In the High Court of Punjab and Haryana at Chandigarh ...... F.A.O. No.7429 of 2010 (O&M) ..... Date of decision:4.8.2011 M/s Pacifica Asset Management Co. Pvt. Ltd. .....Appellant v. Hardesh Chawla and another .....Respondents .... CORAM : HON'BLE MR. JUSTICE MOHINDER PAL ..... 1. Whether Reporters of Local papers may be allowed to see the judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest ? ...... Present: Ms. Savita Bhandari, Advocate for the appellant. Mr. Sanjay Vij, Advocate for respondent No.1. ..... Mohinder Pal, J. This appeal has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as `the Act’) against the judgment dated 9.8.2010 passed by the learned Additional District Judge, Gurgaon, on an application filed under Section 34 of the Act, inter alia directing the appellant to pay three times rent, as provided in the lease agreement, as compensation for the use and occupation charges. It has also been prayed that the award dated 19.1.2010 passed by Mr. Jai Bhagwan F.A.O. No.7429 of 2010 (O&M) [2] Sharma, sole Arbitrator may also be set aside. As per facts of the case, the petitioner (respondent No.1 herein) is owner of the office space, bearing No.36 having super built-up area 1210 sq. feet situated on ground floor of the building, known as Centrum Plaza, Sector 53, Gurgaon. He let out the same to the appellant, vide lease agreement dated 8.1.2008, on payment of rent at the rate of `1,74,240/- per month. The rent was agreed to be payable in advance on or before 7th day of each month and in the event of delay, it was payable with interest at the rate of 24 per cent per annum on the outstanding amount. The lease was executed for a period of 4½ years which could have been extended for a further period of 4½ years at the sole option of the lesser. The period of 36 months exclusive of notice period of three months of lease period was regarded as a lock-in period and during this period neither of the party could terminate the lease. However, after the expiry of lock-in-period, the lessee was given a right to terminate it at any time, by serving upon the lesser a written notice of three months to the same effect or three months' rent in lieu thereof. In the event of non-payment of rent for two months consecutively, the lesser was given a right to terminate the tenancy by serving the lessee a notice to that effect. In the event of lessee failing to hand over the vacant and peaceful possession of the leased premises immediately upon termination or expiry of the lease term, the lessee was to pay to the lesser an amount for the number of days of actual possession after the termination of lease or expiry of lease, as the case may be, calculated at the rate of thrice the amount of monthly rent paid/payable immediately before such termination or expiry. An arbitration clause was also added in F.A.O. No.7429 of 2010 (O&M) [3] the lease agreement to resolve any dispute or difference between the parties in connection with lease. Due to non-payment of rent for the months of June and July 2009, despite repeated requests, respondent No.1 served notices dated 24.6.2009 and 29.7.2009 on the appellant calling upon him to make the payment of rent. The appellant was also warned that if he did not make the payment, its tenancy would be terminated, as provided under Clause 8.2 of the lease agreement. In the above clause it has been provided that the lesser could terminate the lease if monthly rent for a continuous period of two months was not paid. In spite of that, the appellant did not pay the rent, therefore, respondent No.1 terminated the tenancy by serving the appellant notice dated 5.9.2009. Still, the appellant did not vacate the premises. In this manner, a dispute arose between the appellant and respondent No.1. In view of the arbitration clause in the lease agreement, respondent No.2 was appointed as the Arbitrator. The Arbitrator passed the award dated 19.1.2010, whereby it was ordered that if the appellant fails to vacate the property within a period of 30 days from the date of passing of award, it shall be liable to pay a sum of `5,22,720/- as compensation for use and occupation each month to the petitioner (respondent No.1 herein) till the date of delivery of physical possession to respondent No.1. The Arbitrator further awarded an amount of `1,74,240/- per month for a span of 39 months, commencing from 25.2.2008 i.e. for the lock-in period of 36 months and three months notice period. It was further clarified that this amount shall not be included in the amount of `5,22,720/- payable by the appellant as compensation in the event of its occupation of the suit property beyond the period of 30 days from the passing of the award. F.A.O. No.7429 of 2010 (O&M) [4] Challenging the award of the Arbitrator, the appellant filed an application under Section 34 of the Act before the learned Additional District Judge, Gurgaon. That application was dismissed by the learned Additional District Judge, vide judgment dated 9.8.2010 with the modification in the award by holding that by allowing respondent No.1 `5,22,720/-, being three times of rent, as provided under Clause 3.9 of the lease agreement, as compensation as use and occupation charges and at the same time allowing respondent No.1 rent of lock-in-period, the Arbitrator exceeded his jurisdiction. It was held that it is true that as per Clause 3.9 of the lease agreement, the Arbitrator was competent to award three times of rent as use and occupation charges in case the appellant failed to vacate the premises within a period of 30 days from the date of award, but in that eventuality the rent for the remaining period of lock-in period should not have been allowed. Therefore, the award to the extent whereby it was directed that the rent of lock-in period of 39 months commencing from 25.2.2008 shall be to the exclusion of `5,22,720/- was set aside. Hence, this appeal has