Delhi District Court
Nirula Corner House Pvt. Ltd vs Moolchand Khairatiram Hospital on 2 August, 2018
IN THE COURT OF SHRI GIRISH KATHPALIA,
DISTRICT & SESSIONS JUDGE
SOUTH EAST : SAKET COURT, NEW DELHI.
ARBITRATION No. 423/2016
NIRULA CORNER HOUSE PVT. LTD.
10185 C, ARYA SAMAJ ROAD,
KAROL BAGH, NEW DELHI 110005
....PETITIONER
VERSUS
MOOLCHAND KHAIRATIRAM HOSPITAL
& AYURVEDIC RESEARCH INSTITUTE,
LAJPAT NAGARIII, NEW DELHI 110024
...RESPONDENT
Date of filing : 19.11.2016 First date before this court : 01.06.2017 Arguments concluded on : 30.07.2018 Date of Decision : 02.08.2018 Appearance: Shri Ayush Negi, counsel for appellant Shri Shaurya Sahay, counsel for respondent J U D G M E N T
1. By way of this appeal brought under the provisions of Section 37 (2) (a) of the Arbitration & Conciliation Act 1996, the appellant has challenged order dated 19.09.2016 whereby the learned Sole Arbitrator terminated the arbitral proceedings under Section 16 of the Act. I have heard learned counsel for both sides and perused the original record of the arbitral proceedings.
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2. In earlier proceedings between parties to this appeal, vide order dated 09.12.2015 in ARB. P. 516/2015, the Hon'ble Single Judge of the Delhi High Court recorded that in terms with a valid arbitration agreement between the parties, each side had nominated an arbitrator but despite seven meetings, the arbitrators could not agree on the name of an umpire, so both sides had consented for termination of mandate of those two arbitrators and appointment of sole arbitrator by the court. Accordingly, with consent of both sides, the Hon'ble Single Judge of the Delhi High Court terminated mandate of both arbitrators appointed by the parties and appointed the learned Senior Advocate as sole arbitrator.
3. The present appellant filed claim petition before the learned sole arbitrator, which was followed by respondent's application under Section 16 of the Arbitration & Conciliation Act contending that the claims raised by the present appellant are not arbitrable disputes. The present appellant filed reply, which followed a rejoinder from the present respondent and after hearing both sides, the learned sole arbitrator passed the impugned order, thereby allowing the application of the appellant and terminating the proceedings under Section 16 of the Act. Hence, the present appeal.
4. Briefly stated, case set up by the present appellant in its claim petition before the learned sole arbitrator was as follows.
Arbitration No. 423/2016 Page 2 of 11 pages Nirula Corner House Pvt. Ltd. vs Moolchand Khairatiram Hospital 4.1 Parties to this appeal entered into an agreement dated 31.03.2009 whereby the respondent, engaged in running a hospital, allowed the appellant to run a cafeteria in the said hospital premises for a period of 9 years with effect from 01.04.2009. However, in the said agreement, period thereof was stipulated to be a period of two years from 01.04.2009 to 31.03.2011 and it was also agreed that the said agreement would be valid for initial period of two years or till relocation of the cafeteria to the new block of the hospital whichever was later. Parties had also agreed that after relocation, the agreement would be renewed for a further period of 7 years from 01.04.2011 to 31.03.2018.
4.2 On the basis of the said agreement, the appellant spent Rs. 25,00,000/ approximately for necessary interiors, kitchen and ambiance required to run and operate a cafeteria after obtaining necessary approvals from various departments.
4.3 Since by 31.03.2011, new block of respondent hospital was not ready, by mutual consent, agreement dated 31.03.2009 was renewed vide letter dated 02.04.2011 for a period of one year till 31.03.2012.
4.4 The agreement dated 31.03.2009 was further renewed vide agreement dated 21.09.2012 for a period of two years from 01.04.2012 to 31.03.2014 and the appellant incurred an additional expenditure of Rs. 2,00,000/ on renovation of cafeteria.
Arbitration No. 423/2016 Page 3 of 11 pages Nirula Corner House Pvt. Ltd. vs Moolchand Khairatiram Hospital 4.5 Ever since the month of March 2014, appellant remained in touch with the respondent for renewal of the agreement but respondent neither acceded to the requests of the appellant nor showed any sign of discontinuance of the agreement. Appellant continued to operate its cafeteria from the said premises in the hospital run by the respondent and continued to pay commission and dues in time to the respondent as per their agreement.
4.6 But on 03.05.2014, the appellant was informed by its employees that respondent had engaged musclemen who were not allowing the employees of appellant to enter the cafeteria and they had forcibly removed all goods, equipments and other material out of the cafeteria.
