Delhi High Court
Sona Corporation India Pvt.Ltd vs Brightpoint India Pvt. Ltd. & Anr on 25 July, 2018
$-14
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 25th July, 2018
+ O.M.P.(I)(COMM.) 250/2018
SONA CORPORATION INDIA PVT.LTD ..... Petitioner
Through: Mr.A.K. Singla, Sr. Adv. with
Mr.Rahul Shukla, Adv.
versus
BRIGHTPOINT INDIA PVT. LTD. & ANR.... Respondents
Through: Mr.Sudhir Kumar and
Ms.Ashna Abrol, Advs.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
NAVIN CHAWLA, J. (Oral)
1. This petition under Section 9 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as the 'Act') has been
filed by the petitioner inter-alia praying for the following reliefs:
"(i) Restrain the Respondent No. 1 from acting in
terms of the Notice dated 30.04.2018 illegally
terminating the Lease Deed dated 18.06.2013;
(ii) Direct the Respondent No. 1 to pay the Petitioner
Rs.74,34,000/-, being the lease rent for the months of
March to May, 2018 due under the registered Lease
Deed dated 18.06.2013 along with interest at the rate
of 21% p.a. from due date, i.e. 07.03.2018;
(iii) Direct the Respondent No. 1 to pay the Lease
OMP(I.)(COMM.) 250/2018 Page 1
Rent amounts payable on the 7th day of the first
month of every quarter as per the Rent Invoices
raised by Petitioner in terms of the Lease Deed dated
18.06.2013;
(iv) Appoint a Local Commissioner and direct
inspection, forthwith, of the entire premises at G-9,
Block B-1, Mohan Co-operative Industrial Estate,
Mathura Road, New Delhi- 110044, including the
Leased property, and the common areas mentioned
in the Lease Deed;
(v) Direct the Respondent No. 1 to comply strictly
with the conditions in the Lease Deed dated
18.06.2013;"
2. The petitioner had entered into a Lease Deed dated 18.06.2013
with the respondents whereunder it had granted a lease of the fully
constructed Ground and First Floor of the property bearing no.G-9,
Block-I, Mohan Co-operative Industrial Estate, Mathura Road, New
Delhi-110044 to the respondents along with common amenities and
common area as described in Schedule-I, Schedule-II and Schedule-
III to the Lease Deed. The lease was for a period of 9 years with
effect from 18.06.2013. Clause 3(a) of the Lease deed provides for
the lease rent to be paid by the respondents to the petitioner during
the lease period and is reproduced hereinbelow:
"3 LEASE RENT, ESCALATION AND
INTEREST FREE REFUNDABLE SECURITY
DEPOSIT
a) LEASE RENT
i. The Lessee shall pay ·to the Lessor a lumpsum of
Rs.17,50,000/- (Rupees Seventeen Lacs and Fifty
Thousand Only) per month as rent ("Lease Rent").
The Lease Rent shall be paid, in advance, on
quarterly basis on or before the 7th calendar day of
OMP(I.)(COMM.) 250/2018 Page 2
the first month of every quarter ("Due Date"). In the
event of delay in payment of Lease Rent in full and in
advance upto 7th day of the English calendar month
of the respective quarter as stipulated above, the
Lessee shall be liable to pay interest at the rate of
21% per annum, on the Lease Rent past due, from
the Due Date. However, in case the quarterly Lease
Rent is not paid by Due Date, the Lessor shall issue a
demand notice, after the expiry of seven (7) days
from the Due Date, in writing to the Lessee and the
Lessee shall pay the Lease Rent within ninety (90)
days of receipt of such notice along with interest to
the Lessor. In case of failure on part of the Lessee in
payment of Lease Rent within ninety (90) days of
receipt of such notice, the same shall be constituted
as a breach of the terms of this Lease Deed and the
Lessor shall be entitled to terminate the Lease Deed
and also to recover the outstanding Lease Rent along
with interest calculated at the rate of 21% per annum
over the delayed period. The above period of ninety
(90) days shall be read as thirty (30) days in case of
any subsequent default when a demand notice as
above is already issued once.
