Delhi High Court
M/S Fortune Grand Management Pvt. Ltd vs Delhi Tourism & Transport Development ... on 25 April, 2016
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
*IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 25th April, 2016
+ W.P.(C) No.588/2016
M/S FORTUNE GRAND MANAGEMENT
PVT. LTD. ..... Petitioner
Through: Mr. P.S. Bindra, Adv.
Versus
DELHI TOURISM & TRANSPORT DEVELOPMENT
CORPORATION ..... Respondent
Through: Mr. R.K. Dhawan & Ms. Richa Dhawan,
Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. The petition impugns the proceeding initiated by the respondent in
Petition No.1/2016 titled Delhi Tourism and Transport Development
Corporation Vs. M/s Fortune Grand Management Pvt. Ltd. before the Estate
Officer under the Public Premises (Eviction of Unauthorised Occupants) Act,
1971 (PP Act) on the grounds i) that the Agreement dated 16th August, 2013
between the parties provide for resolution of all disputes by reference to
Arbitral Tribunal comprising of three Arbitrators with the petitioner and the
respondent appointing one Arbitrator each and the third Arbitrator being
appointed by the two Arbitrators; ii) that the petitioner prior to initiation of
proceedings under the PP Act had already initiated arbitral proceedings by
W.P.(C) No.588/2016 Page 1 of 14
instituting petitions in this Court under Section 9 and Section 11(6) of the
Arbitration and Conciliation Act, 1996 (Arbitration Act) and till the question
whether the purported termination of the agreement by the respondent is legal
or not, the possession of the petitioner of the premises cannot be said to be
unauthorized and two parallel proceedings cannot simultaneously go on; and,
iii) that Sh. Piyush Agarwal Estate Officer who has issued the notice is biased /
prejudiced having already acted on behalf of the respondent in the dispute with
the petitioner by filing a caveat in this Court.
2. The petition came up first for consideration on 27th January, 2016 when
the counsel for the respondent appearing on advance notice relied upon
International Amusement Ltd. Vs. India Trade Promotion Organization AIR
2015 SC 749. However on a prima facie consideration of the said judgment,
the same appeared to be in the context of arbitration clause subject matter of
agreement therein and which was found to be materially different from the
arbitration clause in the agreement between the parties hereto. Accordingly,
the matter was listed for further consideration on 29th January, 2016. On 29th
January, 2016, the counsels were heard further on the aspect whether the PP
Act would prevail over the arbitration agreement and finding the issue to be a
legal one, need for counter affidavit was not felt and judgment was reserved.
W.P.(C) No.588/2016 Page 2 of 14
The petitioner thereafter applied for stay of proceedings before the Estate
Officer and which application came up for consideration on 18 th March, 2016
when notice of the same was issued though no stay granted.
3. The bid of the petitioner / its predecessor for renovation, operation,
maintenance, marketing, management and transfer of Food Court and Shops in
Dilli Haat, Pitampura was accepted and an Agreement dated 16th August, 2013
was signed between the parties and whereunder the respondent granted to the
petitioner for a period of 10 years the exclusive right, authority, authorization
to plan, operate, allocate, market, maintain and manage the food court,
restaurant and shops at Dilli Haat, Pitampura. Clause 18 of the said agreement
is as under:
"18. Dispute Resolution
18.1. Dispute resolution
18.1.1. Any dispute, difference or controversy of whatever nature
howsoever arising under or out of or in relation to this
Agreement (including its interpretation) between the Parties, and
so notified in writing by either Party to the other Party (the
"Dispute") shall, in the first instance, be attempted to be
resolved amicably in accordance with the conciliation procedure
set forth in Clause 18.2.
18.1.2. The Parties agree to use their best efforts for resolving all
Disputes arising under or in respect of this Agreement promptly,
W.P.(C) No.588/2016 Page 3 of 14
equitably and in good faith, and further agree to provide each
other with reasonable access during normal business hours to all
non-privileged records, information and data pertaining to any
Dispute.
18.2. Conciliation
18.2.1. In the event of any Dispute between the Parties, either Party
may call upon the Chairman of the DTTDC to mediate and
assist the Parties in arriving at an amicable settlement thereof. If
the Dispute is not resolved as evidenced by the signing of
written terms of settlement within 30 (thirty) days of the notice
in writing referred to in Clause 18.1.1 or such longer period as
may be mutually agreed by the Parties, either Party may refer
the Dispute to arbitration in accordance with the provisions of
Clause 18.3.
