Telangana High Court
Mrs.Poonam Talwar Poonam Wasan vs M/S Black Velvet Lifestyle Private ... on 6 July, 2022
Author: A. Abhishek Reddy
Bench: A. Abhishek Reddy
THE HON'BLE SRI JUSTICE A. ABHISHEK REDDY
ARBITRATION APPLICATION No.79 OF 2021
ORDER:
This application is filed under Section 11(5) & (6) read with Section 15(2) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') read with Scheme for Appointment of Arbitrator, 1996, seeking appointment of Arbitrator.
2. The case of the applicant, in brief, is that she is the owner and possessor of the bunglow bearing H.No.8-2-293/82/A/1187 and H.No.8-2-293/82/A/1187/1 constructed over the plot admeasuring 1455 Sq. yards with built up area of 2046 sq. ft. situated at Road No.45, Jubilee Hills, Hyderabad. That the respondent Nos.1 and 2 have entered into a registered lease agreement with the applicant vide document No.426/20185 dated 30.01.2015 and the same is valid from 01.12.2014 to 30.11.2020. However, thereafter, there was no renewal of the lease agreement. In spite of the same, the respondents continued their illegal occupation of the subject premises. As such, the applicant got issued the legal notice dated 27.02.2021 demanding the respondents to pay the outstanding lease amount of Rs.54,96,749/- towards the arrears of rent from April, 2019 to November, 2020. The respondents have neither paid the outstanding lease amounts 2 nor vacated the premises and continued their occupation of the subject premises. The applicant has also got issued another notice dated 19.04.2021 under Section 21 of the Act demanding reconciliation. However, the notice issued to respondent No.1 was returned un-served with an endorsement 'No such Company in this address' and the notices were served on respondents 2 and 3. In spite of the same, the respondents have not bothered either to give any reply notice or vacate the subject premises. Hence, the applicant is constrained to file the present Arbitration Application.
3. A counter has been filed by the respondents denying the liability of Rs.54,96,749/- and mainly contending that the applicant has promised that the lease would be continued for 20 years and therefore the respondents have spent crores of rupees and developed the Hotel in the subject premises. Further, the respondents have also given a suitable reply to the notice dated 27.02.2021. Further, it is stated that in case of dispute between the landlord and the tenant, the appointment of an Arbitrator is improper as the Arbitrator cannot adjudicate the relationship between the landlord and tenant. Hence, it is prayed to dismiss the Arbitration Application.
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4. Heard Sri J. Prabhakar, learned Senior Counsel appearing for Sri A. Srinivas, the learned counsel for the applicant, and Sri MAK Mukheed, learned counsel for the respondents.
5. Learned counsel appearing on behalf of the applicant has brought to the notice of this Court the registered lease agreement dated 31.12.2014, more particularly clause 4.17 thereof wherein it is stated that if there is any dispute or difference with regard to the lease deed, the same shall be settled through negotiation or sole arbitrator. Learned counsel has stated that the applicant has sent a legal notice dated 19.04.2021 suggesting the names of two arbitrators, but to the said legal notice, no reply was given by the respondents herein. Learned counsel has brought to the notice of the Court the track consignment, which shows that the said legal notice was delivered on the respondents.
6. Per contra, the learned counsel appearing on behalf of the respondents has vehemently opposed the very maintainability of the Arbitration Application. Learned counsel has stated that the respondents have not received the legal notice sent by the applicant. Moreover, it is stated that the Arbitrator cannot go into the jural relationship between the landlord and tenant. Learned counsel has stated that the only remedy available to the applicant is to approach 4 the Civil Court for adjudication of her rights. It is further stated that even if there is any clause in the lease deed seeking to resolve the disputes of the parties, if any, through an Arbitrator, the same is contrary to the provisions of the Transfer of Property Act, 1882. In support of his submissions, learned counsel has relied on the following judgments:
1) Himangni Enterprises vs. Kamaljeet Singh Ahluwalia1; and
2) Vidya Drolia vs. Durga Trading Corporation2
7) Perused the material on record.
8) Admittedly, in this case, there is an arbitration clause in the registered lease agreement entered between the applicant and the respondents herein and the same reads as under:
4.17 JURISDICTION AND DISPUTE RESOLUTION:
Courts in Hyderabad shall alone have jurisdiction over the subject matter of this Lease Agreement.
