Case: Bharat Sewa Sansthan Vs. S U. P. Electronics Corporation Limited

( 1 ) BHARAT Sewa Sansthan has filed this appeal challenging the final judgment and order dated 14. 09. 2004 of the learned Single judge of the High Court of Judicature at allahabad, Lucknow Bench, in Writ Petition no. 3388/2004 (MS) by which the order of the learned Additional District Judge (Special judge, E. C. Act) Lucknow, dismissing the application filed by the U. P. Electronics Corporation limited [hereinafter referred to as theunder Section 8 of the Arbitration and Conciliation Act, 1996, has been set aside with direction to the learned additional District Judge to refer the matter to arbitration and both the parties are directed to appoint their Arbitrator as per the arbitration clause in the lease agreement.( 2 ) BACKGROUND facts in a nutshell are as follows: 2. 1 Bharat Sewa Sansthan [hereinafter referred to as theis a charitable society registered under the Societies registration Act. The main object of theis to work for the social, economic, educational and cultural upliftment of the people. Theis the sole and exclusive owner of multistoreyed building known as "chandra Bhanu Gupta smarak Nav Chetna Kendra" located at No. 10, Ashok Marg in the city of Lucknow (U. P. ). On 11. 11. 1980, thetook for office accommodation an area measuring 14,925 square feet on the first floor of thebuilding of theon monthly rent of Rs. 47,7607@ rs. 3. 20p per square foot, which comprised (a) basic rent @ Rs. 2/per square foot amounting to Rs. 29,850/and (b) the balance amount of Rs. 17,910/@ Rs. 1. 20p per square foot towards the ancillary services provided for the said accommodation in the form of elevators (lifts), a designated area for parking of vehicles, lights for public and common passages and sewerages etc. under a lease granted by theion on 01. 12. 1980.( 3 ) IT is the case of thethat in the month of June, 1981 theexpressed its requirement to thefor some additional accommodation on the first floor of the building adjoining to the accommodation which thehad earlier occupied for setting up a Marketing Office and a Registered office of M/s Uptron India Limited, which is the subsidiary of theM/s Uptron India Limited was established for the manufacturing of electronic equipments and components, such as the television, computer, capacitors, process control, EPABX systems etc. It was mutually agreed between theion that additional accommodation measuring 3000 sq. ft. in area shall be leased out to thew. e. f. 25. 06. 1981 on a monthly rent of Rs. 9,750/i. e. @ Rs. 3. 20 per sq. ft. , which comprised of (a) basic rent @ RS.sq. ft. amounting to Rs. 6000/and (b)balance amount of Rs. 3750/@ Rs. 1. 20p. per sq. ft. towards such ancillary charges as has been included in the case of the lease in respect of the first portion of the accommodation let out to the4 ) IT is further the case of thethat the tenancy of both the portions of the accommodation let out to thehad 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 result that the consolidated monthly rent of the two portions of the accommodation let out to thehad risen to Rs. 79,083. 75p. (Rupees Seventy nine thousand and eighty three and seventy five paise only) well before 29. 07. 1999, on which day the lease was determined. Theon 10. 03. 2000 filed Suit no. 16/2000 for eviction and recovery of arrears of rent against thein the Court of learned Additional District judge (Special Judge, E. C. Act) at lucknow. In the said suit, thepresented two applications before the Trial Court before filing of the written statement. The first application beingwas moved under Section 8 (1) of the Arbitration and Conciliation Act, 1996 (for short "arbitration Act") and the second application no.was filed under Order XI Rule 14 of the Civil Procedure Code for summoning of the original lease deeds from the appellant sansthan.( 5 ) LEARNED Additional District Judge (Special judge, E. C. Act), Lucknow, had rejected both theapplications. Being aggrieved, the respondentCorporation has assailed the order of the Trial Court by way of Writ Petition before the High Court. The learned Single judge of the High Court allowed the writ petition and held that the learned Trial Court has wrongly rejected the application under Section 8 of the Arbitration Act as theof the suit is arbitral witn further direction to the learned Additional District Judge (Special Judge, E. C. Act), Lucknow, to refer the matter to arbitration and both the parties may appoint their Arbitrator as per the arbitration clause in the lease agreement.