IN THE COURT OF THE III ADDL.CITY CIVIL & SESSIONS JUDGE, BENGALURU CITY (CCH No.25). Dated: This the 15th day of April, 2019 Present: Sri.RON VASUDEV, B.Com. LL.B, (Spl), III Addl.City Civil & Sessions Judge, Bengaluru. A.S.No. 245/2018 Petitioner [ENTITY] , Leela Hospital and Diagnostic Centre, 9th Cross, Margosa Road, Malleshwaram, Bengaluru-560003, Represented by its CEO and Chairman Dr.[ENTITY]. by Sri.[ENTITY], Advocate. vs. Respondents 1. Sri.[ENTITY], Aged about 81 years, s/o.[ENTITY], No.20, G-2, [ENTITY], Kausthubha Apartments, 10th Cross, Malleshwaram, Bengaluru-560003. 2. Smt[ENTITY], Aged about 50 years, w/o.Sri.[ENTITY], No.21/1, 5th Cross, Wilson Garden, Bengaluru-560027. 3. Sri.[ENTITY], District Judge (Retd.)-Sole Arbitrator Arbitration and Conciliation Centre, Bengaluru (Domestic & International) Bengaluru. R1 & R2-by ALMT, Legal, (Advocates). R3-Arbitrator-Absent. 2 [CASE NUMBER] JUDGMENT
This is a Petition under [SECTION] of the [ACT].
2. The factual matrix which lead to filing of this petition is that, the respondent No.1 is the owner of premises bearing No.24, 9th Cross, Malleshwaram, Bengaluru and he entered into a Joint Development Agreement with respondent No.2 to develop that property. Pursuant to the said JDA, a multistoried complex was constructed there and it was let out to the petitioner to run a hospital, diagnostic centre, pharmacy and lab, under a registered lease deed dated 16-2-2012. The said lease was for 25 years with lock-in period of 5 years. It also provided the mutual obligations of the lessors and lessees as well as the mode of payment of rent and such other things. After some time, alleging that the petitioner was not able to pay the rent and he accumulated huge amounts, these respondents 1 and 2 caused notice to him on 6-6-2017 calling upon to pay the arrears of rent within 30 days. When that notice was not responded, then they issued notice on 13-7-2017 terminating the tenancy and to pay the outstanding amount accrued till then. When that notice was also not responded, on the reason that the lease deed provided for an arbitration clause, the respondents 1 and 2 caused notice on 16-8-2017 to resolve the disputes through arbitration. As usual that notice was also sponded, so they filed [CASE NUMBER] on the file of Hon'ble High Court of Karnataka and upon hearing both side the Hon'ble Court appointed respondent No.3 as an Arbitrator.
3. Before the learned Arbitrator, the respondents 1 and 2 presented their claim petition seeking ejectment, arrears of rent, interest on arrears of rent, mesne profits and such other reliefs. It was contested by the petitioner herein by filing his objection statement. The sum and substance of his objection was that no doubt he entered into a registered lease deed with respondents 1 and 2, but when he negotiated with them to take that commercial complex to run the hospital, it was a bare skeletal structure having beams, columns and flooring without any complete infrastructure to run the hospital. So the petitioner contended that he paid Rs.1,12,50,000/- for providing requisite infrastructure to him to make his hospital operational, but without using that amount in providing the requisite fit outs, they retained it as security deposit coercively, making him to spend on his own for his necessary requirements. Thus, alleging that the said respondents committed breach of oral understanding with him and they did not reimburse him towards expenses incurred by him for the fit outs, he resisted the claim petition and prayed to dismiss the same
4. Based on the said pleadings, respondent No.3/ leraned Arbitrator framed the Issues, held trial and by his impugned award dated 16-10-2018, he decreed the claim petition in toto and adjusting the security deposit of Rs.1,12,50,000/- towards the arrears of rent and mesne profits, he further directed the petitioner herein to pay the amounts to respondents separately, as agreed in the lease deed, within a stipulated time and also directed this petitioner to vacate the said premises before 31st July 2019.
