THEHON'BLE SRI JUSTICE P. NAVEEN RAO
AND
THE HON'BLE Dr. JUSTICE G. RADHA RANI
CIVIL MISCELLANEOUS APPEAL No.57 OF 2020
JUDGMENT: (per Hon'ble Dr. Justice G. Radha Rani)
This Civil Miscellaneous Appeal arises out of the order dated
07.01.2020 passed in Arbitration OP No.88 of 2019 by the III-Additional
Chief Judge, City Civil Court, Hyderabad in dismissing the petition filed by
the petitioner seeking interim measures under Section 9 (ii) (b), (c) (e) of
the Arbitration and Conciliation Act, 1996 (for short 'the Act').
2. For the sake of convenience, the parties are hereinafter referred as
arrayed before the trial Court.
3. The petition was filed seeking temporary injunction against the
respondents and its officials claiming through them, restraining from
interfering, dispossessing, causing obstruction in any way whatsoever in the maintenance of the Lake View Park, pending constitution of Arbitral Tribunal and to restrain the respondents from entering into any contract or agencies with third parties. The case of the petitioner was that the petitioner was a well reputed and well known advertising company in the PNR,J & Dr.GRR,J 2 CMA No.57 of 2020 field of advertising and maintenance of parks etc. The respondent issued a tender notice dated 14.02.2009 for providing LED based lighting solutions and their maintenance, providing water effects like fountains, cascades, their maintenance and amenities for citizens in the settling ponds, park in Khairtabad on DBOT basis. The petitioner was the highest bidder for development of the Lakeview Park in Khairtabad opposite I-Max theatre over an area of Acs.17.5 gts., of land. An agreement was executed by the respondent in favour of the petitioner on 01.09.2009 styling as "Design, Build, operate and transfer" (DBOT) for a period of 10 years commencing from 01.09.2009. The petitioner invested huge amounts for maintenance of the park. The respondent failed to disclose that by the date of entering into agreement, they had already entered into an agreement with M/s.Ramesh Ads, Advertising Agency, for erecting mini uni poles in the park for a period of three years with effect from 01.08.2009 to 31.07.2012. The petitioner approached the respondent for removal of the advertisement boards put up by Ramesh Ads by way of an application dated 03.11.2010 stating that he was sustaining loss @ Rs.6,50,000/- per month. He also gave another representation dated 24.12.2010. Thereafter, the respondent issued a final notice on 12.01.2011 to Ramesh Ads for removal of the hoardings. When the petitioner brought the same to the knowledge of the PNR,J & Dr.GRR,J 3 CMA No.57 of 2020 respondent, the respondent assured that they would consider the loss by extending the period of agreement. On such assurance given by the respondent, the petitioner continued the maintenance of the Lake View Park. After beautification of the park by the petitioner, the officials of the GHMC had demolished the compound wall which was constructed by the petitioner for laying of pipelines. The Executive Engineer of the respondent addressed a letter to the petitioner on 09.12.2014 expressing inconvenience caused during the course of laying of pipelines. The respondent and the officials of the respondent had dug huge pits and trench in the middle of the park and also damaged the walking strips laid by the petitioner. When the same was brought to the notice of the respondent, the respondent regretted for inconvenience. In view of the acts done by the respondent from time to time, the petitioner sustained huge loss. The petitioner addressed a letter to the respondent on 02.11.2016 expressing the difficulties faced by him in maintenance of the park and the loss sustained by him. The Government of Andhra Pradesh proposed a plan to set up a memorial in the name of late Dr. Y.S. Rajasekhar Reddy in the Lakeview Park and also gave contract for the proposed construction to the Agencies. During the said relevant period also the petitioner sustained huge loss in business. Time and again, the officials of GHMC caused loss to the petitioner. The petitioner invested PNR,J & Dr.GRR,J 4 CMA No.57 of 2020 crores of rupees for the maintenance of the Lakeview Park. The petitioner deposited a sum of Rs.5.00 crores as per Clause-17 towards the security deposit. As per Clause-15, the respondent was entitled for 75% of the income derived from the visitors and the petitioner was entitled to 25%. The gate fee was maintained by the respondent only. No charges were to be recovered from the morning walkers as per Clause-11. As per Clause-7 of the agreement, the entire advertisement rights were given to the petitioner which was the only major source of income. The same was also deprived by the respondent by entering into agreement with M/s. Ramesh Ads. As per Clause-32 of the DBOT Agreement dated 01.09.2009, "If any disputes or differences are raised by either party in any matter arising out of the agreement, the aggrieved party may refer such disputes within a period of 7 days to the Metropolitan Commissioner, HMDA. The decision of the Metropolitan Commissioner, HMDA shall be final and binding." The petitioner approached the respondent by submitting a representation/claim on 22.08.2019 expressing his difficulties and loss sustained by him and requested to consider his representation for extension of the period of agreement so as to meet out the loss caused to him since inception of the agreement. The same was pending for consideration. The respondent was taking hectic steps to take the maintenance from the petitioner since the PNR,J & Dr.GRR,J 5 CMA No.57 of 2020 terms of agreement were going to expire by 31.08.2019. Without addressing the loss caused to him, the respondent and its officials were threatening to vacate the Park premises. There was every likelihood of forcibly taking the maintenance of the Lakeview Park from him. If the respondent succeeds in his attempt, the petitioner would be put to irreparable loss and hardship and prayed to grant injunction restraining the respondent from taking forcible possession and maintenance of the Lakeview Park from him without due process of law.