( 6 ) FEELING aggrieved, thehas filed this appeal, by special leave, challenging the correctness and validity of the impugned judgment and order of the learned single Judge of the High Court.( 7 ) WHEN the matter came up before the Court on 24. 03. 2006, this Court passed the followingA. No 2 of 2005 is allowed. Leave granted. Since this appeal pertains to a charitable institution and appears to be an urgent matter, the appeal shall be placed on board for expeditious final hearing on 11th july, 2006.8 ) IT appears from the record that the appeal was called on for hearing on 11. 07. 2006, when the following order came to becase was argued at length by Mr. Shanti Bhushan, learned Senior Counsel for the appellant. We also heard reply on certain preliminary issues from Mr. Manoj swarup, learned counsel for the respondents. We also permit Mr. Manoj Swarup to file additional documents in this appeal. In the meanwhile, the respondentU. P. Electronics Corporation Limited shall handover peaceful vacant possession of the area which was under the occupation of M/s. Uptron Limited,of respondent no. 1 herein, within one week from today. This Court will decide the arrears of rent payable by Uptron Limited at the next hearing. In the meantime, U. P. Electronics Corporation Limited shall pay entire arrears of rent for the portion in their occupation at the admitted rate. Since some details are required, we direct both the parties to file a memo of calculation before this Court so that this Court will be in a position to pass a detailed order. Treat this matter as partheard. Post this matter at 2. 00 p. m. on 12th July, 2006.9 ) ON 12. 07. 2006, this Court passed a detailed order, which reads ashearing both the parties, we passed the following order on 11th July,case was argued at length by Mr. Shanti Bhushan, learned Senior Counsel for the appellant. We also heard reply on certain preliminary issues from Mr. Manoj swarup, learned counsel for the respondent. We also permit Mr. Manoj Swarup to file additional documents in this appeal. In the meanwhile, the respondent U. P. Electronics Corporation Ltd. shall handover peaceful vacant possession of the area which was under the occupation of M/s UPTRON LTD. ,of respondent no. 1 herein, within one week from today. This Court will decide the arrears of rent payable by the UPTRON Ltd. at the next hearing. In the meantime, U. P. Electronics Corporation Ltd. , shall pay entire arrears of rent for the portion in their occupation at the admitted rate. Since some details are required, we direct both the parties to file a memo of calculation before this Court so that this Court will be in a position to pass a detailed order. Treat this matter asPost this matter at 2. 00 PM on 12th July 2006.directed Mr. Manoj Swarup, learned counsel for theplaced before us a Fax Message from U. P. Electronics Corporation Limited in regard to the total rent payable to the appellant upto 30. 06. 2006. The Fax Message readsP. ELECTRONICS corporation LTD. Total rent payable to BSS upto 30. 06. 2006.According to the learned counsel for the appellant, there is some discrepancy in regard to the calculation of rent payable as per the agreement. We, therefore, as an interim measure, without going into the correctness of the statement now placed before us, direct the u. P Electronics Corporation Limited to pay a sum of Rs. 32,69. 155. 50 to the appellant herein within four weeks from today. The U. P. Electronics Corporation Limited has also deducted the tax in a sum of Rs.. Thus, as per the fax message, the rent is calculated upto 30. 6. 2006. We, therefore, direct U. P. Electronics Corporation limited to pay rent from 1 st July, 2006 to the appellant herein for the actual area in their occupation as per the terms of the agreement. The rent shall be paid on or before 10th of every succeeding month without any default. The respondent shall hand over peaceful vacant possession to the appellant herein within one week from today the portion in the occupation of uptron India Limited, aot respondent No. 1 herein, which according to respondent no. 1 is 60% of the total area namely, 17,925 sq. ft. This Court will decide the arrears of rent payable by the uptron India Limited at the time of final hearing. It is also stated by the learned counsel for the appellant that U. P. Electronics Corporation limited has not paid the electricity charges and water and sewerage taxes to the authorities concerned in full. The U. P. Electronics Corporation Limited is directed to pay the entire arrears to the authorities concerned within four week from today. This order is passed as an interim measure without prejudice to the rights and contentions of both the parties. It is open to both the parties to file additional documents. Treat this matter asPost after six weeks for reporting compliance of the aforesaid directions. Pendency of this appeal before this Court will not prevent me parties from settling the matter amicably.10 ) THE appeal was listed for hearing on 08. 