Rani Suri v. Swarantech Information Systems Pvt. Ltd.

Delhi High Court · 19 Sep 2018 · 2018:DHC:6089

Navin Chawla

ARB.P. 430/2018

2018:DHC:6089

civil petition_allowed Significant

AI Summary

The Delhi High Court held that disputes under a commercial lease containing a valid arbitration clause are arbitrable where rent control laws do not apply, and appointed a sole arbitrator to adjudicate the rent arrears dispute.

Full Text

Arb. P. 430/2018 Page 1 $-1 HIGH COURT OF DELHI
Date of Decision: 19th September, 2018

ARB.P. 430/2018
RANI SURI ..... Petitioner
Through: Mr.Raman Gandhi, Ms.Harsha Sharma, Advs.

VERSUS

SWARANTECH INFORMATION SYSTEMS PVT.LTD.
THROUGH ITS DIRECTOR VISHAL MAKHIJA..... Respondent
Through: Mr.Sanjay Aggarwal, Adv.

CORAM:

HON'BLE MR. JUSTICE NAVIN CHAWLA NAVIN CHAWLA, J. (Oral)

JUDGMENT

1. This petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) has been filed by the petitioner seeking appointment of an Arbitrator for adjudicating the disputes that have arisen between the parties in relation to the Lease Deed dated 2nd August, 2010 executed between the parties.

2. In terms of the registered Lease Deed, the petitioner has given on rent commercial premises being entire Second floor, HD-7, Main Metro Road, Pitampura, Delhi-110088 to the respondent at a monthly rent stipulated therein. The lease is 2018:DHC:6089 Arb. P. 430/2018 Page 2 for a period of 9 years starting from 1st August, 2010 and contains an Arbitration Agreement between the parties in the following terms: “ARBITRATION & JURISDICTION All disputes and differences between the parties hereto regarding the interpretation scope or effect of any of the terms and conditions herein contained or in any way touching or concerning these presents shall be referred to Arbitrator(s) appointed by both the Lessors and the Lessee and the same shall be deemed to be a reference within the meaning of the Arbitration and Conciliation Act 1996 or any other statutory enactment or modification thereto for the time being in force. The Venue of such Arbitration shall be in New Delhi. The courts at New Delhi shall have jurisdiction to entertain and try all actions suits and proceedings arising out of these presents.”

3. The petitioner claiming arrears of rent being due from the respondent, issued a notice dated 23rd April, 2018 to the respondent seeking reference of the disputes to arbitration and suggesting that the arbitration be held under the aegis of Delhi International Arbitration Centre.

4. The respondent by its reply dated 22nd May, 2018 disputed the existence of any arrears of rent and therefore, refused to accept the appointment of an Arbitrator or reference of the disputes to arbitration.

5. As the parties could not agree on the appointment of an Arbitrator, the present petition was filed.

6. The respondent does not deny the execution of the Lease Arb. P. 430/2018 Page 3 Deed or the existence of the Arbitration Agreement therein.

7. Counsel for the respondent relying on the judgment of the Supreme Court in Himangni Enterprises vs. Kamaljeet Singh Ahluwalia AIR 2017 SC 5137, submits that the disputes with respect to tenanted premises are not arbitrable in nature. He has placed reliance on paragraph 26 of the judgment, which is quoted hereinbelow:

“26. The Delhi Rent Act, which deals with the cases relating to rent and eviction of the premises, is a special Act. Though it contains a provision (Section 3) by virtue of it, the provisions of the Act do not apply to certain premises but that does not mean that the Arbitration Act, ipso facto, would be applicable to such premises conferring jurisdiction on the arbitrator to decide the eviction/rent disputes. In such a situation, the rights of the parties and the demised premises would be governed by the Transfer of Property Act and the civil suit would be triable by the Civil Court and not by the arbitrator. In other words, though by virtue of Section 3 of the Act, the provisions of the Act are not applicable to certain premises but no sooner the exemption is withdrawn or ceased to have its application to a particular premises, the Act becomes applicable to such premises. In this view of the matter, it cannot be contended that the provisions of the Arbitration Act would, therefore, apply to such premises.”

