Delhi High Court
Independent Power Producers ... vs Sharam Sadhna Delhi Trust on 9 February, 2016
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Order delivered on: 9th February, 2016
+ ARB. A. (COMM.) No.6/2016
INDEPENDENT POWER PRODUCERS ASSOCIATION OF INDIA
..... Appellant
Through Mr.Aman Lekhi, Sr. Adv. with
Mr.Matrugupta Mishra &
Mr.Tanmay Mehta, Advs.
versus
SHARAM SADHNA DELHI TRUST ..... Respondent
Through Mr.Amit Singh Chadha, Sr. Adv.
with Ms.Sangeeta Bharti,
Mr.Luv Kumar Singh, Mr.Krishanu
Adhikary & Mr.Dilpreet, Advs.
CORAM:
HON'BLE MR.JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J.
Arb. A. (COMM.) No.6/2016, I.A. No.1693/2016 (for stay) and
I.A. No.1695/2016 (for condonation of delay of 48 days in re-
filing the appeal)
1. The appellant has filed the present appeal under Section 37(2)
of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as
the 'Act') for setting aside the orders dated 16th October, 2015 and
22nd July, 2015 passed by the Arbitral Tribunal in arbitration
proceedings in the captioned matter.
2. The said order dated 22nd July, 2015 was passed by the Arbitral
Tribunal on application under Section 17 of the Act filed on behalf of
the respondent whereby the Tribunal on 22nd July, 2015 had directed
the appellant to furnish a Bank Guarantee for a sum of Rs.
3,87,90,802/- as rent dues from October, 2013 to August, 2015 within
six weeks and also to deposit an amount of Rs. 17,48,500/- being the
monthly running rent with effect from September, 2015.
3. The application for modification of order dated 22nd July, 2015
was dismissed by order dated 16th October, 2015. It is stated in the
appeal that while passing the interim order dated 22nd July, 2015, the
Arbitral Tribunal had failed to consider, inter-alia that the interim
reliefs sought by the respondent before the Tribunal were, in effect,
the final reliefs and therefore, the same could not have been granted
as an interim measure. The Tribunal had ignored the fact that the
counter claim filed by the appellant, which is also pending adjudication
before the Tribunal, is itself to the tune of Rs. 6,89,81,857/- along
with interest at 18% per annum and therefore, in view of the
pendency of appellant's counter claim for an amount of Rs.
6,89,81,857/- along with interest, the claim of the respondent for an
amount of Rs. 3,87,90,802/- could not have been granted.
4. Learned Senior counsel for the appellant submits that it was duly
informed to the Tribunal by the appellant in its application seeking
modification of the order dated 22nd July, 2015, that even assuming
the case of the respondent to be true, the appellant, in its individual
capacity could not have been made liable to pay more than 5% of the
total amount claimed by the Respondent. Even the order dated 16th
October, 2015 passed by the Tribunal dismissing the application of the
appellant seeking modification of the order dated 22nd July, 2015 is
bad in law as the Tribunal did not consider the aspects brought in by
way of the said application on behalf of the appellant. By the said
application, the appellant had brought out, inter alia, that its individual
liability towards the respondent, if at all, could not be more than 5%
but the Tribunal was of the view that the said aspects had not been
brought before it while passing the interim order dated 22 nd July, 2015
and on such pretext the Tribunal proceeded to dismiss the application
seeking modification of the order dated 22nd July, 2015 without
considering the said application on its merits.
5. In support of his submission, learned Senior counsel has referred
to Sections 105 and 108(e)(f) and (g) of the Transfer of Property
Act,1882 as well as Sections 51 and 52 of the Indian Contract Act,
1872 and submits that the tenanted premises has not been fully
enjoyed by the appellant as the respondent has failed to fulfil its
promises to keep the tenanted premises in proper condition.