5. Being aggrieved by the said award, the petitioner is before this Court and reiterating his objection statement and also the operative portion of the impugned award, in his petition, he urges following grounds to set aside the impugned award. I would narrate the said grounds as briefly as possible, so that I can attend them once again when I take up the rival submissions, in the context of the decisions relied by them as well as the arguments canvassed:
that the arbitrator exceeded his jurisdiction by proceeding to decide a case of a landlord and tenant, which is against the ratio laid down in the decision in [ENTITY] Enterprises vs. Kamaljeet Singh Ahluwalia's case; that nonetheless the clauses of the lease deed provided for resolution of dispute by way of arbitration, the impugned award does not indicate whether the parties were allowed to resolve their dispute; that as per [SECTION] of the said lease deed remedy to forfeiture of lease was provided and as there was no contractual breach of agreement in terms of the said lease, there was no occasion for the arbitrator to direct this petitioner to vacate the premises; that the arbitrator failed to take notice of payment of arrears of rent after causing notice by the respondents 1 and 2 and also during the arbitral proceedings; that when the payments made by this petitioner were received and acknowledged by the respondents, there was no reason for the arbitrator to come to the conclusion that the terms of lease deed were breached; that the arbitrator has failed to analyze the statement of account produced before him and also the waiver of terms and conditions of lease on account of receipt of rent during the arbitral proceedings; that the arbitrator has assigned improper reasons which led to incorrect conclusion; that wrongly interpreting the defence of this petitioner, arbitrator proceeded to adjust the security deposit towards mesne profits which was not the subject of arbitration; that it was wrong on the part of the arbitrator to conclude that there was no sufficient defence evidence to prove the fraud contended by the respondents and when such a plea of fraud was taken, he ought not to have proceeded with the arbitration; that though the attention of the arbitrator was drawn to [SECTION], [SECTION] and [SECTION] of [ACT], he did not take serious note of the said provisions and though so-called breach of non-payment of rent raised by the said respondents could have been remedied, learned arbitrator proceeded to hold that there was a valid termination and directed the petitioner to vacate and that the discretion given under [SECTION] of the [ACT] being discretion vested in a Court, the arbitrator could not have exercised it as if he is a public fora. Thus, on these grounds and other grounds, the petitioner seeks to set aside the impugned award rendered by the respondent No.3.
6. In response to the petition notice, the respondents 1 and 2 appeared and they have filed common written statement and summary of it is as under:
that, the petition is misconceived and it is bereft of merit. That, the grounds urged by the petitioner are not covered under [SECTION] of the [ACT] and this petition is presented as if it is an appeal against a Judgment or Order of a trial Court. That the submission of the petitioner emphasizes on the lack of jurisdiction of the arbitral tribunal, but neither before Hon'ble High Court in CMP or in his objection statement before the arbitral tribunal such an objection was raised by the petitioner. All of a sudden at the fag end of the trial, before the learned arbitrator, an interlocutory application was filed questioning the jurisdiction of the arbitral tribunal and it was suitably attended by the arbitrator. It is true that respondent No.1 is the owner of the premises No.3, 9th Cross, Malleshwaram and he entered into a Joint Development Agreement with the respondent No.2 and they together constructed a multi storied building and let out it to the petitioner under registered lease deed dated 16- 2-2012. But it is denied that the petitioner paid Rs.1,12,50,000/-towards providing of infrastructure to run a hospital. Instead terms of lease deed provided that he paid that amount as a security deposit and he himself voluntarily took responsibility to make that structure suitable to run a hospital. Even the petitioner filed an affidavit undertaking that, while making such fit-outs, he would not violate the building plan or the rules and regulations of local body and in the event if any action is initiated by the local body, he would indemnify these respondents, therefore now it does not lie in his mouth that it is these respondents who had undertaken to make that building suitable to run the hospital at their cost and for that matter, this petitioner paid the said amount of Rs.1,12,50,000/-. They also denied that coercively they converted that amount as a security deposit. They also pointed out that when this petitioner did not dispute the commission of default in payment of monthly rent, he is not legally or morally justified to continue in the premises and respondent No.1 being a senior citizen, he is dependent on the rental income of the said building and petitioner is enjoying it without paying any rent. Thus, supporting the impugned award and also by contending that no valid ground/s is/are made out by the petitioner as envisaged under [SECTION] of the [ACT], they pray to dismiss this petition.
7. Based on the above rival submissions, now the following Points would arise for my consideration:
1. Whether the petitioner proves that the Arbitral Tribunal has no jurisdiction to decide the landlord and tenant dispute?
2. Whether the petitioner has shown that the forfeiture of lease, as contended by him, was remediable?
3. Whether the petitioner has shown that learned Arbitrator has no jurisdiction to quantify the mesne profits?
4. Whether the petitioner has shown that the learned Arbitrator exceeded his jurisdiction by adjusting the security deposit towards mesne profits?
