Nidhi Jain v. M/S G AND B FASHIONS PRIVATE LIMITED

2. Mr. Sidharth Joshi, learned counsel for the petitioner has drawn the attention of this court to (the second) clause 33(a) of the Lease Deed, which comprises the arbitration agreement between the parties; and contemplates reference of disputes between the parties to arbitration in accordance with the A&C Act; which clause also stipulates that arbitration proceedings shall be held at New Delhi. 2022:DHC:3402

3. As per the record, the petitioner invoked arbitration vide, Notice dated 21.09.2021; but to no avail.

4. Pursuant to notice issued on the present petition on 02.12.2021, the respondent has filed short reply dated 09.05.2022, based on which Mr. Manish Kaushik, learned counsel for the respondent has raised the following principal objections to the appointment of an arbitrator: a. That there is no surviving dispute between the parties since the lease in respect of the subject premises was terminated and the premises was handed-back by the respondent to the petitioner in the month of March 2020; whereupon on 10.07.2020 the petitioner even issued to the respondent a cheque for Rs.5,70,711/- after making certain deductions, towards refund of the balance interest-free security deposit made by the petitioner at the commencement of the lease. Furthermore, when the said cheque was dishonoured on 11.08.2020, the petitioner transferred the said sum to the respondent via RTGS, towards refund of the balance interest-free security deposit. b. That upon surrender of possession by the respondent in March 2020, the petitioner entered into a fresh Lease Deed dated June 2020 with the respondent‟s principals M/s Benetton India Private Limited with effect from 01st April 2020, whereby the lease was seamlessly transferred to the respondent‟s principals; and therefore, the petitioner did not even incur any loss of rent for the subject premises; for which reason also the Petitioner is not entitled to rent for the balance of the „lock-in period‟ as claimed from the respondent. c. That the petitioner issued to M/s Benetton India Private Limited a No-Objection Certificate dated 07.08.2020, which is also evidence of the fact that nothing was due from the respondent to the petitioner towards rent, electricity charges, minimum guarantee or other similar charges; and that therefore no dispute survives between the parties; and the contract stands discharged by „accord and satisfaction‟. d. That the factum of the cheque issued by the petitioner to the respondent towards refund of the balance security deposit, followed by the RTGS remittance of the said sum, as also the No-Objection Certificate issued on 07.08.2020 have all been concealed by the petitioner from the court, which shows the mala-fides on the petitioner‟s part. In these circumstances, it is argued that the present petition deserves to be dismissed.

5. Mr. Kaushik has also drawn attention to the judgment of the Hon‟ble Supreme Court in „Indian Oil Corporation Limited vs. NCC Limited‟ 1 citing certain observations in that case to support the aforesaid objection, as discussed below.

6. Mr. Kaushik has further invited the attention of this court to what has been held by the Hon‟ble Supreme Court in ‘Vidya Drolia & Ors. vs. Durga Trading Corporation’2 which is also dealt-with subsequently.

7. Responding to the objections so raised, Mr. Joshi has submitted: a. That the No-Objection Certificate dated 07.08.2020 cited by the respondent as evidence of „accord and satisfaction‟ has neither been issued by the petitioner nor has it been issued to the respondent. It is pointed-out that the said No-Objection Certificate has evidently not been signed by the petitioner but by an „unknown‟ signatory on behalf of M/s Mahagun (India) Private Limited, which was the maintenance agency for the subject mall; and the additional signature appended to the said document purportedly „for Ms. Nidhi Jain‟ also does not bear the petitioner‟s signature. Furthermore, the No-Objection Certificate is not addressed to the respondent but to M/s Benetton India Private Limited. It is accordingly argued, that the said No-Objection Certificate does not support the respondent‟s case that there is no surviving dispute between the parties; b. That the mere return of the balance interest-free security deposit is not evidence of discharge of the contract by „accord and satisfaction‟, since the petitioner‟s main claim is that the respondent was liable to pay the balance amount of rent and other sums due for the unexpired portion of the „lock-in period‟ under the lease deed, which comes to about Rs. 75 lacs plus interest payable thereon.