6. Mr. Amit Chadha, learned Senior counsel appearing on behalf of
the respondent has informed the Court that in the application for
modification of the order, the false statement is made, as the lease
deed itself would show that the appellant is the tenant of the suit
property. Admittedly, he had been paying the entire rent to the
respondent. The question of his individual capacity at 5% does not
arise. The said point was raised only in the application of modification
of the order. He denied the argument addressed by the learned
counsel for the appellant in toto. Mr. Chadha argued that the appeal
filed by the appellant is totally misconceived. The same has been filed
in order to avoid depositing the rent of the premises which the
appellant is enjoying.
7. Mr. Chadha also submits that all the three requirements are
fulfilled i.e. firstly, the relation between the landlord and tenant as per
lease document and the appellant is the tenant as per written document;
secondly, the rent is admitted between the parties; and thirdly, when
the fire took place, the appellant was in possession of the tenanted
premises. The relationship between them was never denied by the
appellant as he had been paying the rent as per lease deed.
8. The order dated 22nd July, 2015 reads as under:
"Counsel for the Claimant presses the application under
section 17 of the Arbitration & Conciliation Act for
directions to the respondent to furnish a bank guarantee
to secure the outstanding amount of rent and to pay
monthly rent of Rs 17,48,500/- by way of demand draft to
the claimant.
The claimant contends that it is the owner in
possession of the demised premises a portion of property
admeasuring 7140 sq.ft comprising of ground floor and
first floor. Registered lease deed was executed between
the parties on 13.9.2010 for a period of 9 years. The lease
was determined and the respondent was asked to deliver
vacant possession / clear arrears of rent. The respondent is
currently in unauthorized possession of the demised
premises since 31.8.2014. The respondent stopped paying
the monthly rent w.e.f from October 2013. Rent is payable
as under:
From October 2013 to 30.8.2014 Rs 1,78,08,802/-
Sept 2014 to April 2015 Rs.1,39,88,000/-
May 2015 to July 2015 Rs. 52,45,000/-
The application is opposed. The respondent concedes
that rent has not been paid and they are in possession of
the premises. However no amount is payable to the
claimant as the respondent is entitled to an amount of Rs.
6,89,81,857/-towards loss and damages due to fire
breakout on account of negligence of the claimant.
Heard. There is no merit in the submission of the
respondent. The respondent continues to be in possession
of the demised premises. The counter claim has yet to be
adjudicated upon.
Under the circumstances, the respondent is directed
to furnish a Bank Guarantee to the satisfaction of the
Tribunal for a sum of Rs3,17,96,802/- within 6 weeks,
being the arrears of rent payable till 30.08.2015 and
thereafter deposit a sum of Rs.1748500/- being the
monthly rent with effect from September 2015 as per the
registered lease deed .
Application allowed.
Application filed by the respondent for postponement
of the date of hearing is dismissed as infructuous.
Order in the main petition
Counsel for the respondent seeks time to file a
rejoinder to the reply filed to the counterclaim. Let the
needful be done within 3 weeks. Parties are directed to file
Affidavits by way of evidence of their witnesses within 6
weeks with advance copy to the opposite party.
List for evidence of the claimant on October 16 & 17,
2015 at Neeti Bagh Club, New Delhi. Parties shall book the
venue well in time.
Parties are directed to arrange for secretarial
assistance on all the dates of hearing and share the
expenses.
(Justice(Retd)Usha Mehra) (Justice(Retd)C.K.Mahajan)
Arbitrator Presiding Arbitrator
(Mr.Rana Sudarshan Biswas)
Arbitrator"
9. The order dated 16th October, 2015 reads as under:
"The respondent has moved an application for modification
of the Tribunal's order dated 22nd July, 2015, directing the
respondent to furnish a bank guarantee towards the
arrears of rent and to deposit the current rent from the
September, 2015 onwards.
It is contended that there was novation of the lease
agreement and this fact was not considered by this
Tribunal. Moreover subsequent events were also not
considered. Besides there are counter claims of the
respondent for which adjudication has yet to take place.