5. Whether the petitioner has made out grounds to resume the arbitral proceedings as prayed in I.A.No.3?
6. What Order?
8. I have heard the arguments of Sri.[ENTITY], advocate for the petitioner and Sri.[ENTITY], advocate for the respondents 1 and 2. Entire file in [CASE NUMBER] was secured from the Arbitration and Conciliation Centre, Bengaluru (Domestic & International), Bengaluru. I have gone through the case file as well as the decisions relied by the learned advocates in support of their submissions.
9. On careful evaluation of the pleadings and evidence as well as the grounds urged by the petitioner, my findings on the above Points are as under:
Point No.1 - In the Negative, Point No.2 - In the Negative, Point No.3 - In the Negative, Point No.4 - In the Negative, Point No.5 - In the Negative, Point No.6 - As per below, for the following:
REASONS
10. Point No. 1 : It was the primary contention of Sri.[ENTITY], advocate, that the Arbitral Tribunal has no jurisdiction to decide the matters of landlord and tenant involving eviction and mesne profits. In order to augment his argument he referred to the decisions reported at (2017) 10 SCC 706 ([ENTITY] Enterprises vs. Kamaljeet Singh Ahluwalia), AIR 2002 SC 562 (Shrikrishna Oil Mill vs. Radhakrishan Ramachandra), MANU/WB/0937/2011 (M/s.Fingertips Solutions Pvt. Ltd. vs. Dhanashree Electronics Ltd.), MANU/AP/0019/ 2018 ([PRECEDENT], as well as Judgment in Civil Appeal No.2402/2019 ([ENTITY] and others vs. Durga Trading Corporation), decided on 28-2-2019. It was his contention that as observed in [ENTITY]'s case and other cases cited by him, the case in hand is not a simple case of termination of tenancy, but it involved the forfeiture of lease, which is a remediable one. In support of his said argument he also drew my attention to the [SECTION] of the [ACT] [SECTION] and [SECTION] of the said Act. He strenuously contended that though the ratio laid down in [ENTITY]'s case was brought to the notice of the learned arbitrator, he was not persuaded by it, therefore the award passed by the Arbitral Tribunal shall have to be set aside, as it is without jurisdiction.
11. On the other hand, Sri.[ENTITY], advocate for respondents 1 and 2 canvassed that the facts and circumstances prevailing in the cases cited by the petitioner are quite contrast to the facts and circumstances of this case and in those cases in the context that eviction proceedings were initiated under the special law, which protects the tenants, the Courts made such observations, whereas in the case in hand, in accordance with [SECTION] and [SECTION] of the [ACT] after taking all necessary steps when their efforts did not resolve the dispute amicably as provided under the undisputed lease deed, which came to be marked as Ex.P2 before the Arbitral Tribunal, in terms of the said lease deed the respondents determined the lease, and referring to [ENTITY]'s case and discussion made in that Judgment he submitted that the ratio laid down in Booz Allen and Hamilton Inc.'s case was not set aside in [ENTITY]'s case, he canvassed that there is no substance in the submission of the petitioner. He also canvassed that the petitioner never raised objections to the jurisdiction of the Arbitral Tribunal either by replying the notice caused by the respondents 1 and 2 on 6-6-2017 marked as Ex.P4 before the Tribunal, much less the two more notices dated 16-2-2017 marked as Ex.P2 and termination notice dated 13-7- 2017 marked as Ex.P5. He also contended that even before the Hon'ble High Court, when CMP was moved, this petitioner did not question the jurisdiction of the Arbitral Tribunal and having consented for the appointment of respondent No.3 as an arbitrator, participated in the arbitral proceedings without any demure and without raising this point in his objection statement filed there, only at the fag end of the trial, that too during the stage of argument, the jurisdiction of the arbitrator was questioned reflecting on his mind to dodge the proceedings some how. Therefore he contended that once the petitioner subjected himself to the jurisdiction of the arbitrator, it is not open to him to question that jurisdiction before this civil court.
12. In reply to the said argument Sri.[ENTITY], advocate contended that no doubt at the initial stages this petitioner could not raise objection as to the jurisdiction of the arbitrator, but before passing award the ratio laid down in [ENTITY]'s case was brought to the notice of the learned arbitrator and only on the reason that objection was not raised at the earliest point legally unsustainable award cannot be allowed to hold the field. In support of his argument that objection as to the jurisdiction of the arbitrator can be raised even at the belated stage, he referred to the decisions reported at [PRECEDENT]. In view of these rival submissions I have carefully gone through the entire case file.
