2016 (12) TMI 1675 - HC - Indian Laws

Payment of lease rent and fees for facility management - Held that - In order to appreciate the contention that the notice dated 05.08.2008 issued by Store One was not vague, as held by the Arbitrator, it is necessary to refer to Clause 7.2 of the Lease Deed as well as to the notice issued by Store One - the complaint made by Store One was general in nature and did not specify any particular covenant of the Lease Deed that had been breached. The deficiencies pointed out also lacked the necessary specifics. In view of the above, the Arbitrator s conclusion that the notice was vague and untenable cannot by any stretch be held to be perverse or patently illegal. The scope of judicial review under Section 34 of the Act is limited and the Court does not sit in appeal over the decision of the Arbitrator - unless Store One is able to establish that any of the grounds as specified under Section 34 of the Act are met, the impugned award cannot be set aside. Petition dismissed.

Summary

Issues Involved:
1. Validity of the termination of the lease by Store One.
2. Award of rent and damages for the period after the termination of the lease.
3. Award of facility management services and electricity charges to Pragya.
4. Whether the arbitral award is in conflict with the Public Policy of India.

Detailed Analysis:

1. Validity of the Termination of the Lease by Store One:
Store One filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the arbitral award dated 09.09.2016. The disputes arose from the payment of lease rent and facility management fees for premises leased by Store One in "Shop in Park (North)." Store One terminated the lease before the lock-in period expired, leading to claims for rent and damages. The Arbitrator found that Store One's notice dated 05.08.2008, which called upon Pragya to cure deficiencies, was vague and untenable. The notice of termination dated 08.09.2008 was also deemed invalid because it was not addressed to Annapurna and Paliwal, the owners of the premises at the time. The Arbitrator's conclusion that the termination of the lease was invalid was upheld, as it was neither perverse nor patently illegal.

2. Award of Rent and Damages for the Period After the Termination of the Lease:
The Arbitrator awarded rent for the period from 01.04.2008 to 22.03.2010, along with interest at 12% per annum, to Annapurna and Paliwal. Additionally, damages equivalent to six months' rent from 22.03.2010 were awarded, along with future interest at the same rate. Store One contended that the Arbitrator erred in awarding rent for a period after it had handed over possession of the premises. The Arbitrator reasoned that six months was a reasonable time for Annapurna and Paliwal to find new tenants, thus mitigating their damages. The Court found this assessment reasonable and not opposed to the Public Policy of India.

3. Award of Facility Management Services and Electricity Charges to Pragya:
The Arbitrator also awarded Pragya amounts for facility management services and electricity charges, along with interest at 12% per annum. Store One had stopped paying Common Area Maintenance (CAM) charges from July 2008, citing deficiencies in services. The Arbitrator's award to Pragya was upheld as it was based on the terms of the lease and the services provided.

4. Whether the Arbitral Award is in Conflict with the Public Policy of India:
Store One argued that the arbitral award was opposed to the Public Policy of India under Section 34(2)(b)(ii) of the Act. The Court noted that an award would be in conflict with the Public Policy of India only if it was induced by fraud or corruption, in contravention with the fundamental policy of Indian law, or in conflict with basic notions of morality or justice. The Court found no such grounds in the present case. The Arbitrator's conclusions were based on the lease terms and the evidence presented, and did not contravene any fundamental principles of Indian law.

Conclusion:
The petition challenging the arbitral award was dismissed. The Arbitrator's findings on the validity of the lease termination, the award of rent and damages, and the award to Pragya were upheld as reasonable and not in conflict with the Public Policy of India. The Court emphasized that its scope of judicial review under Section 34 of the Act is limited and does not entail a review on the merits of the dispute.