Cloud Retail Solutions Pvt Limited vs Thriving Kitchen Private Limited on 17 March, 2022

[Cites 11, Cited by 1]

Chattisgarh High Court

Cloud Retail Solutions Pvt Limited vs Thriving Kitchen Private Limited on 17 March, 2022

1. This is an Appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (in short "the Act, 1996") against the impugned order dated 21.10.2021 passed by the Commercial Court (District Level), Raipur, C.G., by which the petition filed by the respondent -2- under Section 9 of Act, 1996 has been allowed and relief has been granted to the respondent.

2. The subject matter in this case is the property measuring 2000 sq.ft. situated at Surya Treasure Island, near Apollo Hospital, Junwani Road, Surya Vihar, Smriti Nagar, Bhilai, C.G. with 5 kitchens constructed on it. The respondent and the appellants entered into an agreement on 30.09.2021 by which the appellants were provided a property by way of sub-lease agreement on terms and conditions as agreed. The respondent invoked the arbitration clause and filed the application under Section 9 of the Act, 1996 before the Commercial Court (District Level) Raipur, C.G. pleading that the appellants had made default in payment of lease amount which has become outstanding to the tune of Rs.1,18,10,000/- praying for relief of attachment of the property and attachment of the bank accounts of the appellants including other reliefs. The learned Commercial Court has passed the order allowing the application under Section 9 of the Act, 1996 and directing attachment of the bank accounts of the appellants and also directed to furnish a bank guarantee of the amount claimed by the respondents.

3. It is submitted by the learned Senior Counsel for the appellants, that it was agreed between the parties that before the sub-lease dated 30.09.2020 was to be made enforceable, appropriate stamping and registration was required as per the provisions under Transfer of Property Act, 1882. As the sub-lease was to extend beyond one year, and the sub-lease deed was not extended or registered, therefore, the appellant continued as tenant of month to month basis. Finding in the impugned order that the appellant had not made any payment to the respondent is totally false. There had been some delay in payment of the monthly rent in December 2020. There had been a clause for dispute resolution but without pursuing the same the respondent chose to invoke the arbitration clause of the unstamped, unregistered sub-lease dated 30.09.2020.

4. It is submitted by the learned Senior counsel for the appellants that the learned Commercial Court had no territorial jurisdiction to entertain the application under Section 9 of the Act, 1996 as the Seat of the Arbitration for the sub-lease according to the agreement was to be Indore. It is submitted that Hon'ble Supreme Court in the case of B.G.S. S.G.S. Soma J.V. Vs. N.H.P.C. Limited reported in (2020) 4 SCC 234, it is held very clearly regarding the place where should be the Seat of Arbitration. Hence, the impugned order passed is without jurisdiction, therefore, not sustainable.

5. Reliance has been placed on the judgments in the case of Hindustan Construction Co. Ltd. Vs. N.H.P.C. Ltd. reported in (2020) 4 SCC 310, Brahmani River Pellets Ltd. Vs. Kamachi Industries Ltd. reported in (2020) 5 SCC 462, Indus Mobile Distribution (P) Ltd. Vs. Datawind Innovations (P) Ltd. reported in (2017) 7 SCC 678, Balapreetham Guest House Pvt. Ltd. Vs. Mypreferred Transformation and Hospitality Pvt. Ltd. reported in 2021 SCC OnLine Mad 1126, Arvind Constructions Co. (P) Ltd. Vs. Kalinga Mining Corporation reported in (2007) 6 SCC 798, Adhunik Steels Ltd. Vs. Orissa Manganese and Minerals (P) Ltd. reported in (2007) 7 SCC 125, Ramesh Chandra Sankla Vs. Vikram Cement reported in (2008) 14 SCC 58, Modi Rubber Ltd. Vs. Guardian International Corporation reported in 2007 SCC OnLine Del 502 and Ajay Singh Vs. Kal Airways Private Limited and Others reported in 2017 SCC OnLine Del 8934.

6. The respondent party though served with notice has not given appearance and neither is represented by any counsel.

7. Considered on the submissions. The first submission regarding the -4- non-operability of the conditions of the sub-lease deed on account of no-registration is taken into consideration. The copy of sub-lease deed is filed along with the petition. On perusal of the terms and conditions of the lease deed, it appears that this deed required registration and also payment of some stamp duty for the same, but all the same it is an unregistered lease deed. It may not have the value as purported under the law, but even then this is an agreement between the parties and as stated in the Appeal itself that the appellant had continued on tenancy of month to month basis. Such an unregistered lease deed can be made use of for collateral purposes, therefore, the terms of the agreement other than the agreement for vesting of right over the immovable property, shall continue to have its efficacy on the strength of the agreement between the parties. Therefore, the impugned order is not fit to be challenged on this ground.

8. The other ground raised by the appellant on the point of jurisdiction of the learned Commercial Court needs examination. Clause 15 of the Sub-lease agreement provides for dispute resolution. Clause 15.1 and Clause 15.4 are relevant for the purpose of decision on this Appeal, which are as follows:-

"15.1 If a dispute, difference, claim or controversy arises in connection with the interpretation or implementation of this Agreement or the performance of any obligation hereunder (each a "Dispute") it shall first be amicably resolved and failing amicable resolution within 30 days of commencement, the Parties shall refer the difference or dispute shall be referred to an be finally settled by to arbitration. The Parties agree that arbitration shall be conducted under the Arbitration and Conciliation Act, 1996 as amended from time to time the venue and seat of arbitration shall be Indore. The language of the arbitration shall be English.

15.4 The validity, interpretation, implementation and all matters in respect to the subject matter of this Agreement shall be subject to exclusive jurisdiction of the Courts in Raipur and shall be governed by and construed in accordance with the laws in India."

9. On careful reading of the Clause 15.1, it would be seen, that this clause provides for the arbitration to be conducted under the provisions of the Act, 1996 for which the Seat of Arbitration shall be Indore. On further close scrutiny of Clause 15.4, it reveals that on the questions as to validity, interpretation, implementation and to matters subject to this agreement shall be subject to exclusive jurisdiction of the Court in Raipur. Section 9 of the Act, 1996 is titled as interim measures etc. by Court. The provisions under Section 9 of the Act, 1996 is as follows:-

"9. Interim measures, etc. by Court.--A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court--

(i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or

(ii) for an interim measure of protection in respect of any of the following matters, namely:--

(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;

(b) securing the amount in dispute in the arbitration;

(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;

(d) interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may appear to the court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it."

10. on taking into consideration, the provisions under Section 9 of the Act, 1996, it clearly shows that in the matter of implementation and other matters relating to the agreement, the Court in Raipur shall have the jurisdiction to deal with the same. The exercise of power by the Commercial Court under Section 9 of the Act, 1996 is not similar to the exercise of power for arbitrating on the dispute between the parties. -6-

Exercise of Section 9 of the Act, 1996 is clearly apart from the arbitration proceeding and the arbitration proceedings are strictly conducted according to the provisions in Chapter 5 and Chapter 6 of the Act, 1996. Hence, in such a case, the ratio laid down by the Supreme Court in the case of B.G.S. S.G.S. Soma J.V. (Supra) and the other citations, on which the appellant has placed reliance, are clearly not applicable. The learned Commercial Court has exercised jurisdiction vested in it in accordance with the clause 15.4 of the sub- lease agreement between the parties. Hence, on the basis of this finding, we are of the view that this Appeal is without any merit, which is dismissed.

11. Accordingly, the petition stands disposed off.

         Sd/-                                                   Sd/-
  (R.C.S. Samant)                                         (Arvind Singh Chandel)
         Judge                                                  Judge




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Chattisgarh High Court