Contemplation or the existence of an arbitral proceedings is a must before the Court can pass protective orders as contemplated in section 9 (1) (ii) (a) to (e) of the Arbitration Act: Sikkim High Court

Arb.A. No. 021 The Secretary Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi Arb. P.No.021 Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr. THE HIGH COURT OF SIKKIM: GANGTOK Civil Appellate Jurisdiction) DIVISION BENCH: HON’BLE MR. JUSTICE BISWANATH SOMADDER CHIEF JUSTICE HON’BLE MR. JUSTICE BHASKAR RAJ PRADHAN JUDGE Arb. A. No. 021 AND Arb. P. No. 021 1. The Secretary Tourism and Civil Aviation Department Government of Sikkim Gangtok East Sikkim. 2. State of Sikkim Through the Secretary Tourism and Civil Aviation Department Government of Sikkim Gangtok East Sikkim. … Appellants versus Brij Raj Oberoi Managing Director of Elgin Hotel Pvt. Ltd. 18 H.D. Lama Road P.O. Darjeeling West Bengal Resident at Hotel Norkhil Campus Paljor Stadium Road Gangtok. East Sikkim. Section 37 Arbitration and Conciliation Act 1996 read with section 13 of the Commercial Courts Act 2015 Article 227 of the Constitution of India. …. Respondent Dr. Doma T. Bhutia Additional Advocate General and Mr. S.K. Chettri Government Advocate for the Mr. A. Moulik Senior Advocate with Ms. K.D. Bhutia and Mr. Ranjit Prasad Advocates for the respondent. Arb.A. No. 021 The Secretary Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi Arb. P.No.021 Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr. Arb. P. No. 021 Brij Raj Oberoi Managing Director of Elgin Hotels Pvt. Ltd. 18 H.D. Lama Road P.O. Darjeeling West Bengal Resident at Hotel Norkhil Campus Paljor Stadium Road Gangtok. East Sikkim. …. Petitioner. 1. State of Sikkim Through the Secretary Tourism and Civil Aviation Department Government of Sikkim Gangtok East Sikkim. 2. The Secretary Tourism and Civil Aviation Department Government of Sikkim Gangtok East Sikkim. Application for appointment of arbitrator under section 11 of the Arbitration and Conciliation Act 1996 read with section 10 of the Commercial Courts Act 2015 and under Article 227 of the Constitution of India. .… Respondents Mr. A. Moulik Senior Advocate with Ms. K.D. Bhutia and Mr. Ranjit Prasad Advocates for the Petitioner. Dr. Doma T. Bhutia Additional Advocate General and Mr. S.K. Chettri Government Advocate for the State JUDGMENT 1. Arbitration Appeal No. 02 of 2021 arises out of the impugned order dated 31.05.2021 passed by the learned Commercial Court on an application filed by the respondent Arb.A. No. 021 The Secretary Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi Arb. P.No.021 Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr. Brij Raj Oberoi) under section 9 (ii) of the Arbitration and Conciliation Act 1996 of the lease agreement dated 09.12.1997 entered between the appellant and the respondent Brij Raj Oberoi) leasing out the premises known as “Norkhil Hotel”. It held that arbitrable dispute had arisen between the parties which were to be referred to arbitration and restrained the appellant from disturbing the possession and enjoyment of “Norkhil Hotel” until the commencement of arbitral proceedings. 2. Arbitration Petition No. 02 of 2021 is an application filed by Brij Raj Oberoi on 16.07.2021 for appointment of arbitrator under section 11 of the Arbitration Act read with section 10 of the Commercial Courts Act 2015. 3. Both cases shall be disposed by this common judgment. 4. On 09.12.1997 the deed of lease was executed between the State and Brij Raj Oberoi by which “Norkhil Hotel” was leased to Brij Raj Oberoi for a period of 24 years. The lease was to expire on 31.05.2021. The lease deed inter alia contained the following relevant clauses: “3. That the initial terms of the lease under this deed shall be a period of twenty four years from 1.6.1997 to 31.5.2021 and shall be renewable for such further period as the lessor deems fit subject to acceptance of the lessee’s offer in terms of clause 4hereinafter.” Arb.A. No. 021 The Secretary Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi Arb. P.No.021 Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr. x x x x x x “4. xiii. The lessee shall in the last year of the lease tenure and not later than six months prior to the expiry of the present lease communicate in writing to the lessor his terms and conditions for the renewal of the present lease and if the same is accepted by the lessor then the present lease may be renewed for such further period and on such rent as may be mutually agreed upon between the parties thereto failing which arbitration by an