Delhi High Court
Sh Surya Kant Gupta And Anr. vs M/S Richlook Garments Pvt. Ltd. on 26 September, 2008
Author: Hima Kohli
2
IN THE HIGH COURT OF DELHI AT NEW DELHI
ARB.P. 266/2008
Date of Decision : 26.9.2008
SH SURYA KANT GUPTA AND ANOTHER ..... Petitioners
Through Mr.D.K. Gupta, Advocate
versus
M/S RICHLOOK GARMENTS PVT LTD ..... Respondent
Through Mr.S.K. Rungta, Advocate
CORAM
HON'BLE MS.JUSTICE HIMA KOHLI
1. Whether Reporters of Local papers may
be allowed to see the Judgment? No
2. To be referred to the Reporter or not? No
3. Whether the judgment should be
reported in the Digest? No
HIMA KOHLI, J. (ORAL)
1. The present petition is filed by the petitioners praying
inter alia for the appointment of an Arbitrator under Section 11 (6) of
the Arbitration and Conciliation Act, 1996 (in short `the Act'). The
undisputed facts of the case are that M/s STC Developers Pvt. Ltd.
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(hereinafter referred to as `the Company'), acquired a plot at Central
Business District near Karkardooma Court and developed a shopping
mall known as Cross River Mall. In the aforesaid mall, the company
let out a shop bearing no.8, located on the first floor, to the
respondent, in terms of the lease deed dated 5.4.2006, executed
between the respondent and the company. The lease deed contains
an arbitration clause being clause no.19, whereunder the parties have
agreed that their disputes and differences arising in connection with
the lease deed shall be referred to the arbitration of three Arbitrators,
one each to be appointed by the parties and third to be appointed by
the two arbitrators. For ready reference, the relevant part of Clause
No.19 is reproduced herein below:-
" Clause XIX - Resolution of Disputes : -
(a) Indian Laws shall govern the construction,
validity and performance of this agreement
and the Courts at Delhi shall have exclusive
jurisdiction. If any dispute or difference, of
any kind whatsoever, shall arise between the
parties in connection with the interpretation of
any of the provisions hereof and/or the
performance of this agreement (and whether
before or after the termination or breach of
this agreement) the Lessor and the Lessee
shall promptly and in good faith negotiate with
a view to reach its amicable resolution and
settlement. In case no amicable resolution or
settlement is reached within a period of 30
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days from the date of which the dispute or
difference was referred for such settlement
then such dispute and difference shall be
referred to and settled by arbitration of Three
(3) arbitrators, one each to be appointed by
the parties here to and third arbitrator to be
appointed by such (2) two arbitrators. All such
proceedings shall be counducted at Delhi in
accordance with and subject to the provisions
of Arbitration and Conciliation Act, 1996 or any
other statutory modification thereof or any
other re-enactment for the time being in force.
The arbitration proceedings shall be held in
English and the Award shall be reasoned and
given in writing.
(b) Xxxxx"
2. Pursuant thereto, the shop was sold by the company to
the petitioners herein and the respondent attorned to the petitioners
by paying rent to them w.e.f. 18.10.2006 onwards in accordance with
the terms and conditions of the lease deed. Subsequently, the
respondent issued a legal notice dated 14.5.2008, to the petitioners
expressing its intention to vacate the shop on 31.5.2008. The
petitioners responded to the aforesaid notice through their counsel
vide a reply dated 16.5.2008, whereunder various disputes were
raised by the petitioners on account of alleged breach of the lease
deed by the respondent, as enumerated in para 6 of the reply. The
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petitioners also invoked the arbitration clause governing the parties
and while suggesting the name of an Arbitrator, called upon the
respondent to nominate an Arbitrator on its part, so as to refer the
disputes for adjudication to the aforesaid forum. The aforesaid reply
was rejoined to by the respondent vide letter dated 3.6.2008. In
para 7 of the aforesaid rejoinder, the counsel for the respondent
informed the petitioners that it had opted for "Court Jurisdiction" as
per clause 19 of the lease deed and hence stated that there was no
need for appointment of an Arbitrator. Aggrieved by the aforesaid
response of the respondent, the petitioners have filed the present
petition, praying inter alia for appointment of a sole Arbitrator in view
of the fact that the respondent has failed to exercise its option within
30 days from the date of service of notice, for resolution of the
disputes between the parties.
