Ravinder Nath & Anr. vs Best Entertainment (P) Ltd.
2011 Latest Caselaw 3092 Del

*            THE HIGH COURT OF DELHI AT NEW DELHI

%                                         Judgment delivered on: 4th July, 2011

                IA No. 11277/2010 in CS(OS) No. 755/2010

RAVINDER NATH & ANR.                         ..... Plaintiffs
               Through: Mr Ali H. Naqvi, Adv.

                                           versus


BEST ENTERTAINMENT (P) LTD.                 ..... Defendant
               Through: Mr Pradeep Aggarwal, Adv.
CORAM:-
HON'BLE MR JUSTICE MANMOHAN SINGH

     1.

Whether Reporters of local papers may be allowed to see the judgment ?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in Digest ?

MANMOHAN SINGH, J

1. By this order I shall dispose of the present application filed by

the defendant/applicant under section 8 of the Arbitration and

Conciliation Act, 1996 praying that the parties be referred to arbitration,

in terms of clause 16 of the lease deed dated 03.03.2003 executed

between the parties.

2. The brief facts of the case, as per the plaint, are that plaintiffs

are the owners of the property bearing No.B-88, Niti Bagh, New Delhi,

and vide registered lease deed dated 03.03.2003 they had created the

IA No.11277/2010 in CS(OS) No. 755/2010 Page No.1 of 6 tenancy in favour of the defendant in respect of the said property. The

said lease agreement was for the period of five years w.e.f. 01.07.2003 to

30.06.2008.

3. It is averred in the plaint, that there was an undertaking of the

defendant to vacate the suit property on or before 30.06.2008 and before

the expiry of the lease, the plaintiff, sent a notice dated 25.06.2008

reminding the defendant of its obligation under law to vacate the said

premises by 30.06.2008. But, the defendant failed to vacate the said

premises even on the expiry of the lease and agreed to pay rent @

Rs.300,000/- per month for the overstay as per Clause 5 of the lease

deed. In the month of January 2010, it came to the notice of the plaintiff

that the defendants have altered the suit property causing damage to its

structure as well as design. Therefore, as per section 106 of the Transfer

of Property Act, 1882, the plaintiff served a legal notice upon the

defendant to vacate the suit property within 15 days. But, the defendant

continues to be in possession of the suit property.

4. Thus, the present suit for recovery of possession and mesne

profit is filed.

5. According to the defendant, the relief sought by the defendant

in its application under Section 8 of the Arbitration & Conciliation Act,

1996 is clearly covered in view of Clause 16 of the Lease deed which

reads as under:

IA No.11277/2010 in CS(OS) No. 755/2010 Page No.2 of 6 "Any dispute/s or difference/s that may arise between the parties in respect of any matter contained herein including interpretation of any of the terms contained herein and/or the termination of the lease shall be settled by the arbitration under the provisions of Arbitration & Conciliation Act, 1996. The place of arbitration shall be New Delhi and courts in New Delhi shall have exclusive jurisdiction."

6. It is stated by the defendant, that the disputes which are the

subject matter of the present case do not fall within the jurisdiction of this

court and have to be referred to the arbitrator or an arbitration tribunal

constituted in terms of the said lease deed. Therefore, the

applicant/defendant has filed the present application which is liable to b e

allowed.

7. The plaintiff in its reply to the present application has

submitted that the clause referred to by the defendant actually pertains to

the lease tenure from 01.07.2003 to 30.06.2008 and therefore, the said

clause has no nexus with the present suit. An arbitration clause in a prior

lease deed cannot be used to decide the rights of the parties after the

expiry of the lease tenure.

8. Admittedly there was neither a fresh lease nor any registered

extension of the earlier lease between the parties, and as per the law of

the land, an arbitration clause has to be in writing, therefore, the said

arbitration clause cannot be relied upon by the defendant in the

circumstances of the present suit.

IA No.11277/2010 in CS(OS) No. 755/2010 Page No.3 of 6

9. The learned counsel for the defendant/applicant, in order

support his submission, has referred to clause 5 of the lease deed which

contains the provision of overstay. It is stipulated in clause 5 of the lease

deed that in case the lessee continues to occupy the said premises after

the said lease has expired, without the consent of the lessor. The lessor

will charge a rent of Rs. 3 lac per month from the lessee as rent towards

the overstay at the premises after the expiry of the lease. The learned

counsel for the defendant has argued that despite the fact that the lease

tenure ended on 31.06.2008, the defendant is already occupying the

tenanted premises and is paying the rent of Rs.3 lac per month in view of

the clause 5 of the lease deed. The learned counsel for the defendant has

submitted that by implication the lease deed in question continues to exist

and therefore, as per arbitration clause 16 of the lease deed, the present

suit is not maintainable.

10. It is the admitted fact between the parties that the plaintiffs

granted the lease to the defendant through a registered lease deed dated

3.3.2003 for a period of five years commencing with effect from

01.07.2003 up to 30.06.2008. The stamp duty was also paid for the said

period. The lease deed also contained an undertaking of the defendant to

vacate and hand over the vacant and peaceful possession of the property

on the expiry of the lease deed which admittedly expired on 30.06.2008.

IA No.11277/2010 in CS(OS) No. 755/2010 Page No.4 of 6

11. As far as arbitration clause is concerned, clause 16 of the

lease deed clearly states that only disputes or differences which may arise

in respect of any matter contained in the lease deed and/or termination of

the lease deed shall be settled by arbitration. Clause 1 of the lease deed

clearly mentions that the said deed would be terminated on 30.06.2008.

It is also an admitted fact that despite of negotiation the lease deed was

not extended between the parties. The learned counsel for the defendant

has not disputed that the lease deed signed properly registered and the

payment of stamp duty was only for five years.

12. In view of the above said facts and circumstances, this Court

is of the considered view that the arbitration clause referred to by the

defendant in a prior lease deed, which has already expired on

30.06.2008, cannot be used to decide the rights of the parties after expiry

of the lease tenure and under these circumstances, the rights being sought

to be enforced do not relate to the said lease deed or tenure but to a

period later in time.

13. It is not in dispute that the defendant has not vacated the

premises in question after the expiry of the period of the lease deed and

he is also paying the rent to the tune of Rs.3 lac per month. However, the

law of the land mandates that an arbitration clause has to be in writing.

Since the lease between the parties has already ceased to exist with effect

from 30.06.2008, there is no fresh agreement between the parties and

IA No.11277/2010 in CS(OS) No. 755/2010 Page No.5 of 6 therefore, the arbitration clause is inapplicable to the subject mater of the

present suit. The application is totally false and frivolous and the same is

dismissed with the cost of Rs.10,000/-.

CS(OS) No. 755/2010

List on 18th July, 2011 before Joint Registrar for

admission/denial of documents.

MANMOHAN SINGH, J JULY 04, 2011 jk

IA No.11277/2010 in CS(OS) No. 755/2010 Page No.6 of 6