Gg Promoters & Developers Pvt. ... vs M/S.Manpower Pvt Ltd
2009 Latest Caselaw 297 Del

*           IN THE HIGH COURT OF DELHI AT NEW DELHI

+                        AA No.221/2008

%                  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 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. As per clause 8.2 of the lease agreement the respondent company

also entered into a Maintenance Agreement with the petitioner

company, being a maintenance agency appointed by the Misra

Charitable Trust, whereby the petitioner had to provide certain services

to the respondent against a monthly maintenance charge to be paid by

the respondent.

6. 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/-. The License 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 of the

agreement the respondent company had to deposit an amount of Rs. 8,

10, 090/- as interest free security deposit with the petitioner company

which was to be refunded by the petitioner company upon the expiry of

the initial or the extended term of the agreement and the respondent

vacating the leased premises and handing over the physical possession

thereof to the Misra Charitable Trust. The refund of the security deposit

was to be done after adjusting any dues payable under the terms and

conditions of the License Agreement.

7. The license agreement also had an arbitration agreement in terms

of Article 6 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."

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 appointed by 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 License Agreement.

The petitioner has contended that as per the terms and conditions of

the License Agreement the respondent is liable to pay license fee to the

tune of Rs. 13, 502/- 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 the

License Agreement and therefore, disputes arose between the parties.

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

arbitration clause in the License Agreement, being clause 6, 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 9th 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.

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 license 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 arrears

in license fees in only for three days. It is contended that the petitioner

is entitled to adjust the License fees for 3 days against the substantial

security deposit which is 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 suddenly by the Monitoring Committee 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 in the license fees as per the terms and

conditions of the license agreement. The respondent has countered the

allegations contending that the arrears in licensing fees are only for 3

days which amount can 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. The premises have also not been

vacated by the respondent. 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 license 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 provisions 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

appoint another Arbitrator, 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 License Agreement dated 2nd September, 2005

and in terms of Clause 6 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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