13. As rightly pointed out by Sri.[ENTITY], advocate, before moving the Hon'ble High Court by filing [CASE NUMBER] these respondents being annoyed by non- payment of rent by this petitioner continuously for more than a year, in terms of the clauses of Ex.P2, they issued notice to him on 6-6-2017 to pay arrears of rent within a period of 30 days. Before the Tribunal, in addition to producing that Ex.P4-notice, these respondents, who were claimants there, produced postal receipt and postal acknowledgment. Receipt of that notice was not at all disputed by the petitioner either before the Arbitral Tribunal or before this Court. In that context, if one were to look at Ex.P4, it can be seen that this petitioner had mounted arrears of rent running more than crores of rupees, whereas the terms of lease deed at [SECTION] reads that this petitioner has to pay the rent in terms of the chart provided under clause 3.1 with gradual increase over the years and as per [SECTION], he ought to have paid the rent in advance to both respondents by splitting that amount equally and in the event of delay he was liable to pay 18% interest per annum. Further as per clause 3.3. of the said deed, this petitioner was bound to pay the rent strictly as per the table contained in [SECTION] either by way of cheque or D.D. or bank transfer and failure to pay the rent to any one of the lessors (respondents 1 and 2), shall be deemed to be default in payment of rent, entitling the said lessors to initiate action for termination of the lease in accordance with the terms of this deed. Further [SECTION] of the deed speaks regarding mode of termination of lease. As per [SECTION] it shall be deemed that if lessee commits default on occurrence of any one of the grounds as below:
(a) fails to pay rent for 3 consecutive months,
(b) breaches any terms of conditions of the said deed.
No doubt, the further clause of the said Article, i.e., 6.2 provided that there would be a lock-in period for 5 years from the date of lease and during that lock-in period, in the event lessee determines the lease, he has to pay rent for the balance lock-in period and before doing that, he has to issue notice of 6 months, whereas, in case of lessor, it is provided that if the lessee commits default during the lock-in period, the lessors shall serve notice on the lessee calling upon him to rectify/remedy or make good of the default and on the failure of the lessor to rectify the remedy or make good of the default within 30 days from the date of receipt of such notice, lessors were empowered to terminate the lease even during the lock-in period. Therefore, in terms of the said lease deed, when the respondents issued legal notice to the petitioner on 6-6-2017 calling upon him to pay the arrears of rent, which was for almost more than a year, without replying it, the petitioner kept quite. Having waited for the stipulated period of 30 days to pay the arrears of rent, through their second notice, namely the termination notice at Ex.P5, once again the respondents cautioned the petitioner about the consequences of non-adhering to the clauses of the lease deed. Even the said notice was also duly served on the petitioner and regarding which postal receipt and postal acknowledgments were produced by these respondents before the Arbitral Tribunal, and without disputing the service of that notice, as usual the petitioner kept mum. Therefore, left with no option, the respondents were forced to cause third notice in a row on 16-8-2017 as per Ex.P6 notifying their intention to resolve the dispute of non payment of rent amicably. When that notice also received no response from the petitioner, they moved the Hon'ble High Court by filing CMP. It is curious that before the Hon'ble High Court, the petitioner never questioned the jurisdiction of the Arbitral Tribunal on the subject matter of the dispute instead he consented for appointment of respondent No.3 as arbitrator, as a result, High Court disposed of that matter on 12-2- 2018 directing the said respondent to commence the arbitration proceedings.
14. Even before the Arbitral Tribunal in response to the claim petition when this petitioner submitted his objection statement, then also he did not dispute the jurisdiction of the arbitrator, therefore based on the pleadings of the parties, the learned arbitrator framed as many as six Issues and after holding trial he passed the impugned award. Only at the stage of arguments this petitioner stood up and with all his valour he started questioning the jurisdiction of the arbitrator to decide the dispute in hand entirely banking upon the ratio laid down in [ENTITY]'s case. In this background I have to examine whether was it permissible for the petitioner to raise such objection at that belated stage and, even otherwise whether his objection as to the jurisdiction is sustainable. In order to decide these aspects I would take up the decisions relied by Sri.[ENTITY], advocate, one after the other.