18.3. Arbitration
18.3.1. Any Dispute which is not resolved amicably by conciliation, as
provided in Clause 18.2, shall be decided by reference to
Arbitral Tribunal appointed in accordance with Clause 18.3.2.
Arbitration shall be held in accordance with the provisions of
Arbitration and Conciliation Act, 1996. The venue of arbitration
shall be Delhi, and the language of arbitration proceedings shall
be English.
18.3.2. The Arbitral Tribunal shall consist of three arbitrators. Each
Party shall appoint one arbitrator, and the third arbitrator shall
be appointed by the two arbitrators so appointed and in the event
of disagreement between the two arbitrators, the appointment
shall be made in accordance with the Arbitration and
Conciliation Act, 1996.
W.P.(C) No.588/2016 Page 4 of 14
18.3.3. The arbitrators shall make a reasoned award (the "Award").
Any Award made in any arbitration held pursuant to this Article
18 shall be final and binding on the Parties as from the date it is
made, and the Operator and the DTTDC agree and undertake to
carry out such Award without delay.
18.3.4. The Operator and the DTTDC agree that an Award may be
enforced against the Operator and / or the DTTDC, as the case
may be, and their respective assets wherever situated.
18.3.5. This Agreement and the rights and obligations of the Parties
shall remain in full force and effect, pending the Award in any
arbitration proceedings hereunder."
4. Disputes and differences arose between the parties on 28th September,
2015. The respondent issued a show cause notice to the petitioner. The
petitioner besides replying to the show cause notice also requested the
respondent to resolve the disputes in terms of Clause 18 of the Agreement.
However the respondent vide letter dated 3rd December, 2015 terminated the
Agreement.
5. The petitioner filed O.M.P. (I) (COMM.) No.59/2015 supra under
Section 9 of the Arbitration Act seeking stay of the notice dated 3 rd December,
2015 and to restrain the respondent from interfering with the peaceful use and
occupation of the petitioner of the aforesaid project facility. Vide order dated
11th December, 2014 therein a Commissioner was appointed to inspect the
W.P.(C) No.588/2016 Page 5 of 14
project facility and to put locks over the same and to submit the keys along
with report to the Court.
6. The respondent acting through Mr. Piyush Agarwal aforesaid filed a
caveat in this Court with respect to any writ petition to be filed by the
petitioner.
7. The petitioner however filed Arbitration Petition No.47/2016 under
Section 11(6) of the Arbitration Act for appointment of an Arbitrator in
accordance with the arbitration Agreement between the parties.
8. The respondent on its part initiated the proceedings under the PP Act.
9. The first question to be considered is whether the initiation by the
respondent of the proceedings under the PP Act is bad for the reason of the
respondent, in the Agreement with the petitioner, having agreed upon
resolution of all disputes by reference to Arbitral Tribunal in accordance with
the Arbitration Act.
10. According to the counsel for the respondent, the question is no longer
res integra in view of the dicta in International Amusement Ltd. supra.
Undoubtedly, the Supreme Court therein also was concerned with the
maintainability of proceedings under the PP Act in the light of the arbitration
clause in the Agreement between the parties in that case. There also, while the
W.P.(C) No.588/2016 Page 6 of 14
India Trade Promotion Organization (ITPO) had commenced proceedings
under the PP Act, International Amusement Ltd. had commenced proceedings
under the Arbitration Act and filed an application under Section 8 of the
Arbitration Act before the Estate Officer which was rejected and impugning
which a writ petition was filed before this Court. Also, since the nominee of
the Chief Justice had also appointed an Arbitrator in exercise of powers under
Section 11(6) of the Arbitration Act, another writ petition against the said order
was filed by the ITPO. This Court held that the matters enumerated under
Section 15 of the PP Act cannot be referred to arbitration for adjudication by
Arbitrator. Supreme Court, on an interpretation of the following clauses of the
agreement in that case:
"27. The licensed premises are public premises as defined in the
Public Premises (Eviction of Unauthorized Occupants) Act, 1971 and
fall within the jurisdiction of the Estate Officer, Pragati Maidan.
28. In case of any dispute arising out of or in connection with this
agreement the disputes shall be referred to the sole arbitration of the
Chairman, India Trade Promotion Organisation or his nominee whose
decision / award shall be final, conclusive and binding on the parties.
Application for reference to arbitration shall be made by either party
within two months of arising of the dispute."
held Clause 28 aforesaid to be not an arbitration clause but a clause of
expert determination.
W.P.(C) No.588/2016 Page 7 of 14
11. However Clause 18.3 of the Agreement in the present case is
undoubtedly an Arbitration Agreement within the meaning of Arbitration Act.
