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TMI Blog2022 (8) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... g with its land, buildings, annexe, servants quarters and garages. 4. By a registered deed of lease dated 9th December 1997, the Respondent State leased out the said property to the Appellant on terms and conditions stipulated in the said deed of lease. Some of the terms and conditions of the Deed of Lease are set out hereinbelow for convenience:- " *** 2. The consideration of the lease of the premises fully described in the schedule I below, the lessee undertakes to pay to the lessor the sum of Rs. 30.00 lakhs (Rupees Thirty lakhs) only per annum with a 10% (ten percent) increase compounded every three years in quarterly installments of Rs. 7,50,000/- (Rupees Seven Lakhs Fifty Thousand only) payable by the 7th April, 7th July, 7th October and 7th December of each year and the first installment shall be payable on the date of the execution of this deed. 3. That the initial terms of the lease under this deed shall be a period of twenty four years from 01.06.1997 to 31.05.2021 (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 acceptance of the lessee's offer in terms of cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be referred to arbitration by an arbitrator to be appointed by the Chief Justice of the Sikkim High Court. ... xvii) The lessee shall after the expiry of the tenure of this lease or sooner determination thereof, shall peacefully and quietly surrender to the lessor, the possession of the demised premises in the condition in which the same has been delivered to the lessee. 5. The lessor covenants with the lessee as follows: ... ii) The lessee upon paying the lease amount and observing and performing the other covenants and conditions and agreements to be observed and performed, shall peaceably hold and enjoy the leased premises during the tenure of this lease without any interruption or disturbance. 6. In the event of any breach of the terms and conditions of the agreement by the lessee, the agreement/terminated by the lessor, at his option, after giving one months notice in writing of its intention to do so and the lessor shall be entitled to exercise its right of reentry, into the leased premises without prejudice to its right to recover all arrears of rent and other claims for damages caused by such breach of the terms and conditions hereinbefore covenante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el industry in Sikkim and outside the State are available. It would only be fair for the State to provide an opportunity for them to also make their offers for lease ownership, in terms of providing augmented quality of value added services and spelling out their capability to generate and offer more revenues for the state. 6. Hence, the State has decided that it would be in public interest to adopt a process with stringent qualifications and bid participating criteria, and determine appropriate lease owner through a selection process. This approach would ensure that capacities of emerging, capable, professional hoteliers who provide more value added services and revenues can be given the opportunity to participate for lease ownership selection. 7. Hence, the Government has after crateful consideration and application of mind, has decided in public interest that, your request for consideration of renewal of lease ownership and extension of tenure of lease in respect of Nikhill hotel would not be accepted. The decision is also in keeping with the principles laid down by the Hon'ble Supreme Court for letting out Government properties, in a number of cases, which lays down that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ator. 13. The Division Bench, inter alia, held:- "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:- 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reat extent, effect coverage of a retroactive arbitration agreement. Pro-arbitration broad interpretation, normally applied to international instruments, and commercial transactions is based upon the approach that the arbitration clause should be considered as per the true contractual language and what it says, but in case of doubt as to whether related or close disputes in the course of parties' business relationship is covered by the clause, the assumption is that such disputes are encompassed by the agreement. The restrictive interpretation approach on the other hand states that in case of doubt the disputes shall not be treated as covered by the clause. Narrow approach is based on the reason that the arbitration should be viewed as an exception to the court or judicial system. The third approach is to avoid either broad or restrictive interpretation and instead the intention of the parties as to scope of the clause is understood by considering the strict language and circumstance of the case in hand. Terms like "all", "any", "in respect of", "arising out of", etc. can expand the scope and ambit of the arbitration clause. Connected and incidental matters, unless the arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e; when facts are contested; when the party opposing arbitration adopts delaying tactics or impairs conduct of arbitration proceedings. This is not the stage for the court to enter into a mini trial or elaborate review so as to usurp the jurisdiction of the Arbitral Tribunal but to affirm and uphold integrity and efficacy of arbitration as an alternative dispute resolution mechanism." 18. In the considered opinion of this Court, the Division Bench fell in error in rejecting the application of the Appellant under Section 11(6) of the 1996 Act for appointment of an Arbitrator. The dispute arising out of non-renewal of the lease is clearly arbitrable. As observed above, the deed of lease provided "That the initial terms of the lease under this deed shall be a period of twenty four years from 01.06.1997 to 31.05.2021 (First day of June one thousand nine hundred and ninety seven to thirty first day of May two thousand and twenty one) and shall be renewable for such acceptance of the lessee's offer in terms of clause 4(xiii) hereinafter". 19. Clause 4(xiii) provides that the Appellant-lessee shall, in the last year of the lease tenure and not later than six months prior to the expiry ..... X X X X Extracts X X X X X X X X Extracts X X X X
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