3. Counsel for the respondent submits that the arbitration
clause contained in the lease deed and referred to by the petitioners
does not vest exclusive jurisdiction on an Arbitral Tribunal to resolve
the disputes between the parties and that the parties are entitled to
approach the Civil Courts in Delhi which have been conferred
jurisdiction by the parties in terms of Clause 19 of the lease deed. A
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perusal of the arbitration clause, however, shows otherwise. Clause
19 of the lease deed is clear, unambiguous and unequivocal inasmuch
as it is categorically stated therein that any dispute or difference
whatsoever which may arise between the parties in connection with
the interpretation of any of the provisions and/or performance
agreement shall be sought to be resolved by amicable resolution and
in case of no amicable resolution, the same shall be referred for
settlement to an Arbitral Tribunal. The respondent cannot be
permitted to read the first line of Clause 19 (a) out of context to state
that his client had the option to opt for Civil Court jurisdiction, which
it did. Instead, the entire clause has to be read to glean the intention
of the parties, which on the face of it, indicates that the parties had
agreed to submit themselves to the forum of arbitration. In view of
the aforesaid, the stand taken by the respondent is rejected being
misconceived and untenable. It is held that the parties are governed
by the arbitration clause as contained in the lease deed dated
5.4.2006.
4. In the case of Datar Switchgears Ltd. Versus Tata Finance
Ltd. & Anr., reported in (2000) 8 SCC 151, the Supreme Court has
held that if the vacancy of an arbitrator is not filled till the party
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approaches the Court and files a petition for appointment of an
arbitrator by the designated authority of the Chief Justice of that
Court under Section 11(6) of the Arbitration and Conciliation Act, the
right to supply the vacancy by the opposite party stands
extinguished. The ratio of the aforesaid case was approved by the
Supreme Court in Punj Lloyed Ltd. Versus Petronet MHB Ltd.,
reported in (2006) 2SCC 682 and it was again followed by a
Division Bench of this Court in the case of Delkon (India) Pvt. Ltd.
Versus G.M. Bharat Heavy Electricals Ltd., reported in 120 (2005)
DLT 542 (DB).
5. In view of the aforesaid judgments, the respondent has
lost its right to appoint an Arbitrator, it having failed to do so within
30 days from the date of receipt of the notice from the petitioners for
appointment of an Arbitrator or even prior to the date of institution of
the present petition. At this stage, counsels for the parties jointly
state that although the arbitration clause mandates appointment of
three Arbitrators, i.e., one Arbitrator by each side and an Umpire to
be appointed by both the Arbitrators, it would be appropriate if a sole
Arbitrator is appointed to adjudicate the disputes between the
parties.
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6. In these circumstances, the present petition is allowed.
Mr.S.S.Bal (Retd. ADJ) is appointed as the sole Arbitrator to
adjudicate upon all the disputes that have arisen between the parties.
The parties shall share the fee of the Arbitrator equally, which shall
be fixed by him.
7. The parties shall appear before the learned Arbitrator on
23.10.2008 at 4.00 P.M. The parties are at liberty to raise all their
disputes before the Arbitrator. They shall be at liberty to file their
claims and counter claims and also seek any interim order, if
necessary, which may be passed by the learned Arbitrator in
accordance with law, after taking into consideration, the facts and
circumstances of the present case.
8. The Registry is directed to forward a copy of the order to
the Arbitrator forthwith. The parties are also directed to intimate the
Arbitrator about the order.
9. The petition is disposed of.
HIMA KOHLI,J
SEPTEMBER 26, 2008
`ns'/sk
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