M/S. Exclusive Motors Private ... vs India Tourism Development ...
2009 Latest Caselaw 428 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         Arb. Appln. No. 269/2008

%                         Date of Decision: February 06, 2009


# M/s. Exclusive Motors Private Ltd.               ..... Petitioner
!               Through: Mr. Ravi Gupta, Advocate with
                           Mr.Ankit Jain, Advocate

                                 Versus

$ India Tourism Development Corporation
                                                      .....Respondent

^                  Through: Mr.Rajiv Nayyar, Sr. Advocate
                            with Mr.Sushant Kumar, Mr.Sushil Kumar
                            Advocates


CORAM:
HON'BLE MR. JUSTICE S.N. AGGARWAL

1. Whether reporters of Local paper may be allowed to see the judgment?

2. To be referred to the reporter or not?

3. Whether the judgment should be reported in the Digest?

S.N.AGGARWAL, J (ORAL)

1. The petitioner has filed this petition seeking appointment

of an Arbitrator under Section 11(6) of the Arbitration & Conciliation

Act, 1996.

2. The petitioner before filing of this petition has filed a

petition under Section 9 of the Arbitration & Conciliation Act, 1996

being OMP No.183/2008 which stood dismissed vide order of the

learned Single Judge of this Court dated 4.4.2008. Aggrieved by the

order of the learned Single Judge, the petitioner filed an appeal

before the Division Bench being FAO(OS) No.190/2008 which also

stood dismissed vide order of Division Bench dated 18.8.2008.

Mr.Ravi Gupta, learned counsel appearing on behalf of the

petitioner says that the petitioner has preferred a Special Leave

Petition (Civil) against the above referred order of the Division

Bench in the Hon'ble Supreme Court in which notice has been

issued by the Hon'ble Supreme Court. Admittedly, there is no stay

of the operation of the order of the Division Bench by the Hon'ble

Supreme Court.

3. Counsel appearing for both the parties have agreed that

this petition may be heard and decided on its own merits.

4. Briefly stated, the facts of the case are that the

petitioner had taken an area of around 5000 sq. feet on licence

from the respondent in Samrat Hotel, Chanakya Puri, New Delhi at a

licence fee of Rs.2,80,000/- per month. The licence was granted to

the petitioner initially for a period of three years commencing with

effect from 17.02.2004. The terms of the licence came to an end

on 16.02.2007. However, vide subsequent agreement dated

09.03.2007, the term of the licence in favour of petitioner was

extended by the respondent for another year upto 31.3.2008.

Thereafter the respondent issued a letter dated 11.4.2008 asking

the petitioner to vacate the licensed premises immediately, failing

which it would take forcible possession of the premises.

5. The case of the petitioner is that it could not use the

licensed premises till August, 2007 because of certain breaches

under the contract committed by the respondent. It is submitted

that there was seepage and leakage in the licensed premises which

was not got rectified by the respondent and even the electricity

connection was provided in the licensed premises in August, 2007

and for all these reasons the petitioner could not make use of the

licensed premises till August, 2007. The further case of the

petitioner is that since it could not make use of the licensed

premises till August 2007, the three year term of licence should

start from 1.8.2007 and should remain valid till 31.7.2010. Since on

expiry of the extended term of licence, the respondent had already

issued a notice asking the petitioner to hand over the possession of

the licensed premises, the petitioner was facing threat of

dispossession from the licensed premises and, therefore, he filed a

petition under Section 9 of the Arbitration & Conciliation Act, 1996

seeking a restraint order against the respondent that it should not

be dispossessed from the licensed premises till the time the dispute

under the licence agreement dated 18.12.2004/9.3.2007 is decided

by the Arbitrator in terms of arbitration clause being Clause No.60

contained in the said agreement. The interim relief prayed for by

the petitioner in the petition under Section 9 was declined by the

learned Single Judge vide order dated 4.4.2008 in OMP

No.183/2008. The relevant portion of the order of the learned

Single Judge dated 4.4.2008 is extracted below:-

"22. There is another reason why the court is unable to accept the contention of the petitioner. Facially, the license agreement stipulates that if the license is not renewed, the occupier would have no right to continue; Clause 60 also states that arbitration is not available, where the matter falls within the jurisdiction of the authorities constituted under the Public Premises (Eviction of Unauthorised Occupants) Act. That part of the contract cannot be ignored and must be read as a limitation on the arbitration agreement; to ignore it would be to ignore giving effect to what was agreed to by the parties. The cause of action to seek vacant possession would be squarely within the domain of the officer under that Act. Any order made in this proceeding would impinge on the independent statutory power of such an Officer, which is impermissible. This position is also reinforced by Section 15 of that Act, which bars jurisdiction of civil courts. This conclusion is supported by the decision of a Division Bench of this court, in India Trade Promotion Organization where it was held, in a similar case that such condition should be read harmoniously and that matters that can be made subject matter under the Public Premises Act and decided there cannot be subject to the order to be passed in arbitral proceedings. The jurisdiction of the former is

exclusive.

