* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ AA No.220/2008
% Date of Decision: 29.01.2009
GG Promoters & Developers Pvt. Ltd. ....... Petitioner
Through: Mr.N.K.Kaul, Sr.Advocate with
Mr.Karan Mehra, Advocate.
Versus
M/s.Manpower Pvt Ltd ........ Respondent
Through : Mr.Shashank Deosudhi, Advocate.
CORAM :-
HON'BLE MR. JUSTICE ANIL KUMAR
1. Whether reporters of Local papers may be YES
allowed to see the judgment?
2. To be referred to the reporter or not? NO
3. Whether the judgment should be reported in NO
the Digest?
ANIL KUMAR, J.
*
1. This is a petition under Sections 11(3), 11(4), 11(6), 11(7), 11(8) of The Arbitration & Conciliation Act, 1996 for appointment of arbitrator.
2. The petitioner contended that it is a company incorporated under the provisions of the Indian Companies Act, 1956. The petition is filed by Mr.Gautam Misra who is a Director of the petitioner company and who has signed and verified the petition.
AA No.220/2008 Page 1 of 10
3. The respondent is stated to be a company incorporated under the provisions of the Companies Act, 1956 which is carrying on the business of providing services for recruitment of personnel.
4. The respondent company had entered into a lease agreement dated 2nd September, 2005 with the Misra Charitable Trust whereby the Misra Charitable Trust had leased 5th Floor of the office block (admeasuring 9,001 square feet) at MCT House, Okhla Industrial Area, New Delhi-110025 for a monthly rent of Rs. 4, 05, 045/- to the respondent. The premises were demised to the respondent for an initial non determinable term of three years with effect from 5th September, 2005. The lease dated 2nd September, 2005 also contemplated that on the expiry of initial term of three years on 4th September, 2008 the respondent shall have a right to renew the lease for a further two terms of three years each subject to escalation in the lease rent.
5. The respondent company also entered into a License Agreement, dated 2nd September, 2005, with the petitioner company, who was nominated by the Misra Charitable Trust, for the use of equipments to be supplied by the petitioner company in consideration of a license fee of Rs. 1, 35, 015/-.
6. As per the terms of clause 8.2 of the lease agreement the respondent company had also entered into a Maintenance Agreement, AA No.220/2008 Page 2 of 10 dated 2nd September, 2005 with the petitioner company, being a maintenance agency appointed by the Misra Charitable Trust. The Maintenance Agreement entered into between the parties was co- terminus with the Lease Agreement between the Respondent and the Misra Charitable Trust. As per the terms and conditions of the maintenance agreement the respondent company had to pay maintenance charges per month for the services to be provided by the petitioner company.
7. The Maintenance Agreement also had an arbitration agreement in terms of clause 10 which is as under:-
"Arbitration:- In the event of any disputes and differences between the parties arising out of or in connection with this Agreement or the consequent lease, all such disputes and differences shall be referred to three arbitrators appointed one each by both the parties and the third to be appointed by the two arbitrators and failing their agreement, in accordance with the provision of Arbitration & Conciliation Act, 1996. The venue of the arbitration shall be New Delhi. The arbitration shall be conducted in accordance with the Arbitration and Conciliation Act, 1996 as may be enforced at the relevant time or any subsequent legislation in place thereof, as the case may."
8. The premises which were let out to the respondent by the Misra Charitable Trust and in respect of which a maintenance and license agreement was also entered between the respondent and the petitioner, was sealed by the Monitoring Committee under the directions of the Hon'ble Supreme Court on 3rd January, 2007.
AA No.220/2008 Page 3 of 10
9. The petitioner has stated that the Misra Charitable Trust moved an application for desealing the premises on 5th January, 2007 as an interim application in W.P(C) No.4677/1985 titled M.C.Mehta v. Union of India which, however, is still pending adjudication and the premises has remained sealed.
10. Since the premises was sealed, the petitioner by a letter dated 27th September, 2007, requested the respondent to vacate the premises and to collect the security deposit after adjustment of the charges due and payable as per the terms and conditions of the Maintenance Agreement. The petitioner has contended that as per the terms and conditions of the Maintenance Agreement the respondent is liable to pay maintenance charges to the tune of Rs. 1, 26, 123/- for the month of December, 2006 and further maintenance charges to the tune of Rs. 11, 732/- for the period starting from 1st January, 2007 to 3rd January, 2007. The respondent company did not respond to the letter dated 27th September, 2007 nor did they vacate the premises or pay the charges due and payable as per the terms and conditions of Maintenance Agreement and therefore, disputes arose between the parties. The petitioner, by a letter dated 28th April, 2008, invoked the arbitration clause in the Maintenance Agreement, being clause 10, and nominated Mr. Justice J.K. Mehra as its arbitrator and called upon the respondent to appoint their arbitrator within 30 days. The communication dated 28th April, 2008 was replied to by the respondent by a letter dated 23rd AA No.220/2008 Page 4 of 10 May, 2008, in which the respondent denied the legality of invocation of arbitration clause contending that the claim for arbitration is immature. Even though the respondent claimed an amount of Rs.8,53,00,000/- as damages, it still claimed that there are no arbitrable disputes.
11. Since the respondent failed to appoint an arbitrator, the present petition dated 2nd July, 2008 was filed and it is sought that an arbitrator be appointed.