4.7 The appellant lodged police complaints dated 05.05.2014 and 05.06.2014 but to no avail. The respondent got issued a frivolous legal notice dated 12.05.2014 to which the appellant sent reply dated 22.05.2014. The respondent again got issued notice dated 02.06.2014 to which the appellant sent reply dated 07.06.2014.
4.8 Since the agreement dated 31.03.2009 was to be extended till 31.03.2018 but respondent illegally terminated the agreement by forcibly dispossessing the appellant, the latter suffered losses to the total Arbitration No. 423/2016 Page 4 of 11 pages Nirula Corner House Pvt. Ltd. vs Moolchand Khairatiram Hospital tune of Rs. 32,50,356/ on different counts as enumerated in para 21 of the claim petition.
5. In its application under Section 16 of the Arbitration & Conciliation Act, the present respondent contended that the Hon'ble Delhi High Court in order dated 09.12.2015 had granted liberty to the respondent to raise all pleas before the arbitrator including the plea that the present appellant's claims are not arbitrable. It was further contended by the present respondent before the learned sole arbitrator that the allegations of the present appellant related mainly to preventing the employees of the appellant from entering into the premises of the respondent and also preventing them from taking away their material, which would have a remedy before a civil court and not under arbitration since clause 3.2 of the agreement dated 21.09.2012 provided that any dispute arising in relation to the terms and conditions thereof would be submitted to the exclusive jurisdiction of the courts of Delhi. It was further contended by the present respondent before the learned sole arbitrator that the arrangement dated 31.03.2009 had expired and was renewed for one year vide letter dated 02.04.2011 and thereafter a new arrangement dated 21.09.2012 was created for a period upto 31.03.2014, thus all arrangements expired by efflux of time and there was no termination of any agreement. According to respondent, the arrangement between the parties was extended vide agreement dated Arbitration No. 423/2016 Page 5 of 11 pages Nirula Corner House Pvt. Ltd. vs Moolchand Khairatiram Hospital 21.09.2012 with revised terms for a period of two years with effect from 01.04.2012 and that agreement elapsed by efflux of time on 31.03.2014.
6. In reply to application under Section 16 of the Arbitration & Conciliation Act, the present appellant stated that the liberty was granted by the Hon'ble Single Judge of the Delhi High Court in order dated 09.12.2015 in routine. It was contended by the appellant that agreement dated 21.09.2012 was in continuance of the first agreement dated 31.03.2009 and the same has to be read in the light of all earlier agreements between the parties. It was contended that agreements dated 31.03.2009, 02.04.2011 and 21.09.2012 have to be read in continuance and in the light of first agreement dated 31.03.2009 whereby the respondent had agreed for entering into the arrangement for a total period of 9 years.
7. In the impugned order, the learned sole arbitrator, after analysis of rival pleas, took a view that claims of the present appellant were for breach of agreement dated 31.03.2009 while the arbitration proceedings were commenced on the basis of agreement dated 21.09.2012 but agreement dated 21.09.2012 was not placed on record from which the appellant could show that there was any breach of any agreement or that the arbitration clause of the said agreement permitted the appellant to raise disputes pertaining to the earlier agreement dated 31.03.2009. The learned arbitrator took a view that apparently, the Arbitration No. 423/2016 Page 6 of 11 pages Nirula Corner House Pvt. Ltd. vs Moolchand Khairatiram Hospital agreement dated 21.09.2012 superseded the earlier agreement dated 31.03.2009 and parties did not place on record the agreement dated 21.09.2012, so the dispute having arisen out of agreement dated 31.03.2009 cannot be looked into. Therefore, according to learned sole arbitrator, he had no jurisdiction and as such proceedings were terminated under Section 16 of the Act.
8. During argument, learned counsel for both sides took me through record and their rival contentions, already narrated above. Learned counsel for appellant argued that the learned arbitrator arrived at wrong conclusion that agreement dated 21.09.2012 had superseded the agreement dated 31.03.2009. It was argued that all agreements between the parties flowed from agreement dated 31.03.2009 and therefore, it was wrongly held that the disputes were not arbitrable. It was also argued on behalf of appellant that since agreement dated 21.09.2012 was not on record of the learned arbitrator, it could not be recorded that the said agreement had superseded the agreement dated 31.03.2009. Per contra, learned counsel for respondent supported the impugned order, contending that even according to the claim petition filed by the appellant, the agreement dated 31.03.2009 stood expired and the agreement dated 21.09.2012 was a fresh agreement, containing fresh arbitration clause. It was argued on behalf of respondent that it is the appellant who was under duty to place on record agreement dated 21.09.2012 but did not do so.
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9. Against the above backdrop of rival contentions I have examined the original records of arbitration proceedings.
