Civil Revision No. 3887 of 2008 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Revision No. 3887 of 2008 (O&M) Date of decision: 17.12.2008 M/s Vinton Healthcare Ltd. and others ....Petitioners Versus Balbir Kumar Malhotra and others ....Respondents CORAM: HON'BLE MR. JUSTICE VINOD K. SHARMA Present: - Mr. Amit Rawal, Advocate, for the petitioners. Mr. Sudhir Aggarwal, Advocate, for respondents No. 1 and 2. ***** VINOD K. SHARMA, J (ORAL) This revision petition under Article 227 of the Constitution of India is directed against the order dated 19.5.2008 passed by the learned Civil Judge (Junior Division), Gurgaon, dismissing an application moved by the petitioners under Section 8 of the Arbitration and Conciliation Act, 1996 (for short 'the Act'), seeking stay of suit by referring the dispute to the Arbitral Tribunal. The plaintiff-respondent filed a suit for possession by way of ejectment with consequential relief of permanent injunction. It was prayed in the suit that decree of possession by way of ejectment of defendants from office space units, bearing No. 804 (565 sq. ft.) and 804-A (565 sq. ft.) in Tower-B, 8th Floor, Millennium Plaza, Sushant Lok, Gurgaon, be passed. It was pleaded in the suit that the contractual period of lease expired on 30.9.2007 by efflux of time, as lease was not renewed thereafter Civil Revision No. 3887 of 2008 (O&M) -2- and possession of the defendant-petitioners thus had become unauthorised and were thus trespassers. It was also pleaded in the suit that a legal notice was issued by the plaintiffs on 8.11.2007 asking defendants No. 2 and 3 to vacate the premises in question and to handover the vacant possession to the plaintiffs within a period of 15 days from the receipt of notice, failing which it was claimed that the petitioners would be liable to damages @ Rs.125/- per sq. feet per month, being the current market rent of such like premises in the area along with interest @ 18% per annum for use and occupation. On notice having been issued, the petitioner appeared in the Court and moved application under Section 8 of the Act seeking stay of the suit and for referring the parties to Arbitral Tribunal as per the arbitration clause in the lease deed. The lease deed was for a period of three years. The arbitration clause in lease deed reads as under: - “40. That if at anytime, any dispute, doubt or question arise between the parties relating to arising out of, touching upon, or connected with the transaction, including the construction, meaning or effect of this agreement are any clause thereof or respective rights and liabilities hereunder or any act or thing to be done or performed by any party, the same shall be referred and finally decided by a panel of Arbitrators, one to be nominated by each party and third to be appointed jointly by two respective Arbitrators. The Arbitration proceedings shall be held at New Delhi and will be conducted in accordance with the applicable with Indian Civil Revision No. 3887 of 2008 (O&M) -3- Arbitration Laws.” Clause 32 of the lease provided that on expiry of 36 months from the effective date, the lease would expire and come to an end unless the same was renewed for a further period of 36 months or a longer or lower period by the lessee with an increase of 15% rent. It is admitted case that no such option was exercised by the petitioners. The learned trial Court has been pleased to dismiss the application moved by the petitioners on the ground that the application moved by the petitioners under Section 8 of the Act was not accompanied by the original lease deed or copy thereof and thus the application as framed was not competent in view of the provisions contained in Section 8 of the Act. Learned Court below also non-suited the petitioners by recording a finding that admittedly the lease deed was for a period of three years but the lease deed executed between the parties was not registered and, therefore, the lease deed as such was not admissible in evidence for want of registration of the document as the same could only be seen for collateral purposes. Learrned trial Court was also pleased to hold that after the expiry of lease period the agreement between the parties came to an end and, therefore, the suit filed could not be stayed as claimed by the petitioners. Mr. Amit Rawal, learned counsel appearing on behalf of the petitioners, vehemently contended that the impugned order passed by the learned trial Court cannot be sustained as the learned trial Court committed an error in holding that there was no certified copy of lease deed placed on record. The contention of the learned counsel for the petitioners is that a notorised copy of the lease was placed on record and, therefore, it could not Civil Revision No. 3887 of 2008 (O&M) -4- be said that the application was not filed as per the provisions of Section 8 of the Act. There is a force in this contention of the learned counsel for the petitioners. Once a notorised copy of the lease was filed along with application, the same has to be taken to be a certified copy of the lease- agreement between the parties and Court could not have rejected the application on the ground that the application under Section 8 of the Act was not accompanied by the certified copy of the lease-agreement specially when the lease deed was not disputed. However, the learned trial Court was fully justified in dismissing the application under Section 8 of the Act for want of arbitration agreement between the parties. The lease admittedly is not registered and, therefore, could not be read in evidence in view of Section 17 of the Registration Act and, thus, once the lease deed is taken out of consideration, then there was no document on record which entitled the petitioners to seek the reference of dispute to the arbitration. Even otherwise, the arbitration clause covers all the disputes arising out of the lease deed, but it would not cover the matter which does fall for consideration under the terms of the lease deed. The suit filed by the respondents is for possession on expiry of the period of lease deed by claiming the petitioners to be unauthorised occupants of the property in dispute, therefore, terms of lease deed are not required to be looked into to determine the claim whether the plaintiff-respondents are entitled to possession of the property in dispute. The matter in suit is not one which cannot be said to be covered by the arbitration clause. With the expiry of the lease period stipulated in the lease deed the Civil Revision No. 3887 of 2008 (O&M) -5- agreement itself came to an end and thus arbitration caluse also ceased to operate and, therefore, learned trial Court was fully justified in rejecting the application. Though