23. For the above reasons, this Court is of the opinion the claim for interim measures under Section 9 has not been made out by the present petitioner. The petition, OMP 183/2008, therefore, fails and is dismissed, without order as to costs. Order dasti."

6. The appeal preferred by the petitioner against the above

referred order of the learned Single Judge dated 4.4.2008 was

dismissed by the Division Bench of this Court vide judgment and

order dated 18.8.2008 in FAO(OS) No.190/2008 and the relevant

portion of the order of the Division Bench is extracted below:-

"5. We have heard learned counsel for the parties at length. It is sought to be urged by learned counsel appearing for the appellant that if indeed the learned Single Judge was of the opinion that the Court lacked jurisdiction to entertain the application under Section 9 of the Act, the Court ought not to have pronounced on the merits of the case. It is submitted that inasmuch as the learned Single Judge has opined that the appellant was not entitled as a matter of right to renewal of the agreement, there was nothing left to be determined in proceedings under the Public Premises Act.

6. As far as this submission is concerned, this Court is of the view that the impugned order of the learned Single Judge must be held to have decided only the issue of jurisdiction of the Court to entertain an application under Section 9 of the Act and nothing more. The observation of the learned Single Judge as regards the kind of relief that can be granted under Section 9 cannot be an expression on the merits of the contention of the appellant as regards its claim for renewal of the licence agreement or for continuing to remain in possession.

7. ....not be a matter for which the Public Premises Act would have to be invoked. We are unable to agree. Clearly the relief sought by the appellant in the application under Section 9 would be a matter that would fall within the realm of the Public Premises Act. If the ITDC was entitled, in terms of the contract, to terminate the agreement by giving three months notice or retain the discretion not to renew the licence, the net result would be that the occupation by the appellant of the premises in question would be rendered unauthorised. We concur with the view expressed by the learned Single Judge that the issue arising in the petition falls within the realm of the Public Premises Act.

8. It is pointed out that after the impugned order of the learned Single Judge, ITDC has issued to the appellant a letter dated 1th April, 2008 asking it to vacate the premises immediately, failing which it would take forcible possession of the premises. The appellant has filed a writ petition in this Court in which an interim order was passed on 12th April, 2008 to the effect that the appellant would not be forcibly dispossessed except in accordance with the procedure prescribed under the Public Premises Act.

9. It is made clear that any observation made on merits by the learned Single Judge in the impugned order would not affect the decision to be taken in the proceedings under the Public Premises Act.

10. We accordingly find no merit in this appeal and it is disposed of as such, with no order as to costs."

7. The appointment of the Arbitrator prayed for by the

petitioner in the present petition is strongly opposed by Mr.Rajiv

Nayyar, learned senior counsel appearing on behalf of the

respondent, inter alia, on the ground that the Division Bench of this

Court has already held that the dispute raised by the petitioner is

not arbitrable because the said dispute has to be decided by the

statutory authority under the provisions of Public Premises (Eviction

of Unauthorised Occupants) Act, 1971. To meet this argument

advanced on behalf of the respondent, Mr.Ravi Gupta, learned

counsel appearing on behalf of the plaintiff has relied upon Clause

60 in the licence agreement dated 18.12.2-004/9.3.2007 and

relying upon the same he has contended that the petitioner has

raised several disputes in connection with the licence agreement

executed between the parties and all those disputes raised by the

petitioner according to him cannot be decided under the Public

Premises (Eviction of Unauthorised Occupants) Act, 1971. It is

contended by the learned counsel appearing on behalf of the

petitioner that the parties had consciously entered into an

agreement that except those disputes which can be decided under

Public Premises (Eviction of Unauthorised Occupants) Act, 1971, all

other disputes between the parties under the agreement have to be

decided by reference to the Sole Arbitrator named in the

agreement. Clause 60 in the licence agreement dated

18.12.2004/9.3.2007 is an arbitration clause and the said clause

reads as under:-

"60. That in respect where provisions of public premises (eviction of unauthorized occupants) Act, 1971 can be