Therefore, the order passed on 22nd July, 2015 may be
kept in abeyance pending decision on the application for
amendment. Even otherwise in light of the novation of
agreement, contesting Respondent is liable to pay only 5%
of the rent.
This application was contested by the claimant. Oral
submissions were made. It was contended that the
Tribunal cannot review its own order. Moreover, there was
no novation of the lease agreement, which fact was
categorically conveyed to the Respondent vide letter dated
29th April, 2013 wherein it was stated that the entities
which the Respondent wanted to associate to share the
burden of lease rent, would not claim any right of tenancy
in the said premises and would carry its administrative
function and under no circumstances any manufacturing
activity or any activity which create a nuisance would be
permitted. It was also conveyed that the Claimant would
only deal for all purpose with the registered lessee i.e. IPPA
and primarily IPPA would be liable for payment of the lease
rent. Therefore, there is no novation of the lease
agreement.
Be that as it may, when the Tribunal passed the
order, the Respondent/Applicant did not contend that there
was a novation of agreement nor was any reliance placed
on any documents.
We consider all aspects particularly the fact that the
Respondent is in occupation of the premises since October
2013 and has not paid the rent. Rent is admitted,
execution of the lease agreement is admitted and under
these circumstances the impugned order was passed and
we see no reason to vary or review the same. The
applicant/respondent if so advice can take recourse in
accordance with law. The applications is dismissed.
(Justice(Retd)Usha Mehra) (Justice(Retd)C.K.Mahajan)
Arbitrator Presiding Arbitrator
(Mr.Rana Sudarshan Biswas)
Arbitrator"
10. Having gone through both the orders referred above, there is no
infirmity in the said orders. I am of the view that the impugned order
dated 22nd July, 2015 passed by the Tribunal is reasonable and it has
been passed in order to strike balance at this stage. In the said order,
merely the admitted rent has been secured which is not being paid to
the respondent. The same is being released. The Court at this stage
has to examine the conduct of the parties prior to the dispute. The
relation between the parties cannot be disputed. The agreed rent was
being paid by the appellant. The only ground in the reply to the
application under Section 17 of the Act was taken that the counter-
claim has been filed by which the appellant is entitled to recover the
amount towards loss and damages due to the fire breakout on account
of negligence of the respondent. The appellant has not denied the fact
that at that time, he was in possession of the tenanted premises.
11. The counter-claim hence filed by the appellant is yet to be
considered by the Arbitral Tribunal who would decide as to whether
there is any merit or not. The same is to be determined on merit. A
mere filing of counter-claim would not mean that any tenant would not
pay the due rent to the landlord. Thus, none of the pleas raised by the
appellant are sustainable. The provisions of two Acts referred by the
learned Senior counsel for the appellant are not attracted in the facts
of the present case and do not help the case of the appellant.
12. This Court in the case of The Chamber of Colours and
Chemicals (P.) Ltd. Delhi v. Trilok Chand Jain, reported in
(9)1973 DLT 510, wherein similar issue was involved, held that "....In
the case of tenancy premises being wholly destroyed or rendered
substantially and permanently unfit by fire etc. for the purposes for
which it was let, the only right given to the lessee by section 108(e) of
the Transfer of Property Act is to exercise the option of treating the
lease to be void. In such a case the lessee cannot continue to hold on
to the premises or say that the lease continues but he will not pay the
rent. If the lessee does not exercise the option to treat the lease to be
void, he will remain liable to pay the rent. ......There cannot be any
unilateral suspension of rent. The tenant continues to be liable for the
whole of the rent until he obtains an order from the Court or
agreement from the landlord for reduction of the proportionate part of
the rent."
13. The abovementioned case referred by the learned Senior counsel
appearing on behalf of respondent is squarely applicable to the facts of
the present case.
14. The appeal filed by the appellant is without any merit. The same
is accordingly dismissed.
15. No costs.
(MANMOHAN SINGH)
JUDGE
FEBRUARY 09, 2016
