Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment pronounced on: June 13, 2014
+ Arb. A. No.14/2014
SURESH SHAH ..... Appellant
Through Mr.Maninder Singh, Sr.Adv. with
Mr.Vikas Dhawan, Mr.Devdutt
Kamat & Mr.S.Panda, Advs.
versus
M/S TATA CONSULTANCY SERVICES LTD ..... Respondent
Through Mr.Suhail Dutt, Sr.Adv. with
Ms.Ekta Kapil, Mr.Munindra
Dvivedi, Ms.Divya Bhalla &
Ms.Preeti Yadav, Advs.
CORAM:
HON'BLE MR. JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J.
1. The appellant has filed the present appeal against the order
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dated 16 April, 2014 passed by the learned Arbitrator in the
application filed by the appellant under Section 17 of the Arbitration
and Conciliation Act, 1996 (hereinafter referred to as “the Act”) in the
arbitration proceedings bearing case reference No.DAC/522/01-14
pending between the parties.
2. Brief facts for the purpose of deciding the present appeal are
that the property bearing No.154-B, Block-A, Sector 63, Gautam
Budh Nagar, Noida (“the said property”) was allotted and leased by
Noida Authority to AARDEE Fashions Pvt. Ltd. which was transferred
to Ms.Pooja Arora who subsequently transferred the said property to
Arb.A. No.14/2014 Page 1 of 26
Sun Light Buildcon Pvt. Ltd. (SBPL) with the permission from the
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Noida Authority. Vide a sub-lease deed dated 29 September, 2007,
SBPL leased the said property to the respondent (TCS) with the prior
permission from the Noida Authority. Vide a letter of Attornment
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dated 19 April, 2011, SBPL transferred all the rights and liabilities
under the sub-lease deed to the appellant except for the amendments
contained in the said letter of attonrment.
3. The appellant filed a petition under Section 9 of the Act, inter
alia , seeking direction against the respondent to furnish a bank
guarantee to secure the outstanding rent based on the ‘area’ and rent
agreed under the sub-lease-deed and on the issue of protection in
respect of stamp duty, as according to the appellant, the respondent
failed to pay the lease rental for a period of 9 months from April to
December, 2013, by raising the disputes that the sub-leased area is
not 1.75 lakh sq. ft. but it is 1.35 lakhs sq. ft. as indicated in the
Occupancy Certificate and secondly, it is for the lessor/appellant to
pay stamp duty liability, being demanded by authorities.
4. In the petition under Section 9 of the Act, the appellant sought
following reliefs against the respondent:
“(a) Direction to pay Rs.12,34,47,210/- as arrears of rent
from quarter April-July, 2013 to the quarter October-
December, 2013 with interest thereon at 12% per
annum from the due date till date of realization;
(b) Direction to pay rent in terms of clause 7(a) of the sub-
lease deed dated 29.9.2007 during continuation of the
lease;
(c) Direction to respondent to settle/pay the liability arising
on account of stamp duty, interest and penalty in
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respect of the Deed of Sub-lease dated 29.9.2007,
demanded by NOIDA as per its final notice dated
12.2.2013; and
(d) A declaration that liability for payment of stamp duty as
demanded by NOIDA by notice dated 12.2.2013 in
respect of Deed of Sub-lease dated 29.9.2007 as
amended, is solely on the respondent.”
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5. By order dated 20 December, 2013, the Court disposed of the
Section 9 petition with certain agreed directions, which inter alia
included the following:
“(i) The respondent will furnish a bank guarantee,
favouring the Registrar General of this Court qua the
outstanding lease rent (based inter alia on the provisions
of the lease deed which would include the rate and the
area indicated therein).
(ii) The lease rent for the period January, 2014 and
thereafter, shall be paid by the respondent for an area
equivalent to 1,35,000 sq. ft. in accordance with the
provisions of the lease obtaining between the parties.
(iii) The petition (under Section 9) shall be placed
before the learned arbitrator, who will treat the same as
an application under Section 17 of the Act.”
6. The application filed by the appellant for interim measures i.e.
the petition filed under Section 9 of the Act before this Court treated
as an application under Section 17 of the Act in the arbitration
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proceedings was heard on 22 February, 2014. The appellant filed
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another application dated 1 April, 2014 stating that the sub-lease in
its favour has been terminated by the respondent as per notice of
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termination dated 31 March, 2014 on the expiry of six months from
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1 April, 2014. By the said application, the appellant requested the
Arb.A. No.14/2014 Page 3 of 26
Arbitral Tribunal to take the said notice of termination on record and
also consider the subsequent developments and the submissions
made in the said application while deciding the application for interim
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measures. The said subsequent application was heard on 5 April,
2014. During the said hearing, the appellant submitted that the
second application may be treated as its written submissions in
regard to the application for interim measures. The said request was
accepted and respondent was permitted to file its written submission
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by 15 April, 2014.
7. The Section 17 application of the appellant stood disposed of
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on 16 April, 2014 by the learned Arbitrator.