4. The respondent filed counter affidavit contending that there was no arbitration clause in the agreement and requested to decide it as a preliminary issue before embarking on an enquiry in Arbitration OP No.88 of 2019. He further contended that the agreement entered on 01.09.2009 was for a period of 10 years and it would end by 31.08.2019. Before entering into contract with the petitioner, on nominal basis, a licence was granted to M/s. Ramesh Ads, for erecting 7 hoardings for advertisement purpose for an amount of Rs.2,45,000/- per annum for a period of one year for the financial year 2004-05, and from time to time, the licence period was extended. The licence period was granted for a further period of three years to M/s.Ramesh Ads from 01.08.2009 to 31.07.2012 to the hoarding PNR,J & Dr.GRR,J 6 CMA No.57 of 2020 of advisement board on rent @ Rs.5,25,000/- per annum with security deposit of Rs.2,62,500/-. The petitioner represented vide letter dated 24.12.2010 for removal of existing advertisement boards permitted to M/s.Ramesh Ads, and to hand over the vacant possession of the site. Vide letter dated 03.04.2010, they inspected and instructed to remove the mini polls existing in Lakeview Park. A final notice was issued to Ramesh Ads, vide letter dated 12.01.2011 to remove the three mini unipols in Lakeview Park to Kidney Island and west side parking area and accordingly, they were removed. The order for extension of lease period was given to M/s. Ramesh Ads at the relocated the place i.e. NTR Garden for the period from 01.08.2009 to 31.07.2012, but not in the Lakeview Park.
4.1. The Executive Engineer Division-9, GHMC informed vide letter dated 10.05.2013 that the construction of community hall was sanctioned at PJR Nagar, Khairatabad and the proposed site was located behind compound wall of Lakeview Park and requested for permission to break a portion of compound wall of Lakeview Park for passage to carting the debris. On the request of the petitioner, not to allow the GHMC, to break a portion of the compound wall of the Lakeview Park and if the request of the GHMC was considered, the entire look of the Lakeview Park PNR,J & Dr.GRR,J 7 CMA No.57 of 2020 would be spoilt and it would cause inconvenience to the walkers and visitors who come to the park, they accordingly, informed the Executive Engineer Division - 9, GHMC, vide letter dated 03.09.2013.
4.2. The Government vide G.O.Rt.No.4738/GA (Govt Dept), dated 01.10.2019 appointed a Group of Ministers to recommend about the Memorial for Late Dr.Y.S. Rajasekhar Reddy, Former Chief Minister of the combined State of Andhra Pradesh. The Group of Ministers proposed the area which was allotted earlier to Dr. Cars for the purpose of the (pre- owned) car sales. The said area was adjacent to the I-Max theatre. The proposal for YSR Memorial was submitted to the Hon'ble Supreme Court for clearance, but not at the Lakeview Park, as alleged by the petitioner. The said proposals were still pending.
