M/S Celebrity Fitness (India) ... vs Jmd Ltd. & Anr.
2009 Latest Caselaw 3163 Del

             * IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                                     Date of Reserve: 10.8.2009
                                                                 Date of Order: 13th August, 2009
OMP No. 117/2009
%                                                                                   13.08.2009

        M/s Celebrity Fitness (India) Pvt. Ltd.       ... Petitioner
                        Through: Mr. Ravi Gupta, Mr. Jenis Francis,
                        Mr. Gaurav Bhal & Mr. Tahir Nizami, Advocates

                   Versus


        JMD Ltd. & Anr.                                   ... Respondents
                                  Through: Mr. Anil Grover &
                                  Mr. Rakesh Garg, Advocates for R-1
                                  Mr. Rakesh Munjal, Sr. Advocate with
                                  Mr. S.P.Singh, Advocate for R-2


JUSTICE SHIV NARAYAN DHINGRA

1. Whether reporters of local papers may be allowed to see the
judgment?

2. To be referred to the reporter or not?

3. Whether judgment should be reported in Digest?

JUDGMENT

By this application under Section 9 of the Arbitration & Conciliation

Act, 1996 the petitioner has made a prayer that the respondents be restrained

from disconnecting the electricity/water supply of the petitioner and withdrawing

the maintenance services including inter alia chilled water supply, lifts,

escalators, parking etc., which were being provided by the respondents to the

petitioner, till the time Respondent No.1 has complied with terms of the

Agreement dated 8th July, 2008 or till the time arbitration proceedings take place

and are decided and the respondents be also restrained from

issuing/pasting/publishing in any manner any notices prejudicial to the interests

of the petitioner.

2. The petitioner had entered into an agreement titled as "Agreement

to Lease" with respondent no.1 on 8th July, 2008 whereunder it was agreed

between the parties that the petitioner would be given on lease a built up super

area of 38,000 sq. feet on third and fourth floors of the "JMD REGENT ARCADE"

for running a fitness center in the name and style of "Celebrity Fitness". At the

time when Agreement to Lease was entered into, the occupancy certificate had

not been received by the respondent however respondent represented that this

was likely to be received shortly. The petitioner and respondent no.1 had agreed

that a separate lease agreement shall be entered into between the parties as and

when the hurdles in letting out the premises are overcome. It was also agreed

that the rent payable by the leasee to the lessor shall commence on 1.9.2008 or

from the date of commercial business operation of leasee‟s fitness center under

the name and style of "Celebrity Fitness" in the said commercial complex,

whichever was earlier, provided 65% of the shops including "Celebrity Fitness"

Center in the commercial complex were open for business operations. The

petitioner paid a sum of Rs.75,24,000/- towards interest free refundable security

deposit qua the premises. Out of the aforesaid amount the lessor (respondent

no.1) retained a sum equivalent to two months‟ rent qua the demised premises

as interest free refundable security deposit and transferred the remaining security

deposit to the other owners, since the super area agreed to be leased out was

owned partly by respondent no.1 and partly by other persons. The agreement

further provided that the petitioner shall, in addition to the monthly rent, pay

monthly maintenance charges @ Rs.22 per sq. ft. for running the Centre from 6

am to 12 midnight amounting to Rs.8,36,000/- per month to the lessor or to the

appointed Maintenance Agency towards maintenance, preservation, upkeep of

the said Complex, operation of common services and management of common

areas including parking space, services and cost of lift operation, lighting of

common passages, cost towards common air-conditioning, power back up,

maintenance of sanitary conditions, common security arrangements in the

Complex including the parking area, firefighting equipment, capital replacement

funds etc. This amount was either payable to the lessor or to the Maintenance

Agency rendering services and a separate agreement was to be entered into with

the Maintenance Agency. The facts as pleaded and as revealed during

arguments show that the petitioner though had started its fitness center and a

club and also had its equipment in place in a part of the area under „agreement to

lease‟ but claimed that it was not liable to pay the rent in view of the fact that 65%

of the commercial space was not being commercially utilized in the Mall. It is

also not disputed that the maintenance service was handed over to respondent

no.2 and the maintenance services were being provided by respondent no.2 to

the petitioner and other users in the shopping mall. The petitioner states that it

was not liable to pay the maintenance @ Rs.22 per. Sq. ft. of the super area in

view of clause 10.1 which provided that common area maintenance charges shall

commence from the rent commencement date and before that the lessee shall

pay the actual power charges consumed by the lessee during fit out period.