invoked by the licensor in respect of the license premises, the provisions of the said Act shall apply. In respect of any other dispute or difference relating to the terms of this license deed, the matter shall be referred to the sole arbitration of the Vice-President, Hotel or any other person appointed by him in this behalf. The award given by the arbitrator shall be binding upon the parties. It is specifically agreed by the licensees that it will have no objection to any such appointment that the arbitrator so appointed is an employee of the licensor or has already expressed view on, for or any of the matters in dispute or difference. The arbitrator so appointed shall have power to extend the time for making an award. Same as above the Arbitrator shall act under the provisions of the Arbitration and Conciliation Act, 1996. subject to above only Delhi Courts will have jurisdiction."

8. On a plain reading of above referred Clause-60 contained

in the licence agreement dated 18.12.2004/9.3.2007, it may be

seen that the parties had entered into an agreement that where

provisions of Public Premises (Eviction of Unauthorised Occupants)

Act, 1971 can be invoked, the provisions of the said Act shall apply.

However, in respect of any other dispute or differences regarding

the terms of the licence deed, the matter was agreed to be referred

to the sole arbitration of the Vice President (Hotels) or to any other

person appointed by him in this regard.

9. The petitioner in this petition has raised the following

disputes:-

"i. That the petitioner is entitled to with-hold the

possession of the premises for initial period of three years starting w.e.f. 01.08.2007 and thereafter the petitioner is entitled for three renewals of this agreement after every three years each.

v. That the petitioner is liable to claim damages from the respondent for the several damages suffered by the petitioner on account of breaches on the part of the respondent for the loss of business, goodwill and reputation.

vi. Petitioner is also entitled for refund of the amount spent by it for carrying out repairs, renovations in the suit premises, which otherwise was the duty and obligation of the respondent corporation.

vii. Issuance of letter dated 08.01.2008 by the respondent corporation is absolutely malafide, illegal and is liable to be quashed."

10. Having regard to the facts and the circumstances of the

case and the submissions made by the counsel for the parties and

also having regard to the orders passed by the Division Bench in

FAO(OS) No.190/2008, this Court is of the opinion that the dispute

in so far it relates to eviction of the petitioner is concerned, the said

dispute is to be decided by the statutory authority under the Public

Premises (Eviction of Unauthorised Occupants) Act, 1971 and the

dispute in regard to that is excluded from the purview of arbitration

as is so evident from Clause-60 referred hereinabove. The above

referred claim Nos. i, ii, iii, iv and vii made by the petitioner are in

regard to possession of the licensed premises and the said claims

are subject matter of provisions of Public Premises (Eviction of

Unauthorised Occupants) Act, 1971. As far as claim Nos. 'v' and 'vi'

referred hereinabove are concerned, they relate to alleged

damages suffered by the petitioner on account of alleged breach of

terms and conditions of licence deed on the part of the respondent

and the said claims fall in the category of any other dispute

mentioned in Clause-60 referred hereinabove. The claims No.'v'

and 'vi' made by the petitioner as referred above have to be

decided through the process of arbitration agreed between the

parties in the licence agreement dated 18.12.2004/09.3.2007. The

claims No.'v' and 'vi' are disputes which do not fall within the

domain of the provisions of Public Premises (Eviction of

Unauthorised Occupants) Act, 1971.

11. The respondents are stated to have already appointed

the named Arbitrator, i.e. Vice President (Hotels) as Sole Arbitrator

vide its letter dated 27.6.2008 sent to the petitioner in response to

its notice dated 9.6.2008. Let the named Arbitrator who has

already been appointed should decide claims No.'v' and 'vi' referred

above as per law. The petitioner is given liberty to file a quantified

claim with regard to alleged damages mentioned in Item Nos.'v'

and 'vi' referred above before the learned Arbitrator within three

weeks from today. The respondent will be entitled to defend the

claim of the petitioner before the learned Arbitrator with regard to

alleged damages.

12. The parties are directed to appear before the learned

Arbitrator for necessary directions at 4:00 PM on 16.03.2009.

13. In view of the above, this petition stands disposed of

leaving the parties to bear their own costs.

February 06, 2009                              S.N.AGGARWAL
vg                                                [JUDGE]