4.3. In view of the completion of agreement period, the respondents issued notice to the petitioner vide letter dated 19.08.2019 informing to remove all advertisement boards which were located in Lakeview Park on or before 31.08.2019. In the meantime, the petitioner filed Arbitration OP No.88 of 2019 before the III Additional Chief Judge, City Civil Court. As such, the office had not taken any decision on the petitioner's application dated 21.08.2019 which was received in the office on 03.09.2019. There PNR,J & Dr.GRR,J 8 CMA No.57 of 2020 was no such clause of arbitration in the agreement dated 01.09.2009 executed by the petitioner. However, an order was passed by the Metropolitan Commissioner rejecting the claim of the petitioner. The III Additional Chief Judge, City Civil Court, passed status quo orders on 30.08.2019 and as such, prayed to vacate the status quo which was extended from time to time and to dismiss the Arbitration OP.
5. On hearing both the learned counsel on record, the learned III Additional Chief Judge, dismissed the petition holding that there was no prima facie case and balance of convenience in favour of the petitioner as the period of lease expired and was not extended by the respondent and directed the petitioner to seek appropriate remedy for loss if any caused to him in an appropriate Forum and vacated the status quo orders dated 30.08.2019.
6. Aggrieved by the said dismissal, the petitioner preferred this appeal contending that the Court below ought to have seen that once there was an arbitration agreement between the parties, the application under Section 9 of the Act was maintainable before the Court. The Court erred in holding that the agreement expired. The agreement would continue to exist since the petitioner raised a dispute before the date of expiry of the PNR,J & Dr.GRR,J 9 CMA No.57 of 2020 agreement between the parties. The dispute was raised on 22.08.2019 which was well within the subsistence of the agreement. That it was for the Arbitrator/Arbitral Tribunal to decide whether there existed an arbitration clause or not and prayed to set aside the order.
7. Heard the learned counsel for the appellant and Sri V.N. Goud, learned Standing Counsel for the HMDA.
8. The petitioner filed the petition under Section 9 of the Arbitration and Conciliation Act, 1996 on 28.08.2019, three days prior to the expiry of the agreement period. The licence agreement was entered between the petitioner and the respondent for a period of 10 years commencing from 01.09.2009 to 31.08.2019 styled as Design, Build, Operate and Transfer agreement. Learned counsel for the petitioner relied upon Clause - 32 of the said agreement contending that it would amount to arbitration clause. Clause-32 of the agreement reads as under:
"32. Settlement of Disputes: If any dispute or difference is raised by either party to any matter arising out of the agreement, the aggrieved party may refer such dispute within the period of 7 days to the Metropolitan Commissioner, HMDA. The decision of the Metropolitan Commissioner, HMDA shall be final and binding."
PNR,J & Dr.GRR,J 10 CMA No.57 of 2020
9. The learned counsel for the petitioner relied upon the judgments of the High Court of Delhi in Uttam Wires and Machines (P) Ltd., v.
State of Rajasthan and another1 to contend that:
"In order to determine whether or not a clause in agreement amounts to arbitration clause, the court has to look to the substance of the clause and not the mere form. The absence of word "arbitration:" in clause cannot be construed to mean that it is not an arbitration clause."
10. He also relied upon the judgment of the High Court of Jharkhand in Shri Ram Multicom Pvt. Ltd. v. B.N. Hotels (P) Ltd.2, wherein it was held that:
"5. The existence of this Clause is not in dispute and it clearly says that in case of any dispute with regard to terms of this agreement and "for developing the same will be adjudicated by the arbitrator. It appears that the arbitration clause is not happily worded but intention of the parties is clear to have all disputes arising out of the contract should be resolved through arbitration. The cancellation of power of attorney and development agreement is also a covered dispute under the terms of the Development Agreement only."
11. He relied upon the judgment of the Hon'ble Apex Court in Smt. Rukmanibai Gupta v. The Collector, Jabalpur and others3, wherein it was held that:
"6. Does Clause 15 spell out an arbitration agreement? Section 2(a) of the Arbitration Act, 1940, defines 'arbitration agreement' to mean a written agreement to submit present or future 1 AIR 1990 DELHI 72 2 2012 SCJOnline (Jhar) 804 3 AIR 1981 SC 479 PNR,J & Dr.GRR,J 11 CMA No.57 of 2020 differences to arbitration, whether an arbitrator is named therein or not. Clause 15 provides that any doubt, difference or dispute, arising after the execution of the lease deed touching the construction of the terms of the lease deed or anything therein contained or any matter or things connected with the said lands or the working or non-working thereof or the amount or payment of any rent or royalty reserved or made payable thereunder, the matter in difference shall be decided by the lessor whose decision shall be final. The reference has to be made to the lessor and the lessor is the Governor. His decision is declared final by the terms of the contract. His decision has to be in respect of a dispute or difference that may arise either touching the construction of the terms of the lease deed or disputes or differences arising out of the working or non- working of the lease or any dispute about the payment of rent or royalty payable under the lease deed. Therefore, Clause 15 read as a whole provides for referring future disputes to the arbitration of the Governor. Arbitration agreement is not required to be in any particular form. What is required to be ascertained is whether the parties have agreed that if disputes arise between them in respect of the subject-matter of contract such dispute shall be referred to arbitration, then such an arrangement would spell out an arbitration agreement. A passage from Russel on Arbitration, 19th Edn., p. 59 may be referred to with advantage:
If it appears from the terms of the agreement by which a matter is submitted to a person's decision that the intention of the parties was that he should hold an inquiry in the nature of a judicial inquiry and hear the respective cases of the parties and decide upon evidence laid before him, then the case is one of an arbitration.
