Delhi District Court
Arjun Aggarwal vs Seema Mehra on 12 September, 2023
IN THE COURT OF MS. PURVA SAREEN
ADDITIONAL DISTRICT JUDGE-01
SOUTH, SAKET COURT, NEW DELHI
CS DJ No.93/19
DLST-01-000877-2019
Arjun Aggarwal
S/o Sh. Mukesh Gupta
R/o 11-B, Birbal Road,
jangpura Ext., New Delhi
THROUGH
Power of Attorney Sh. Mukesh Gupta
Plaintiff
Vs
Seema Mehra
W/o Sh. Arun Mehra
R/o Farm No.29 & 30,
Green Meadow Farms,
Satbari, Chattarpur,
New Delhi-110074
Defendant
12.09.2023
ORDER
Vide this order, I shall decide the application under section 8 of the Arbitration and Conciliation Act, 1996 moved on behalf of defendant seeking dismissal of present suit and reference of the matter to arbitration.
1. The present suit is for recovery of Rs.5,08,000/- filed by the plaintiff who had taken on lease a farm house belonging to the defendant situated at Farm No.10, Mehra Farms, Satbari Chhatarpur, New Delhi vide lease agreement dated 18.08.2015 at a monthly rent of Rs.1,00,000/- for a period of 11 months 28 days and paid a sum of Rs.12,00,000/- through account payee cheque and also deposited Rs.4,00,000/- as security out of which Rs.2,00,000/- were paid in cash and Rs.2,00,000/-
Arjun Aggarwal Vs Seema Mehra Page No.1through cheques which were refundable at the time of handing over of possession. Another fresh lease agreement dated 28.07.2016 was executed between plaintiff and defendant for another period of 11 months and 28 days on the same terms and conditions as per earlier agreement. Plaintiff paid Rs.12,00,000/- to the defendant and the security amount of Rs.4,00,000/- was adjusted with the same terms and conditions.
2. The plaintiff incurred huge expenses to make the premises habitable as the fixture and fittings were totally obsolete and non functional. On 14.08.2017, plaintiff handed over the peaceful and vacant possession with prior intimation to the defendant but defendant failed to refund the security deposit of Rs.4,00,000/- to the plaintiff. Plaintiff got issued a legal notice to the defendant to refund the security deposit of Rs.4,00,000/- with interest @ 18% per annum w.e.f 14.08.2017. Despite service, neither any amount was refunded nor any reply was made by the defendant. Hence, the present suit was filed by the plaintiff claiming that a sum of Rs.5,08,000/- is outstanding, and recoverable together with interest.
3. The defendant, upon appearance in the present proceedings, filed an application under Section 8 of Arbitration and Conciliation Act for reference of the dispute to arbitration. The defendant claimed that there exists a valid Arbitration Agreement between the parties under Clause 29 of the Lease Deed dated 28.07.2016 in respect of premises. The lease deed has been entered into by the plaintiff (tenant) with the defendant (owner). Thus, due to the existence of a valid Arbitration Agreement between the parties, the present suit is not maintainable and is barred Arjun Aggarwal Vs Seema Mehra Page No.2 under section 8 of the Arbitration and Conciliation Act 1996 and the defendant, by means of application under consideration has prayed for reference of the matter to arbitration.
4. Reply has been filed by plaintiff to the application of the defendant. He has objected to the application filed by the defendant by referring to the judgment of Hon'ble Supreme Court titled Himangni Enterprises Vs Kamaljeet Singh Ahluwalia (2017) 10 SCC 706 wherein it was held that section 8 of Arbitration & Conciliation Act shall not apply to matters related to rent and eviction. He further argued that there was no valid arbitration agreement when the dispute between the parties arose and denied all the contents of the application of the defendant.
5. I have heard the learned counsel for the parties and have also gone through the application filed by the defendant and reply filed by the plaintiff and the judgments therein relied upon.
6. It is contended that since the dispute is arbitrable, in view of Section 8 of Arbitration and Conciliation Act, 1996, the matter cannot be proceeded with, and the parties are to be referred to arbitration.
