Delhi High Court
M/S Srm Infracon Pvt Ltd & Anr vs M/S An Elegant Hospitality & Anr on 7 December, 2016
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 409/2016
M/S SRM INFRACON PVT LTD & ANR ..... Plaintiffs
Through: Mr. Dinesh Garg, Ms. Rachna
Agrawal & Mr. Pradeep Goel, Advs.
Versus
M/S AN ELEGANT HOSPITALITY & ANR ..... Defendants
Through: Mr. Yogesh K. Jagia, Mr. Amit Sood
& Ms. Sushma Yadav, Advs. for D-
1&2.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
ORDER
% 07.12.2016
IA No.14694/2016 (of both the defendants under Section 8 of the
Arbitration & Conciliation Act, 1996)
1. This application came up first before this Court on 28 th November,
2016 when the following order was passed:
"1. The defendants in this suit for ejectment from immovable property
on determination of lease seek reference to arbitration in accordance with
Clause 24 of the registered lease deed.
2. The counsel for the plaintiffs appears on advance notice and states
that the defendants have not filed the written statement and hence their
defence is liable to be struck off and the suit be decreed and for which
purpose, an application under Order VIII Rule 10 CPC has already been
filed.
3. Even if that be so, that in my view would not defeat the application.
4. Section 8 of the Arbitration & Conciliation Act, 1996 would be
applicable as long as the written statement on the merit of the defence has
not been filed and which has admittedly not been filed.
5. The counsel for the plaintiffs next contends that as per the arbitration
clause itself, the same is not applicable in case of default of rent. He
contends that the determination of lease was on the ground of default in
payment of rent and in any case, the term of the lease has also expired.
6. I have enquired from the counsel for the defendants / applicants as to
what is the dispute to be referred to arbitration qua the claim for ejectment if
the term of the registered lease has expired.
7. The counsel for the defendants / applicants first states that he has not
examined whether the term of the lease has expired.
8. Finding it to be preposterous, the counsel for the defendants /
applicants has been asked to check just now whether the term of the lease
has expired or not but seeks time to obtain instructions.
9. The plaintiffs, if feels the need to file a reply to the application, may
file a reply to the same or before 2nd December, 2016 with advance copy to
the counsel for the defendants/applicants.
10. List for hearing on 7th December, 2016 as already scheduled."
2. The counsel for the defendants today fairly admitted that the term of
the registered lease deed has expired.
3. Once that is the admitted position, there appears to be no dispute to be
referred to arbitration as far as the claim of the plaintiffs for ejectment of the
defendants from the premises earlier leased out to the defendants is
concerned.
4. The counsel for the defendants states that the term of the registered
lease has expired on 14th October, 2016; however the present suit was filed
prior thereto on the ground of determination of the lease prior to the expiry
of term thereof and has to be decided on the cause of action on which it has
been filed and not on a cause of action which may have accrued to the
plaintiffs subsequent to the filing of the suit. It is argued that as far as the
cause of action for the relief of ejectment on the basis of determination of
lease prior to the expiry of term thereof is concerned, the same is arbitrable
in accordance with the arbitration cause between the parties and the parties
have to be referred to arbitration. It is yet further contended that if the
plaintiffs now desire the relief of ejectment of the defendants from the
property on the cause of action of determination of the lease by efflux of
time, the plaintiffs have to file a fresh proceeding therefor.
5. I am unable to agree. The question is no longer res integra.
6. It has been held in Hindustan Petroleum Corporation Ltd. Vs. Uma
Rani (1996) 2 LW 568, T.B. Nath Vs. Hindustan Petroleum Corporation
Ltd. (1999) 2 LW 552, Mohinder Pal Singh Vs. Sunil Kumar 2013 SCC
Online Del 3292 and in judgment dated 28th July, 2015 of this Court in Case
No.RFA 285/2015 titled Dilip Nigam Vs. Sanjay Kumar that even where
the suit for ejectment has been filed prior to expiry by efflux of time of the
term for which the premises are let out, if the said time expires during the
pendency of the suit or where the renewal / extension of lease period
pleaded and on the basis whereof the suit for ejectment is defended comes
to an end during the course of court proceedings, the tenant is liable to be
ejected forthwith without requiring the landlord to file a fresh proceeding for
ejectment.
