Sikkim High Court
The Secretary, Tourism And Civil ... vs Mr. Brij Raj Oberoi on 18 November, 2021
Bench: Hon'Ble The Justice, Bhaskar Raj Pradhan
1
Arb.A. No. 02 of 2021
The Secretary, Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi
AND
Arb. P.No.02 of 2021
Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr.
THE HIGH COURT OF SIKKIM: GANGTOK
(Civil Appellate Jurisdiction)
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DIVISION BENCH: HON'BLE MR. JUSTICE BISWANATH SOMADDER, CHIEF JUSTICE
HON'BLE MR. JUSTICE BHASKAR RAJ PRADHAN, JUDGE
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Arb. A. No. 02 of 2021
AND
Arb. P. No. 02 of 2021
1. The Secretary,
Tourism and Civil Aviation Department,
Government of Sikkim,
Gangtok, East Sikkim.
2. State of Sikkim,
Through the Secretary,
Tourism and Civil Aviation Department,
Government of Sikkim,
Gangtok, East Sikkim.
.... Appellants
versus
Brij Raj Oberoi,
Managing Director of Elgin Hotel Pvt. Ltd.,
18, H.D. Lama Road,
P.O. Darjeeling, West Bengal,
Resident at Hotel Norkhil Campus,
Paljor Stadium Road, Gangtok.
East Sikkim.
.... Respondent
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Section 37 Arbitration and Conciliation Act, 1996 read
with section 13 of the Commercial Courts Act, 2015
& Article 227 of the Constitution of India.
Appearance:
Dr. (Ms.) Doma T. Bhutia, Additional Advocate General
and Mr. S.K. Chettri, Government Advocate for the
appellants.
Mr. A. Moulik, Senior Advocate with Ms. K.D. Bhutia and
Mr. Ranjit Prasad, Advocates for the respondent.
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2
Arb.A. No. 02 of 2021
The Secretary, Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi
AND
Arb. P.No.02 of 2021
Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr.
Arb. P. No. 02 of 2021
Brij Raj Oberoi,
Managing Director of Elgin Hotels Pvt. Ltd.,
18, H.D. Lama Road,
P.O. Darjeeling, West Bengal,
Resident at Hotel Norkhil Campus,
Paljor Stadium Road, Gangtok.
East Sikkim. .... Petitioner.
versus
1. State of Sikkim,
Through the Secretary,
Tourism and Civil Aviation Department,
Government of Sikkim,
Gangtok, East Sikkim.
2. The Secretary,
Tourism and Civil Aviation Department,
Government of Sikkim,
Gangtok, East Sikkim.
.... Respondents
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Application for appointment of arbitrator under section
11 of the Arbitration and Conciliation Act, 1996 read
with section 10 of the Commercial Courts Act, 2015
and under Article 227 of the Constitution of India.
Appearance:
Mr. A. Moulik, Senior Advocate with Ms. K.D. Bhutia and
Mr. Ranjit Prasad, Advocates for the Petitioner.
Dr. (Ms.) Doma T. Bhutia, Additional Advocate General
and Mr. S.K. Chettri, Government Advocate for the State-
respondents.
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JUDGMENT
1. Arbitration Appeal No. 02 of 2021 arises out of the
impugned order dated 31.05.2021 passed by the learned
Commercial Court on an application filed by the respondent
Arb.A. No. 02 of 2021
The Secretary, Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi
AND
Arb. P.No.02 of 2021
Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr.
(Brij Raj Oberoi) under section 9 (1) (ii) of the Arbitration and
Conciliation Act, 1996 (the Arbitration Act). The learned
Commercial Court examined, inter-alia, the relevant arbitration
clause i.e. 4 (xiii) of the lease agreement dated 09.12.1997
entered between the appellant (the State) and the respondent
(Brij Raj Oberoi) leasing out the premises known as "Norkhil
Hotel". It held that arbitrable dispute had arisen between the
parties which were to be referred to arbitration and restrained
the appellant from disturbing the possession and enjoyment of
"Norkhil Hotel" until the commencement of arbitral proceedings.
2. Arbitration Petition No. 02 of 2021 is an application filed
by Brij Raj Oberoi on 16.07.2021 for appointment of arbitrator
under section 11 of the Arbitration Act read with section 10 of
the Commercial Courts Act, 2015.
3. Both cases shall be disposed by this common judgment.
4. On 09.12.1997 the deed of lease was executed between the
State and Brij Raj Oberoi by which "Norkhil Hotel" was leased to
Brij Raj Oberoi for a period of 24 years. The lease was to expire
on 31.05.2021. The lease deed, inter-alia, contained the
following relevant clauses:-
"3. That the initial terms of the lease under this deed
shall be a period of twenty four years from 1.6.1997
to 31.5.2021 (First day of June one thousand nine
hundred and ninety seven to the thirty first day of
May two thousand and twenty one) and shall be
renewable for such further period as the lessor
deems fit subject to acceptance of the lessee's offer
in terms of clause 4 (xii) hereinafter."
Arb.A. No. 02 of 2021
The Secretary, Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi
AND
Arb. P.No.02 of 2021
Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr.
x x x x x x
"4. xiii. The lessee shall in the last year of the lease
tenure and not later than six months prior to the
expiry of the present lease, communicate in writing to
the lessor his terms and conditions for the renewal of
the present lease and if the same is accepted by the
lessor, then the present lease may be renewed for
such further period and on such rent as may be
mutually agreed upon between the parties thereto,
failing which the matter shall be referred to
arbitration by an arbitrator to be appointed by the
Chief Justice of the Sikkim High Court."