It is for this reason that I had on 27th January, 2016 not agreed with the
contention of the counsel for the respondent that the matter was squarely
covered by the dicta of the Supreme Court in International Amusement Ltd.
supra. I may however add that it was undoubtedly also the contention of the
counsel for ITPO before the Supreme Court that the jurisdiction conferred
upon the Estate Officer by the PP Act cannot be taken away by a contract
between the parties incorporating arbitration clause and that the Estate Officer
has exclusive jurisdiction which is not arbitrable and the parties cannot by
contract agree to refer the matters in respect thereto by arbitration but the said
contention was not adjudicated by the Supreme Court which decided the matter
purely on the plea of there being no arbitration agreement between the parties.
12. The counsel for the respondent on the next date i.e. 29 th January, 2016
also drew attention to Natraj Studios (P) Ltd. Vs. Navrang Studios (1981) 1
SCC 523, Ranjit Kumar Bose Vs. Anannya Chowdhury (2014) 11 SCC 446,
Central Warehousing Corporation, Mumbai Vs. Fortpoint Automotive Pvt.
Ltd. (2010) 1 Mh.L.J. 658 (FB) and Jiwan Dass Vs. Life Insurance
Corporation of India 1994 Supp. (3) SCC 694.
W.P.(C) No.588/2016 Page 8 of 14
13. Supreme Court in Natraj Studios (P) Ltd. supra held that since under the
Bombay Rents, Hotel and Lodging House Control Act, 1947 exclusive
jurisdiction had been conferred on the small cause court to decide dispute
between landlord and tenant, the jurisdiction of the Arbitrator under the
Arbitration Clause in the agreement between the landlord and tenant to decide
such disputes stands excluded. Similarly in Ranjit Kumar Bose supra the
arbitration clause in the tenancy agreement providing for any dispute arising
out of tenancy agreement to be settled by Arbitrator in accordance with
provisions of Arbitration and Conciliation Act, 1996 was held to be of no avail
in the light of the bar contained in Section 6 of the State Tenancy Act, 1997
which prescribed that notwithstanding anything to the contrary contained in
any contract, the dispute as to recovery of possession of premises by landlord
from tenant has to be decided only by the Civil Judge having jurisdiction under
the Tenancy Act. The Full Bench of the Bombay High Court in Central
Warehousing Corporation, Mumbai supra was concerned with the question
whether in view of Section 5 of the Arbitration Act, the jurisdiction of the
small cause court under the Presidency Small Cause Courts Act, 1882 would
be ousted by the arbitration clause in the Agreement between the licensor and
the licensee. On an interpretation of Section 41 of the Presidency Small Cause
W.P.(C) No.588/2016 Page 9 of 14
Courts Act and Section 5 and Section 2(3) of the Arbitration Act, it was held
that even if the license agreement contains arbitration agreement, the exclusive
jurisdiction of the court of small causes under Section 41 of the Presidency
Small Cause Courts Act is not effected in any manner and that the arbitration
agreement in such case would be invalid and inoperative on the principle that it
would be against public policy to allow the parties to contract out of the
exclusive jurisdiction of the small causes court by virtue of Section 41 of the
Presidency Small Cause Court Act.
14. I may however state that the question as far as this Court is concerned is
not res integra. A Division Bench of this Court in Fabiroo Gift House Vs.
India Tourism Development Corp. MANU/DE/1712/2002 referring to Section
15 of the PP Act as under:
"15. Bar of jurisdiction.--No court shall have jurisdiction to
entertain any suit or proceeding in respect of--
(a) the eviction of any person who is in unauthorised occupation of
any public premises, or
(b) the removal of any building, structure or fixture or goods, cattle
or other animal from any public premises under section 5A, or
(c) the demolition of any building or other structure made, or
ordered to be made, under section 5B, or
[(cc) the sealing of any erection or work or of any public premises
under section 5C, or]
W.P.(C) No.588/2016 Page 10 of 14
(d) the arrears of rent payable under sub-section (1) of section 7 or
damages payable under sub-section (2), or interest payable
under sub-section (2A), of that section, or
(e) the recovery of--
(i) costs of removal of any building, structure or fixture or
goods, cattle or other animal under section 5A, or
(ii) expenses of demolition under section 5B, or
(iii) costs awarded to the Central Government or statutory
authority under sub-section (5) of section 9, or
(iv) any portion of such rent, damages, costs of removal, ex-
penses of demolition or costs awarded to the Central
Government or the statutory authority."