In the Clause under discussion there is a provision for referring the disputes to the lessor and the decision of the lessor is made final. On its true construction it spells out an arbitration agreement."
12. The learned Standing Counsel for the respondents, on the other hand, relied upon the judgment of the Hon'ble Apex Court in South Delhi PNR,J & Dr.GRR,J 12 CMA No.57 of 2020 Municipal Corporation v. SMS AAMW Tollways Private Ltd.4, wherein it was held that:
"22. Arbitration has always been understood to mean the process by which a dispute is resolved by an arbitrator chosen or acceptable to both sides under an arbitration agreement between the two parties. In the present case, under Clause 16 of the Agreement only the party dissatisfied by the order of the Competent Officer can approach the Commissioner. It is, therefore, not possible to hold that the proceedings before the Commissioner constitutes an arbitration. In K.K. Modi v. K.N. Modi [1998 (3) SCC 573], this Court observed as follows: -
"17. Among the attributes which must be present for an agreement to be considered as an arbitration agreement are:
(1) The arbitration agreement must contemplate that the decision of the tribunal will be binding on the parties to the agreement, (2) that the jurisdiction of the tribunal to decide the rights of parties must derive either from the consent of the parties or from an order of the court or from a statute, the terms of which make it clear that the process is to be an arbitration, (3) the agreement must contemplate that substantive rights of parties will be determined by the agreed tribunal, (4) that the tribunal will determine the rights of the parties in an impartial and judicial manner with the tribunal owing an equal obligation of fairness towards both sides, (5) that the agreement of the parties to refer their disputes to the decision of the tribunal must be intended to be enforceable in law and lastly, (6) the agreement must contemplate that the tribunal will make a decision upon a dispute which 4 2018 (15)Scale 123 PNR,J & Dr.GRR,J 13 CMA No.57 of 2020 is already formulated at the time when a reference is made to the tribunal.
18. The other factors which are relevant include, whether the agreement contemplates that the tribunal will receive evidence from both sides and hear their contentions or at least give the parties an opportunity to put them forward; whether the wording of the agreement is consistent or inconsistent with the view that the process was intended to be an arbitration, and whether the agreement requires the tribunal to decide the dispute according to law."
24. We find that the present Clause 16 and in particular Clause 16.3 does not provide for the reference of any dispute that may arise between the parties to an Arbitrator. The purpose of this Clause is to vest the Competent Officer and the Commissioner with supervisory control over the execution of work and administrative control over it from time to time and thus to prevent disputes. The intention is not to provide for a forum for resolving disputes. Thus, in the present circumstances no Arbitrator could have been appointed by the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996, therefore, the impugned order dated 17.06.2016 is set aside."
13. He also relied upon the judgment of the Hon'ble Apex Court in Vimal Kishor Shah and others v. Jayesh Dinesh Shah and others5, wherein it was held that:
"19) The basic question, which arises for consideration in this appeal, is whether a clause in a Trust Deed, which provides for resolving the disputes arising between the beneficiaries of the Trust through arbitration, can constitute an "arbitration agreement" within the meaning of Section 2(b) and 2(h) read with Section 7 of the Act and whether the application filed by the respondents under Section 11 of the Act can be held as maintainable?
23) A reading of the aforementioned sections in juxtaposition goes to show that in order to constitute a valid, binding and 5 2016 (5) ALD 152 (SC) PNR,J & Dr.GRR,J 14 CMA No.57 of 2020 enforceable arbitration agreement, the requirements contained in Section 7 have to be satisfied strictly. These requirements, apart from others, are (1) there has to be an agreement (2) it has to be in writing (3) parties must sign such agreement or in other words, the agreement must bear the signatures of the parties concerned and (4) such agreement must contain an arbitration clause.