The aforesaid Lease Rent is in respect of the leasing
of the Leased Property, the Common Amenities and
the Common Areas by the Lessor to the Lessee.
ii. ESCALATION - The Lease Rent escalation in
respect of the Leased Property, the Common
Amenities and the Common Area shall be @ 20% of
the last paid Lease Rent and shall be effective after
the expiry of every 3 (three) years from the Lease
Commencement Date. For the sake of clarity,
following shall be the Lease Rent during different
periods:
Period Lease Rent Per
Month (Rs.)
18th June, 2013 to 17th June, 2016 17,50,000/-
OMP(I.)(COMM.) 250/2018 Page 3
18th June 2016 to 17th June , 2019 21,00,000/-
18th June, 2019 to 17th June, 2022 25,20,000/-
3. The respondents were also to deposit with the petitioner an
Interest Free Refundable Security Deposit (IFRSD) in terms of
Clause 3(b) of the Lease Deed, which is reproduced hereinbelow:
"b) INTEREST FREE REFUNDABLE
SECURITY DEPOSIT ("IFRSD") - The Lessee has
paid to the Lessor interest free refundable security
deposit equivalent to 10 (ten) months of Lease Rent
aggregating to Rs.1,75,00,000/- (Rupees One Crore
and seventy Five Lacs Only) ("IFRSD") on the
Lease Commencement Date vide cheque no. 229945
dated 20-05-2013 drawn on The Royal Bank of
Scotland N.V., Hansalaya Building, 15, Barakhamba
Road, New Delhi-110001, the receipt which the
Lessor hereby acknowledges. There shall be
escalation @ 20% on the earlier IFRSD after the
expiry of every 3 (three) years from the Lease
Commencement Date and the additional IFRSD shall
be paid within a period of 10 (ten) days from the
expiry of the respective period of 3 (three) years.
For the sake of clarity, following shall be the IFRSD
during different periods:
Period IFRSD (Rs.) Additional
IFRSD(Rs.)
18th June, 2013 to 17th 1,75,00,000/- -
June, 2016
18th June 2016 to 17th 2,10,00,000/- 35,00,000/-
June , 2019
18th June, 2019 to 17th 2,52,00,000/- 42,00,000/-
June, 2022
OMP(I.)(COMM.) 250/2018 Page 4
In case the Lessee fails to pay the additional IFRSD
within the above stipulated time lines, the same
would constitute a breach of this Lease Deed and
would entitle the Lessor to terminate the Lease Deed
after giving three (3) months written notice to the
Lessee to make the payment of the additional
IFRSD."
4. The respondents, vide their notice dated 30.04.2018 terminated
the Lease Deed informing the petitioner that they would be vacating
the premises on 29.10.2018. The respondents further made a request
to the petitioner to adjust the IFRSD against the monthly rent payable
for the period 01.03.2018 to 29.10.2018. There is a dispute between
the parties as to whether the respondents could have issued such
notice of termination or not, however, the learned senior counsel for
the petitioner, for the present petition, confines his prayers only to
prayer no. (ii) and (iii) made in the petition.
5. Learned counsel for the respondents submits that in terms of
Clause 8 of the Lease Deed the respondents are entitled to seek
adjustment of the IFRSD against the quarterly lease rent till the date
of vacation. Clause 8 of the Lease Deed is reproduced hereinbelow:
"8. REFUND OF THE IFRSD
On termination/expiry of this Lease Deed and
simultaneous to handover of peaceful and vacant
possession of the Leased Property, the Common
Amenities and the Common Areas, the Lessor shall
refund, in full and by way of a demand draft, IFRSD,
subject to deductions of any unpaid Lease Rent, if
any, or other charges, due and payable under this
Lease Deed to the Lessee. However, in case the
IFRSD is not refunded by the Lessor to the Lessee on
OMP(I.)(COMM.) 250/2018 Page 5
the handover of peaceful and vacant possession of
the Leased Property, the Common Amenities and the
Common Areas, the Lessee shall be entitled, without
prejudice to any other rights that it may have in this
regard, to continue to be in the possession of the
Leased Property, the Common Amenities and the
Common Areas without any obligation to make any
payment of Lease Rent till such time the IFRSD is not
refunded by the Lessor to the Lessee as per the terms
of this Lease Deed."