8. The observations of the Hon‟ble Supreme Court in Indian Oil Corporation Limited (supra) to which the respondent has drawn attention are:

9. Furthermore in support of its case, the respondent has cited the following portion of Vidya Drolia (supra): “154.4. Rarely as a demurrer the court may interfere at Section 8 or 11 stage when it is manifestly and ex facie certain that the arbitration agreement is non-existent, invalid or the disputes are non-arbitrable, though the nature and facet of non-arbitrability would, to some extent, determine the level and nature of judicial scrutiny. The restricted and limited review is to check and protect parties from being forced to arbitrate when the matter is demonstrably “non-arbitrable” and to cut off the deadwood. The court by default would refer the matter when contentions relating to non-arbitrability are plainly arguable; when consideration in summary proceedings would be insufficient and inconclusive; when facts are contested; when the party opposing arbitration adopts delaying tactics or impairs conduct of arbitration proceedings. This is not the stage for the court to enter into a mini trial or elaborate review so as to usurp the jurisdiction of the Arbitral Tribunal but to affirm and uphold integrity and efficacy of arbitration as an alternative dispute resolution mechanism.” (emphasis supplied) Yet again, a bare perusal of the aforesaid observations shows that these do not support the respondent‟s case and it is not the mandate of the Hon‟ble Supreme Court that while deciding a section 11 petition, the court is to embark upon a mini-trial or undertake an elaborate review of the merits of the disputes, thereby usurping the jurisdiction of the arbitral tribunal.

10. The doctrine of „accord and satisfaction‟ as a principle for discharge of a contract, is more than mere rubric and is required to be examined with reference to the attendant facts based on available evidence. Only when the adjudicator is satisfied that parties had put a final closure to a matter, can it be said that nothing remains to be adjudicated. If one party alleges that there is a surviving dispute and the other denies it, in the opinion of this court, that itself is a dispute, which may require consideration. In the context of an arbitral mechanism, it is the arbitrator who is the adjudicator of the existence or otherwise of whether there has been accord and satisfaction. As held in British Russian Gazette & Trade Outlook, Ltd vs. Associated Newspapers, Ltd,[3] „accord‟ is the agreement by which an obligation (1993) 1 KB 616 at 643-644 under a contract is discharged; and „satisfaction‟ is the consideration which makes the agreement operative. If there is no satisfaction, that is to say performance of the accord, the accord by itself is perfectly useless and devoid of legal consequences.

11. If therefore, as in the present case, a party receives a certain sum of money (satisfaction), it requires to be seen if the payment of money was in performance of a settlement in relation to the contract (accord).

12. As recognised by the Hon‟ble Supreme Court in Union of India vs. Kishorilal Gupta & Bros, 4 for determination of „accord and satisfaction‟, the intention of the parties to that effect must be discerned. And ascertainment of intention is “essentially a question of fact to be decided on the facts and circumstances of each case”.

13. The determination of a contested factual aspect of a dispute (in this case, the intention of the parties) is within the remit of the arbitrator since it would involve a detailed inquiry/trial. Unless it is a clear case of „dead-wood‟, the mere invocation of the doctrine of accord and satisfaction cannot stand in the way of reference of a dispute between the parties to arbitration.

14. Upon a conspectus of the averments contained in the petition, the stand taken by the respondent and the submissions made, this court is satisfied that there is a valid and subsisting arbitration agreement between the parties; that this court has territorial jurisdiction to entertain and decide the present petition; and also that the disputes that are stated to have arisen between the parties as set-out inter-alia (1960) 1 SCR 493 at 503-504 in demand/invocation notice dated 21.09.2021 do not appear ex-facie to be non-arbitrable.