2023 (2) TMI 1339 - HC - Indian Laws

Seeking appointment of an Arbitrator to adjudicate the disputes between the parties - Section 11 of the Arbitration and Conciliation Act, 1996 - HELD THAT - It is noteworthy that the Supreme Court has emphasized that while exercising jurisdiction under Section 11, the Court is to take a 'prima facie' view on issues relating to existence of arbitration agreement, and that issues of arbitrability/validity are matters to be adjudicated by the arbitral tribunal The only narrow exception is to cut the deadwood . It has been emphasized that the watchword for the Court is when in doubt, do refer . There is no impediment in constituting an Arbitral Tribunal to adjudicate the disputes between the parties - Mr. Vikas Mehta, Advocate is appointed as the Sole Arbitrator to adjudicate the disputes between the parties. Petition disposed off.

Summary

Issues Involved:
1. Validity of the Arbitration Clause in the lease deed.
2. Interpretation of Clauses 25 and 27 of the lease deed.
3. Applicability of Supreme Court precedents on arbitration in landlord-tenant disputes.
4. Appointment of an Arbitrator.

Detailed Analysis:

1. Validity of the Arbitration Clause in the lease deed:
The petitioner sought the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, based on Clause 25 of the lease deed dated 15.12.2019. The respondent argued that Clause 25 does not constitute a valid arbitration agreement as it provides an option to either seek arbitration or approach civil courts in Delhi. The court found this contention to be misconceived, clarifying that Clause 25 unambiguously mandates that disputes "shall be referred to an arbitrator under the Arbitration and Conciliation Act, 1996." The phrase "and/or the same may be defended subject to Delhi Court Jurisdictions only" was interpreted to mean that any decision by the arbitrator would be subject to the jurisdiction of Delhi Courts, not providing an option to bypass arbitration.

2. Interpretation of Clauses 25 and 27 of the lease deed:
The respondent contended that a conjoint reading of Clauses 25 and 27 results in a classification of claims, giving the petitioner the option to either invoke arbitration or approach a civil court, while the respondent has no such option. The court rejected this argument, stating that Clause 27 does not limit the scope of the arbitration clause in Clause 25. The arbitration clause is binding for both parties, covering all claims without classification.

3. Applicability of Supreme Court precedents on arbitration in landlord-tenant disputes:
The court referred to Supreme Court judgments in Vidya Drolia vs. Durga Trading Corporation and Suresh Shah vs. Hipad Technology (India) (P) Ltd., which held that landlord-tenant disputes governed by the Transfer of Property Act are arbitrable. The court emphasized that such disputes are not actions in rem but pertain to subordinate rights in personam, making them suitable for arbitration. The court noted that the arbitration clause in the present case is mandatory and fits within the legal framework established by these precedents.

4. Appointment of an Arbitrator:
The court concluded that there was no impediment to constituting an Arbitral Tribunal to adjudicate the disputes between the parties. Accordingly, Mr. Vikas Mehta, Advocate, was appointed as the Sole Arbitrator. The court clarified that the respondent could raise objections regarding jurisdiction, existence, or validity of the arbitration agreement before the Sole Arbitrator. The arbitrator is to proceed with the arbitration subject to requisite disclosures under Section 12 of the Arbitration and Conciliation Act. The fees for the arbitrator would be in accordance with the Fourth Schedule of the Act or as otherwise agreed between the parties.

Conclusion:
The petition was disposed of with the appointment of Mr. Vikas Mehta as the Sole Arbitrator to adjudicate the disputes, with all rights and contentions of the parties regarding claims and counter-claims kept open for decision by the arbitrator on their merits, in accordance with the law.