6. A reading of the above clause, in my opinion, does not support
the contention of the respondents. This clause, in fact, confers a right
on the petitioner to adjust any unpaid lease rent against IFRSD but
does not confer any reciprocal right in favour of the respondents to
seek such adjustment as a matter of right. In terms of Clause 3(a) of
the Lease Deed reproduced hereinabove read with Clause 2(c) of the
Lease Deed, the obligation of the respondents as lessee, to pay lease
rent continues even during the notice period. Clause 2(c) of the
Lease Deed is reproduced hereinbelow:
"2(c) NOTICE PERIOD - This Lease Deed can be
terminated only by the Lessee, after the expiry of the
Lock-in Period, by serving 6(six) months advance
notice herein after referred to as "Notice Period".
However, the Lessee can serve the abovementioned
notice anytime after the expiry of 2 years and 6
months from the Rent Commencement Date. As a
matter of clarity, the Lessee shall be liable to pay the
Lease Rent during the Notice Period. Subject to
Clauses 3 and 13.a(iv) below, the Lessor shall not
have any right to terminate this Lease Deed until the
expiry of the Lease Period."
OMP(I.)(COMM.) 250/2018 Page 6
7. Learned counsel for the respondents has further placed reliance
on Clause 13(iv) of the Lease Deed to submit that even where the
lessee fails to rectify/remedy any illegal activity being conducted
from the lease premises, the petitioner has only been conferred a right
to terminate the Lease Deed but at the same time has to refund the
IFRSD to the respondents/lessees. Clause 13(a)(iv) is reproduced
hereinbelow:-
"13. TERMINATION OF THE LEASE DEED
a) In addition to the termination rights available to
each Party elsewhere under this Lease Deed, the
Lease Deed shall be terminated under all or any
of the following events:
(i)xxxxxx
(ii)xxxxxx
(iii)xxxxx
iv. In case the Lessee carries out any illegal
activities from the Leased Property, the Common
Amenities and the Common Areas, the Lessee
shall rectify/remedy the same. In case the Lessee
fails to do so, in that event the Lessor shall be
entitled to terminate/forfeit the Lease Deed
immediately. In such event the Lessor would have
the right to re-enter the Leased Property, the
Common Amenities and the Common Areas.
in which cases, the Lessor shall refund the IFRSD
to the Lessee on simultaneous hand over of the
possession of the Leased Property, the Common
Amenities and the Common Areas to the Lessor
and in accordance with Clause 8 of this Lease
Deed."
8. I do not see any relevance of this Clause to the submissions
made by the counsel for the respondents. It does not in any manner
absolve the respondents as lessees to pay the agreed lease rent during
OMP(I.)(COMM.) 250/2018 Page 7
the period of the lease till its termination in accordance with the
Agreement.
9. Learned counsel for the respondents has further relied upon
Clause 14 of the Lease Deed which is reproduced hereinbelow:-
"14. DAMAGE OR DESTRUCTION.
Notwithstanding anything to the contrary contained
under this Lease Deed, if the Leased Property, the
Common Amenities and the Common Areas or any
part thereof shall at any time during the Lease
Period be destroyed or damaged by fire, earthquake,
defective construction or any other reason
whatsoever not attributable to the Lessee so as to be
unfit for habitation or the Said Use, the Lessee shall
have the option to terminate the Lease Deed and
hand over the possession (in its then current state)
thereof to the Lessor or to continue in the Leased
Property. However, in case the Lessee opts to
continue in the Leased Property, then the Lease Rent
and other charges, if any payable under the Lease
Deed for the period of three months or till the Leased
Property, the Common Amenities and the Common
Areas are restored back to its normal condition,
whichever is earlier, shall not be payable by the
Lessee to the Lessor. As a matter of clarity, such
restoration of the Leased Property, the Common
Amenities and the Common Areas shall be at the sole
cost, risk and ·expense of the Lessor. However, if the
Leased Property, the Common Amenities and the
Common Areas are not restored back to its normal
condition at the ·end of said three months period and
notwithstanding anything to the contrary contained
under this Lease Deed, the Lessee shall have
unfettered right to forthwith terminate this Lease
Deed.
In the event of any damage to the Leased Property,
the Common Amenities and the Common Areas due
OMP(I.)(COMM.) 250/2018 Page 8
to the fault of the Lessee, the Lessee undertakes to
repair and restore the Leased Property, the Common
Amenities and the Common Areas in its original state
and condition at its own cost, expense and risk."