15. I think before I take up the [ENTITY]'s case, it is necessary to have a glance at other decisions and there after it is better to look into the facts and circumstances of [ENTITY]'s case and subsequent observation of the Hon'ble Supreme Court in [ENTITY]'s case. In Shrikrishna Oil Mill's case, as evidenced from the facts of that case, the landlord and tenant dispute was covered by [ACT], therefore the Hon'ble Supreme Court held that when rights of the tenants are protected under the special statute, arbitrator has no jurisdiction to decide. In M/s.Fingertips Solutions Pvt. Ltd.'s case, Hon'ble High Court of Calcutta was of the opinion that when certain disputes overlap with other disputes and those overlapping disputes cannot be segregated with the disputes which are covered under the arbitration agreement, then the arbitrator has no jurisdiction to decide such dispute. Similar was the observation of Hon'ble High Court of Andhra Pradesh in Vodafone Essar Infrastructure Ltd. It may be noted that in Vodafone Essar Infrastructure Ltd.'s case the tenant/defendant having participated in the proceedings of eviction suit, and availed several adjournments for filing his written statement, at the fag end he disputed the jurisdiction of the civil court by filing an application under [SECTION] of the [ACT] and sought to refer the matter to the arbitrator. When that application was rejected by the trial court, he moved the Hon'ble High Court. Therefore, in the context of that case the Hon'ble High Court held that arbitrator has no jurisdiction to decide the dispute involved in that case. Therefor the circumstances that were prevailing in the cases cited by the learned advocate being distinguishable, ratio laid down in them cannot be straight away imported and applied to the facts of this case.
16. As rightly canvassed by the respondents 1 and 2 in Booz Allen and Hamilton Inc.'s case, setting rest to all disputes, the Hon'ble Supreme Court, referring to its previous judgments at para 35 to 37 categorically held which disputes are arbitrable and which are not. In that case setting out in unequivocal words the Hon'ble Court held that only where eviction or tenancy matters are covered by special statute, where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes, the private fora like arbitral tribunal has no jurisdiction, but in respect of other eviction proceedings there is no bar for the arbitrator to deal with those matters. Therefore if at all the petitioner in this case intends to have advantage of the said observation, he has to first demonstrate that the subject matter of lis between him and the respondents 1 and 2 is covered under the special statute, viz., [ACT]. When admittedly he has no space there to fight out this litigation under the umbrella of that Act, he cannot deliberately mis-read the observation made in that case and contend that the Arbitral Tribunal had no jurisdiction.
17. No doubt, to some extent the submission of the petitioner can be countenanced in the context of the observation made in [ENTITY]'s case, wherein at para 24 of the Judgment the Hon'ble Court held that no sooner the exemption provided in a special statute is lifted all the tenants would get the benefit under that Act, that is why the Arbitral Tribunal cannot decide the matters of eviction, but referring to the ratio laid down in Booz Allen and Hamilton Inc.'s case, to which I discussed above, in para 21 of its Judgment by reproducing para 36 of the said Judgment, Hon'ble Court did not lay down a precedent holding that the ratio laid down in Booz Allen and Hamilton Inc.'s case is not a good law nor it set aside the distinction made between the disputes which are arbitrable and non- arbitrable in that case. Therefore, when the observation and distinction as well as the jurisdiction of the private fora and public fora were well defined in Booz Allen and Hamilton Inc.'s case, only on the basis of some passing observations made in the [ENTITY]'s case, this Court cannot get itself misled. I would point out how the facts involved in [ENTITY]'s case are distinguishable from the case in hand. In the said case, after expiry of the lease period the landlord had initiated a suit for eviction. Having entered his appearance the tenant filed an application by invoking [SECTION] of the [ACT], it was rejected by the trial court and the matter was taken to the Hon'ble Supreme Court. Since already dispute was commenced before the civil court, the Hon'ble Supreme Court was of the view that the trial should proceed there instead of referring the dispute to the arbitrator. Whereas in the case in hand no such attempt was made by respondents by moving the civil court, instead, calling upon the petitioner for amicable resolution of dispute, by filing CMP with consent respondent No.3 was appointed as arbitrator.
18. Added to that, in [ENTITY]'s case, which is latest observation of Hon'ble Supreme Court rendered subsequent to [ENTITY]'s case, once again concurring with the precedent laid down in Booz Allen and Hamilton Inc.'s case and also by referring to [SECTION], [SECTION] and [SECTION] of [ACT] Hon'ble Court categorically held, even in cases of forfeiture of lese for non-payment of rent and allied matters, arbitrator can decide the dispute and while seeking to refer the matter to the larger Bench at para 31 of its Judgment it allowed the Arbitral proceedings to proceed further notwithstanding the fact that matter is referred to the larger Bench. Therefore it leaves no doubt in any corner that in view of the observation in [ENTITY]'s case, the Arbitral Tribunal looses its jurisdiction to decide this dispute.