7. Thus though the present suit is found to have been filed on 16 th
August, 2016 i.e. prior to 14th October, 2016 when the term of the registered
lease deed was to expire but now that the term for which the premises were
admittedly let out has expired, the defendant is left with no defence of the
termination of tenancy earlier effected being bad and is liable to be ejected
merely on the ground of the expiry by efflux of time during the pendency of
the suit and is liable to be ejected forthwith.
8. Order VII Rule 7 of the CPC provides that it shall not be necessary in
a plaint to ask for general or other relief which may always be given as the
Court may think just to the same extent as if it had been asked for. The
Court, for its delays in adjudication, cannot penalize the litigants by
compelling them to file successive suits seeking a relief which is implicit in
the relief sought for at the time of institution of the suit.
9. Reference in this regard can also be made to the legal principle
evolved by by the Supreme Court in Nopany Investments (P) Ltd. Vs.
Santokh Singh (HUF) (2008) 2 SCC 728. It was held that even if 15 days‟
notice of termination of tenancy under Section 106 of the Transfer of
Property Act, 1882 is not given but since the institution of suit 15 days have
expired, then the technicality of failure to prove service of such notice or to
prove such notice should not be allowed to come in the way of granting the
relief of ejectment. The said principle was invoked in Saurabh Buildcon
Pvt. Ltd. Vs. Aster Technologies Pvt. Ltd. 2013(5) R.A.J. 562 (Del) to hold
that even if letting was for manufacturing purpose requiring a six months
notice and which was not given, since more than six months had lapsed
since the institution of the suit, the said plea was of no avail.
10. There is thus no merit in the contention of the counsel for the
defendants of the plaintiffs being not entitled to the relief of ejectment for
the reason of the cause of action for the suit being termination of the lease
prior to the expiry of term thereof and not the expiry of the term of the lease.
11. Section 8 of the Arbitration & Conciliation Act, 1996 requires this
Court to refer the parties to arbitration unless it finds that prima facie no
valid arbitration agreement exists. Section 7 of the Act defines „arbitration
agreement‟ as an agreement by the parties to submit to arbitration "disputes"
which have arisen or which may arise between them in respect of a defined
legal relationship whether contractual or not.
12. Thus, for the existence of an arbitration agreement and / or for
reference by this Court of the parties to arbitration, the existence of
"disputes" is a must.
13. Once it is found that there is no dispute between the plaintiffs and the
defendants insofar as the claim of the plaintiffs for ejectment of the
defendants from the premises is concerned, no purpose will be served in
referring the parties to arbitration.
14. The counsel for the plaintiffs in this regard relies upon Sanjay Saxena
Vs. K. Sudershan Reddy 190 (2012) DLT 33 where also it was held that
where the tenant owing to determination of tenancy has no legal right to stay
in possession, the arbitrator would de facto be unable to perform his
functions as there are no disputes which require adjudication and the
arbitration agreement would stand superseded so far as disputes of
possession is concerned and on Saurabh Buildcon Pvt. Ltd. supra following
Sanjay Saxena supra.
15. Thus, the occasion for referring the parties to arbitration insofar as the
relief of ejectement is concerned, does not arise. The counsel for the
defendants also has not urged any reason as to why the defendants would not
be liable to ejectment.
16. The counsel for the plaintiffs states that though the plaintiffs have
claimed mesne profits / damages for use and occupation at the rate higher
than the agreed rent but for the sake of expediency and without prejudice to
the rights and contentions of the parties are willing to give up the claim for
mesne profits / damages for use and occupation at the rate higher than
agreed rate of rent and seek a decree for recovery of arrears of rent / mesne
profits since the date when the defendants are not paying and till the date of
ejectment.
