9911796707
TMI Blog2022 (2) TMI 1450X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitration of the Managing Director of the Appellant who was to be the sole Arbitrator, and only if the Managing Director was unable or unwilling to act as sole Arbitrator the disputes were to be referred to the sole Arbitrator designated or nominated by the Managing Director in his place. If the disputes could not be referred to the Managing Director for any reason, the matter was not to be referred to arbitration at all - In the instant case, the Respondent invoked the Arbitration Clause under the Dealership Agreement and approached the Director (Marketing) of the Appellant who appointed Mr. B.L. Parihar as the sole Arbitrator. The Arbitrator, Mr. B.L. Parihar, nominated by the Director (Marketing) of the Appellant had no authority and/or jurisdiction to adjudicate any dispute pertaining to the lease agreement. The Arbitral Award is liable to be set aside in so far as the same deals with disputes with regard to the Lease Agreement which are not contemplated by the Arbitration Clause in the dealership agreement and/or in other words, do not fall within the terms of the submission to Arbitration. The Arbitral award is thus liable to be set aside under Section 34(2)(a)(iv) of the 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered, in order to set up a retail outlet for sale of its petroleum products. 5. The recital of the deed of lease, inter alia, records:- 1) .The abovementioned Property is owned by SHRI. LAXMAN DAGDU THITTE. The said leased Property is more particularly described in the Schedule hereinbelow given together with the Structures and Building now standing thereon or that may be hereafter erected thereon by the LESSEE TO BOLD the premises hereby demised I hereinafter for the sake of brevity referred to as the ( DEMISED PREMISES ) unto the LESSEE for a term of 29 (TWENTY NINE years, commencing from the 20th day of SEPTEMBER 2005 renewable and determinable as hereinafter provided yielding and paying thereof during the said term monthly and the proportionately for any part of a month the rent of Rs. 1750 /- (RUPEES ONE THOUSAND SEVEN HUNDRED AND FIFTY only) to be paid without any deduct on or before the 15th day of each and every calendar month. 6. The deed of lease, hereinafter referred to as the lease agreement contained, inter alia, the following terms and conditions:- 2) THE LESSEE DOTH HEREBY COVENANT WITH THE LESSOR/S AS FOLLOWS: i) Lease Rent will be Rs. 1750 /- (RUPEES ONE THOUS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to possess and enjoy as in all their former state and interest Provided always and it is hereby agreed and declared that the Power of Re-entry hereinabove contained shall not be exercised unless and until the LESSOR/S shall have first given to the LESSEES 90 days Notice in writing pointing out the Breach in respect of which the right to Re-Entry is exercised and the LESSEE shall have failed to remedy the breach within a reasonable period of not less than 90 days thereafter. . (e) The LESSEE shall be entitled to ASSIGN, TRANSFER, SUBLET, UNDERLET or part with the Possession of the DEMISED PREMISES or any part thereof to any person above name whomsoever it chooses without the consent of the LESSOR. (f) The LESSEE shall be entitled to appoint, remove, reappoint, change and substitute any dealers, agents, licensees and other authorized representatives on and in respect of the DEMISED PREMISES without the consent OF THE LESSOR. (n) PROVIDED ALWAYS AND IT IS AGREED AND DECLARED that at the expiration of the said Term of 30 years this LEASE will be renewed for a further term by mutual consent. The renewed lease will be on the rents, conveyance, conditions and Agreements to be mutually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a Plot of land and is the Owner/Lessee/Tenant/licensee of the superstructures thereon more particularly described in the First Schedule hereunder written and of the structures thereon (Hereinafter collectively referred to as the Premises ) and has installed and/or is about to install at and under the said premises the apparatus and equipment described in the Second Schedule hereto (hereinafter called the Outlet ) 1st Schedule WHEREAS at the request of the Dealer, the Corporation has agreed to appoint the Dealer as its Dealer for the retail sale or supply at the said premises of certain petroleum products on the terms and conditions hereinafter contained. 