10. The above Clause again, in fact, confers the right in favour of
the petitioner to seek restoration of the leased premises incase the
same are damaged due to fault of the lessee. I again do not see any
relevance of this Clause to the claim made by the petitioner for the
lease rent during the notice period.
11. Learned counsel for the respondents further submits that even
after adjustment of the lease rents for the period from 01.03.2018 till
29.10.2018, the petitioner would have in its possession a sum of
Rs.11,76,000/- as IFRSD which would be sufficient to secure the
petitioner on any claims for damages in terms of the Lease Deed. In
my opinion, once it is held that the respondents are not entitled to
seek adjustment of the lease rentals against IFRSD, there is no reason
to denude the petitioner of its security as agreed between the parties
in terms of the Lease Deed and the respondents cannot claim the
same as a matter of right.
12. In Permanand Verma & Anr v. Vimal Chand Jain, 1995 SCC
OnLine Del 326, this Court held as under:-
"6. In view of the aforesaid decisions of this Court I am of the
view that the amount which was placed by the tenant with the
landlord as security deposit is not liable for adjustment
particularly at the stage when notice claiming arrears of rent
is served by the landlord on the tenant or the eviction petition
on account of nonpayment of rent is filed. Same will be the
situation qua an order under Section 15(1) of the Act passed
OMP(I.)(COMM.) 250/2018 Page 9
against such a tenant. The purpose of a security deposit is
totally different. The same is generally meant to secure the
landlord against various defaults of the tenant at the time of
final determination of the lease. Such defaults may include
damage to the property, arrears of rent, arrears on account of
electricity or water charges, telephone bills etc. etc. Therefore,
the security deposit is not liable to be adjusted at interim
stages as in the present case when notice of demanding
arrears was issued, unless there is a stipulation between the
parties to the contrary."
13. In Supertrack Hotels Pvt. Ltd. v. Friends Motels Pvt. Ltd.,
2017 SCC OnLine Del 11662, the Division Bench of this Court has
observed as under in relation to the power of the Court under Section
9 of the Act:-
"15. Section 9 of the Act empowers the Court to
issue an interim measure of protection securing the
amount in dispute in the arbitration as also such
other interim measures of protection as may appear
to the Court to be just and convenient. Section 9
specifically provides that "Court shall have the same
power for making orders as it has for the purpose,
and in relation to, any proceedings before it." Thus,
though it is correct that Arbitral Tribunal shall not
be bound by the CPC i.e. Code of Civil Procedure,
1908, as held by the Supreme Court in Arvind
Construction Company Pvt. Ltd. v. Kalinga Mining
Corporation & Ors., (2007) 6 SCC 798, general
rules that govern and guide the Court while
considering grant of an interim injunction are
attracted even while dealing with an application
under Section 9 of the Act.
16. In Ajay Singh (supra) it has been held that
Section 9 grants wide power to the Court in
fashioning an appropriate interim order. Thus, it is
correct that in exercise of such power, the Court
OMP(I.)(COMM.) 250/2018 Page 10
should be guided by known principles, equally, the
Court should not find itself unduly bound by the text
of Section 9 of the Act rather it is to follow the
underlying principles.
17. Order XV-A of CPC, applicable to Delhi,
provides that in any suit of a owner/lessor for
eviction of an unauthorized occupant/lessee or for
the recovery of rent and future mesne profit from
him, the Court may direct the defendant to deposit
such amount on account of arrears, upto date of the
order and thereafter continue to deposit in each
succeeding month the rent claimed in the suit.
Similarly, Order XXXIX Rule 10 of CPC empowers
the Court to order payment of money which the other
party admits to be due. As stated, that though the
said provisions have not been expressly mentioned in
Section 9 of the Act, the principles thereof would
certainly apply to such proceedings. These
provisions are in the nature of interim protection
which can be passed by the Courts.
18. Supreme Court in the case of Pt.Rishikesh v.
Salma Begum (Smt.) (1995) 4 SCC 718, while
upholding the validity of the Order XV Rule 5 CPC
as amended by UP Civil Laws (Reforms and
Amendments), Act, 1976 observed that such
provision is made to protect the landlord from
hardship and to prevent unfair advantage of delaying
the disposal of the suit by the tenant.
