Gg Promoters & Developers Pvt. ... vs M/S.Manpower Pvt Ltd
2009 Latest Caselaw 295 Del

*           IN THE HIGH COURT OF DELHI AT NEW DELHI

+                        AA No.220/2008

%                  Date of Decision: 29.01.2009

GG Promoters & Developers Pvt. Ltd.           .......        Petitioner
                      Through:     Mr.N.K.Kaul,  Sr.Advocate    with
                                   Mr.Karan Mehra, Advocate.

                                  Versus

M/s.Manpower Pvt Ltd                             ........ Respondent
                         Through :    Mr.Shashank Deosudhi, Advocate.



CORAM :-
 HON'BLE MR. JUSTICE ANIL KUMAR

1.   Whether reporters of Local papers may be                   YES
     allowed to see the judgment?
2.   To be referred to the reporter or not?                     NO
3.   Whether the judgment should be reported in                 NO
     the Digest?


ANIL KUMAR, J.

*

1. This is a petition under Sections 11(3), 11(4), 11(6), 11(7), 11(8) of

The Arbitration & Conciliation Act, 1996 for appointment of arbitrator.

2. The petitioner contended that it is a company incorporated under

the provisions of the Indian Companies Act, 1956. The petition is filed

by Mr.Gautam Misra who is a Director of the petitioner company and

who has signed and verified the petition.

3. The respondent is stated to be a company incorporated under the

provisions of the Companies Act, 1956 which is carrying on the

business of providing services for recruitment of personnel.

4. The respondent company had entered into a lease agreement

dated 2nd September, 2005 with the Misra Charitable Trust whereby the

Misra Charitable Trust had leased 5th Floor of the office block

(admeasuring 9,001 square feet) at MCT House, Okhla Industrial Area,

New Delhi-110025 for a monthly rent of Rs. 4, 05, 045/- to the

respondent. The premises were demised to the respondent for an initial

non determinable term of three years with effect from 5th September,

2005. The lease dated 2nd September, 2005 also contemplated that on

the expiry of initial term of three years on 4th September, 2008 the

respondent shall have a right to renew the lease for a further two terms

of three years each subject to escalation in the lease rent.

5. The respondent company also entered into a License Agreement,

dated 2nd September, 2005, with the petitioner company, who was

nominated by the Misra Charitable Trust, for the use of equipments to

be supplied by the petitioner company in consideration of a license fee

of Rs. 1, 35, 015/-.

6. As per the terms of clause 8.2 of the lease agreement the

respondent company had also entered into a Maintenance Agreement,

dated 2nd September, 2005 with the petitioner company, being a

maintenance agency appointed by the Misra Charitable Trust. The

Maintenance Agreement entered into between the parties was co-

terminus with the Lease Agreement between the Respondent and the

Misra Charitable Trust. As per the terms and conditions of the

maintenance agreement the respondent company had to pay

maintenance charges per month for the services to be provided by the

petitioner company.

7. The Maintenance Agreement also had an arbitration agreement in

terms of clause 10 which is as under:-

"Arbitration:- In the event of any disputes and differences between the parties arising out of or in connection with this Agreement or the consequent lease, all such disputes and differences shall be referred to three arbitrators appointed one each by both the parties and the third to be appointed by the two arbitrators and failing their agreement, in accordance with the provision of Arbitration & Conciliation Act, 1996. The venue of the arbitration shall be New Delhi. The arbitration shall be conducted in accordance with the Arbitration and Conciliation Act, 1996 as may be enforced at the relevant time or any subsequent legislation in place thereof, as the case may."

8. The premises which were let out to the respondent by the Misra

Charitable Trust and in respect of which a maintenance and license

agreement was also entered between the respondent and the petitioner,

was sealed by the Monitoring Committee under the directions of the

Hon'ble Supreme Court on 3rd January, 2007.