19. As rightly submitted by Sri.[ENTITY], advocate, having meekly surrendered at all stages and actively participated in the arbitral proceedings, only at the stage of arguments petitioner raised objection as to jurisdiction. Here I need not reiterate the well settled principle of law that an objection as to jurisdiction has to be taken at an earliest. I have also gone through M/s.Sathyanarayana Brothers (P) Ltd.'s case relied by Sri.[ENTITY], advocate. As observed in para 9 of that Judgment, a party who objects to the award on the ground that tribunal lacks substantive jurisdiction, should not only act promptly, but should also take care not to lose his right to object. A party who takes part or continues to take part in the proceedings is in a different position from someone who takes no part in the proceedings. Thus referring to the latter class of litigants, Hon'ble Court held that such litigants will not loose their right to object as to the jurisdiction. In that paragraph it was further held that a person alleged to be a party to the arbitral proceedings, but who takes no part in those proceedings may at any time apply to the Court for declaration, an injunction or other relief concerning the validity of the arbitration agreement; the proper constitution of the arbitral tribunal and any matter submitted to arbitration in accordance with the arbitration agreement. But in the case in hand, as I repeatedly observed, the petitioner never murmured about the jurisdiction of the arbitrator throughout the trial, so he being a litigant falling in category-I of the observation made in M/s.Sathyanarayana Brothers (P) Ltd.'s case, it is legally impermissible for him to raise objection as to the jurisdiction at the stage of arguments either before the learned arbitrator or before the civil court.
20. Now I will turn to the provisions of the [ACT] vis vis, the evidence made available. It is true that the claim petition filed by these respondents 1 and 2 was not a claim for ejectment simplicitor, instead it was a determination of lease by forfeiture. It is also true that [SECTION] of the Act speaks regarding determination of lease by way of forfeiture and as per the said clause, the forfeiture can occur under three circumstances, namely, (1) where the lessee breaks an express condition which provides that, on breach thereof, the lessor may re-enter, (2) In case the lessee renounces his characters such by setting up a title in third person or claiming title in himself, (3)The lessee is adjudicated as an insolvent and the lease provides that lessor may re- enter on the happening of such event and in any of these cases the lessor or his transferee gives notice in writing to the lessee of his intention to determine the lease.
Here I have to find out whether there was any breach of express term or condition of Ex.P2 as other two clauses do not apply. For that, once again I refer to the [SECTION] which enjoined that, lessee shall pay the rent strictly as per the table contained in [SECTION] and his failure to pay the rent to any one of the lessors, shall be deemed to be a default, entitling the lessors to initiate action for termination of the lease. Added to that, as per [SECTION], to which I already referred in the previous paragraphs, if the lessee fails to pay rent for three consecutive months, it enabled the lessors/respondents to terminate the tenancy and re-enter into the leased premises. One has to take note of the non-obstinate clause used in [SECTION], which gave power to the lessors to terminate the lease even during the lock-in period if the lessee fails to pay the amount within 30 days of notice to remedy the breach.
21. As discussed earlier, before moving the Hon'ble High Court, the respondents issued Ex.P4 and called upon this petitioner to pay the arrears of rent within 30 days and when he did not choose to comply the demand, they issued Ex.P5 and terminated the lease and again by causing Ex.P6, when there was no response from him to constitute arbitral tribunal, CMP was filed. Therefore, as required under [SECTION] of [ACT] when this petitioner was failed to make payment of entire arrears of rent within 15 days as envisaged under that Section, then only they proceeded for arbitral proceedings. One may notice that [SECTION] deals with relief against forfeiture for non-payment of rent and the said provision is precisely meant for defaulting lessee, with an object of protecting the lessees, the Legislatures have given discretion to the Court to decline the granting of decree in the event if the lessee pays entire arrears of rent as well as the costs of the suit. However, [SECTION], which also speaks regarding the relief against forfeiture in other cases, it is laid down that the said provision is not applicable where the tenant fails to pay the rent as agreed, since the said aspect is covered in [SECTION] of the Act. In the case in hand, when opportunity was given to the petitioner to remedy the breach of Ex.P2, he did not opt to remedy the same by paying the entire arrears of rent, therefore it was too much on his part to contend that when an alternate remedy was available to the respondents by filing a suit for recovery of arrears of rent, there was no need to terminate the lease or to determine the lease. Even on equity, a defaulting lessee cannot seek such relief nor set up such defence. So I have no hesitation to hold that considering all these aspect as well as the alleged grievance of the petitioner that Rs.1,12,50,000/- paid by him prior to the execution of Ex.P2 was not utilized by the respondents in providing requisite infrastructure to him etc, arbitral tribunal passed award.
