Arbitration and Conciliation Act, 1996 - Section 8 (1)--Arbitration--Photocopies of lease agreements can be taken on record under Section 8 for ascertaining existence of arbitration clause.
Appeal (civil) 2016 of 2006
PETITIONER:
Bharat Sewa Sansthan
RESPONDENT:
U. P. Electronics Corporation Limited
DATE OF JUDGMENT: 29/08/2007
BENCH:
H.K. Sema & Lokeshwar Singh Panta
Citation;AIR 2007 S.C. 2961
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 the ’respondent-Corporation’] under 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:
Bharat Sewa Sansthan [hereinafter referred to as the
’appellant-Sansthan] is a charitable society registered under
the Societies Registration Act. The main object of the
appellant-Sansthan is to work for the social, economic,
educational and cultural upliftment of the people. The
appellant-Sansthan is 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, the respondent-
Corporation took for office accommodation an area measuring
14,925 square feet on the first floor of the multi-storeyed
building of the appellant-Sansthan on monthly rent of Rs.
47,760/- @ 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
the appellant-Sansthan to the respondent-Corporation on
01.12.1980.
3. It is the case of the appellant-Sansthan that in the month
of June, 1981 the respondent-Corporation expressed its
requirement to the appellant-Sansthan for some additional
accommodation on the first floor of the building adjoining to
the accommodation which the respondent-Corporation had
earlier occupied for setting up a Marketing Office and a
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Registered Office of M/s Uptron India Limited, which is the
subsidiary of the respondent-Corporation. M/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 the appellant-Sansthan and the
respondent-Corporation that additional accommodation
measuring 3000 sq. ft. in area shall be leased out to the
respondent-Corporation w.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. 2/- per 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 the respondent-Corporation.
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
result that the consolidated monthly rent of the two portions
of the accommodation let out to the respondent-Corporation
had 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. The
appellant-Sansthan on 10.03.2000 filed Suit No. 16/2000 for
eviction and recovery of arrears of rent against the
respondent-Corporation in the Court of learned Additional
District Judge (Special Judge, E.C. 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 "Arbitration Act") and the second application No.C-17
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 the above-said applications.
Being aggrieved, the respondent-Corporation 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 the subject-matter of the suit is arbitral with 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, the appellant-Sansthan has 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 following orders:-
"I.A. 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."
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8. It appears from the record that the appeal was called on
for hearing on 11.07.2006, when the following order came to
be passed:-
"The 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
respondents. We also permit Mr. Manoj
Swarup to file additional documents in
this appeal.
In the meanwhile, the respondent \026 U.P.
Electronics Corporation Limited shall
handover peaceful vacant possession of
the area which was under the occupation
of M/s. Uptron Limited, sub-lessee 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 as follows:-
"After hearing both the parties, we passed the following
order on 11th July, 2006.
"The 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., sub-lessee 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.
As directed Mr. Manoj Swarup, learned counsel for the
respondent-Corporation placed 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 reads thus:
"U.P. ELECTRONICS CORPORATION LTD.
Total rent payable to BSS upto 30.06.2006
Financial
year
Rent
UIL
UPLC
TDS Paid
1
2
3
4
5
Upto
31.3.2001
2001-2002
3556068.75
948285.00
2367966.75
558742.50
1188104.00
389542.50
218145.00
85700.00
2002-2003
948285.00
558742.50
389542.50
85700.00
2003-2004
948285.00
558742.50
389542.50
85700.00
2004-2005
948285.00
558742.50
389542.50
85700.00
2005-2006
948285.00
558742.50
389542.50
85700.00
1.04.06-
30.6.06
133335.00
0
133335.00
0
TOTAL
8430830.75
5161682.25
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3269155.50
646650.00
From 1.4.2006 to 30.6.2006 @ Rs. 44445/- per month
(50% proposed to be retained)
UPLC Liability \026 Rs.2622505.50 (payable as per area
occupied and approved by the Management)
UPLC UIL
Rent of Front Portion
64923.75 x 12 = Area 14925@
Rs.4.35 per sq. ft.
779085.2
389542.50 389542.50
Rent of Rear Portion
14100 x 12 = Area 3000 @ Rs.
4.72 per sq. ft. (exclusively in
the use of UPTRON)
169200
- 169200.00
Total Rent per annum
948285.00
389542.50 558742.50
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. 6,46,650/-.
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 1st 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, a sub-lessee
of 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.
10. The appeal was listed for hearing on 08.09.2006, when
further following order was recorded:-
"Learned senior 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 following order:-
"Memo of Understanding between the parties to this
appeal filed in this Court, pursuant to this Court’s 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 be
passed:-
"Mr. Prashant Bhushan, learned counsel for the
appellant placed before us a Statement in respect of the
amount due in regard to 60% area occupied b y the
respondent and their subsidiaries upto June, 2006. A
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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, the appellant-Sansthan
submitted 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 the appellant-Sansthan by the respondent-Corporation
for 40% area in its occupation. In addition to the arrears of
rent from July 1997 to June 2006, the appellant-Sansthan
has 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 & sewerage tax from July 1997 to
June 2006. The appellant-Sansthan has 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 the respondent-Corporation in the year
1980.
14. In response to the order of this Court, the respondent-
Corporation has 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 & 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 appellant-Sansthan. The respondent-
Corporation 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 appellant-Sansthan.