12. The petition is contested by the respondent, who has filed the reply, contending inter-alia that the petition has been filed on the wrong assumption that respondent has failed to pay the outstanding dues payable as per the maintenance agreement and that the respondent has also failed to vacate the premises. The respondent has contended that he never refused to pay the outstanding dues and that in any case outstanding dues are adjustable against the huge amount of security deposit which is with the petitioner. It is contended that the petitioner is entitled to adjust the maintenance fees against the substantial security deposit with them and to return the balance security deposit on the respondent vacating the premises. Regarding the vacation of premises it is contended that the respondent has never refused to vacate the premises and that the petitioner has not filed any documents to substantiate the allegation that the respondent refused to vacate the premises. The respondent submitted that the premises was sealed by AA No.220/2008 Page 5 of 10 the Monitoring Committee suddenly and so there was never an occasion to vacate the premises. In the circumstances, it is contended that there is no arbitrable dispute. Reliance was also placed by the respondent on a report submitted by Monitoring Committee in respect of the Misra Charitable Trust being report No.24 dated 9th January, 2007. A dispute was also raised by the respondent that the letter dated 27th September, 2007 was not received by the respondent as the letter was posted at the address 5th Floor, MCT House, Okhla Industrial Area, Opposite Holy Family Hospital which address was not provided in the agreement, whereas the address provided in the agreement is of UG 66-69, World Trade Centre, Barakhamba Road, New Delhi-110001.
13. I have heard the learned counsel for the parties and perused the petition and the reply and the notice invoking the arbitration agreement and the reply given by the respondent. The respondent cannot dispute that there are arbitrable disputes between the parties. The petitioner is praying for the arrears of the maintenance fees as per the terms and conditions of the Maintenance Agreement. The respondent has countered the allegations contending that the amount due under the Maintenance Agreement can easily be adjusted from the security deposit lying with the petitioner. This has not been specified as to how much amount is to be adjusted and from which date. All these are disputes which are to be adjudicated by the arbitrator and it cannot be held that there are no arbitrable disputes. The arbitration clause in the AA No.220/2008 Page 6 of 10 maintenance agreement contemplates appointment of three arbitrators one each by both the parties and the third to be appointed by the two arbitrators and failing their agreement in accordance with the provision of Arbitration & Conciliation Act, 1996.
14. The petitioner has appointed his arbitrator, however, the respondent has failed to appoint his arbitrator and has also lost his right to appoint an arbitrator. Since the respondent has lost his right to appoint an arbitrator the option is to appoint an arbitrator on behalf of respondent and leaving the petitioner arbitrator and the respondent arbitrator, to be appointed by the Court, to appoint another arbitrator. The petitioner has appointed a retired Judge of High Court as an Arbitrator. The learned counsel for the respondent prays that in case another arbitrator is appointed on his behalf and then two Arbitrators will appoint another Arbitrator and in the circumstances the cost and expenses involved would be substantial and considering the nature of disputes and other relevant factors, it will be just and appropriate to appoint a sole Arbitrator. The learned counsel for the respondent has also relied on Abdul Gaffar v. Sri Jaichandlal Ashok Kumar & Co.Pvt. Ltd., JT 2000 (8) SC 152, to contend that a sole Arbitrator can be appointed considering various factors even if the arbitration agreement contemplates appointment of two Arbitrators by two parties and appointment of the third Arbitrator by the two Arbitrators appointed by the parties.
AA No.220/2008 Page 7 of 10
15. In Abdul Gaffar (supra), precedent relied on by the respondent both the parties had agreed to appoint a sole arbitrator despite the Arbitration Agreement contemplating appointing of three Arbitrators, one each by the two parties and the third by the two Arbitrators appointed by the parties.
16. The learned counsel for the petitioner contended that the Arbitrator appointed by the petitioner be appointed as a sole Arbitrator considering the nature of the disputes, amount involved, the costs of the Arbitration and the fact that the respondent has failed to appoint his arbitrator. The learned counsel for the respondent is not agreeable to appointment of the Arbitrator appointed by the petitioner as the sole Arbitrator.
17. In the circumstances, if the petitioner has agreed to appoint his Arbitrator as the sole Arbitrator, and the respondent is also amenable to appointing another person as a sole Arbitrator, it cannot be said that a sole Arbitrator cannot be appointed in view of the Arbitration Agreement contemplating appointment of two Arbitrators by the parties and appointment of third Arbitrator by the two Arbitrators appointed by the parties. The plea of the petitioner in the facts and circumstances is not that a sole Arbitrator cannot be appointed in view of the Arbitration AA No.220/2008 Page 8 of 10 Agreement but that the Arbitrator appointed by the petitioner should be appointed as sole Arbitrator. The petitioner should not be allowed, in the facts and circumstances, to appoint his arbitrator as the sole Arbitrator and cannot be allowed to qualify his consent.
18. In the circumstances, it will be just and appropriate and in the interest of justice to appoint another person as a sole Arbitrator taking into consideration the nature of disputes, costs of Arbitration involved in case three Arbitrators are appointed and plea of the petitioner to appoint his Arbitrator as the sole Arbitrator.
19. Therefore, in the totality of these circumstances it will be just and appropriate to appoint a sole arbitrator in order to resolve the disputes between the parties. The parties shall be entitled to raise all their disputes before the said arbitrator.
20. Therefore, in the facts and circumstances the petition is allowed. Ms. Justice Usha Mehra (Retd.) C 1/36 Safdarjung Development Area, New Delhi (Cellular No.9818421144 Phones: 26531100, 26561316) is appointed as a sole arbitrator to adjudicate all the disputes between the parties pursuant to the Maintenance Agreement dated 2nd September, 2005 and in terms of Clause 10 of the said agreement. The arbitrator shall decide her own fees and shall also decide the procedure to be adopted by her and the place of Arbitration. Parties are directed to AA No.220/2008 Page 9 of 10 appear before the Learned Arbitrator on 12th February, 2009 at 4.30 PM. A copy of this order be sent forthwith to the Learned arbitrator. Copies of the order be also given dasti to the parties.
JANUARY 29, 2009 ANIL KUMAR, J.
'k'
AA No.220/2008 Page 10 of 10