22. This civil court cannot simply meddle with the said award only on the reason that the learned arbitrator could have taken another view favouring this petitioner. While dealing with a petition under [SECTION] of the Act a Civil Court cannot decide the same as an appellate court, it has to see whether grounds as contained in that provision are made out by the petitioner, then only it has to interfere and modify the award. I am making this observation based on the decisions reported at [PRECEDENT], [PRECEDENT]) and [PRECEDENT] ([PRECEDENT]. In all these cases Hon'ble Court held that the findings of the arbitrator should be so perverse and capricious that no man of ordinary prudence would have come to that conclusion, unless such things are made out there is no scope for the civil court to interfere in the award passed by the Arbitral Tribunal. Therefore I conclude that the petitioner has miserably failed to demonstrate that Arbitral Tribunal had no jurisdiction to decide the dispute in hand. Hence, I answer this Point in the Negative.
23. Point No.2: While discussing on Point No.1 I have already made a passing observation that even after providing enough opportunity for him to remedy the breach of forfeiture of lese, this petitioner did not opt to pay the entire arrears of rent. Before the Arbitral Tribunal the respondents produced the statement of accounts showing how much amount is due to them by examining their Chartered Accountant. The Learned Arbitrator accepting the said statement of accounts towards arrears of rent, interest on delayed payment and also interest on the arrears of rent in terms of clause 3.2 of the lease deed, categorically held that the petitioner is guilty of committing of gross default in payment of rent. As pre clause 1.2 of Ex.P2, tenancy is for month to month corresponding to the calendar month, so it was incumbent on the part of the petitioner to go on paying the rent as agreed by him. Indisputably he did not pay the rent for many months not simply for three consecutive months, consequently he lost the opportunity to remedy the breach, which he wantonly committed. In the words of the Arbitrator, the material on record is reflective of the fact that the respondent (petitioner herein), unmindful of mushroom growth of the hospitals in this sprawling city, risking a misstep in making huge investment for its project. Little did he realize that its expectations would flip and the business would not pay off. It was a brazen act of extreme misadventure (para 23 of impugned award). It is only a suggestive fact why this petitioner failed in his unmindful long leap, which was beyond his capacity. So, there is no substance in his contention that forfeiture of lease could have been remedied and the arbitrator could have rejected in granting the award, hence I answer this Point in the Negative.
24. Point Nos. 3 and 4: It was also contended by Sri.[ENTITY], advocate, that arbitrator has no jurisdiction to award damages/mesne profits and it was his submission that, it was wrong on the part of Arbitrator to adjust the mesne profits in the security deposit. In support of his said argument, the learned advocate once again drew my attention to the observations made in Fingertips Solutions Pvt. Ltd.'s case and Vodafone Essar Infrastructure Ltd.'s case. Having gone through the ratio laid down in Booz Allen and Hamilton Inc.'s case, I would like to differ from persuasive observations made in those cases by the Hon'ble High Court of Calcutta and Andhra Pradesh. When an arbitrator can resolve the dispute of determination of lease, the granting of mesne profits being only a consequential relief, stemming from such main relief, one cannot agree that only for the purpose of mesne profits the arbitrator would loose his jurisdiction. In this regard I may refer to the decision of Hon'ble High Court of Punjab and Haryana in [CASE NUMBER] between [PRECEDENT] In that case, on page 5 disagreeing with the observation of the trial Court that arbitrator cannot quantify the mesne profits or assess the mesne profits, Hon'ble Court held that the Arbitral Tribunal nonetheless is a private fora when the parties themselves voluntarily choose such fora in place of regular courts, the courts would always lean in favour of the interpretation that such dispute would be adjudicated upon by the Arbitral Tribunal.
25. As per [SECTION] of [ACT], mesne profits means those profits which a person in wrongful possession of a property actually received or might have ordinarily received, together with interest on such profits, however it shall not include profits due to improvements made by that person. So once a lease is determined with reference to a deed, the subsequent possession of the erstwhile lessee being a wrongful possession, he has to pay mesne profits which would be normally above the agreed rate or contractual rate of rent. For this, I would lay my hand on the decision reported at [PRECEDENT].
26. In the instant case, the learned arbitrator was generous, therefore he directed the petitioner to pay the damages at the agreed rate of rent with marginal interest thereon and added to that, he also permitted this petitioner to continue in the leased premises till 31-7-2019, without mandating him to pay at least the arrears of rent to continue in possession, which he computed after deducting the security deposit. Once the petitioner turned as defaulter, he cannot question the jurisdiction of the arbitrator to adjust the security deposit in the arrears of rent or in the mesne profits. So to that extent, one cannot agree with the submission of the petitioner.