arbitrator to be appointed by the Chief Justice of the Sikkim High Court.” the matter shall be referred 5. On 12.11.2020 before the expiry of the period of lease on 31.05.2021 Brij Raj Oberoi sent an offer of renewal to the State to the following effect: the period 01.06.2021 will be Rs.64 30 766.43 per year i.e. 10% more than the annual rent that is being paid now. The escalation clause will remain the same i.e. 10% more every three years. The rent will be paid in equal quarterly suggested that the period of the renewed lease will be 30 years commencing from 1.6.2021. All other terms and conditions of the lease will remain the installment every year. 6. As there was no response to the letter dated 12.11.2020 Brij Raj Oberoi sent a reminder on 09.04.2020. Thereafter it was followed by a legal notice dated 05.05.2021. On 15.05.2021 Brij Raj Oberoi moved an application under section 9 (ii) of the Arbitration Act of the lease agreement to refrain from taking any steps as contemplated by them for tender to handover “Norkhil Hotel” to a third party until the disputes are decided through arbitration. On 24.05.2021 Brij Raj Oberoi filed an additional affidavit before the learned Commercial Court informing about the issuance of the letter dated 17.05.2021 by the State declining to renew the lease without considering the offer made by him. He also appraised the learned Commercial Court about his reply dated 21.05.2021 and the fact that he had come to learn that the State was taking steps for allotment of “Norkhil Hotel” to a party person of their choice and the fact that the lease itself was going to expire on 31.05.2021. 7. On 28.05.2021 the State filed a response to the application contending that Brij Raj Oberoi had misconstrued clause 4(xiii) of the lease agreement. It was contended that as the State had not accepted the offer made by Brij Raj Oberoi there was no case for arbitration. Read properly clause 4(xiii) Arb.A. No. 021 The Secretary Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi Arb. P.No.021 Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr. would permit reference of the quantum of rent and the period of renewal for arbitration. Under clause 4(xiii) upon termination and or expiry of the lease Brij Raj Oberoi was required to quit and vacate “Norkhil Hotel”. Section 9 of the Arbitration Act deals with interim measures for protection which a party may before or during arbitral proceedings or at any time after the making of the arbitral award or before it is enforced in accordance with section 36 apply to a Court for. It is certain that a contemplation or the existence of an arbitral proceedings is a must before the Court can pass protective orders as contemplated in section 9(ii)to3 SCC 155 Arb.A. No. 021 The Secretary Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi Arb. P.No.021 Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr. i. If there is a dispute with regard to the further period of renewal of the present lease as proposed and ii. If there is a dispute with regard to the quantum of rent proposed to be paid by the lessee to the lessor for the extended period of lease. 10. In the instant case the State expressed its inability to renew the lease through its letter dated 17th May 2021. It may have been written belatedly however it was before expiry of the lease period. As a consequence the result of this letter dated 17th May 2021 tantamount to a final decision on the part of the State not to renew the present lease in favour of Brij Raj 11. In such circumstances none of the disputes which can be termed as arbitrable dispute as specified hereinbefore are present in the facts of the instant case. In absence of any arbitrable dispute an order could not have been passed by the Learned Commercial Court under section 9 of the Arbitration 12. Consequently Arbitration Appeal No. 02 of 2021 is allowed and judgment and order dated 31.05.2021 passed by the learned Commercial Court on the application filed by Brij Raj Oberoi under section 9 of the Arbitration and Conciliation Act 1996 is set aside. The Arbitration Petition No. 02 of 2021 seeking appointment of Arb.A. No. 021 The Secretary Tourism & Civil Aviation Department & Anr. v. Brij Raj Oberoi Arb. P.No.021 Brij Raj Oberoi v. State of Sikkim through the Secretary & Anr. Arbitrator under section 11 of the Arbitration and Conciliation Act 1996 read with section 10 of the Commercial Courts Act 2015 is also dismissed. The parties to bear their own costs. ( Biswanath Somadder ) Chief Justice 18.11.2021 Judge 18.11.2021 sdl Approved for reporting: yes. Internet: yes. 