5. On 12.11.2020 before the expiry of the period of lease on
31.05.2021 Brij Raj Oberoi sent an offer of renewal to the State
to the following effect:-
"The rent for the period commencing from
01.06.2021 will be Rs.64,30,766.43/- per year i.e.,
10% more than the annual rent that is being paid
now. The escalation clause will remain the same i.e.
10% more every three years. The rent will be paid in
equal quarterly installment every year. It is
suggested that the period of the renewed lease will
be 30 years commencing from 1.6.2021. All other
terms and conditions of the lease will remain the
same."
6. As there was no response to the letter dated 12.11.2020,
Brij Raj Oberoi sent a reminder on 09.04.2020. Thereafter, it
was followed by a legal notice dated 05.05.2021. On 15.05.2021
Brij Raj Oberoi moved an application under section 9 (1) (ii) of
the Arbitration Act (the application). The State thereafter,
issued a letter dated 17.05.2021 to Brij Raj Oberoi conveying
their inability to renew the lease on the ground that the State
Government had approved a policy which envisages
professional methods of managing tourism infrastructure,
Arb.A. No. 02 of 2021
The Secretary, Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi
AND
Arb. P.No.02 of 2021
Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr.
assets and facilities in the State. For that purpose the State had
decided to adopt a process, in public interest, with stringent
qualifications and bid participating criteria, and determine
appropriate lease owner through a selection process. On
21.05.2021 Brij Raj Oberoi wrote to the State contending that
disputes and differences had arisen between them in respect of
the renewal of the lease and its terms; and keeping in mind
clause 4(xiii) of the lease agreement to refrain from taking any
steps as contemplated by them for tender to handover "Norkhil
Hotel" to a third party until the disputes are decided through
arbitration. On 24.05.2021 Brij Raj Oberoi filed an additional
affidavit before the learned Commercial Court informing about
the issuance of the letter dated 17.05.2021 by the State
declining to renew the lease without considering the offer made
by him. He also appraised the learned Commercial Court about
his reply dated 21.05.2021 and the fact that he had come to
learn that the State was taking steps for allotment of "Norkhil
Hotel" to a party/person of their choice and the fact that the
lease itself was going to expire on 31.05.2021.
7. On 28.05.2021 the State filed a response to the
application contending that Brij Raj Oberoi had misconstrued
clause 4(xiii) of the lease agreement. It was contended that as
the State had not accepted the offer made by Brij Raj Oberoi
there was no case for arbitration. Read properly, clause 4(xiii)
Arb.A. No. 02 of 2021
The Secretary, Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi
AND
Arb. P.No.02 of 2021
Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr.
would permit reference of the quantum of rent and the period of
renewal for arbitration. Under clause 4(xiii), upon termination
and/or expiry of the lease, Brij Raj Oberoi was required to quit
and vacate "Norkhil Hotel".
8. Section 9 of the Arbitration Act deals with interim
measures for protection which a party may, before or during
arbitral proceedings or at any time after the making of the
arbitral award or before it is enforced in accordance with
section 36, apply to a Court for. It is certain that a
contemplation or the existence of an arbitral proceedings is a
must before the Court can pass protective orders as
contemplated in section 9 (1) (ii) (a) to (e). In Firm Ashok Traders
vs. Gurmukh Das Saluja1 the Supreme Court observed that the
party invoking section 9 may not have actually commenced the
arbitral proceedings but must be able to satisfy the Court that
arbitral proceedings were actually contemplated or manifestly
intended and were positively going to commence within a
reasonable time.
9. As stated hereinbefore, the arbitration clause is set out
under clause 4 (xiii). A plain reading of this clause reveals that
it can be invoked only if the following two situations arise, once
the proposal for renewal of the present lease - communicated in
writing by the lessee to the lessor within the stipulated time
frame - is accepted by the lessor:-
(2004) 3 SCC 155
Arb.A. No. 02 of 2021
The Secretary, Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi
AND
Arb. P.No.02 of 2021
Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr.
i. If there is a dispute with regard to the further period of
renewal of the present lease, as proposed; and
ii. If there is a dispute with regard to the quantum of rent
proposed to be paid by the lessee to the lessor for the
extended period of lease.
10. In the instant case, the State expressed its inability to
renew the lease through its letter dated 17th May, 2021. It may
have been written belatedly, however, it was before expiry of the
lease period. As a consequence, the result of this letter dated
17th May, 2021, tantamount to a final decision on the part of
the State not to renew the present lease in favour of Brij Raj
Oberoi.
11. In such circumstances, none of the disputes - which can
be termed as arbitrable dispute - as specified hereinbefore, are
present in the facts of the instant case. In absence of any
arbitrable dispute, an order could not have been passed by the
Learned Commercial Court under section 9 of the Arbitration
Act.
12. Consequently, Arbitration Appeal No. 02 of 2021, is
allowed and the impugned judgment and order dated
31.05.2021, passed by the learned Commercial Court on the
application filed by Brij Raj Oberoi under section 9 of the
Arbitration and Conciliation Act, 1996 is set aside. The
Arbitration Petition No. 02 of 2021 seeking appointment of
Arb.A. No. 02 of 2021
The Secretary, Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi
AND
Arb. P.No.02 of 2021
Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr.
Arbitrator under section 11 of the Arbitration and Conciliation
Act, 1996 read with section 10 of the Commercial Courts Act,
2015 is also dismissed. The parties to bear their own costs.
(Bhaskar Raj Pradhan) ( Biswanath Somadder)
Judge Chief Justice
Approved for reporting: yes.
sdl/ Internet: yes.