been filed by the appellant to set aside the award of the Arbitrator and the judgment dated 9.8.2010 of the learned Additional Sessions Judge, Gurgaon. I have heard Ms. Savita Bhandari, Advocate appearing for the appellant and Mr. Sanjay Vij, Advocate appearing for respondent No.1 and have gone through the records of the case. The application was filed by the appellant before the learned Additional District Judge, inter alia, on the ground that the appointment of respondent No.2 as sole Arbitrator was without the consent F.A.O. No.7429 of 2010 (O&M) [5] of the appellant. As per arbitration clause, the arbitration proceedings were to take place at New Delhi, whereas the proceedings had been conducted by respondent No.2 at Gurgaon, the award was not registered as per the provision of Section 17(e) of the Registration Act, 1908, the award has not been made on a properly stamped paper and the appellant was not given equal, proper and sufficient opportunity to appear and defend his case and, in this manner, the Arbitrator had illegally and arbitrarily accepted the claim of respondent No.1. Learned counsel appearing for the appellant argued before me that the sole Arbitrator was not appointed with the consent of the appellant. It is further contended that, as per arbitration clause, the arbitration proceedings were to take place at New Delhi, but the venue of the arbitration proceedings had been changed without intimation or consent of the appellant to Gurgaon, which was against the arbitration clause. On the other hand, learned counsel for respondent No.1 argued that the award had been passed in accordance with law and no illegality or irregularity has been committed by the sole Arbitrator. I have given my thoughtful consideration to the contentions of learned counsel appearing for both the parties and have gone through the record with their assistance. I find no merit in the contentions raised by learned counsel for the appellant as the appointment of respondent No.2 as sole Arbitrator was a unilateral act on the part of respondent No.1. The appellant’s concurrence was sought by way of notice but it did not reply and join the arbitration proceedings, from which it could be inferred that it had given its F.A.O. No.7429 of 2010 (O&M) [6] concurrence to the appointment of respondent No.2 as sole Arbitrator. If the appellant had any objection to the appointment, it could have objected by replying to the notice sent to it by respondent No.1. Even if for any reason the appellant could not reply to the notice, then it could have raised said point before the Arbitrator when it appeared before the Arbitrator through its counsel at the first instance. The appellant did not raise any such objection before the Arbitrator, rather its counsel sought adjournment for filing reply to the statement of claim of respondent No.1 and further started the process for settlement by conciliation by making same offer. The said offer was accepted by respondent No.1 but no authorized representative on behalf of the appellant appeared to make a statement regarding said offer. So, it cannot be said that the appointment of respondent No.2 as sole Arbitrator was bad in the eyes of law. Regarding the change of venue of arbitration proceedings, it is true that there is a clause in the lease agreement that the proceedings were to be conducted at New Delhi. As per the record of the case, the arbitration proceedings were got conducted at 23-C Naraina Vihar, New Delhi, and the learned counsel for the appellant could not produce any document from which it could be gathered that the proceedings were conducted at Gurgaon and not at New Delhi. Therefore, there was no violation of arbitration clause. Even otherwise, no prejudice is shown to have been caused to the appellant on account of the proceedings held at Delhi. From the proceedings before the Arbitrator, it may be noticed that the appellant had not produced any defence. It was only gaining time by seeking adjournments. There was no justification to seek 45 days F.A.O. No.7429 of 2010 (O&M) [7] adjournment when the appellant had not paid the rent for the period of June 2009 and respondent No.1 was incurring loss of `6,000/- per day. The proposal put forth by learned counsel for the appellant to adjust the amount of security towards the arrears of rent was also accepted by respondent No.1, if the premises was vacated but still no authorized representative on behalf of the appellant appeared to make a statement to that effect. Therefore, it cannot be said that the Arbitrator himself has committed misconduct by not allowing the appellant 45 days adjournment. The appellant having given undertaking before the Arbitrator to vacate the premises within one month, did not vacate the premises. It is well-settled that while hearing objections against the award, the Court need not re-appreciate the evidence led by the parties before the Arbitrator in order to substitute its own opinion. A perusal of the record reveals that the Arbitrator had afforded reasonable opportunity to the parties to plead their case by producing the evidence they wanted to bring on record. Apparently, there was no illegality or impropriety in the award given by respondent No.2. All the documents produced by the parties were taken into account by the Arbitrator and the award was made after considering the submissions made by them. In view of this, the learned Additional District Judge was justified in dismissing the application filed by the appellant under Section 34 of the Act with modification, as noticed above, in the award dated 19.1.2010 passed by respondent No.2. In view of the above, I do not find any ground, warranting interference in the impugned judgment passed by the learned Additional F.A.O. No.7429 of 2010 (O&M) [8] District Judge, Gurgaon. Accordingly, this appeal is hereby dismissed. August 4, 2011. (Mohinder Pal) Judge *hsp*