27. Sri.[ENTITY], advocate, also contended that arbitrator has exceeded his jurisdiction by quantifying the mesne profits and also adjusting the security deposit. In order to substantiate his arguments that arbitrator has exceeded his jurisdiction he referred to the decisions reported at [PRECEDENT], [PRECEDENT], [PRECEDENT], [PRECEDENT] [PRECEDENT]. I have gone through the said decisions and find that none of the said decision would come to the help of the petitioner. In International Air Port Authority of India's case Court was seized with the bias of arbitrator, in Bharat Cooking Coal Ltd.'s case, Hon'ble Court held that arbitrator cannot resolve the dispute, which is not contemplated in the arbitration agreement. In [PRECEDENT]'s case considering the fact that claims were not included in the reference, Hon'ble Court held that it was not permissible for the arbitrator to adjust such claims. In Rajasthan State Mines and Minerals Ltd.'s case, noticing that arbitrator exceeded his jurisdiction, the Hon'ble Court held that award is liable to be set aside. Then, in Oil and Natural Gas Corporation Ltd.'s case, Hon'ble Court was of the opinion that if the award is contradictory to the provisions of law, then it is liable to be set aside. Lastly, in [PRECEDENT]'s case, it was held that inconsistent part of the award are suggestive of the fact that arbitrator mis-conducted himself. In the impugned award, existence of any one of the element as discussed above, is shown by the petitioner.
28. It was also contended by the petitioner that once the learned arbitrator found that respondents retracted from their words by providing the fit outs after receipt of Rs.01,12,50,000/- from the petitioner, it amounted to commission of fraud by the said respondents, therefore the learned arbitrator ought to have declined to arbitrate. According to me, the said submission is devoid of merit. It is true that learned arbitrator made a passing observation, based on the admission of respondent No.1 (PW1) that the said amount was paid towards the furnishing of requisite infrastructure, that does not lead to an inference that, they committed fraud on the petitioner and that divested the jurisdiction of the Arbitral Tribunal. To imagine such situation, he ought to have raised this before Hon'ble High Court when CMP was seized for hearing or at least when he filed his objection statement before the Arbitral Tribunal. So his contention of commission of fraud that too through this petition cannot be countenanced.
29. It was also contended that during the pendency of the Arbitration Case, as respondents received the arrears of rent, that amounted to waiver, therefore it was wrong on the part of the learned arbitrator to ignore the said aspect and decree the claim. After hearing the said submission of the petitioner, I am fully convinced that to find out the shortcoming in the impugned award, he has not left any stone unturned. When admittedly he did not clear the entire outstanding rent, paying of some meager amount and accepting of it by the respondents, did not denue the jurisdiction of the arbitrator to deal with the matter. There was no waiver as canvassed by the petitioner. When he himself set up the plea of forfeiture of lease which was remediable, his failure to pay the entire arrears of rent with cost, made him disentitle to seek any kind of sympathy either from the hands of learned arbitrator or from this court. Therefore, it cannot be said that the impugned award is an outcome of excessive jurisdiction of the Arbitral Tribunal, hence, I answer both these Points in the Negative.
30. Point No.5: During the pendency of this petition, the petitioner filed IA No.3 under [SECTION] of the [ACT] and prayed this Court to direct the Arbitral Tribunal to resume the proceedings to eliminate the grounds for setting aside of the arbitral award, by keeping open this suit. In this regard, having gone through the affidavit annexed to the application and also the objections filed by the respondents 1 and 2, I find that even after taking so much pain in urging that the Arbitral Tribunal has no jurisdiction to decide the dispute by referring to [ENTITY]'s case, once again the petitioner seeks to send back the file to the arbitrator by exercising power under [SECTION] of the Act to resume the proceedings. In other words, at one breath he disputes the very jurisdiction of the arbitrator and in the next breath he seeks to have some more sittings at the Arbitral Tribunal to see that the so called grounds which he has urged in this petition are remedied or attended by the arbitrator. Therefore, keeping open that application, parties were directed to address their arguments on the merit of the case. In view of the discussions and findings arrived on the earlier Points, without any hesitation I hold that the IA No.3 is totality a meritless application and it is misdirected one.
Hence, the same is rejected and consequently this Point is answered in the Negative.
31. Point No.6: In the result I proceed to make the following:
ORDER Petition is dismissed with costs throughout.
Draw Decree.
(Dictated to the Judgment Writer, transcription computerized, then corrected and pronounced by me in Open Court on this the 15th day of April, 2019) ([ENTITY]) III Addl. City Civil & Sessions Judge, Bengaluru.