10. The record of arbitration proceedings bear at page 80 thereof, a copy of notice dated 10.06.2014 addressed to the present appellant, whereby the present respondent nominated Shri Gian Chand as arbitrator in accordance with clause 3.1 and 3.2 of agreement dated 21.09.2012. In response, the present appellant vide reply dated 16.06.2014 (page 82 of arbitral record) nominated Shri T.S. Ahuja as arbitrator on its behalf under the same clause no. 3.1 and 3.2 of agreement dated 21.09.2012. Admittedly, when the two arbitrators could not agree on the name of umpire, the present appellant approached the Hon'ble Delhi High Court and vide order dated 09.12.2015, learned sole arbitrator was appointed. It cannot be denied that appointment of the learned Sole Arbitrator was under agreement dated 21.09.2012. It also cannot be denied that agreement dated 21.09.2012 contained a specific arbitration clause.
11. The disputes under reference arise out of the alleged breach of agreement dated 31.03.2009 since according to the present appellant also, the space for cafeteria allowed to the present appellant by the present respondent for a period of 9 years was under agreement dated 31.03.2009. It cannot be disputed that the dispute under reference pertained strictly to the agreement dated 31.03.2009.
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12. In application under Section 16 of the Arbitration & Conciliation Act, the present respondent specifically pleaded that agreement dated 31.03.2009 had expired by efflux of time and agreement dated 21.09.2012 was a fresh arrangement. In reply to the said application, the present appellant disputed that contention, pleading that agreement dated 21.09.2012 was in continuation of agreement dated 31.03.2009. That being so, it was incumbent upon the present appellant to place on record of learned arbitrator a copy of agreement dated 21.09.2012, but the same was not done. Since, as mentioned above, the agreement dated 21.09.2012 contained an arbitration clause under which the arbitral proceedings had been commenced by the present appellant, a copy of the said agreement ought to have been placed on record by the present appellant to establish that the disputes under reference were arbitrable under the said arbitration agreement.
13. I have also examined the agreement dated 31.03.2009, copy whereof is at page 64 of the arbitral record. Clause 17 of the Commercial part of agreement dated 31.03.2009 is the arbitration clause. But as mentioned above, it is not this clause which was invoked for initiation of arbitration. As mentioned above, arbitration was initiated on the basis of clause 3.1 and 3.2 of agreement dated 21.09.2012. Further, according to clause 1 of the Commercial part of agreement dated 31.03.2009, renewal of the arrangement for a period from Arbitration No. 423/2016 Page 9 of 11 pages Nirula Corner House Pvt. Ltd. vs Moolchand Khairatiram Hospital 01.04.2011 to 31.03.2018 was subject to relocation of the cafeteria to the new building of the hospital. Even according to the present appellant, no relocation of the cafeteria took place. That being so, it cannot be said that agreement dated 31.03.2009 could have continued to survive after 31.03.2011 automatically. It is for this reason that by letter dated 02.04.2011, the engagement was continued for a period of one year till 30.03.2012.
14. Respondent's letter dated 02.04.2011 at page 72 of the arbitral record also has been perused by me. The said letter is of hardly three sentences, holding that the agreement dated 31.03.2009 stood extended for one year on same terms and conditions. As mentioned above, in agreement dated 21.09.2012, there was a specific arbitration clause no. 3.1 and 3.2 and it was not a short and crisp extension of agreement dated 31.03.2009 similar to letter dated 02.04.2011. Had the agreement dated 21.09.2012 been in continuation of agreement dated 31.03.2009, it would have been in the form of a short and crisp extension/renewal letter, and not an agreement containing fresh arbitration clauses. Therefore, the view taken by the learned arbitrator that agreement dated 21.09.2012 was not in continuance of agreement dated 31.03.2009 was sound and sustainable. Consequently, the view of the learned arbitrator that the disputes pertaining to agreement dated 31.03.2009 could not be held to be arbitrable under the agreement dated Arbitration No. 423/2016 Page 10 of 11 pages Nirula Corner House Pvt. Ltd. vs Moolchand Khairatiram Hospital 21.09.2012 was sound and sustainable. I am unable to find any infirmity in the impugned order.
15. In view of above discussion, the impugned order is upheld and the present appeal is dismissed.
16. File be consigned to records.
Announced in the open court on
this 02nd day of August 2018 (GIRISH KATHPALIA)
District & Sessions Judge
Digitally signed
South East, Saket Courts
by GIRISH
GIRISH New Delhi 02.08.2018 (a)
KATHPALIA
KATHPALIA Date:
2018.08.03
12:51:35 +0530
Arbitration No. 423/2016 Page 11 of 11 pages
Nirula Corner House Pvt. Ltd. vs Moolchand Khairatiram Hospital