 15 of the PP Act as under:

16. Held that a claim for recovery of arrears of rent payable under Section 7(1) or damages payable under Section 7(2) or interest payable under Section 7(2A) of the PP Act cannot be subject matter of arbitration. Another Division Bench of this Court in Harjit Singh Vs. Delhi Development Authority MANU/DE/0397/2009 also held that the kind of disputes which as per the terms of the perpetual lease deed were to be arbitrated by the Lieutenant Governor could not be subject matter of arbitration; it was held that the dispute insofar as it related to eviction of the petitioner from the public premises has to be decided by the statutory authority under the PP Act and only the dispute which was not covered by the PP Act could be adjudicated in accordance with the arbitration clause in the agreement between the parties. ”

26. Reference may also be made to the decision of Division Bench of this court in the case of India Trade Promotion Organisation Vs International Amusement Limited[2], wherein it has been held that Section 15 of PP Act read with Sections 5 and 7 of the PP Act confers exclusive jurisdiction on the Estate Officer to deal with applications under Sections 5 and 7 of the said Act. Section 15 of the PP Act bars and prohibits any Court from entertaining any suit or proceeding for eviction as provided under Clauses (a) to (e) therein. It has been held that PP Act is a special Act which prescribes complete procedure for adjudication of proceedings for eviction of unauthorised occupants and for payment of rent and damages in respect of the public premises. Proceedings under Section 5 and 7 of the PP Act cannot be made subject matter of arbitration. The said enactment is a special legislation whereby specific powers have been conferred on an Estate Officer to adjudicate and decide applications under Section 5 and 7 of the PP Act. Reading of Sections 5 and 7 of PP Act make it clear that it is the Estate Officer alone who has the sole and exclusive jurisdiction to decide applications under Section 5 and 7 of the said Act. Thus, it has been held as follows:- “33. It cannot be said that proceedings under the PP Act and arbitration Act for the same dispute can be resorted to and permitted under the licence deed. No such argument was in fact raised. It is also not permissible to raise any such argument and there cannot be an arbitration clause which gives option to a parties to have resort to arbitration and also have right and option to resort to proceedings under the PP Act. The two clauses have to harmoniously interpreted. The intention of the parties as disclosed from the aforesaid clauses in the licence agreement is that wherever and when-ever the provisions of PP Act are applicable the same would apply. Matters that can be made subject matter under the PP Act and decided therein can be made subject matter of Arbitration. Consequently, we hold that the jurisdiction to be exercised by the Estate Officer cannot be said to be subject to the order to be passed by the Arbitrator in the arbitration proceedings..........

38. Section 15 read with Sections 5 and 7 of the PP Act confers exclusive jurisdiction on the Estate Officer appointed under Section 3 of the aforesaid Act to deal with the applications under Sections 5 and 7. Section 15 of the PP Act bars and prohibits any Court from entertaining any suit or proceeding for eviction, etc. as provided under Clauses (a) to (e) therein. The general power of the Court under Section 9 of the Code of Civil Procedure, 1908 to entertain suit or proceedings is therefore ousted if a dispute raised falls in Clauses (a) to (e) of the aforesaid section. Sections 5 and 7 of the PP Act empowers an Estate Officer appointed under Section 3 to deal with applications for eviction of unauthorised occupants and applications for payment of rent and damages in respect of public premises. The Act also prescribes a procedure for filing an appeal by a person aggrieved by an order passed by the Estate Officer under Section 9 of the PP Act. The aforesaid Act is, therefore, a special Act which also prescribes complete procedure for adjudication of proceeding under the PP Act. The said Act is a complete code in itself. We do not think that proceedings under Sections 5 and 7 of the PP Act can be made subject matter of arbitration. The said enactment is a special legislation, whereby specific powers have been conferred on an Estate Officer to adjudicate and decide applications under Sections 5 and 7 of the PP Act. Courts have been prohibited and restrained from exercising jurisdiction over matters mentioned in Sections 5 and 7 of PP Act in view of Section 15 of the PP Act. Reading of Sections 5 and 7 makes it clear that it is the Estate Officer alone who has the sole and exclusive jurisdiction to decide applications under Sections 5 and 7 of the Said Act. The said jurisdiction conferred by the statute cannot by a contract be conferred upon an arbitrator or made subject matter of reference before an arbitrator. PP Act has given exclusive jurisdiction to an Estate Officer, who alone has authority to determine the specified disputes and matters and, therefore, these are not matters that can be referred to an Arbitrator. There cannot be waiver of statutory provisions. Contract must be within the legal framework. Parties cannot contract out of the statute. The matters on which an Estate officer has exclusive jurisdiction are not arbitrable and parties by a contract cannot agree to refer matters on which jurisdiction has been conferred and given to Estate Officer. Arbitrability of the claims covered by Sections 5 and 7 of PP Act is therefore excluded. We are fortified in our conclusion by the judgment of the Supreme Court in the case of Ashoka Marketing Limited v. Punjab National Bank, (1990) 4 SCC 406. In the said case the question arose whether the Rent Control Act which also a special Act will override the provisions of PP Act. It was held that the PP Act is a special statute relating to eviction of unauthorised occupants from public premises and will prevail over Delhi Rent Control legislation which is intended to deal with the general relationship of landlords and tenants in respect of premises other than Government premises. Rent Control legislation, it was held is also a special statute but was enacted earlier in point of time. However, both enactments are special statutes in relation to the matters dealt with therein and in such circumstances, it is the objective and purpose behind the two enactments, that determines which enactment will apply and given preference. The purpose and objective underlying the two Acts and intentment are conveyed by the language of the relevant provisions [See Shri Ram Narain v. The Simla Banking and Industrial Company Limited, 1956 SCR 603]. Applying the said principles in Ashoka Marketing (supra) it has been held that PP Act was enacted to control the rampant unauthorised occupation of public premises by providing machinery for eviction of persons in unauthorised occupation. The said enactment has a public purpose and interest. Special powers in this regard have been conferred under the enactment on the Estate Officer to deal with the problem of unauthorised occupation in premises belonging to Government, public companies and corporations controlled and owned by the Central Government. Same reasoning will equally apply to PP Act and Arbitration and Conciliation Act.”

27. The findings in the aforesaid DB judgment in the case of India Trade Promotion Organisation (supra) was reiterated by the Supreme Court in the case of International Amusement Limited Vs India Trade Promotion Organisation and Another[3].

28. To similar effect is the judgment in the case of Kesar Enterprises Limited and Another Vs. Union of India and Others[4], wherein it was held that an arbitrator will have no jurisdiction in the matter of disputes falling under Section 15 of the PP Act. The arrears of rent/damages squarely fall under Section 15 of the PP Act. Thus, it was held that proceedings before the Estate Officer under the PP Act cannot be stayed in view of the bar contained in Section 15 of the PP Act. It was held as follows:-

29. While dealing with similar issue with respect to adjudication of disputes by an Estate Officer or an Arbitrator, this Court in the case of Maruti Suzuki India Limited Vs. India Tourism Development Corporation Ltd[5], held that firstly the issues shall be determined by the Estate Officer under the PP Act and thereafter it shall be open to the parties to seek reference of other claims/issues to arbitration. Thus, it was held as follows:-

30. In view of the aforesaid detailed discussion, I find no infirmity in the impugned order passed by the learned Estate Officer. Accordingly, the present writ petition is dismissed.

JUDGE MAY 18, 2023 c