19. We are therefore of the opinion that while
exercising the powers under Section 9 of the Act, the
Court can certainly be guided by the principles of
Order XV-A and Order XXXIX Rule 10 of CPC. The
same view was expressed by another Division Bench
of this Court in the case of Value Source Mercantile
Ltd. (supra). The relevant portion of the said
judgment reads:
"13. Section 9 of the Arbitration Act uses the
expression "interim measure of protection" as
OMP(I.)(COMM.) 250/2018 Page 11
distinct from the expression "temporary
injunction" used in Order XXXIX Rules 1&2 of
the CPC. Rather, "interim injunction" in
Section 9 (ii) (d) is only one of the matters
prescribed in Section 9 (ii) (a) to (e) qua which
a party to an Arbitration Agreement is entitled
to apply for "interim measure of protection".
Section 9(ii)(e) is a residuary power
empowering the Court to issue / direct other
interim measures of protection as may appear
to the Court to be just & convenient. Section 9
further clarifies that the Court, when its
jurisdiction is invoked thereunder "shall have
the same power for making orders as it has for
the purpose of, and in relation to, any
proceedings before it".
14. The question which thus arises is that if the
dispute as aforesaid had been brought before
this Court by way of a suit, whether this Court
could have, during the pendency of the suit,
granted the relief as has been granted in the
impugned order. Order XXXIX Rule 10 of the
CPC empowers the Court to direct deposit /
payment of admitted amounts. The appellant, as
aforesaid does not controvert that it continued
to be the tenant of office unit B-1 and had not
terminated the tenancy with respect thereto.
There is thus an admission by the appellant of
the liability for rent at least of office unit B-1.
The appellant, if had been a defendant in a suit,
could have thus been directed by an interim
order in the suit to make such payment to the
respondent. Order XV-A added to the CPC as
applicable to Delhi and which was added, as
held by us in judgment dated 15th May, 2014 in
FAO(OS)597/2013 titled Raghubir Rai Vs.
Prem Lata, to empower the Court to direct
payment during the pendency of the suit at a
OMP(I.)(COMM.) 250/2018 Page 12
rate other than admitted rate also, empowers
the Civil Court to direct payment which is
apparently wrongfully disputed. The denial by
the appellant of the entire rent as agreed, on the
ground of having determined the tenancy of one
of the two office units taken on rent, is clearly
vexatious, as in law the appellant as a tenant
could not determine tenancy of part of the
premises taken on rent. It is not the case of the
appellant that it was entitled to do so as part of
terms of its tenancy. In that view of the matter,
the appellant could under Order XV-A of the
CPC have been directed to pay the rent of the
entire premises notwithstanding having given
notice of termination of tenancy of part thereof.
We are therefore satisfied that the impugned
order satisfies the test of being in exercise of
the same power for making orders as the Court
has for the purpose of a Civil Suit and is thus
within the ambit of Section 9 of the Arbitration
Act."
xxxxxx
22. In view of the above, we do no agree with the
submission of Learned Senior Counsel for the
appellant that under Section 9 of the Act, this Court
is not empowered to order the payment of money,
when justified as an interim measure of protection."
14. In view of the above the respondents are directed to pay
quarterly lease rents to the petitioner for the period commencing from
01.03.2018 till the date of their occupation of the leased premises.
The arrears of the rent shall be paid within a period of three weeks
from today. Future payment shall be made strictly in compliance with
OMP(I.)(COMM.) 250/2018 Page 13
the lease deed. The interim order shall continue till the Arbitral
Tribunal considers the same on an appropriate application filed by
either party seeking modification / variation of the said order.
15. The learned senior counsel for the petitioner submits that the
petitioner has invoked the Arbitration Agreement between the parties
vide its notice dated 25.05.2018. He submits that an Arbitrator be
also appointed by this Court. The learned counsel for the
respondents, however, submits that he has no instructions from the
respondents in this regard.
16. The observations made hereinabove are prima facie in nature
and would not prejudice either party before the Arbitral Tribunal,
which shall consider the disputes between the parties remaining
uninfluenced by any observations made in this order.
NAVIN CHAWLA, J
JULY 25, 2018/Arya
OMP(I.)(COMM.) 250/2018 Page 14
