-Report by Shreya Gupta

The petition and respondent in this case is SMT. SUNITA GARG and M/S SCRAFT PRODUCT P LTD respectively. The case arose due to the arbitration clause in the lease agreement.


The present case has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 in order of appointment of an arbitrator. The dispute has risen between them due to a lease deed according to which the petitioner is the owner of the property and the respondent is the tenant. The tenant had approx. 25000 sq. feet on ground floor, 25000 sq. feet on first floor, total area 50000 sq. feet which also included the mezzanine floor sides, washroom and rooms at the back, genset panel and the sundry assets area etc. at a monthly rent of Rs. 8,00,000/- exclusive of all other charges.


The petioner contended that the respondent is a defaulter in payment of rents and he is required to pay arrears of rent amounting to Rs.29,49,350/-.


The respondent contends that the clause 25 in the lease deed does not constitutes an arbitration agreement rather it states an alternative to reach to the Delhi high court. He also draws attention to the clause 27 of the agreement. He contends further that when cluse 25 is read with clause 27 it gives the option to either invoke arbitration or to approach a civil court for getting the leased premises vacated in the event of any violation or infringement on the part of the lessee, whereas, for the purpose of the claims of the respondent, no such option has been given. He further takes support of the previous judgements of Wellington Associates Ltd. vs. Kirti Mehta and Shri Chand Construction and Apartments Pvt. Ltd and Ors. Vs. Tata Capital Housing Finance Ltd.


The court stated that “ the contention of learned counsel for the respondent that Clause-25 in the said lease deed gives an option to the petitioner/lessor to either take recourse to the arbitration or pursue her remedies in a court of law, is misconceived and is based on a misreading of the Arbitration Clause. The clause unambiguously provides that any disputes arising with regard to “interpretation and/or implementation of terms and conditions of this deed the same shall be referred to an arbitrator under the Arbitration and Conciliation Act, 1996, whose decision shall be final and binding on both the parties‖. The later part of the clause i.e., the words “and/or the same may be defended subject to Delhi Court Jurisdictions only”, are evidently, intended to convey that any decision of the arbitrator would be subject to jurisdiction of the Delhi Courts. The Clause cannot be construed as giving an option to any party to either take recourse to arbitration or alternatively, file a civil suit.” The court stated that the reliance placed on the previous judgements is completely misconceived. The court appointed Mr. Vikas Gupta as the sole arbitrator in this case.

READ FULL JUDGEMENT: https://bit.ly/41qr3IE

Neutral Citation Number: 2023/DHC/001285                    

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