2009 (7) TMI 1226 - SC - Indian Laws

Whether the writ petition by the respondent was not maintainable, in view of clause 17 of the lease agreements dated 11.4.1989, 10.5.1990 and 29.4.1991 providing for settlement of disputes by arbitration ? Whether the recommendation by the Hiring Committee was binding on the appellant and whether the respondent- landlord could enforce payment of the rent recommended by the Hiring Committee ? Whether the directions issued by the High Court in the impugned order dated 31.8.2006 are warranted or justified ?

Summary

Issues Involved:
1. Maintainability of the writ petition in view of the arbitration clause in the lease agreements.
2. Binding nature of the recommendations by the Hiring Committee.
3. Justification of the High Court's directions in the impugned order.

Issue-Wise Detailed Analysis:

1. Maintainability of the Writ Petition:
The appellant argued that the writ petition was not maintainable due to the arbitration clause in the lease agreements dated 11.4.1989, 10.5.1990, and 29.4.1991. The arbitration clause stipulated that any dispute or difference concerning the lease agreements should be referred to an arbitrator appointed by the Government of India. However, the court noted that the writ petition was not in respect of the lease agreements but arose out of the Official Memoranda (O.M.) dated 13.6.1985 and related government orders. The subject matter of those official memoranda was not subject to any provision for arbitration. Therefore, the arbitration clause in the lease agreements did not cover or govern the issue raised in the writ petition, making the writ petition maintainable.

2. Binding Nature of the Recommendations by the Hiring Committee:
The court examined the scope, purport, and effect of the O.M. dated 13.6.1985 and other related government orders. It was noted that the Hiring Committees were constituted to assist government departments in assessing reasonable rents for private buildings taken on lease. The recommendations of the Hiring Committees were intended to be advisory and not binding. The O.M. dated 13.6.1985 explicitly stated that the final decision regarding the actual rent to be paid would rest with the authorities desiring to hire the property. The court held that the recommendations of the Hiring Committee were neither binding on the hiring departments nor on the lessors unless there was an express contract agreeing to be bound by such recommendations.

3. Justification of the High Court's Directions:
The High Court, in its impugned order, relied on the decision in Rabindra Nath Nandi and directed the appellant to pay the rent as recommended by the Hiring Committee. The court observed that the decision in Rabindra Nath Nandi proceeded on the assumption that the O.M. dated 13.6.1985 and related circulars made it obligatory for the government to revise the rent every five years. This assumption was found to be baseless as the O.M. clearly stated that the recommendations were only advisory. The court concluded that the High Court's directions were not warranted or justified as they were based on a misinterpretation of the O.M. and related circulars.

Conclusion:
The Supreme Court allowed the appeal, set aside the orders of the Single Judge and Division Bench of the High Court, and dismissed the writ petition. The respondent was directed to refund all amounts received in excess of the agreed rent to the appellant within three months. The court clarified that the recommendations of the Hiring Committee were advisory and not binding unless there was an express agreement to that effect.