Summary:   This dispute arises out of the impugned order dated 31.05.2021 passed by the learned Commercial Court on an application filed by the respondent (Brij Raj Oberoi) under section 9 (1) (ii) of the Arbitration and Conciliation Act, 1996. The learned Commercial Court examined, inter-alia, the relevant arbitration clause i.e. 4 (xiii) of the lease agreement dated 09.12.1997 entered between the appellant (the State) and the respondent (Brij Raj Oberoi) leasing out the premises known as “Norkhil Hotel”. After an appeal by the plaintiff this dispute was decided by Sikkim High court in the matter of The Secretary, Tourism &amp; Civil Aviation Department &amp; Anr. v. Brij Raj Oberoi [Arb.A. No. 02 of 2021] The facts of the case were that the on 09.12.1997 the deed of lease was executed between the State and Brij Raj Oberoi by which “Norkhil Hotel” was leased to Brij Raj Oberoi for a period of 24 years. The lease was to expire on 31.05.2021 further, the lease deed contained some important facts for the consideration of the case as: The lessee shall in the last year of the lease tenure and not later than six months prior to the expiry of the present lease, communicate in writing to the lessor his terms and conditions for the renewal of the present lease and if the same is accepted by the lessor, then the present lease may be renewed for such further period and on such rent as may be mutually agreed upon between the parties thereto, failing which the matter shall be referred to arbitration by an arbitrator to be appointed by the Chief Justice of the Sikkim High Court. On 12.11.2020 before the expiry of the period of lease on 31.05.2021 Brij Raj Oberoi sent an offer of renewal to the State but there was no response from the state side. Thus, Brij Raj decided to send a legal notice. The State thereafter, issued a letter dated 17.05.2021 to Brij Raj Oberoi conveying their inability to renew the lease furthermore, on 21.05.2021 Brij Raj Oberoi wrote to the State contending that disputes and differences had arisen between them in respect of the renewal of the lease and its terms; and keeping in mind clause 4(xiii) of the lease agreement to refrain from taking any steps as contemplated by them for tender to handover “Norkhil Hotel” to a third party until the disputes are decided through arbitration. The state side argued that Brij Raj Oberoi had misconstrued clause 4(xiii) of the lease agreement. It was contended that as the State had not accepted the offer made by Brij Raj Oberoi there was no case for arbitration. The bench comprising of consisting of Justice Bhaskar Raj Pradhan and Chief Justice Biswanath Somadder decided that Section 9 of the Arbitration Act deals with interim measures for protection which a party may, before or during arbitral proceedings or at any time after the making of the arbitral award or before it is enforced in accordance with section 36, apply to a Court for. It is certain that a contemplation or the existence of an arbitral proceedings is a must before the Court can pass protective orders as contemplated in section 9 (1) (ii) (a) to (e) of the Arbitration act. The bench relied on the case of Firm Ashok Traders vs. Gurmukh Das Saluja [(2004) 3 SCC 155] in which the supreme court held that party invoking section 9 may not have actually commenced the arbitral proceedings but must be able to satisfy the Court that arbitral proceedings were actually contemplated or manifestly intended and were positively going to commence within a reasonable time. “In such circumstances, none of the disputes – which can be termed as arbitrable dispute – as specified hereinbefore, are present in the facts of the instant case. In absence of any arbitrable dispute, an order could not have been passed by the Learned Commercial Court under section 9 of the Arbitration Act.” Hence, the arbitration appeal was allowed. and the impugned judgment and order dated 31.05.2021, passed by the learned Commercial Court on the application filed by Brij Raj Oberoi under section 9 of the Arbitration and Conciliation Act, 1996 was set aside.