held that a claim for recovery of arrears of rent payable under Section
7(1) or damages payable under Section 7(2) or interest payable under Section
7(2A) of the PP Act cannot be subject matter of arbitration. Another Division
Bench of this Court in Harjit Singh Vs. Delhi Development Authority
MANU/DE/0397/2009 also held that the kind of disputes which as per the
terms of the perpetual lease deed were to be arbitrated by the Lieutenant
Governor could not be subject matter of arbitration; it was held that the dispute
insofar as it related to eviction of the petitioner from the public premises has to
be decided by the statutory authority under the PP Act and only the dispute
which was not covered by the PP Act could be adjudicated in accordance with
the arbitration clause in the agreement between the parties.
W.P.(C) No.588/2016 Page 11 of 14
15. On an interpretation of the arbitration clause in Exclusive Motors Pvt.
Ltd. Vs. India Tourism Development Corporation MANU/DE/0834/2009, a
Single Judge of this Court held the matters within the jurisdiction of PP Act to
be not arbitrable. LPA No.589/2009 preferred thereagainst is found to have
been withdrawn on 13th November, 2013. Following the aforesaid judgments,
I have in Nuurrie Media Ltd. Vs. Indian Tourism Development Corp. Ltd.
MANU/DE/4814/2009 held that there could be no arbitration with respect to
the disputes covered under the PP Act.
16. The same view was also taken by me in Airports Authority of India Vs.
Grover International Ltd. MANU/DE/0537/2011 that a tenant / lessor of a
public premises upon its tenancy / lease being determined, cannot before the
public authority has had an opportunity to initiate proceedings for eviction
under the PP Act, rush and raise the dispute of validity of termination in a
Court or in arbitration proceedings and invite adjudication thereon and contend
that the same is maintainable for the reason of the proceedings under the PP
Act having not been initiated till then. It was further held that if the public
authority does not initiate the proceedings under the PP Act, the termination in
any case would be of no avail whether it be valid or invalid and if proceedings
under the PP Act are initiated then the invalidity of the termination has to be
W.P.(C) No.588/2016 Page 12 of 14
set up as a defence in the said proceedings only and cannot be subject matter of
adjudication before any other fora. It was reasoned that under Section 5 of the
PP Act, the satisfaction, to be accorded whether a person is an unauthorized
occupant or not is of the Estate Officer and not of any other fora and that if it
were to be held otherwise, it would frustrate the jurisdiction of the Estate
Officer. Reliance was placed on Ashoka Marketing Ltd. Vs. Punjab National
Bank (1990) 4 SCC 406 holding the PP Act to be a special legislation enacted
to deal with the mischief of rampant unauthorized occupation of public
premises.
17. Mention may lastly be made of the judgment of the Division Bench of
this Court in India Trade Promotion Organisation Vs. International
Amusement Limited (2007) 142 DLT 342, it was held by referring to Section
2(3) of the Arbitration Act that Section 15 read with Sections 5 and 7 of the PP
Act confers exclusive jurisdiction on the Estate Officers appointed under
Section 3 of the said Act to deal with applications under Sections 5 and 7 of the
PP Act and that the PP Act being a special Act which also prescribes the
complete procedure for adjudication of proceedings under the PP Act is a
complete code in itself and proceedings under Sections 5 and 7 of the PP Act
cannot be made subject matter of arbitration. The said reasoning was not
W.P.(C) No.588/2016 Page 13 of 14
interfered with by the Supreme Court and as far as this Court is concerned, is
binding. In fact, as far back as in Kesar Enterprises Vs. Union of India
MANU/DE/0117/1994 the Division Bench of this Court had also observed that
Arbitrator will have no jurisdiction in matters in view of Sections 7 and 15 of
the PP Act.
18. As far as the contention, of the Estate Officer Sh. Piyush Agarwal being
biased is concerned, I am of the view that no such ground also is open to the
petitioner. Against the order of the Estate Officer, the remedy of statutory
appeal before the District Judge is available and even if the order of the Estate
Officer were to be found to be biased, the same can be corrected therein.
19. There is thus no merit in the petition.
Dismissed.
20. Needless to state that the petition having been dismissed, CM
No.9964/2016 filed by the petitioner for stay of proceedings before the Estate
Officer and notice whereof was issued for 2nd May, 2016 becomes infructuous
and is disposed of.
No costs.
RAJIV SAHAI ENDLAW, J.
th APRIL 25 , 2016 „gsr‟ W.P.(C) No.588/2016 Page 14 of 14