2nd Schedule 2. This agreement shall remain in force for a period of fifteen years from 15th day of Nov' 2006 and continue thereafter for successive periods of one year each until determined by either party by giving three months notice in writing to the other of its intention to terminate this agreement and upon the expiration of any such notice, this agreement shall stand cancelled revoked, provided that nothing contained in this clause and prejudice the rights of either of the parties hereto to terminates this agreement e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Establishments Act, Factories Act and the Workmen's compensation Act. The Explosives Act, 1884 or any other Act or Statutory Rules, Regulations or Bye-Laws made thereunder and/ or applicable from time to time to the business of storage and sale of products and servants, workmen and persons engaged in connection therewith and the corporation shall not be responsible in any manner for any liabilities arising out of non-compliance by the Dealer with the same. 8(e) For the use of the said premises including the construction thereon and outfit, the Dealer shall pay to the Corporation a licence fee as may be fixed and recovered or deducted in the manner as may be decided by the Corporation, at its sole discretion and without any previous notice to the Dealer shall from time to time and at all times be entitled to increase or revise or modify the said licence fee. Licence Fee 8(j) It is understood by the Dealer that the premises mentioned in the First Schedule hereunder writer are Public Premises within the meaning of the provisions of the Public Premises (Eviction of Unauthorized Occupants). Dealer to safeguard Corporation right in the premises 10. It is specifically agreed and de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation has been contaminated and/or adulterated shall be final and binding upon the Dealer Product Specification/ Conamination/ adulteration In the event of the said General Manager finding that the contamination and/or adulteration of product has been due to any act or default or negligence of the Dealer or of his servants or agents, the Corporation shall have the right, without being bound to do so, to remove the contaminated/ adulterated product and to destroy or otherwise deal with the same without making any payment therefor to the Dealer and without prejudice to the Corporation a right to terminate this Agreement forthwith. Terms of Payment 21. It shall be a paramount condition of this Agreement that the Dealer himself (if he be an individual) or both partners of the Dealer firm (if the Dealer is a partnership firm consisting of two partners only) or the majority of the partners of the Dealer firm (if the Dealer is a firm consisting of more than two partners) or the majority of the office bearers / elected members of the Dealer o-operative Society (if the Dealer is a Cooperative Society) or the Managing/whole time Directors (if the Dealer is a Private Limited Company), as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eto arising out of or in relation to this agreement shall be referred to the sole arbitration of the Director (Marketing) of the Corporation who may either himself act as the Arbitrator or nominate some other officer of the Corporation to act as the Arbitrator. The Dealer will not be entitled to raise any objection to any such Arbitrator on the ground that the Arbitrator is an Officer of the Corporation. Arbitration 9. There can be no dispute that the Lease Agreement and Dealership Agreement are distinct agreements independent of each other. This is evident from the terms and conditions of the respective agreements. While the lease agreement was for a fixed period of 29 years from 15th April 2005, after which the lease could be extended by mutual agreement on mutually agreed terms and conditions, the dealership agreement was for a period of 15 years from 15th November 2006 and to continue thereafter for successive periods of one year each, until determined by the other party. 10. Furthermore, the lease agreement specifically authorized the Appellant to sublet, underlet, assign or transfer possession of the said premises to any person. The lease agreement also reserved on the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d independent from the lease agreement by which the land on which the outlet was installed, had been demised to the Appellant. 16. In Rahul Yadav v. Indian Oil Corporation (supra), this Court held:- 18. We have referred to the clauses in extenso to highlight that the lessee had entered into an agreement of lease with the appellant with immense liberty and the lease deed does lay down that the lessee has the freedom to sublet and appoint another dealer. The lease would remain in force till the dealership of the appellant continued and the licence remained in vogue. At this juncture, it is pertinent to reproduce certain clauses of the dealership agreement which would clearly spell out the purpose. They read as follows: 2. The Corporation do hereby grant to the Dealer leave and licence and permission for the duration of this Agreement to enter on the said premises and to use the premises and outfit for the sole and exclusive purpose of storing, selling and handling the products purchased by the Dealer from the Corporation, save as aforesaid, the Dealer shall have no right, title or interest in the said premises or outfit and shall not be entitled to claim the right of lessee, sub-less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealership is bound to be cancelled and at that juncture, if the lease deed is treated to have been terminated along with the dealership, it will lead to a situation which does not flow from the interpretation of the instruments. The dealership agreement has been terminated because of the decision rendered by this Court in Mukund Swarup Mishra [(2007) 2 SCC 536]. The consequence of cancellation of the dealership is a sequitur of the judgment. The inevitable consequence of that is that the appellant has to vacate the premises and the Corporation has the liberty to operate either independently or through another dealer. The appellant cannot be allowed to cause obstruction or create an impediment. The submission that the appellant entered into the lease agreement at a monthly rent of Rs 10,000 as it was given the dealership is a mercurial plea, only to be noted to be rejected. The dealership was availed of as has been held by this Court in an inapposite manner. In such a situation, consequences are to be faced by the appellant. 17. It appears that during a routine inspection on 17th April 2008 certain irregularities were noticed with regard to functioning of the retail outlet of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th 20% increase after every three years . The said alternative prayers of the Claimant are outside the ambit of this arbitration proceedings and hence not maintainable and are liable to be rejected. xxx xxx xxx 9. The rent was fixed after the Claimant had negotiated with the Committee of Officials of the Respondent and had agreed to the amount of rent. As such the Rent was fixed mutually between the parties. The Respondent further submits that the Claimant has been regularly accepting the monthly rent of Rs.1750/- from 2005 till date and has never raised any objection to the amount of the said Rent till filing of this Statement of Claim. As such the Claimant has raised this issue of monthly rent as purely an afterthought in this Statement of Claim. xxx xxx xxx 29. The alternative prayers of the Claimant at para 34(b)(I)(II) are not within the ambit of the Arbitration proceedings and hence not maintainable and not admitted by the Respondent . The Claimant has no ground whatsoever to call upon the Arbitrator to Order the Respondent to pay to the Claimant the sum of Rs.45,28,000/- with interest at the rate of 15% per annum from the date of filing the claim till the payment by the Clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the Claimant offered and agreed to let out his Land on Long Lease for monthly rent of Rs.1,750/- only because the Respondent agreed to allot the dealership of petrol pump as his plot of land and the monthly income from the said dealership was assured. I have perused the Government Valuation Report of the Land of the Claimant (Exhibit O ) and instance of one Mr. Bajirao Jadhav relied upon the Claimant (Exhibit P ) to prove the market rate of the vicinity of the Land of the Claimant. Both the documents are registered documents. The Lease Agreements executed by Mr. Bajirao Jadhav and the Claimant are altogether different with different terms and conditions and negotiations between the parties. The Claimant and Respondent are bound by terms and conditions of Lease Agreement dated 20.09.2005 and this Arbitral Tribunal cannot go beyond the Lease Agreement dated 20.09.2005 have provided and determined the rates of rent and increases in the rent and the same are binding upon the parties. I find that since the Dealership of petrol pump is already terminated there shall be no income of the dealership to the claimant other than the lease rent which is too low to survive and cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that (i) the subject-matter of the dispute is not capable of settlement by arbitration unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. The Arbitral award is thus liable to be set aside under Section 34(2)(a)(iv) of the 1996 Act. The decision enhancing the lease rent is patently beyond the scope of the submission to arbitration. Moreover, the composition of the Arbitral Tribunal or the arbitral procedure was not in accordance with the lease agreement dated 20th September, 2005. 35. By a judgment and order dated 29th January 2013, the District Judge-3, Pune allowed the Counter Objection of the Respondent to the award in part and modified the award by deleting the last clause, that is, and the period of Lease Deed to be kept as per the period mentioned in the advertisement published in the newspapers on 6.7.2005 with the observation that the term of agreement if wholly prejudicial or capable of causing grave injustice to one of the parties, could certainly be overlooked not only by Court of Justice, but also by the Arbitrator. The District Judge held that the learned Arbitrator had rightly enhanced the rent to Rs. 10,000/- with 10% increase after every three years. However, the learned Court held that it was not within the province of the Arbitrator to decrease the lease period to 19 years and 11 months as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The High Court rejected the aforesaid contention with the observation:- 9. Perusal of the record however shows that no such contention was taken before the Arbitrator as also in the application filed under Section 34 of the Arbitration Act. Therefore, the appellant cannot be allowed to raise it for the first time before this court. Because it would mean that the claimant has accepted Mr. B.L. Parihar as the Arbitrator for the dispute under the lease agreement. 