17. The counsel for the defendants states that the defence of the
defendants is of suspension of payment of rent owing to the plaintiffs having
not fulfilled their obligations under the lease agreement.
18. The counsel for the plaintiffs states that the arbitration clause as
under:
"24) That in case of any dispute or controversy that may arise between
the parties at any time with regard to the Deed or interpretation or
applicability of any provision of this Deed, the same shall be finally settled
by arbitration in accordance with the provisions of the Arbitration and
Conciliation Act, 1996, by Mr. Shyam Lal Chopra, Partner, Evergreen
Sweet House, Green Park, New Delhi or in his absence by a mutually
appointed Arbitrator. The arbitration proceedings shall be conducted in the
English language and the venue for the same shall be New Delhi. The
Award of the Arbitrator shall be final and binding upon the parties. All
dispute between the parties shall be decided within a period of 6 months
from the date of the reference of the dispute to the arbitrator. The
Arbitration clause will not however, be applicable in case of default of rent.
In case any further litigation arises in connection with the Said Premises or
this Lease Agreement, then the Courts of New Delhi shall have exclusive
jurisdiction."
between the parties excludes arbitration "in case of default of rent" and thus
does not come in the way of adjudication by this Court of the claim of the
plaintiffs for arrears of rent / mesne profits at the agreed rate. Reliance in
this regard is placed on Maruti Suzuki India Ltd. Vs. India Tourism
Development Corporation Ltd. 2013 (136) DRJ 171 and on National
Textile Corporation Ltd. Vs. Ashval Vaderaa 155 (2008) DLT 221.
19. As far as the latter of the aforesaid two judgments holding that an
arbitration clause in an unregistered lease deed cannot be looked into, is no
longer good law in view of the subsequent judgment of the Supreme Court
in SMS Tea Estates Pvt. Ltd. Vs. Chandmari Tea Company Private Ltd.
(2011) 14 SCC 66. The former judgment in Maruti Suzuki India Ltd. supra
was with respect to exclusion of arbitration clause from the applicability of
the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 and
would also not have any bearing.
20. At this stage, both counsels agree that the disputes between the parties
as to recovery of arrears of rent / mesne profits (at whichsoever rate the
plaintiffs may deem fit) be referred to the sole arbitration of Mr. B.B.
Choudhary, Additional District Judge (Retd.), Mob. No.9910384611 instead
of the named arbitrator in the arbitration clause aforesaid.
21. Both counsels are required to have this order signed from the duly
authorized representatives of the two plaintiffs and from the defendant no.1
and the partner of defendant no.1.
22. The application is disposed of in above terms.
CS(OS) 409/2016
23. In accordance with above, a decree is passed in favour of the
plaintiffs and against the defendants for recovery of possession of basement,
ground floor, first floor (excepting one small office room), second floor and
third floor (excepting one office / room) and all other portions in occupation
of the defendants of property No. 2105, Ward No.XVI, Khasra
Nos.425&426, Nai Wala Estate, Desh Bandhu Gupta Road, Karol Bagh,
New Delhi-110005, leaving the parties to bear their own costs.
Decree sheet be prepared.
24. So far as the claim of the plaintiffs against the defendants for recovery
of arrears of rent, mesne profits, interest, service tax, electricity charges,
water charges or of any other nature relating to occupation by the defendants
of the aforesaid properties is concerned, the same is referred to the sole
arbitration of Mr. B.B. Choudhary, Additional District Judge (Retd.).
25. The fee of the arbitrator, besides out of pocket expenses, is fixed at
Rs.1,50,000/- to be borne equally by the plaintiffs and the defendants.
26. The arbitrator is requested to endeavour to render the award within six
months of the parties first appearing before him.
27. The parties to appear before the Arbitrator with prior appointment on
6th January, 2017.
RAJIV SAHAI ENDLAW, J
DECEMBER 07, 2016
„gsr‟