Any disputes and differences whatsoever arising under or in connection with this Lease Deed or other agreements/ contracts executed pursuant hereto, which could not be settled by the Parties through negotiations shall be finally settled by a Sole Arbitration in accordance with the Arbitration and Conciliation Act, 1996 with written consent of both the Parties. The arbitration shall be held in 1 (2017) 10 SCC 706 2 (2021) 2 SCC 1 5 Hyderabad and the decision of the sole Arbitrator shall be final and binding on both Parties.
9) Further, the legal notice dated 19.04.2021 has also been issued to the respondents. The track consignment shows that the same was delivered to the respondents herein. Therefore, it cannot be contended by the learned counsel for the respondents that no legal notice was served on the respondents invoking the arbitration clause. Insofar as the another contention of the respondents that the Arbitrator cannot settle the disputes between the landlord and the tenant as the said relationship is governed by the provisions of the Transfer of Property Act, 1882, is concerned, the learned counsel for the respondents has relied on two judgments in support of such contention.
10) It is to be noted that the case in Himangni (referred supra) has arisen under the provisions of Delhi Rent Act, 1995 wherein the Hon'ble Supreme Court has held that where a separate agreement is entered, which regulates the relationship between the tenant and the landlord and if there is any dispute with regard to the eviction of the tenant, the said dispute has to be dealt with only under the Delhi Rent Act and the provisions of the Arbitration Act are not applicable.
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11) Admittedly, in the present case, the registered lease amount is more than Rs.3000/- per month. Therefore, the question of applicability of the Telangana State Rent Control Act is does not arise. Therefore, the ratio laid down in Hmangni (referred supra) is not applicable to the facts of the present case.
12) In the other judgment relied by the respondents in Vidya Drolia (referred supra), the Hon'ble Supreme Court, at paras 79 and 80, has held as under:
"79. Landlord-tenant disputes governed by the Transfer of Property Act are arbitrable as they are not actions in rem but pertain to subordinate rights in personam that arise from rights in rem. Such actions normally would not affect third-party rights or have erga omnes effect or require centralized adjudication. An award passed deciding landlord-tenant disputes can be executed and enforced like a decree of the civil count. Landlord-tenant disputes do not relate to inalienable and sovereign functions of the State. The provisions of the Transfer of Property Act do not expressly or by necessary implication bar arbitration. The Transfer of Property Act, like all other Acts, has a public purpose, that is, to regulate landlord-tenant relationships and the arbitrator would be bound by the provisions, including provisions which ensure and protect the tenants.
80. In view of the aforesaid, we overrule the ratio laid down in Himangni Enterprises and hold that landlord-tenant disputes are arbitrable as the Transfer of Property Act does not forbid or foreclose arbitration. However, landlord-tenant disputes covered and governed by rent control legislation would not be arbitrable when specific court or forum has been given exclusive jurisdiction to apply and decide special 7 rights and obligations. Such rights and obligations can only be adjudicated and enforced by the specified court/forum and not through arbitration."
13) In view of the above proposition of law laid down by the Hon'ble Supreme Court in Vidya Drolia (referred supra), the contention of the respondents that the provisions of Arbitration Act are not applicable and the Arbitrator does not have the jurisdiction is totally misplaced and legally untenable and the same is hereby rejected.
14) For the afore-stated reasons and having regard to the fact that there is an arbitration clause in the lease agreement entered between the parties, this Court is of the opinion that the present Arbitration Application can be allowed.
14) In the result, the Arbitration Application is ordered appointing Sri B. Chandra Kumar, retired Judge of erstwhile High Court of Andhra Pradesh, as the sole Arbitrator to arbitrate on the disputes between the applicant and the respondents and the said arbitrator shall enter on reference and proceed with, as enjoined by the Act.
15) The learned Arbitrator shall fix his remuneration as per the statutory provisions. He shall also fix the costs and expenses of the secretarial assistance for the arbitration proceedings upon 8 deliberation and consultation with the parties. All the costs and expenses of the arbitration proceedings shall be borne by both the parties in equal share. The learned Arbitrator is requested to complete arbitration proceedings, and pass an award at the earliest, preferably within six months from the date of commencement of the arbitral proceedings. It is made clear that this order does not preclude the respondents from raising any legally tenable objections as may be permissible under the law.
Miscellaneous Applications, if any, pending in the Arbitration _________________________ A. ABHISHEK REDDY, J Date : 06.07.2022 sur