39. In so far as disputes with regard to lease rent and/or any other conditions of the deed of lease were concerned, the High Court proceeded on the patently erroneous basis that the Appellant had not objected to the competence or the authority or jurisdiction of the learned Arbitrator to entertain and decide disputes with regard to lease agreement, ignoring the specific averments made by the Appellant in its counter statement, which have been extracted hereinabove. 40. In its counter statement, the Appellant had specifically averred that the alternate prayer of the Respondent claiming increase in lease rent to Rs.35,000/- per month with 20% increase in every three years was outside the ambit of the arbitration proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a contract. An Arbitral Tribunal is entitled to interpret the terms and conditions of a contract, while adjudicating a dispute. An error in interpretation of a contract in a case where there is valid and lawful submission of arbitral disputes to an Arbitral Tribunal is an error within jurisdiction. 46. The Court does not sit in appeal over the award made by an Arbitral Tribunal. The Court does not ordinarily interfere with interpretation made by the Arbitral Tribunal of a contractual provision, unless such interpretation is patently unreasonable or perverse. Where a contractual provision is ambiguous or is capable of being interpreted in more ways than one, the Court cannot interfere with the arbitral award, only because the Court is of the opinion that another possible interpretation would have been a better one. 47. In Associate Builders (supra), this Court held that an award ignoring the terms of a contract would not be in public interest. In the instant case, the award in respect of the lease rent and the lease term is in patent disregard of the terms and conditions of the lease agreement and thus against public policy. Furthermore, in Associate Builders (supra) the jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, a fundamental principle of justice has been breached, namely, that a unilateral addition or alteration of a contract can never be foisted upon an unwilling party, nor can a party to the agreement be liable to perform a bargain not entered into with the other party. Clearly, such a course of conduct would be contrary to fundamental principles of justice as followed in this country, and shocks the conscience of this Court. However, we repeat that this ground is available only in very exceptional circumstances, such as the fact situation in the present case. Under no circumstance can any court interfere with an arbitral award on the ground that justice has not been done in the opinion of the Court. That would be an entry into the merits of the dispute which, as we have seen, is contrary to the ethos of Section 34 of the 1996 Act, as has been noted earlier in this judgment. 51. In PSA SICAL Terminals Pvt. Ltd. v. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin and Others [(2021) SCC Online SC 508] this Court referred to and relied upon SSangyong Engineering and Construction Company Limited (supra) and held: 87. As such, as held by this Court in Ssangyong Engineering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement in the aforesaid case. 57. In this case, there is no finding by the Arbitral Tribunal that any condition of the dealership agreement was unconscionable and the Arbitral Tribunal has not interfered with termination of the dealership agreement. 58. The Appellant and the Respondent entered into the lease agreement in this case with their eyes open. The Respondent had the option not to lease out its property to the Appellant. The situation of an owner of property, executing a lease agreement in respect of his property cannot be equated with a contract of employment executed by and between an employee and a mighty employer, where the employee has little option but to accept the terms and conditions offered by the employer. 59. It is well settled that a judgment of a Court is precedent for the issue of law which is raised and decided. Words and phrases used in a judgment cannot be read in isolation, out of context. To quote the distinguished author V. Sudhish Pai Judgments and observations in judgments are not to be read as Euclid s theorems or as provisions of statute. Judicial utterances/pronouncements are in the setting of the facts of a particular case. To interpret words a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
