Madras High Court
T.Kannan vs M/S. Chennai Network ... on 7 July, 2021
O.P.No.628 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 07.07.2021
CORAM
THE HONOURABLE MR.JUSTICE V.PARTHIBAN
O.P.No.628 of 2020
T.Kannan,
Son of Thiruvengada Mudaliar,
No.3, Mahalakshmi Street,
Velan Nagar Annex,
Valasaravakkam,
Chennai – 600 087 ... Petitioner
Vs
M/s. Chennai Network Infrastructure Limited
Now GTL Infra Structure Ltd.
Represented by its Authorized Signatory,
Having office at City centre,
3rd Floor, No.232 Old No.186,
Purasaiwalkkam High Road,
Kilpauk,
Chennai – 600 010 ... Respondent
Prayer:
Petition filed under Section 11(6) of Arbitration and Conciliation Act,
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1996 to appoint an Arbitrator and refer all the disputes arising between the
petitioner and the respondent as per Clause 16 of the agreement dated
01.07.2013 accepted by the petitioner and the respondent.
For Petitioner : Mr.S.Sai Shankar
For Respondent : Mr.C.Sakthi Manikandan
ORDER
(The matter is taken up through web hearing)
The petitioner is the owner of the building located in No.3,
Mahalakshmi Street, Velan Nagar Annex, Valasaravakkam, Chennai–
600087. The representatives of the respondent Company approached the
petitioner in 2004 and expressed their need to erect mobile network tower
on the top of the petitioner's building for monthly rent.
2. The lease agreement was entered into between the petitioner and
the the respondent on 20.05.2004. As per the agreement 2520 sq.ft of terrace
portion was leased out to the respondent for erection of mobile network
tower for a monthly rent of Rs.6500/-. Pursuant to the agreement, a sum of
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Rs.65,000/- was paid by the respondent as a refundable advance to the
petitioner/landlord. The agreement also provides for increase of monthly
rent by 15% once in every three years and the period of lease was fixed for
nine years and renewable in every nine years period.
3. In terms of the agreement, the respondent erected a huge tower
with 100 feet height by occupying 2520 sq.ft of terrace portion owned by
the petitioner. The respondent also installed electronic devices for the
operation of the tower and also installed a generator for the operation. The
agreement originally entered into on 20.05.2004 expired in the year 2013
and the lease was renewed on 01.07.2013 and the monthly rent payable was
fixed at Rs.10,000/-. From 01.07.2016, the respondent was paying the rent
at Rs.11,500/-.
4. While so, according to the petitioner, the respondent has stopped
paying the rent from November 2017 onwards and till date, there is a huge
outstanding arrears of rent payable to the tune of Rs.2,64,500/-. After giving
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deduction to the refundable advance of Rs.65,000/- paid by the respondent,
the outstanding arrears of rental payment as on date of filing of the petition
is Rs.1,99,500/- and the outstanding would keep increasing as by passage of
time. The respondent is also liable to pay interest at 8% per annum on the
arrears of rent due and payable by him.
5. When notice was issued demanding payment, a reply notice was
issued on behalf of the respondent on 20.07.2018 expressing their inability
to pay the rent, but neither rents have been paid continuously for more than
3 years nor the premises have been vacated by the respondent. The lease
agreement provides for arbitration between the parties, in case of any
dispute arising under the agreement, in terms of clause 16 of the agreement.
6. As the respondent did not come up with any payment and was
also not inclined to appoint any Arbitrator whose appointment is to be made
on mutual consent in terms of the agreement, the petitioner issued notice on
05.09.2019 calling upon the respondent to come forward and take part in
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appointing an Arbitrator within a period of 15 days, failing which, the
petitioner will be constrained to file an application under Section 11 of the
Arbitration and Conciliation Act, 1996. It is submitted that despite the said
notice on 06.09.2019, there was no response from the respondent but the
respondent continued to default in making payment towards monthly rent.
Therefore, the present application has been filed under Section 11 of the
Arbitration and Conciliation Act, 1996.
7. Learned counsel appearing for the petitioner reiterated the above
facts and requests this Court to allow the petition by appointing an
Arbitrator for resolving the dispute between the petitioner and the
respondent within the frame work of the lease agreement entered into
between them.