7. The main contentions of learned counsel for the plaintiff is that as the dispute arose after the expiry of lease i.e. after 14.08.2017, hence, they could not be adjudicated by arbitration and were subject of ordinary civil laws of the land and that the jurisdiction of civil court is all pervasive, and further that there is no bar in approaching the civil court once the agreement is terminated.
Arjun Aggarwal Vs Seema Mehra Page No.38. Defendant has relied upon the judgment of hon'ble Supreme Court of India titled as A. Ayyasamy Vs P. Parmasivam & Others (AIR 2016 SC 467) wherein it has been held that "when arbitration proceedings are triggered by one of the parties because of the existence of an arbitration agreement between them, Section 5 of the Act, by a non-obstante clause, provides a clear message that there should not be any judicial intervention at that stage scuttling the arbitration proceedings. Even if the other party has objection to initiation of such arbitration proceedings on the ground that there is no arbitration agreement or validity of the arbitration clause or the competence of the Arbitral Tribunal is challenged, Section 16, in clear terms, stipulates that such objections are to be raised before the Arbitral Tribunal itself which is to decide, in the first instance, whether there is any substance in questioning the validity of the arbitration proceedings on any of the aforesaid grounds".
9. Learned counsel for defendant further referred to judgment of Hon'ble Supreme Court in case titled as State of Goa V. Praveen Enterprises (2012) 12 SCC 581 wherein it has been held that "when the judicial authority finds that the subject matter of the suit is covered by a valid arbitration agreement between the parties to the suit, it will refer the parties to arbitration, by refusing to decide the action brought before it and leaving it to the parties to have recourse to their remedies by arbitration. When such an order is made, parties may either agree upon an arbitrator and refer their disputes to him, or failing agreement, file an application under Section 11 of the Act for appointment of an arbitrator".
Arjun Aggarwal Vs Seema Mehra Page No.410. Learned counsel for defendant has further relied upon the judgment titled as S.B.P and Company V. Patel Engineering Limited (2005) 8 SCC 618 wherein it has been held that "we may at this stage notice the complementary nature of Section 8 and 11. Where there is an arbitration agreement between the parties and one of the parties, ignoring it, files an action before a judicial authority and the other party raises the objection that there is an arbitration clause, the judicial authority has to consider that objection and if the objection is found sustainable to refer the parties to arbitration. The expression used in this Section is 'shall' and this Court in P. Anand Gajapathi Raju v. P.V. G. Raju and in Hindustan Petroleum Corporation Ltd. v. Pink City Midway Petroleum Page 1807 has held that the judicial authority is bound to refer the matter to arbitration once the existence of a valid arbitration clause is established. Thus, the judicial authority is entitled to, has to and bound to decide the jurisdictional issue raised before it, before making or declining to make a reference.
11. Before proceeding further reference to the clause 29, appears to be desirable. The said clause reads under:
"29 Both parties agree to resolve any and all matters mutually and amicably within fifteen days arising out of any dispute, failing which both parties agree to refer any and all disputes arising out of interpretation of this agreement to an arbitrator. The arbitrator shall look over disputes of all nature arising out of this agreement. The place of arbitration shall be New Delhi and the dispute shall be referred to Delhi Dispute Resolution Society, UdyogSadan, C-22 & C-23, Qutab Institutional Area, Lower Gr. Floor, New Delhi- 110016 whose resolution or orders shall be binding on both parties."Arjun Aggarwal Vs Seema Mehra Page No.5
12. Considering the nature of the claim/dispute and the scope of the arbitration clause covered in clause 29, it is more than clear that the dispute is arbitrable as the same arises out of the contractual obligations.
13. The main opposition of the plaintiff side is the validity/subsistence of the arbitration agreement, as it is contended that the main agreement itself stands terminated.
14. Having regard to Section 16 of Arbitration and Conciliation Act 1996 and the catena of cases, the arbitral clause cannot be treated as co - terminus with the Arbitration Agreement itself.
15. Section 8 requires the judicial authority to compulsorily refer the parties to arbitration, if the judicial authority finds that a valid arbitration clause prima facie exits.