9. The petitioner has stated that the Misra Charitable Trust moved

an application for desealing the premises on 5th January, 2007 as an

interim application in W.P(C) No.4677/1985 titled M.C.Mehta v. Union

of India which, however, is still pending adjudication and the premises

has remained sealed.

10. Since the premises was sealed, the petitioner by a letter dated

27th September, 2007, requested the respondent to vacate the premises

and to collect the security deposit after adjustment of the charges due

and payable as per the terms and conditions of the Maintenance

Agreement. The petitioner has contended that as per the terms and

conditions of the Maintenance Agreement the respondent is liable to pay

maintenance charges to the tune of Rs. 1, 26, 123/- for the month of

December, 2006 and further maintenance charges to the tune of Rs. 11,

732/- for the period starting from 1st January, 2007 to 3rd January,

2007. The respondent company did not respond to the letter dated 27th

September, 2007 nor did they vacate the premises or pay the charges

due and payable as per the terms and conditions of Maintenance

Agreement and therefore, disputes arose between the parties. The

petitioner, by a letter dated 28th April, 2008, invoked the arbitration

clause in the Maintenance Agreement, being clause 10, and nominated

Mr. Justice J.K. Mehra as its arbitrator and called upon the respondent

to appoint their arbitrator within 30 days. The communication dated

28th April, 2008 was replied to by the respondent by a letter dated 23rd

May, 2008, in which the respondent denied the legality of invocation of

arbitration clause contending that the claim for arbitration is immature.

Even though the respondent claimed an amount of Rs.8,53,00,000/- as

damages, it still claimed that there are no arbitrable disputes.

11. Since the respondent failed to appoint an arbitrator, the present

petition dated 2nd July, 2008 was filed and it is sought that an

arbitrator be appointed.

12. The petition is contested by the respondent, who has filed the

reply, contending inter-alia that the petition has been filed on the wrong

assumption that respondent has failed to pay the outstanding dues

payable as per the maintenance agreement and that the respondent has

also failed to vacate the premises. The respondent has contended that

he never refused to pay the outstanding dues and that in any case

outstanding dues are adjustable against the huge amount of security

deposit which is with the petitioner. It is contended that the petitioner

is entitled to adjust the maintenance fees against the substantial

security deposit with them and to return the balance security deposit

on the respondent vacating the premises. Regarding the vacation of

premises it is contended that the respondent has never refused to

vacate the premises and that the petitioner has not filed any documents

to substantiate the allegation that the respondent refused to vacate the

premises. The respondent submitted that the premises was sealed by

the Monitoring Committee suddenly and so there was never an occasion

to vacate the premises. In the circumstances, it is contended that there

is no arbitrable dispute. Reliance was also placed by the respondent on

a report submitted by Monitoring Committee in respect of the Misra

Charitable Trust being report No.24 dated 9th January, 2007. A dispute

was also raised by the respondent that the letter dated 27th September,

2007 was not received by the respondent as the letter was posted at the

address 5th Floor, MCT House, Okhla Industrial Area, Opposite Holy

Family Hospital which address was not provided in the agreement,

whereas the address provided in the agreement is of UG 66-69, World

Trade Centre, Barakhamba Road, New Delhi-110001.

13. I have heard the learned counsel for the parties and perused the

petition and the reply and the notice invoking the arbitration agreement

and the reply given by the respondent. The respondent cannot dispute

that there are arbitrable disputes between the parties. The petitioner is

praying for the arrears of the maintenance fees as per the terms and

conditions of the Maintenance Agreement. The respondent has

countered the allegations contending that the amount due under the

Maintenance Agreement can easily be adjusted from the security

deposit lying with the petitioner. This has not been specified as to how

much amount is to be adjusted and from which date. All these are

disputes which are to be adjudicated by the arbitrator and it cannot be

held that there are no arbitrable disputes. The arbitration clause in the

maintenance agreement contemplates appointment of three arbitrators

one each by both the parties and the third to be appointed by the two

arbitrators and failing their agreement in accordance with the provision

of Arbitration & Conciliation Act, 1996.