8. The petition was opposed by the respondent by filing a counter
affidavit. The objection for appointment of Arbitrator was that the lease
agreement which was relied on for invoking the arbitration clause is
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insufficiently stamped and therefore, the clauses contained therein cannot be
relied upon. In this regard, the counsel for the respondent has cited a
judgment of the Hon'ble Supreme court of India reported in 2021 SCC
Online SC 13 (N.N.Global Mercantile Pvt.Ltd. vs. Indo Unique Flame
Ltd. and others). This was specifically refuted by the learned counsel for
the petitioner by relying on a recent decision of the learned single Judge of
this Court dated 15.04.2021 in O.P.No.550 of 2020. While dealing with
similar objection, the learned single Judge has observed as under:
“9(v) While Garware principal read in the context
in Dura Felguera as well as Mayavati Trading principles
makes it clear that the question regarding an instrument
being duly stamped (when there is an arbitration
agreement (arbitration agreement within the meaning of
Section 7 of A and C Act) in the form of a convenant in an
instrument) clearly falls within the contours of sub-
section 6-A of Section 11. In the light of facts of this case,
Garware principle does not help the respondent as the
petitioners have restricted instant OP to be one
predicated on clause 16 of the said licence agreement,
which is not compulsorily registrable and which is
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undisputedly sufficiently stamped. As already alluded to
supra Section 17 of the Registration Act and entry 5(j) of
Schedule I of Indian Stamp Act makes this position very
clear.”
In this case also, the petitioner merely relied on the arbitration clause and
for the purpose of invoking the same, the document is sufficiently stamped.
Therefore, he would submit that the Original Petition may be allowed.
9. This Court considered the submissions of the learned counsel for
the petitioner and the respondent.
10. At the outset, this Court is unable to countenance the reliance
placed by the counsel for the respondent on the recent decision of the
Hon'ble Supreme Court in 2021 SCC Online SC 13 (N.N.Global
Mercantile Pvt.Ltd. vs. Indo Unique Flame Ltd. And others). The
decision, in fact, supports the contention of the petitioner. The observation
of the Hon'ble Supreme Court in paragraphs 76 & 78 of the decision as
extracted in the counter affidavit, is extracted hereunder.
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“76. The arbitration agreement contained in the
Work Order is independent and distinct from the
underlying commercial contract. The arbitration
agreement is an agreement which provides the mode of
dispute solution. Section 3 of the Maharastra Stamp Act
does not subject an arbitration agreement to payment of
Stamp Duty, unlike various other agreements enlisted in
the schedule to the act. This is for the obvious reason
that an arbitration agreement is an agreement to resolve
disputes arising out of a commercial agreement through
the mode of arbitration. On the basis of the doctrine of
separability, the arbitration agreement being a separate
and distinct agreement form the underlying commercial
contract, would survive independent of the substantive
contract. The arbitration agreement would not be
rendered invalid, un-enforceable or nonexistent, even if
the substantive contract is not admissible in evidence, or
cannot be acted upon on account of non-payment of
Stamp Duty.”
“78. In our view, there is no legal impediment to
the enforceability of the arbitration agreement pending
payment of stamp duty on the substantive contract. The
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adjudication of the rights and obligations under the
work order or the substantive commercial contract
would however not proceed before complying with the
mandatory provisions of the Stamp Act.”
In the light of the above, the contention of the respondent is to be
discountenanced as being without substance and merits.
11. Be that as it may, this Court is in agreement with the submission
made on behalf of the petitioner. As far as the invocation of the arbitration
clause provided under clause 16 of the agreement dated 01.07.2013, the
document is sufficiently stamped and the observation of the learned single
Judge of this Court in the above said Original Petition would squarely apply
to the factual matrix of the present case as well.
12. Although the learned counsel for the respondent strenuously
argued that both the lease deed dated 20.05.2004 and the renewal lease
agreement dated 01.07.2013 should be read in conjunction with, the subject
renewal lease, would also refer to the first lease as being the principal
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document, yet as far as invocation of clause 16 of the agreement which
provided under the renewal lease agreement dated 01.07.2013, this Court
does not find any legal infirmity at all. Since the issue is confined only to
the invocation of arbitral clause, it is immaterial, whether the agreement
would have to be read in conjunction with the initial agreement dated
20.05.2004 or not. This Court finds that it is only on the above said
objections, the above original petition has been resisted by the learned
counsel for the respondent.
13. In the above circumstances, the Original Petition is allowed.
i) Mr.Karthik Rajan, Advocate, having office at Haji Madhar Sha &
Sons Building, 2nd Floor, No.148, Moore Street, Chennai – 600 001.
(Ph.No.04425354955) is hereby appointed as an Arbitrator to enter upon
reference and adjudicate the disputes inter se the parties.
ii) The learned Arbitrator may, after issuing notice to the parties and
upon hearing them, pass an order as expeditiously as possible, preferably
within a period of six months from the date of receipt of the order.
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iii) The learned Arbitrator is at liberty to fix his remuneration and
other incidental expenses.
iv) The proceedings may be conducted under the aegis of the
Madras High Court Arbitration Centre and in accordance with the Madras
High Court Arbitration Rules.
v) The parties shall bear their own costs.
07.07.2021
vsi
Speaking/Non-speaking
Internet : Yes/No
Index : Yes/No
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V.PARTHIBAN.J.,
vsi
O.P.No.628 of 2020
07.07.2021
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