16. In Hema Khattar and another vs Shiv Khera , (2017) 7 SCC 716, Honourable Supreme Court has observed as under:
"34.In Sundaram Finance Ltd. v. T. Thankam [Sundaram Finance Ltd. v. T. Thankam, (2015) 14 SCC 444] this Court has held as under:
(SCC p. 447, para 8) "8. Once there is an agreement between the parties to refer the disputes or differences arising out of the agreement to arbitration, and in case either party, ignoring the terms of the agreement, approaches the civil court and the other party, in terms of Section 8 of the Arbitration Act, moves the court for referring the parties to arbitration before the first statement on the substance of the dispute is filed, in view of the Arjun Aggarwal Vs Seema Mehra Page No.6 peremptory language of Section 8 of the Arbitration Act, it is obligatory for the court to refer the parties to arbitration in terms of the agreement, as held by this Court in P. Anand Gajapathi Raju v. P.V.G. Raju [P. Anand Gajapathi Raju v. P.V.G. Raju, (2000) 4 SCC 539] ."
17. 35. In P. Anand Gajapathi Raju v. P.V.G. Raju [P. Anand Gajapathi Raju v. P.V.G. Raju, (2000) 4 SCC 539] it was held as under:
(SCC p. 542, para 5) "5. The conditions which are required to be satisfied under sub-sections (1) and (2) of Section 8 before the court can exercise its powers are:
(1) there is an arbitration agreement;
(2) a party to the agreement brings an action in the court against the other party;
(3) subject-matter of the action is the same as the subject-matter of the arbitration agreement;
(4) the other party moves the court for referring the parties to arbitration before it submits its first statement on the substance of the dispute."
18. In view of the above, where an agreement is terminated by one party on account of the breach committed by the other, particularly, in a case where the clause is framed in wide and general terms, merely because agreement has come to an end by its termination by mutual consent, the arbitration clause does not get perished nor is rendered inoperative. The Court, in P. Anand Gajapathi Raju [P. Anand Gajapathi Raju v. P.V.G. Raju, (2000) 4 SCC 539] has held that the language of Section 8 is peremptory in nature. Therefore, in cases where Arjun Aggarwal Vs Seema Mehra Page No.7 there is an arbitration clause in the agreement, it is obligatory for the court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an Arbitrator. Therefore, it is clear that in an agreement between the parties before the civil court, if there is a clause for arbitration, it is mandatory for the civil court to refer the dispute to an arbitrator.
19. In view of the above, this court is of the considered opinion that in the present case, the prerequisites for an application under Section 8 are fulfilled viz. there is an arbitration agreement; the party to the agreement brings an action in the court against the other party; the subject-matter of the action is the same as the subject-matter of the arbitration agreement; and the other party moves the court for referring the parties to arbitration before it submits his first statement on the substance of the dispute. The court has come to the conclusion that the civil court has no jurisdiction to entertain a suit after an application under Section 8 of the Act is made for arbitration. In such a situation, refusal to refer the dispute to arbitration would amount to failure of justice as also causing irreparable injury to the defendant.
20. Having regard to the above, this court is fully convinced as to the existence of a valid and subsisting arbitral clause and that the matter is squarely covered under the scope of the said arbitral clause, and thus, is not required to dwell upon the matter any further. Once the defendant is able to prima facie show the existence of valid arbitration agreement, Section 8 of Arbitration and Conciliation Act would preclude the court from proceeding on merits.
Arjun Aggarwal Vs Seema Mehra Page No.821. The parties, thus, are to be referred to arbitration in view of clause 29 of the Agreement dated 28.07.2016, regardless the claim of the plaintiff as to its termination of the lease.
22. The Application is, accordingly, disposed off as allowed with liberty to both the parties to proceed for appointment of an Arbitrator in accordance with law.
23. The present proceedings, accordingly, stands disposed off as Section 8 Application stands allowed and dispute be referred to arbitration.
Digitally
24. File be consigned to record room. Purva signed by Purva Sareen Date:
Sareen 2023.09.15
12:52:58
+0530
(Purva Sareen)
Additional District Judge-01
South District, Saket Court
New Delhi/12.09.2023
Arjun Aggarwal Vs Seema Mehra Page No.9