Kesar Enterprises Ltd. & ... vs Union Of India & Others
1994 Latest Caselaw 208 Del

ORDER

Sat Pal, J.

1. By this order I am disposing of both IAs bearing No. 9297/89 and 9302/89 as the point raised in both the applications is identical. IA 9297/89 in Suit No. 3405/89 has been filed on behalf of Kesar Enterprises Ltd. (hereinafter referred to as the Company) and IA 9302/89 in Suit No. 3408/89 has been filed on behalf of Petroleum & Petro Chemical Purveyors (hereinafter) referred to as the Firm) under Section 41 Schedule II of Arbitration Act read with Section 151 CPC and in both the applications it has been prayed that proceedings under Sections 4 and 7 of the Public Premises Act pending before the Estate Officer, Northern Railway DRM Office. New Delhi be stayed.

2. Briefly stated the facts of the case are that the Company in terms of agreements dated 6.1.1962 and 3.9.1980 with the President of India acting through the Divisional Suprintendent of Northern Railway was allowed as the licensee the use of contiguous pieces of land admeasuring about 15352.5 sq. mtrs. adjacent to railway station. On this land the Company constructed storage tank, godown and other accomodation and depots for receiving stores and dealing vegetable oil and kerosen oil, petroleum and petroleum products. The license fee during period 1955-60 was Rs. 0.48 per sq. yard per annum and it was increased to Rs. 9/- per sq. yard in the year 1980. w.e.f. 1st March, 1982 the license fee was increased to Rs. 68.31 p. and was further increased to Rs. 119.96 p. per sqr. meter per year w.e.f. 5.12.1982. But later on by letter dated 11.3.1986 the license fee was fixed at Rs. 60/- per sq. meter per year for covered area and Rs. 30/- per sqr. meter years for uncovered area for the period 5.12.1982 to 31.3.1986. Vide letter dated 27.10.1986, the license fee was revised to Rs. 60/- per sq. meter per year for both covered as well as uncovered area plus 10% increase every year. Vide letter 26.10.1987, the license fee was fixed @ Rs. 78/- per sqr. mtr. per year for the period 1.4.1986 to 31.3.1988. Since the Company did not deposit the license fee at the enhanced rates, the license was terminated by the respondents on 12.5.1988 and thereafter proceedings under Public Premises (Eviction of Unauthorised Occupant) Act, 1971 (in short P.P. Act) were initiated. Hence the company filed the petition under Section 20 of the Arbitration Act and Along with it filed IA No. 9297/89 for stay of the proceedings initiated under the P.P. Act.

3. In the case of Firm, it was allowed by the respondents as the licensee for the use of land admeasuring 6956 sq. mtr. situated at Rohtak Road, Shakur Basti, Delhi on Rs. 37,424/- per annum as the annual license fee in June, 1978. Vide letter dated 11.3.1981, the license fee was increased to Rs. 91.26 p. per sq. meter per year w.e.f. 1.1.1981. Vide letter dated 11.2.1986 it was fixed at the old rate of Rs. 37,424/- per annum for the period 10.6.1982 to 31.12.1982. From 1.1.1983 the license fee was fixed at Rs. 60/- per sq. mtr. per year for covered area and Rs. 30/- per sq. meter per year for uncovered area. Vide letter dated 27.10.1986, the license fee was fixed at Rs. 60/- per sq. meter per year for both covered and uncovered area plus 10% increase every year for the period 1.1.1983 to 31.3.1986. Vide letter dated 19.4.1984, the license fee was revised to Rs. 78/- per sq. meter per year from 1.4.1986 onwards. Since the firm failed to deposit the amount of license fee at the enhanced rate, the license was terminated by the respondents on 12.5.1988 and proceedings under the P.P. Act were initiated against the firm. Accordingly, the firm filed the petition bearing No. 3408/89 under Section 20 of the Arbitration Act and Along with the petition filed an IA No. 9302/89.

