* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ AA No.222/2008
% Date of Decision: 29.01.2009
Misra Charitable Trust ....... 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 registered trust under the Indian Trust Act, 1882. The petition is filed by Mr.Gautam Misra who is AA No.222/2008 Page 1 of 10 an authorized representative of the trust and who has signed the petition.
3. The respondent is stated to be a company incorporated under the provisions of the Companies Act, 1956 which is carrying on business of providing services for recruitment of personnel.
4. The petitioner had entered into agreements with respondent company in respect of 5th Floor of office block (admeasuring 9,001 square feet) at MCT House, Okhla Industrial Area, New Delhi-110025.
5. The petitioner entered into a lease agreement dated 2nd September, 2005 at a monthly rent of Rs.4,05,045/- with 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. The lease agreement also contemplated payment of security amount by the respondent to the petitioner.
6. The lease agreement also had an arbitration agreement in terms of Clause 19 which is as under:-
AA No.222/2008 Page 2 of 10
"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 arbitrator shall be entitled to grant interim relief measures including an interim award directing the handing over of vacant physical possession and to make a final award including for delivery of possession, refund of security deposit, payment of damages etc. 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."
7. The petitioner had also appointed a maintenance agency, M/s.G.G.Promoters & Developers Pvt Ltd and a maintenance agreement dated 2nd September, 2005 was entered between the respondent and the said maintenance agency. The respondent also entered into a licence agreement dated 2nd September, 2005 with M/s.G.G.Promoters & Developers Pvt Ltd a company nominated by the petitioner which was for the use of the equipment supplied by said company, M/s.G.G.Promoters & Developers Pvt Ltd to the respondent.
8. The premises which were let out to the respondent by the petitioner and in respect of which a maintenance and license agreement were also entered between the respondent and M/s.G.G.Promoters & AA No.222/2008 Page 3 of 10 Developers Pvt. Ltd., were sealed by the Monitoring Committee on 3rd January, 2007.
9. The petitioner contends that he 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 is alleged to have demanded the respondent to vacate the premises by letters dated 27th September, 2007 and 15th November, 2007 and to collect the security deposit after adjustment of deposit charges and rents due. According to the petitioner the amounts are due on account of electricity charges as well arrears of rents. The respondent failed to vacate the premises and also failed to pay the electricity charges and other amounts due under the lease agreement and, therefore, the disputes arose between the parties and in terms of Clause 19 in the lease deed which is an arbitration agreement, the petitioner invoked the arbitration agreement and appointed Mr.Justice J.K.Mehra as an arbitrator and asked the respondent to appoint his arbitrator within 30 days.
11. The communication dated 28th April, 2008 by the petitioner to the respondent appointing its arbitrator, was replied by letter dated 9th AA No.222/2008 Page 4 of 10 May, 2008. The respondent, however, denied the legality of invocation of arbitration clause contending that the claim for arbitration is immature. The respondent though claimed an amount of Rs.8,53,00,000/- as damages, however, still claimed that there are no arbitrable disputes. Since the respondent failed to appoint an arbitrator the present petition dated 2nd July, 2008 was filed.
12. The petition is contested by the respondent, who has filed the reply, contending inter-alia that disputes raised by the petitioner are based on the wrong assumption that the respondent has failed to pay the outstanding dues as per the terms and conditions of the lease agreement and that the respondent has also failed to vacate the premises. The respondent has contended that he has never refused to pay the outstanding dues and that in any case the outstanding dues are only in respect of rent for 3 days. It is contended that the petitioner is entitled to adjust the amount of rent of 3 days against the substantial security deposit which is with them and to return the balance security deposit on respondent vacating the premises. Regarding the vacation of premises it is contended that the respondent did not refuse 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 suddenly and there was no occasion to vacate the premises. In the circumstances, it is contended that there is no arbitrable dispute. AA No.222/2008 Page 5 of 10 Reliance was also placed by the respondent on a report submitted by Monitoring Committee in respect of petitioner, Misra Charitable Trust being report No.24 dated 9th January, 2007. The dispute was also raised by the respondent that the copies of letters dated 27th September, 2007 and 15th November, 2007 were posted at the address 5th Floor, MCT House, Okhla Industrial Area, Opposite Holy Family Hospital which address is not provided in the agreement because 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 demanding arrears of electricity charges and the arrears of other charges under the lease agreement. The respondent has countered the allegations that the rent is payable only for 3 days which amount can be adjusted from the security deposit and other amounts which are due under the lease agreement can also be adjusted. This has not been specified as to how much amount is to be adjusted and from which date. The premises have also not been vacated by the respondent. Whether the tenancy could be surrendered without vacating the premises and whether there will not be any liability of the respondent on account of sealing of the premises pursuant to the orders of AA No.222/2008 Page 6 of 10 Monitoring Committee, 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 lease agreement contemplates appointment of three arbitrators one each by both the parties and third to be appointed by the two arbitrators and failing their agreement in accordance with the provisions 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 his 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 appoint another Arbitrator, 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 JT 2000 (8) SC 152, Abdul Gaffar Vs Sri Jaichandlal Ashok Kumar & Co.Pvt. Ltd. to contend that a sole Arbitrator can be appointed considering various factors even if the arbitration agreement contemplates appointment of AA No.222/2008 Page 7 of 10 two Arbitrators by two parties and appointment of third Arbitrator by the two Arbitrator appointed by the parties.
15. In Abdul Gaffar (supra), precedent relied on by the respondnet both the parties had agreed to appoint one of the three arbitrators to appoint a sole arbitrator despite the Arbitration Agreement contemplating appointing of two Arbitrators by two parties and appointment of third Arbitrator 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 disputes and amount involved and the costs of the Arbitration and as the respondent 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 AA No.222/2008 Page 8 of 10 that a sole Arbitrator cannot be appointed in view of the Arbitration 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 lease agreement dated 2nd September, 2005 and in terms of Clause 19 of the said agreement. The arbitrator shall decide her own fees and shall also decide the procedure to be adopted by her AA No.222/2008 Page 9 of 10 and the place of Arbitration. Parties are directed to 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.
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