Arbitration Case No. 28 of 2008 1 IN THE HIGH COURTOF PUNJAB AND HARYANA, CHANDIGARH. Arbitration Case No. 28 of 2008 Date of decision: 24.4.2009 Harpreet Singh ....Petitioner. vs. M/s International Cars and Motors Ltd. and another ..Respondents CORAM: HON'BLE MR.JUSTICE J.S.KHEHAR. --- Present: Mr.Arvinder Singh, Advocate, for the petitioner. Mr.Suvir Sehgal, Advocate, for the respondents. -- J.S.KHEHAR,J. (Oral) Through the instant arbitration case the petitioner seeks the appointment of an arbitrator in furtherance of clause (M) of the lease deed dated 12.1.2007. Clause (M) of the lease deed is being extracted hereunder:- “In case of any dispute, both the parties shall resolve the same through arbitration as per the Arbitration & Conciliation Act, 1996. The place of arbitration shall be at Ludhiana & the language of the Award shall be in English.” It is also not necessary to narrate the sequence of facts leading upto the filing of this petition. After the registration of the lease deed dated 12.1.2007, the tenancy was to commence on 15.1.2007. In furtherance of the execution of the aforesaid lease deed under reference the respondents paid an advance of Rs.10,000/-. The aforesaid lease was executed for a period Arbitration Case No. 28 of 2008 2 of three years, commencing from 15.1.2007, and expiring on 14.1.2010. As per the lease deed, a sum of Rs.2,40,000/- was payable as rent annually by the respondents to the petitioner. The pleadings of this case reveal that the registration costs (for executing the lease deed) were also incurred by the respondent. A dispute is stated to have arisen between the parties, wherein the petitioner is demanding rent from the respondent, whereas the respondent is denying any liability. In the first instance, the petitioner issued a notice to the respondents date 14.2.2007 (Annexure P2) directing the respondents to pay the lease amount to the petitioner. Similarly another notice dated 19.3.2007 (Annexure R-5) was issued by the petitioner to the respondents. In the aforesaid legal notice the petitioner reiterated his request to the respondents to pay the lease amount. Additionally, he made a request to the respondents to nominate an arbitrator in terms of clause (M) of the lease deed, extracted hereinabove. The respondents neither paid the lease amount nor nominated any arbitrator. In response to the legal notice issued by the petitioner the respondents addressed communications to the petitioner informing him that no lease amount was payable on account of the fact that the petitioner had failed to hand over physical possession of the premises in question to the respondent. Even during the course of the hearing of the present arbitration case the claim of the respondents is, that the lease deed dated 12.1.2007, was never given effect to, and as such, no payment is due from the respondents to the petitioner. It is not a matter of dispute that the lease deed dated 12.1.2007, Arbitration Case No. 28 of 2008 3 was executed between the petitioner on the one side, and the respondents on the other. Due execution of the lease also established from the fact that a sum of Rs.10,000/- was paid by the respondents to the petitioner on 15.1.2007, as also from the fact that the expenses incurred in the execution of the lease deed dated 12.1.2007, were borne by the respondents. Thus viewed, there can be no doubt about the fact that the lease deed dated 12.1.2007, was duly executed. Whether or not the lease amount, as claimed by the petitioner, is payable by the respondents, is a question of dispute arising under the deed referred to above. The same is to be adjudicated at the hands of the arbitrator in terms of clause (M), extracted hereinabove. It is apparent that the claim of the petitioner and the counter claim of the respondents can only be adjudicated upon by an arbitrator in terms of clause (M) of the lease deed. In spite of the aforesaid conclusions, it is the vehement contention of the learned counsel for the respondents, that the arbitration clause in the lease deed dated 12.1.2007, is not in consonance with the law, and is in clear violation of the mandatory provisions of the East Punjab Urban Rent Restriction Act, 1949. It is, therefore, the vehement contention of the learned counsel for the respondents, that it would not be just and appropriate for this Court to appoint an arbitrator to adjudicate upon the dispute raised by the petitioner. In order to substantiate his contention, learned counsel for the respondents has invited the pointed attention of this Court to the decision rendered in Natraj Studios (P) Ltd v. Navrang Studios and another, AIR 1981 Supreme Court 537 wherein the Apex Court held as Arbitration Case No. 28 of 2008 4 under:- “ The Bombay Rent Act is a welfare legislation aimed at the definite social objective of protection of tenants against harassment by landlords in various ways. It is a matter of public policy. The scheme of the Act shows that the conferment of exclusive jurisdiction on certain Courts is pursuant to the social objective at which legislation aims. Public policy requires that contracts to the contrary which nullify the rights conferred on tenants by the Act cannot be permitted. Therefore, public policy requires that parties cannot also be permitted to contract out of the legislative mandate which requires certain kind of disputes to be settled by special Courts constituted by the Act. It follows that arbitration agreements between parties whose rights are regulated by the Bombay Rent Act cannot be recognised by a Court of law.” Reference has also been made to the judgment rendered by the Delhi High Court in M/s Rex Optical Co. v. M/s Kanwal Industries Corporation, 1997 (1)R.C.R.(Rent) 550, and to the following observations recorded therein:- “ The provisions of Section 45 are beneficial provisions intended to safeguard the tenants from the hands of unscrupulous landlords resorting to extra legal methods for pressurising the tenants into vacating the premises or enhancing the rent. The provision is based on public policy. The jurisdiction so vested in the Rent Controller cannot be taken away and vested in the Arbitrator merely by agreement of the parties. There is yet another reason for taking this view. The dispute arising out of contract between the parties may be liable to be referred for adjudication by Arbitrator but a dispute arising within the meaning of Section 45 of the DRC Act cannot be said to be a dispute arising out of a contract between the parties. For the foregoing reasons, no fault can be found with the view taken by the Rent Controller. Arbitration Case No. 28 of 2008 5 I have considered the submissions advanced by the learned counsel for the respondents, as have been noticed in the foregoing paragraphs. A perusal of the provisions of the East Punjab Urban Rent Restriction Act, 1949, reveal that the aforesaid enactment was solely aimed at restraining landlords from enhancing rent, as also from unauthorisedly evicting tenants. In fact, a detailed procedure has been envisaged under the East Punjab Urban Rent Restriction Act, 1949 depicting the ground on which eviction of a tenant can be claimed at the hands of the landlord. Having considered the totality of the mandatory provisions of the East Punjab Urban Rent Restriction Act, 1949, it is clear that the claim raised by the petitioner does not even remotely fall within the provisions of the said Act. The petitioner before this Court is neither claiming enhancement of the rent, nor ejectment of the respondents. He is merely claiming recovery of the lease amount, in furtherance of the lease deed dated 12.1.2007. In view of the above, it is not possible to accept that either of the judgments relied upon by the learned counsel for the respondents is relevant to the facts of this case. In view of the factual and legal position, noticed hereinabove since the respondents have failed to nominate an arbitrator in spite of the notice issued by the petitioner dated 19.3.2007, an arbitrator deserves to be appointed by this court, under the mandate of section 11 of the Arbitration and Conciliation Act, 1996. Accordingly, Mr. B.R.Gupta, Advocate (retired Additional District Judge from Haryana) is appointed as arbitrator. Mr. B.R.Gupta, Advocate, shall determine his own fee taking into consideration the total amount involved. Needless to mention, that it will be open to the respondents to raise their counter claim if the respondents are Arbitration Case No. 28 of 2008 6 so advised, in accordance with law. The instant arbitration case is accordingly disposed of in the aforesaid terms. (J.S.Khehar) Judge April 24, 2009 rk