8. I am unable to agree with the submission made by the counsel for the respondent. In the case of Himangni Enterprises(supra), the Supreme Court was dealing with the case where the lease deed containing the Arbitration Agreement executed between the parties had expired by the Arb. P. 430/2018 Page 4 efflux of time and it was an admitted case of the parties that thereafter, no fresh Lease Deed was executed for extension of the time period. The tenant was therefore, occupying the property on a month to month basis without any written documents containing Arbitration Agreement. It was in those facts that the High Court had held that there was no Arbitration Agreement in existence between the parties therein and the said finding was affirmed by the Supreme Court. The Supreme Court in para 26 stated that only because the Delhi Rent Control Act is not applicable, it would not ipso facto mean that there is an Arbitration Agreement in existence or that the disputes have to be necessarily referred to arbitration. In the absence of an Arbitration Agreement, the parties cannot be referred to arbitration, this is all that the Supreme Court has held in the above judgment.

9. I may also note that the Supreme Court in Himangni Enterprises (supra) also relied upon the judgment of the Supreme Court in Natraj Studios(P) Ltd. vs. Navrang Studios & Anr. 1981 (1) SCC 523, which was a case where there was a statutory protection granted to the tenant under Section 28(1) of the Bombay Rent Act which vests exclusive jurisdiction in the Court of Small Causes to entertain and try any suit or proceeding between the landlord and tenant relating to the recovery of rent or possession of any premises. It was in those facts that the Civil Suit filed by the landlord was held to be maintainable by the Court. Arb. P. 430/2018 Page 5

10. The Supreme Court further placed reliance on the earlier judgment of Supreme Court in Booz Allen and Hamilton Inc. vs. SBI Home Finance Ltd. & Ors. AIR 2011 SC 2507. I may only quote para 22 of the said judgment as under:

“22. 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.

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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 tribunal 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. 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.

The well recognised examples of non-arbitrable disputes

are: (i) disputes relating to rights and liabilities which

given 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

Arb. P. 430/2018 Page 6 disputes.” (emphasis supplied)

11. A reading of the above would clearly show that the Supreme Court had clarified that it is only in cases where eviction or tenancy matters are governed by special statutes and where the tenant enjoys statutory protection against eviction and only the specified Courts are conferred jurisdiction to grant eviction or decide the dispute, that the same cannot be referred to arbitration.

12. In the present case, as the provisions of Delhi Rent Control Act do not apply to the premises in question, no such bar exists.

13. In view of the above, the judgment of the Supreme Court in Himangni Enterprises (supra) would be of no assistance to the contention of the respondent.

14. As the Lease Deed, existence of the Arbitration Agreement and the due invocation thereof are not denied by the respondent and it is also not the case of the respondent that the tenancy in question would fall under the provisions of the Delhi Rent Control Act, I see no impediment in appointing a Sole Arbitrator for adjudicating the disputes that have arisen between the parties in relation to the Lease Deed dated 2nd August, 2010.

15. I appoint Mr.Rishi Manchanda, Advocate Chamber No.704, Block-III, Delhi High Court, New Delhi, Mobile- 9911681178, as the Sole Arbitrator for adjudicating the Arb. P. 430/2018 Page 7 disputes that have arisen between the parties in relation to the abovementioned Lease Deed. The Arbitrator shall give his disclosure under Section 12 of the Act before proceeding with the reference.

16. With the consent of the parties, it is directed that the arbitration shall be conducted under the aegis of the Delhi International Arbitration Centre (DIAC). The rules, procedure and the fees of the DIAC shall apply to the arbitration.

17. The petition is allowed in the above terms, with no order as to costs.

NAVIN CHAWLA, J SEPTEMBER 19, 2018 RN

Rani Suri v. Swarantech Information Systems Pvt. Ltd.

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