14. The petitioner has appointed his arbitrator, however, the

respondent has failed to appoint his arbitrator and has also lost his

right to appoint an arbitrator. Since the respondent has lost his right to

appoint an arbitrator the option is to appoint an arbitrator on behalf of

respondent and leaving the petitioner arbitrator and the respondent

arbitrator, to be appointed by the Court, to appoint another arbitrator.

The petitioner has appointed a retired Judge of High Court as an

Arbitrator. The learned counsel for the respondent prays that in case

another arbitrator is appointed on his behalf and then two Arbitrators

will appoint another Arbitrator and in the circumstances the cost and

expenses involved would be substantial and considering the nature of

disputes and other relevant factors, it will be just and appropriate to

appoint a sole Arbitrator. The learned counsel for the respondent has

also relied on Abdul Gaffar v. Sri Jaichandlal Ashok Kumar & Co.Pvt.

Ltd., JT 2000 (8) SC 152, to contend that a sole Arbitrator can be

appointed considering various factors even if the arbitration agreement

contemplates appointment of two Arbitrators by two parties and

appointment of the third Arbitrator by the two Arbitrators appointed by

the parties.

15. In Abdul Gaffar (supra), precedent relied on by the respondent

both the parties had agreed to appoint a sole arbitrator despite the

Arbitration Agreement contemplating appointing of three Arbitrators,

one each by the two parties and the third by the two Arbitrators

appointed by the parties.

16. The learned counsel for the petitioner contended that the

Arbitrator appointed by the petitioner be appointed as a sole Arbitrator

considering the nature of the disputes, amount involved, the costs of

the Arbitration and the fact that the respondent has failed to appoint

his arbitrator. The learned counsel for the respondent is not agreeable

to appointment of the Arbitrator appointed by the petitioner as the sole

Arbitrator.

17. In the circumstances, if the petitioner has agreed to appoint his

Arbitrator as the sole Arbitrator, and the respondent is also amenable to

appointing another person as a sole Arbitrator, it cannot be said that a

sole Arbitrator cannot be appointed in view of the Arbitration Agreement

contemplating appointment of two Arbitrators by the parties and

appointment of third Arbitrator by the two Arbitrators appointed by the

parties. The plea of the petitioner in the facts and circumstances is not

that a sole Arbitrator cannot be appointed in view of the Arbitration

Agreement but that the Arbitrator appointed by the petitioner should be

appointed as sole Arbitrator. The petitioner should not be allowed, in

the facts and circumstances, to appoint his arbitrator as the sole

Arbitrator and cannot be allowed to qualify his consent.

18. In the circumstances, it will be just and appropriate and in the

interest of justice to appoint another person as a sole Arbitrator taking

into consideration the nature of disputes, costs of Arbitration involved

in case three Arbitrators are appointed and plea of the petitioner to

appoint his Arbitrator as the sole Arbitrator.

19. Therefore, in the totality of these circumstances it will be just and

appropriate to appoint a sole arbitrator in order to resolve the disputes

between the parties. The parties shall be entitled to raise all their

disputes before the said arbitrator.

20. Therefore, in the facts and circumstances the petition is allowed.

Ms. Justice Usha Mehra (Retd.) C 1/36 Safdarjung Development Area,

New Delhi (Cellular No.9818421144 Phones: 26531100, 26561316) is

appointed as a sole arbitrator to adjudicate all the disputes between the

parties pursuant to the Maintenance Agreement dated 2nd September,

2005 and in terms of Clause 10 of the said agreement. The arbitrator

shall decide her own fees and shall also decide the procedure to be

adopted by her and the place of Arbitration. Parties are directed to

appear before the Learned Arbitrator on 12th February, 2009 at 4.30

PM. A copy of this order be sent forthwith to the Learned arbitrator.

Copies of the order be also given dasti to the parties.

JANUARY 29, 2009                                    ANIL KUMAR, J.
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