09. 2006, when further following order wassenior counsel for the appellant has placed before us a fresh calculation memo with the Statement of Accounts duly stamped by a Chartered Accountant. Mr. Krishnamani, learned senior counsel appearing for the respondent seeks time to respond to the Memo of Calculation filed now. Three weeks time is granted for the purpose. The respondent is directed to file reply to this Calculation Memo within the said time. Parties will discuss further in regard to the possession and readjustment of the areas and file reply thereto. Further directions will be made on the next adjourned date of hearing.11 ) ON 7. 11. 2006, upon hearing the counsel on both sides, this Court made the followingof Understanding between the parties to this appeal filed in this Court, pursuant to this Courts order dated 8. 9. 2006, is taken on record. A rough sketch plan is also attached to the Memo of Settlement. Clause (c) of the Memo says that the respondent, namely, U. P. Electronics Corporation limited will vacate the portion marked in pink as per the map within two weeks from date of Memo of Understanding i. e. 10. 10. 2006. It is now represented by Mr. Prashant Bhushan, learned counsel for the appellant that in spite of the undertaking under clause (c) of Memo of settlement, the U. P. Electronics Corporation limited have not vacated the entire portion marked in pink and also constructed wall separating the pink and green marked portion. Since the undertaking has not been complied by M/s. U. P. Electronics corporation Limited further time is given to them to comply with the undertaking by three weeks from day. The clause (c) of the Memorandum shall be complied with in full and the entire portion shall be handed over to the appellant within that time and also the construction of the wall shall be completed in time. When the matter came up for hearing on 8. 9. 2006, the learned senior counsel appearing for the respondent had sought some time to respond to the Memo of Calculation filed and that three weeks time was granted for the purpose. So far no response has been filed to the Memo of calculation. The respondent is directed to file the response to Memo of Calculation within two weeks from today. Call after four weeks for reporting compliance.12 ) AGAIN on 26. 02. 2007, the following order came to bePrashant Bhushan, learned counsel for the appellant placed before us a Statement in respect of the amount due in regard to 60% area occupied by the respondent and their subsidiaries upto June, 2006. A copy of the said Statement has also been furnished to the learned counsel for the respondent. Post after two weeks for filing response by the respondent.13 ) IN terms of the above extracted interim orders passed by this Court on a number of hearings, thesubmitted its statement of accounts in which a total sum of Rs. 95,09,467. 50 has been claimed as arrears of rent for the Front Block and the Tower block, measuring 17,925 sq. ft. of area, out of which a sum of Rs. 32,69,155. 50 in terms of interim order dated 12. 07. 2006 passed by this Court has been paid to theion for 40% area in its occupation. In addition to the arrears of rent from July 1997 to June 2006, thehas claimed a sum of Rs. 6,46,645. 00 in regard to TDS Certificates. Further, a sum of Rs. 13,38,492. 43 has been claimed on account of water and sewerage tax from July 1997 to June 2006 Thehas also claimed a sum of Rs. 40,95,867/on account of interest at the rate of 12% p. a. on the arrears of rent in relation to 15,925 sq. ft. area which was let out to thein the year 1980.( 14 ) IN response to the order of this Court, thehas filed affidavit dated 18. 11. 2006 along with details of calculations of arrears of rent of 40% area; arrears of rent of 60% area and also details of calculation of amount for water and sewerage tax the stand of the respondent Corporation in the affidavit is that in pursuance to the interim order of this Court dated 12. 07. 2006, a sum of Rs. 32,69,155. 50 towards arrears of rent (Rs. 25,95,310. 50 as rent and Rs. 6,73,845. 00 as TDS] for the 40% portion, which was actually occupied by the respondent Corporation has been paid to the appellantsansthan. The respondentCorporation stated that as per its statement of calculation and after deduction of the amount already paid in pursuance to the interim order of this Court, the amount payable in respect of the portion which was under occupation of M/s Uptron india Limited and the possession thereof has already been handed over to the appellant sansthan (subject to the adjustment made in the MOU dated 10. 