24) In other words, aforementioned four conditions are sine qua non for constituting a valid and enforceable arbitration agreement. Failure to satisfy any of the four conditions would render the arbitration agreement invalid and unenforceable and, in consequence, would result in dismissal of the application filed under Section 11 of the Act at its threshold."
14. Admittedly, in the present case, in the licence agreement dated 01.09.2009, entered into between the respondent and the petitioner, no arbitration clause is existing. The petitioner also had not filed any petition under Arbitration and Conciliation Act, 1996 in support of Arbitration OP No.88 of 2019 alleging that there was an arbitration clause and not sought for the appointment of any Arbitrator. Admittedly, the petitioner is bound by the terms and conditions of licence agreement dated 01.09.2009, wherein he agreed to vacate the land in question on expiry of licence period on 31.08.2019 as per clause-46 of the said agreement.
15. The contention of the learned counsel for the appellant/petitioner was that even after expiry of the licence period, the arbitration clause in the agreement would survive and relied upon the judgment of the Division PNR,J & Dr.GRR,J 15 CMA No.57 of 2020 Bench of this Court in G. Radha Madhavi v. Indian Oil Corporation Ltd., Mumbai and others6.
16. But, a reading of the said judgment would disclose that it is more in favour of the respondents than in favour of the petitioner. The Division Bench observed that:
"13. There can be no dispute in the fact that an arbitration clause in an agreement would survive even after expiry/termination of such agreement in relation to any disputes that arose in the context of the period of the agreement or even the termination thereof. In the case on hand, however, it is not in dispute that the M & H Contract executed on 27.10.2003 was never renewed. In terms of Clause 48 of the agreement, it stood automatically terminated at the end of the initial agreement period. Continuance of the appellant thereafter was not permissive or with the tacit consent of the Corporation. It was only because of the status quo order secured by her husband in W.P.No.25859 of 2006 that the appellant continued to operate as a M & H Contractor. This state of affairs seems to have continued till the Supreme Court directed the appellants husband, amongst others, to vacate the premises by 30.06.2017. That being so, the judgments cited are of no avail to the appellant. The agreement in question did not stand extended automatically by virtue of the status quo order granted by this Court during the pendency of the writ petition. In effect, the agreement, as such, expired in terms of Clause 48 thereof and the continuance of the appellant thereafter was not by virtue of or under the said agreement but under the binding order of this Court. Once the agreement itself ceased to exist so long ago and the relationship between the parties thereafter was attributable to a Court order, the question of the arbitration clause contained in the said agreement surviving till this date does not arise.
14. On the above analysis, this Court finds that on the principal issue as to whether there was an arbitration clause existing as on date, whereby the appellant would have the right to approach the Court below with a petition under Section 9 of the Act of 1996, 6 2017 (6) ALD 406 PNR,J & Dr.GRR,J 16 CMA No.57 of 2020 the Court below rightly held that no such arbitration clause was available to the appellant. The other issue as to whether the Court below had jurisdiction otherwise to entertain the application therefore does not call for a finding on merits."
17. The above judgment is applicable to the facts of this case also as the petitioner continued to hold on basing on the 'status quo' order passed by the learned III ACJ on 30.08.2019 till it is vacated on 07.01.2020 even after the expiry of the license on 31.08.2019 as per clause 46 of the said agreement. Except making some representations, the petitioner had not raised any dispute for arbitration as required under Section 21 of the Act before approaching the III Additional Chief Judge, under Section 9 of the Act. His representation dated 21.08.2019 was only for extension of the lease period, but no dispute was raised by him. The said representation for extension was rejected by the respondents vide letter dated 06.09.2019.
18. Hence, we do not find any merit in the contention of the learned counsel for the appellant for grant of injunction in his favour even after the expiry of licence period and find no grounds to interfere with the orders of the Court below.
PNR,J & Dr.GRR,J 17 CMA No.57 of 2020
19. Accordingly, the Civil Miscellaneous Appeal is dismissed. No order as to costs. Miscellaneous Petitions pending, if any, shall, stand closed.
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P. NAVEEN RAO, J
_____________________
Dr. G. RADHA RANI, J
July , 2022
KTL