Misra Charitable Trust vs M/S.Manpower Pvt Ltd
2009 Latest Caselaw 299 Del

*           IN THE HIGH COURT OF DELHI AT NEW DELHI

+                        AA No.222/2008

%                  Date of Decision: 29.01.2009



Misra Charitable Trust                           ....... 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 registered trust under the

Indian Trust Act, 1882. The petition is filed by Mr.Gautam Misra who is

an authorized representative of the trust 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 business of

providing services for recruitment of personnel.

4. The petitioner had entered into agreements with respondent

company in respect of 5th Floor of office block (admeasuring 9,001

square feet) at MCT House, Okhla Industrial Area, New Delhi-110025.

5. The petitioner entered into a lease agreement dated 2nd

September, 2005 at a monthly rent of Rs.4,05,045/- with 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. The lease

agreement also contemplated payment of security amount by the

respondent to the petitioner.

6. The lease agreement also had an arbitration agreement in terms

of Clause 19 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 arbitrator shall be entitled to grant interim relief measures including an interim award directing the handing over of vacant physical possession and to make a final award including for delivery of possession, refund of security deposit, payment of damages etc. 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."

7. The petitioner had also appointed a maintenance agency,

M/s.G.G.Promoters & Developers Pvt Ltd and a maintenance agreement

dated 2nd September, 2005 was entered between the respondent and

the said maintenance agency. The respondent also entered into a

licence agreement dated 2nd September, 2005 with M/s.G.G.Promoters

& Developers Pvt Ltd a company nominated by the petitioner which was

for the use of the equipment supplied by said company,

M/s.G.G.Promoters & Developers Pvt Ltd to the respondent.

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

petitioner and in respect of which a maintenance and license agreement

were also entered between the respondent and M/s.G.G.Promoters &

Developers Pvt. Ltd., were sealed by the Monitoring Committee on 3rd

January, 2007.

9. The petitioner contends that he 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 is alleged to have

demanded the respondent to vacate the premises by letters dated 27th

September, 2007 and 15th November, 2007 and to collect the security

deposit after adjustment of deposit charges and rents due. According to

the petitioner the amounts are due on account of electricity charges as

well arrears of rents. The respondent failed to vacate the premises and

also failed to pay the electricity charges and other amounts due under

the lease agreement and, therefore, the disputes arose between the

parties and in terms of Clause 19 in the lease deed which is an

arbitration agreement, the petitioner invoked the arbitration agreement

and appointed Mr.Justice J.K.Mehra as an arbitrator and asked the

respondent to appoint his arbitrator within 30 days.

11. The communication dated 28th April, 2008 by the petitioner to the

respondent appointing its arbitrator, was replied by letter dated 9th

May, 2008. The respondent, however, denied the legality of invocation of

arbitration clause contending that the claim for arbitration is immature.

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

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

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 disputes raised by the petitioner are

based on the wrong assumption that the respondent has failed to pay

the outstanding dues as per the terms and conditions of the lease

agreement and that the respondent has also failed to vacate the

premises. The respondent has contended that he has never refused to

pay the outstanding dues and that in any case the outstanding dues

are only in respect of rent for 3 days. It is contended that the petitioner

is entitled to adjust the amount of rent of 3 days against the substantial

security deposit which is with them and to return the balance security

deposit on respondent vacating the premises. Regarding the vacation of

premises it is contended that the respondent did not refuse 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 and there was no 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 petitioner, Misra Charitable Trust

being report No.24 dated 9th January, 2007. The dispute was also

raised by the respondent that the copies of letters dated 27th

September, 2007 and 15th November, 2007 were posted at the address

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

Hospital which address is not provided in the agreement because 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

demanding arrears of electricity charges and the arrears of other

charges under the lease agreement. The respondent has countered the

allegations that the rent is payable only for 3 days which amount can

be adjusted from the security deposit and other amounts which are due

under the lease agreement can also be adjusted. 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.

Whether the tenancy could be surrendered without vacating the

premises and whether there will not be any liability of the respondent

on account of sealing of the premises pursuant to the orders of

Monitoring Committee, 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 lease agreement contemplates

appointment of three arbitrators one each by both the parties and 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 his 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 JT 2000 (8) SC

152, Abdul Gaffar Vs Sri Jaichandlal Ashok Kumar & Co.Pvt. Ltd. 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 third Arbitrator by

the two Arbitrator appointed by the parties.

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

both the parties had agreed to appoint one of the three arbitrators to

appoint a sole arbitrator despite the Arbitration Agreement

contemplating appointing of two Arbitrators by two parties and

appointment of third Arbitrator 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 disputes and amount involved and the costs of the

Arbitration and as the respondent 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 lease agreement dated 2nd September, 2005 and

in terms of Clause 19 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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