4. Mr. Aggarwal, learned senior counsel appearing on behalf of the Company and the Firm submitted that the increase in the rate of license fee by the respondents was arbitrary and unreasonable and as such the disputes between the parties on this aspect of the matter be referred to the arbitration in terms of the arbitration clause contained in the agreement between the parties. He further submitted that during the pendency of the arbitration proceedings, Company and the Firm were willing to pay the annual license fee @ Rs. 32.70 p. per sq. mt. per annum in terms of the order dated 27.10.1989 passed by a learned Single Judge of this court in an other similar case titled as M/s. Batra Brothers v. UOI and others (Suit No. 2950-A/88 decided on 27.10.1989). He also submitted that the Estate Officer under the P.P. Act could not go into the question whether the rates of license fee enhanced by the respondents were reasonable and this question could only be gone into by the arbitrator in terms of the arbitration clause.

5. Mr. Kapur, learned counsel appearing on behalf of the respondents, however, submitted that the respondents had already initiated proceedings under the P.P. Act as the Company and the Firm were in arrears of rent payable in respect of the premises which were in their occupation and which admittedly were public premises and the Company and the Firm had been participating in the said proceedings throughout. Learned counsel drew my attention to Section 15 of the P.P. Act and submitted that this court had no jurisdiction to entertain any suit or proceeding in respect of the arrears of rent/damages payable under Section 7 of the said Act. He submitted that even though the license deed contained an Arbitration clause which constituted the arbitration agreement between the parties, the proceedings under Section 20 of the Arbitration Act on the question of eviction or payment of rent or damages in respect of public premises were not maintainable in view of the bar contained in Section 15 of the P.P. Act. In support of his contention learned counsel placed reliance on an order dated 16.10.1990 passed by a learned Single Judge of this court in the case of M/s. C.J. International Hotels Ltd. v. New Delhi Municipal Committee (I.A. 2957/90 in Suit No. 1193/90).

6. I have given my thoughtful consideration to the submissions made by learned counsel for the parties and have perused the records. Admittedly, the premises in question are public premises and as such the provisions of P.P. Act are applicable to the present cases. It is true that the agreement between the parties contains an arbitration clause and in terms of the said clause, the dispute between the parties can be referred to arbitration. But since the proceedings under the P.P. Act have already been initiated in respect of payment of arrears of rent/damages payable by the Company and the Firm, petition under Section 20 of the Arbitration Act is not maintainable as the Arbitrator will have no jurisdiction in the matter of disputes falling under Section 15 of the P.P. Act and the arrears of rent/damages squarely fall under Section 15 of the said Act, I am fully in agreement with the observations of learned Single Judge of this court in his order 16.10.1990 in the case of C.J. International Hotels (supra) that on a petition filed under Section 20 of the Arbitration Act, the proceedings before the Estate Officer under the P.P. Act cannot be stayed in view of the bar contained in Section 15 of the P.P. Act. It may be pointed out here that the aforesaid observations are based on a judgment of the Supreme Court in the case of Ashok Marketing Ltd. v. Punjab National Bank .

7. I also do not find any merit in the contention urged by learned senior counsel for the Company and the Firm that since the question whether the rates enhanced by the respondents were reasonable or not cannot be gone into by the Estate Officer, disputes between the parties should be referred to Arbitration. In this connection a reference may be made to Section 7 of the P.P. Act which stipulates "where any person is in arrears of rent payable in respect of any public premises, the estate officer may, by order, require that person to pay the same within such time and in such Installments as may be specified in the order". In terms of this section the arrears of rent payable means the rent payable in accordance with law that is in terms of the agreement between the parties read with circulars, guidelines issued by the respondent-railways and statutory provisions. Here a reference may be made to a judgment of the Supreme Court reported in the case of New Delhi Municipal Committee v. Kalu Ram , wherein it was held that the word 'payable' in Section 7 of the P.P. Act, in the context in which occurs, means "legally recoverable".

8. In view of the above discussion, both the applications are dismissed. The parties are, however, left to bear their own costs.