Thus, the total payment made by the respondent-Corporation
to the appellant-Sansthan towards water & sewerage tax
comes to Rs.5,95,238.80 for the area which is in possession of
the respondent-Corporation. The respondent-Corporation
contended that as per the calculation sheet annexed with the
affidavit-in-reply, the balance amount comes to Rs.24,558.20
towards water & sewerage tax for the portion in possession of
respondent-Corporation, which is also tendered to the
appellant-Sansthan by Cheque No.275979 dated 12.10.2006
of Andhra Bank, Lucknow. The balance amount of
Rs.9,26,763.00 towards water & 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 the
appellant-Sansthan.
16. The Divisional Incharge (Personnel), working in the
respondent-Corporation in his reply affidavit to calculation
statement filed by the appellant-Sansthan on 26.02.2007,
states that in terms of the order dated 12.07.2006 of this
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Hon’ble Court, the entire amount is paid in respect of the
portion in possession of the respondent-Corporation. The
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
the respondent-Corporation and 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 the
respondent-Corporation was 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 the appellant-Sansthan. It is also stated in the
affidavit that Clause I(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 the appellant-Sansthan has 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.
18. Shri Shanti Bhushan, learned senior counsel appearing
on behalf of the appellant-Sansthan, submitted that this Court
in exercise of its jurisdiction under Article 142 of the
Constitution of India for doing complete justice to the
appellant-Sansthan is empowered to pass an order of payment
of arrears towards water & sewerage tax and payment of
interest at the rate of 12% p.a. on the arrears of rent in terms
of the agreement. He submitted that sending the matter at
this stage to the Arbitrator will prolong the agony of the
appellant-Sansthan in getting its legitimate claims settled as
per the calculation statement submitted before this Court in
terms of its interim orders.
19. Per contra, Shri Manoj Swarup, learned counsel for the
respondent-Corporation, submitted that the balance amount
of arrears of rent, payment of water & sewerage tax and the
amount of interest as claimed by the appellant-Sansthan in its
calculation statement cannot be decided by this Court in the
absence of any satisfactory and tangible evidence appearing on
record of this appeal. He next submitted that in terms of the
clause of the Agreement, this Court will be slow in exercise of
its jurisdiction under Article 142 of the Constitution of India
as the parties are governed by the procedure of the Arbitration
Act, which is speedy and less expensive for effective
adjudication of the dispute in issue.
20. We have carefully considered the respective contentions
of the learned counsel for the parties.
21. It is not in dispute that on 11.11.1980 the respondent-
Corporation took from the appellant-Sansthan an area
measuring 14,925 sq. ft. on monthly rent under a lease
agreement. In June 1981, the appellant-Sansthan let out
additional accommodation measuring 3000 sq. ft. area on
monthly rent for setting up Marketing Office of M/s Uptron
India Limited, which is the subsidiary of the respondent-
Corporation. The appellant-Sansthan filed suit for recovery of
arrears of rent and ejectment of the respondent-Corporation
from the demised premises. In the trial court, the respondent-
Corporation preferred two applications, i.e. one under Section
8(1) of the Arbitration Act and second under Order XI Rule 14
CPC for summoning of the original lease deed from the
appellant-Sansthan. The learned Additional District Judge
(Special Judge, E.C. Act), Lucknow, has rejected both the
applications. The High Court in writ petition filed by the
respondent-Corporation against the order of the trial court,
allowed the application of the respondent-Corporation filed
under Section 8(1) of the Arbitration Act. It was the specific
case of the respondent-Corporation before the High Court that
the original agreements are in the possession of the appellant-
Sansthan, whereas the stand of the appellant-Sansthan was
that the original agreements are not in its possession. 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 contained in the lease agreement is arbitral.
22. Now, the question pressed before us is whether we
should, in exercise of our power and jurisdiction under Article
142 of the Constitution of India as submitted by Shri Shanti
Bhushan, grant the payment of balance of arrears of rent,
payment of balance arrears of water & sewerage tax and
interest on the arrears of rent to the appellant-Sansthan,
which amounts are disputed by the respondent-Corporation
before us. The nature and ambit of the power of this Court
under Article 142 of the Constitution of India, no doubt, is
meant to do complete justice between the litigating parties,
but at the same time this Court has to bear in mind that the
power is conceived to meet the situations which cannot be
effectively and appropriately tackled by the existing provisions
of law. Human and equitable approach should be balanced to
do complete justice to both the parties and not be tilted in
favour of either party without ignoring the statutory
provisions. This Court in exercise of its jurisdiction can grant
appropriate relief where there is some manifest illegality, or
where there is manifest want of jurisdiction, or where some
palpable injustice is shown to have resulted to the parties.
23. In the light of above factual aspects, the claim relating to
balance arrears of rent, balance arrears of water & 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 above-said disputed claims can be
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 the
respondent-Corporation. Therefore, the contention of the
appellant-Sansthan that this Court can grant the payment of
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balance amount of arrears of rent and arrears of water &
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 the appellant-Sansthan
has not claimed the arrears of rent and water & sewerage tax
for the additional area of 2000 sq. ft., which was subsequently
let out to the respondent-Corporation, as 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, the appellant-
Sansthan will 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.
27. For the afore-stated reasons, the appeal deserves and it
is accordingly dismissed. The order of the learned Single
Judge dated 14.09.2004 passed in Writ Petition No.3388
(M/S) of 2004 shall stand affirmed. However, the parties are
left to bear their own costs.
28. Before parting, we may make it clear that any observation
made in this judgment shall not be construed as an
expression of opinion on the merits of the case. The dispute
raised by the parties shall be adjudicated upon by the
Arbitrator(s) on its own merit in accordance with law.
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