it is settled law that it cannot be laid as abstract proposition that whenever the contract is completed all the rights and obligation of the parites under the contract ipso facto come to an end and the arbitration agreement also perishes with the contract. Each case is required to be considered on its own facts. The settled law, therefore, is that the arbitrator can decide the matter arising out of the contract even after expiry thereof, if reference is to be made to the said contract to determine the claim raised. However, in case no reference is required to be made to the contract and the plaintiff claims no right under the said contract with the expiry of lease in the present case arbitration clause also comes to an end and thus there exists no arbitration agreement between the parties. However, the learned counsel for the petitioners by placing relaince on the judgment of Hon'ble Supreme Court in Bharat Sewa Sansthan Vs. U.P. Electronics Corpn. Ltd, (2007)7 Supreme Court cases 737 contends that the dispute regarding termination of lease would be covered by the arbitration clause. He has made special reference to para Nos. 4, 24 and 27 of the said judgment, in support of his contention. Para Nos. 4, 24 and 27 of the said judgment read as under: - "4. It is further the case of the appellant Sansthan that the tenancy of both the portions of the accommodation let out to the respondent Corporation had continued without any interruption from the respective dates of commencement of lease, subject to periodical escalation of the rent including other charges on the basis of mutual agreement with the Civil Revision No. 3887 of 2008 (O&M) -6- result that the consolidated monthly rent of the two portions of the accommodation let out to the respondent Corporation had risen to Rs.97,083.75p. (Rupees seventy-nine thousand and eighty-three and seventy-five paise only) well before 29.7.1999, on which day the lease was determined. The appellant Sansthan on 10.3.2000 filed Suit No. 16 of 2000 for eviction and recovery of arrears of rent against the respondent Corporation in the Court of the learned Additional District Judge (Special Judge, EC Act) at Lucknow. In the said suit, the respondent Corporation presented two applications before the trial Court before filing of the written statement. The first application being C- 12 was moved under Section 8(1) of the Arbitration and Conciliation Act, 1996 (for short "the Arbitration Act") and the second Application No. C-17 was filed under Order 11 Rule 14 of the Civil Procedure Code for summoning of the original lease deeds from the appellant Sansthan." "24. The respondent Corporation placed on record of the trial Court photocopies of the agreements along with an application under Section 8(1) of the Arbitration Act. The High Court, in our view, has rightly held that the photocopies of the lease agreements could be taken on record under Section 8 of the Arbitration Act for ascertaining the existence of arbitration clause. Thus, the dispute raised by the appellant Sansthan against the respondent Corporation in terms of the arbitration clause Civil Revision No. 3887 of 2008 (O&M) -7- contained in the lease agreement is arbitral" "27. In the light of above factual aspects, the claim relating to balance arrears of rent, balance arrears of water and sewerage tax and rate of interest on payment of arrears of rent raised by the appellant Sansthan in its calculation statement filed before this Court is at variance with the calculation statement submitted by the respondent Corporation. The respondent Corporation has denied the payment of interest to the appellant Sansthan. The abovesaid disputed claims can be appropriately tackled and adjudicated upon by the arbitrator in terms of the arbitration clause. The main objective of the Arbitration Act is to make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration and to minimise the supervisory role of courts in the arbitral process and to permit an Arbitral Tribunal to use mediation, conciliation or other procedures during the arbitral proceedings in settlement of disputes, etc. etc. This Court ordinarily will not be obliged to bypass the provisions of the Arbitration and Conciliation Act, 1996 in exercise of its power and jurisdiction under Article 142 of the Constitution of India." However, reading of the judgment of the Hon'ble Supreme Court would show that it has no application to the facts of the present case. The matter before the Hon'ble Supreme Court was with regard to the termination of lease as well as the recovery of the amount payable under the said lease. Civil Revision No. 3887 of 2008 (O&M) -8- It is not in dispute that the said lease was extended from time to time as per escalation clause and the same was in full force when it was determined. It was in that situation, the Hon'ble Supreme Court has been pleased to lay down that the matter in dispute would be covered by the arbitration clause. Whereas in the present case, on expiry of 36 months, the lease was neither extended nor did plaintiffs accept higher rent from the petitioners so as to extend the lease for further period. Rather, notice was issued to handover possession of the suit property by claiming the petitioners to be in unauthorised occupation. The learned Court has also rightly held that the lease deed was not admissible in evidence for want of registration and, therefore, no reliance can be placed on the terms of the lease deed so as to see the arbitration clause in the document. Learned counsel for the petitioners thereafter placed reliance on the judgment of the Hon'ble Supreme Court in Hindustan Petroleum Corporation Vs. Pinkcity Midway Petroleums (2003)6 Supreme Court Cases 503 to contend that the word "dispute" would cover all the matters to be determined between the parties and has wider amplitude and, therefore, the suit for possession and damages would also be covered under the arbitration clause executed between the parties. There is no force in this contention of the learned counsel for the petitioners. The dispute has to be one, which is covered under the terms of lease-agreement. The arbitrator is a creation of the arbitration-agreement, therefore, the Arbitrator can determine only the matters which are covered under the Civil Revision No. 3887 of 2008 (O&M) -9- said contract and cannot determine the dispute which does not fall under the agreement. In the present case, the suit is for possession after expiry of lease period and for damages on account of use and occupation, for which lease is not required to be looked into. For the reasons stated above, no ground for interference with the impugned order is made out. Dismissed. (Vinod K. Sharma) Judge 17.12.2008 R.S.