Suresh Shah v. Hipad Technology India Private Limited

 

Case Analysis

Suresh Shah v. Hipad Technology India Private Limited, 2020 SCC Online 1038.

 

Brief

The petitioner was allotted land by Noida authority in form of leased under transfer of memorandum date 13.04.2011. In 2018 petitioner sub leased this land to respondent on 14.11.2018 by sublease deed which contain provision for arbitration in case of any dispute by clause 12 in it. Now the petitioner want to invoke this clause to solve dispute between them so he come before court to invoke this clause.

Facts

Property bearing no. 154B block ‘A’ sector 63 madhu bala phase 3 noida ,UP was lease to petitioner by NOIDA authority under Transfer of Memorandum. Petitioner acquired full right on this land. In 2018 petitioner give this to respondent under Sublease deed which contain clause 12 for resolution of dispute by arbitration. Now there some dispute arise between them and petitioner want to invoke this clause to solve dispute but respondent was not agree with this. The petitioner come before the court for invoke this clause to solve issue.

Legal issues

Enforcement of clause 12 for appointment of arbitrator is correct when one party not agree with this.

To check whether any special status is apply on this cases or not?

Judgment

This case was file on before Delhi High Court because Sublease deed sign by both party contain clause 12 in which resolution was given for solve dispute by arbitration method with 21 day and if dispute was not solve in 21 day then they appoint sole arbitrator by help of Delhi High court.

“12.1 All disputes, differences or disagreements arising out of, in connection with or in relation to this Sub­Lease Deed, including w.r.t. its interpretation, performance, termination, in the first instance shall be endeavored to be settled through good faith mutual discussions between the officials of the Sub­Lessor and the Sub­ Lessee.

12.2 If no settlement can be reached through such discussions between the Parties within a period of 21 (twenty one)days, then all such unresolved disputes, differences or disagreements shall be finally decided through arbitration, to be held in accordance with the provisions of the Arbitration & Conciliation Act, 1996. The venue of arbitration shall be New Delhi and the language of such arbitration shall be English. 12.3 The Arbitral Tribunal shall consist of a sole arbitrator to be mutually agreed by the Parties. In the event of any disagreement regarding the appointment of the sole arbitrator, the same shall only and exclusively be appointed by the Hon’ble High Court of Delhi at New Delhi. The arbitral award shall be final and binding.”.¹

For enforcement of this clause the petitioner file suit and notice of this petition was also send to respondent on 02.03.2020. But Respondent not agree with this. To show his disagreement he not come to court on date and also not show any interest on it.  In that light we have heard Mr. Vikas Dhawan, learned counsel for the petitioner and perused the petition papers.²

The petitioner, therefore, got issued a Notice dated 11.12.2019 detailing the default committed by the respondent which gave rise to the dispute between the parties and also invoked the Arbitration Clause. The petitioner proposed the name of Justice (Retired) Mukul Mudgal as the Sole Arbitrator and indicated that if the respondent does not agree to the same the petitioner would seek appointment of Sole Arbitrator through Court. It is in that view the petitioner is before this Court.³

The petitioner counsel said that this case not deal with section 114-A of  Transfer of Property Act, 1882 with  any special status, any act which solve by only court and court which have jurisdiction for it. So we can go ahead with process of arbitration which any problem.

114A. Relief against forfeiture in certain other cases.—Where a lease of immovable property has been determined by forfeiture for a breach of an express condition which provides that on breach thereof the lessor may re­enter, no suit for ejectment shall lie unless and until the lessor has served on the lessee a notice in writing—

(a) specifying the particular breach complained of; and

(b) if the breach is capable of remedy, requiring the lessee to remedy the breach; and the lessee fails, within a reasonable time from the date of the service of the notice, to remedy the breach, if it is capable of remedy. Nothing in this section shall apply to an express condition against assigning, under­ letting, parting with the possession, or disposing, of the property leased, or to an express condition relating to forfeiture in case of non­payment of rent.”⁴

In the case of Vidya Drolia & Ors. vs. Durga Trading Corporation (2019) SCC online SC 358 noticed that Natraj Studios (supra) had dealt with tenancy under Rent Act and Booz Allen (supra) had made reference to special statutes and had not stated with respect to non­arbitrability of cases arising under TP Act. In that regard having noted the provision contained in Section 111, 114 and 114A of TP Act had in para 16 concluded as follows:

“16. In fact, a close reading of Section 114 would show that the rights of landlord and tenant are balanced by the aforesaid provision. This is because where a lease of immoveable property has determined by forfeiture for non­payment of rent, and at the hearing of the suit, the lessee pays or tenders to the lessor the rent in arrears, together with interest thereon and his full costs within 15 days, the Court in its discretion may relieve the lessee against the forfeiture. This shows two things ­ one that the landlord's interest is secured not only by the deposit of rent in arrears but also interest thereon and full costs of the suit. The option given, of course, is that security may also be given but what is important is that the Court is given a discretion in making a decree for ejectment if this is done.

The discretion may be exercised in favour of the tenant or it may not. This itself shows that Section 114 cannot be said to be a provision conceived for relief of tenants as a class as a matter of public policy. The same goes for Section 114A. Here again, a lessee is given one opportunity to remedy breach of an express condition, provided such condition is capable of remedy. However, the exception contained in this section shows that it is a very limited right that is given to a tenant, as this would not apply to assigning, sub­ letting, parting with the possession, or di111sposing of the property leased, or even to an express condition relating to forfeiture in case of non­payment of rent. Thus, it is clear that every one of the grounds stated in Section 111, whether read with Section 114 and/or 114A, are grounds which can be raised before an arbitrator to decide as to whether a lease has or has not determined.”⁵

Form all above discussion we have came to the point that both the party agree to appoint arbitrator when the dispute arise so we can assume that respondent also agree which this appointment without any objection. This court accepted the petition and allow to appoint Justice (Retired) Mukul Mudgal as the Sole Arbitrator in this case.

Decision

In the result, the petition is allowed. Shri Justice (Retired) Mukul Mudgal, former Chief Justice of Punjab and Haryana High Court is appointed as the Sole Arbitrator to resolve the dispute between the parties. The arbitral fee shall be payable as provided under the Fourth Schedule to Act, 1996. There shall be no order as to costs in this petition.⁶