10. 2006) comes to rs. 75,47,368. 50 which is more than what has been calculated and indicated by the appellant Sansthan in paragraph 6 of its affidavit dated 06. 09. 2006 and an amount of rs. 6,46,645. 00 is taken into account twice and shown as paid in excess.( 15 ) IT is also submitted that during the pendency of this case and in compliance of order dated 12. 07. 2006, another sum of rs. 3,97,161. 00 was also paid to the appellantsansthan. Thus, the total payment made by theto the appellant sansthan towards water and sewerage tax comes to Rs. 5,95,238. 80 for the area which is in possession of theon contended that as per the calculation sheet annexed with thethe balance amount comes to Rs. 24,558. 20 towards water and sewerage tax for the portion in possession of respondent corporation, which is also tendered to theby Cheque no. 275979 dated 12. 10. 2006 of Andhra bank, Lucknow. The balance amount of rs. 9,26,763. 00 towards water and sewerage tax is due in regard to the portion vacated by m/s Uptron India Limited and the possession of that area has already been handed over to the16 ) THE Divisional Incharge (Personnel), working in thein his reply affidavit to calculation statement filed by theon 26. 02. 2007, states that in terms of the order dated 12. 07. 2006 of this Honble Court, the entire amount is paid in respect of the portion in possession of theThe possession of 60% area which was previously in use and occupation of M/s Uptron india Limited, which is a Sick Industrial company, has already been given to the appellant sansthan and the payment of rent for the said area is not covered under the directions of this Court. It is stated that the calculation chart submitted by the appellant sansthan showing the amount due and payable pertains to 60% portion for which rent was paid by M/s Uptron India Limited through theand the first part of the calculation chart filed by the appellant sansthan indicating total amount of rs. 66,74,131. 50 due, is in respect of 60% portion of the leased area. It is also stated that thewas always ready and willing to make payment of agreed rent for the portion under its occupation and, in fact, it had tendered the amount, which was not accepted by theIt is also stated in the affidavit that Clause l (3) of the lease agreement as alleged by the appellant sansthan is not applicable in the present case and as such no interest at the rate of 12%, as claimed, is payable and thehas calculated the interest on total amount of rent payable in respect of total area including the one which was under use and occupation of M/s Uptron India Limited.( 17 ) WE have heard the learned counsel for the parties and examined the material on record.

Court's reasoning:
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 theagainst the respondent corporation in terms of the arbitration clause contained in the lease agreement is23 ) 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 thein its calculation statement filed before this Court is at variance with the calculation statement submitted by theon has denied the payment of interest to theid disputed claims can to appropriately tackled and adjudicated upon by the Arbitrator in terms of the arbitration clause. The main objectives 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.( 24 ) IN the backdrop of this case, we do not find it a fit case to grant relief to the appellant sansthan as claimed by it in its calculation statement which is vehemently disputed by theTherefore, the contention of thethat this Court can grant the payment of balance amount of arrears of rent and arrears of water and sewerage tax and interest on arrears of rent detailed in calculation statement submitted before this Court, does not merit acceptance.( 25 ) SHRI Shanti Bhushan, learned senior counsel, has fairly stated that in Civil Suit no. 16/2000 thehas not claimed the arrears of rent and water and sewerage tax for the additional area of 2000 sq. ft. , which was subsequently let out to theas such the claim to that extent in terms of the calculation statement filed before this Court is not pressed in this appeal. He submitted that for claiming the relief for 2000 sq. ft. area, thewill take appropriate proceedings before the Court/forum. We do not wish to express any views on this aspect of the matter in this appeal.( 26 ) IN this view of the matter, we do not find any perversity or infirmity in the order of the high Court to warrant any interference.