3. The respondent has taken objection to the jurisdiction of the Court

on the ground that property was situated in Gurgaon (Haryana) and injunction

was being prayed by petitioner in respect of property in Gurgaon. The other

objection taken by respondent no.2 is that respondent no. 2 was not a party to

the agreement. Respondent no.2 was the company providing maintenance

services in the Mall and the petitioner had not entered into a maintenance

agreement with respondent no.2 and therefore, respondent no.2 could not be

made a party to the application under Section 9 as there was no arbitration

clause. Respondent no.1 has also submitted that the petitioner was deliberately

not paying rent of the premises on one or the other pretext and was not even

willing to pay the maintenance charges for the services of which it was taking

benefit whereas the petitioner was running his fitness center and the respondents

cannot be forced to provide maintenance to the petitioner free of charge.

4. It may be that the petitioner was not liable to pay rent/lease amount

as agreed in on the ground that 65% of the commercial space was not being

commercially utilized but the petitioner cannot force respondent no.2 to provide

all those facilities stated in annexure „D‟ of the agreement, free of charge

because of dispute on payment of rent. The facilities being provided include

Central Air conditioning, Security services, providing of power back

up/uninterrupted power supply, cleaning and sanitary services, common area

lighting up services, lift service etc. as enumerated in the agreement. These

services do not come for free. Any operator/provider has to spend on these

services. It has to pay salary to the employees, to pay for the diesel to provide

power back up when electricity cut is there, it has to provide for lift operations,

caretaking staff etc. etc. The assessment of maintenance charges @ Rs.22/- per

sq. ft. was made by the lessor on the assumption that the entire Mall would be on

lease. When even according to petitioner, the entire mall is not on lease and the

total commercial space is not occupied, the maintenance expenses being spent

by the lessor would be much more than what the lessor would be able to recover

from the shop owners/commercial space occupiers because the entire area of

the Mall has to be Centrally Air-conditioned, lifts are to be kept operational in the

entire Mall, security has to be there on all gates and at the parking whether the

commercial space is being fully utilized or not. Recovery of maintenance

charges could be done from all the shop keepers according to their occupied

space, if the entire space was being utilized. The petitioner has not been asked

to pay more than what has been agreed in the initial agreement i.e. @ Rs.22/-

per sq. feet. It is true that the agreement provides that the petitioner would not

be liable to pay maintenance at this rate till the commencement of the

operations/rent but there is a dispute between the parties about date of

commencement of the rent. The petitioner has claimed that rent has not

commenced while the respondent no.1 claims that rent had already commenced.

This dispute is to be decided by the Arbitrator. Pending adjudication of the

dispute, the respondents cannot be forced that the entire premises in occupation

of the petitioner should be maintained and all facilities should be provided to

petitioner free of cost or it would be liable only to pay electricity charges whereas

it would be entitled to get all facilities.

5. The plea that the respondent no.2 was not a necessary party is not

tenable because it is provided in the agreement to lease that the maintenance

would be provided either by lessor or an agency of the lessor. It is clear that the

agency created by the lessor was bound by the agreement and it cannot be said

that the agency created by the lessor for maintenance would not be bound by the

agreement when it has been specifically provided in the agreement that lessor or

agency created by the lessor shall be doing the maintenance.

6. In view of my above discussion, in case the petitioner clears

arrears of maintenance and continues to pay maintenance at the agreed rate of

Rs.22/- per sq. feet on super area, the respondents shall continue to provide all

facilities and maintenance in accordance with annexure „D‟ to the agreement.

This payment by the petitioner shall be without prejudice to its rights and the

petitioner can raise this issue before the Arbitrator.

With above directions, the petition is disposed of.

August 13, 2009                                                  SHIV NARAYAN DHINGRA, J.
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