The relevant prayers sought by the appellant in the arbitration
proceeding i.e. prayers (b) and (d) made in the interim application
were disposed of by the learned Arbitrator. The details given in para
18 to 23 of the impugned order are reproduced as follows:
“18) Prayer (d) is for an interim direction to respondent to
deposit before Court (now Arbitral Tribunal) the entire
amount as demanded by the Stamp Authorities as stamp
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duty payable on the Deed of Sub-lease dated 29
September, 2007, along with interest. The case of the
claimant is that the claim of Stamp Authorities/NOIDA
for payment of stamp duty on the Deed of Sub-lease is
not valid or legal; and that alternatively, even if the claim
made by the Stamp Authority/NOIDA is valid and
enforceable, it is the respondent who is liable to pay the
same under the terms agreed. Both parties have also
stated that the demand for the said amount has been
stayed by the High Court in a case filed by the lessee of
some other premises in the same area. It is not the case
of the claimant that it has been directed to pay the stamp
duty or that it has made such payment. The
apprehension of the claimant is that if respondent
Arb.A. No.14/2014 Page 4 of 26
vacates the leased premises without paying the stamp
duty amount, NOIDA may not grant permission to re-let
the premises unless the stamp duty amount is deposited
by the claimant. This interim prayer is the subject matter
of main prayer No.(d) and (e) and requires adjudication
by examining the evidence. In the circumstances, this is
not a fit case to grant the direction sought as an interim
relief, even before adjudicating and determining who is
liable for such payment. This interim prayer is therefore
rejected.
19) It is needless to state at this stage that irrespective
of who is legally liable (if stamp duty is due), it is the duty
of both claimant and respondent to resist and contest
diligently the claim for stamp duty to ensure that an
unnecessary burden is not created on the person who
may be ultimately held liable under the award that may
be passed.
20) Prayer (b) has two parts. The first part of interim
prayer (b) seeks a direction restraining the respondent
from committing breach of the terms of Deed of Sub-
lease, in regard to payment of rent. Every person who
enters into a contract, is expected to perform it. If he
commits breach, the consequences for such breach as
provided under the contract and/or law, will follow.
Therefore, whenever there is a breach, the aggrieved
party is entitled to seek the remedies open in law as a
consequence of such breach. Therefore, a prayer for an
order restraining the other party to the contract from
committing breach of the terms of a contract is
misconceived. In this case, the object of the prayer is to
ensure that the rents accruing in future are paid. If the
lessee fails to pay the rent, the remedy is not to seek an
injunction/direction restraining the tenant from
committing breach of the term relating to payment of rent
in the lease deed, but to take action for recovery of the
arrears or terminate the lease and recover possession as
a consequence of such breach. In this case, the claimant
does not want the lease deed to be terminated by the
Arb.A. No.14/2014 Page 5 of 26
sub-lessee. Nor is the claimant is interested in
terminating the lease. Therefore, the claimant can only
claim the rents and damages/interest on the delayed
payments in accordance with law. There is already such
a prayer in claim statement [that is main prayers (b) and
(c) and in this application (interim prayer (c)]. Hence the
first part of prayer (b) is rejected.
21) What remains for consideration is interim prayer (c)
and second part of interim prayer (b). The second part
of prayer (b) is for a direction to respondent to pay
Rs.11,27,17,134/- towards outstanding rents up to date
with interest at 12% per annum from the date when such
payment became due till date of payment. Prayer (c) is
for a direction to respondent to make payment of rent in
future every month in terms of the Deed of Sub-lease.
The effect of these prayers is to seek payment of the
arrears of rent in terms of the deed of sub-lease and
continue to pay future rent in terms of the deed of sub-
lease.
22) The respondent does not deny its liability to pay the
rent during the period of its occupation. It is disputing
the quantum of rent payable on the ground that the
claimant has illegally collected a higher rent by
misrepresenting the area of the leased premises to be
1,75,000 sq. ft. It is contending that if rent is calculated
for the actual area (1,35,352 sq. ft.), it has paid rents in
excess and claimant itself should refund the excess,
even after adjustment of the rent for the period between
April, 2013 to December, 2013.
23) These two interim prayers are in effect reiteration of
main prayers (a) and (b) in the claim petition. The parties
themselves had arrived at a broad understanding in
regard to these interim prayers by agreeing before the
High Court that (a) the respondent will furnish a bank
guarantee in regard to the outstanding lease rent; and
(b) the respondent will pay from January, 2014 rent
calculated for an area of 1,35,000 sq. ft. in accordance
Arb.A. No.14/2014 Page 6 of 26
with the provisions of the deed of sub-lease. The High
Court, made an order in terms of the said consensus
between the parties by directing the respondent – (i) to
furnish bank guarantee of Rs.10 crores, towards the
disputed arrears, and (ii) to pay rent calculated on
1,35,000 sq. ft. from January, 2014. The said order, was
intended to continue during the pendency of the
arbitration proceedings or until the application for interim
measures (that is, the petition under Section 9 of the Act
converted into application under Section 17 of the Act)
was disposed of by the Arbitrator. The High Court also
directed that the Arbitrator will be at liberty to pass
appropriate orders after hearing the parties. It is not in
dispute that the interim directions issued by this Court in
the proceedings under Section 9 of the Act will operate
even during the course of arbitration.”
8. The main grievance of the appellant in the present appeal is
that the interim reliefs prayed for by the appellant have become
necessary as the respondent has now proceeded to terminate the
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sub-Lease Deed by issuing termination notice dated 31 March, 2014
and is in the process of walking out in September, 2014 without
paying the agreed rent or discharging the stamp duty liability owned
towards the authorities. The appellant has to undergo the exercise of
finding a new tenant and it is thus necessary to secure a permission
from the Noida Authority for letting out to a new tenant, which
permission may not be granted on account of pendency of demand
and non-discharge of liability by the respondent regarding the stamp
duty in relation to appellant’s premises. Therefore, it is difficult for the
appellant to locate a new tenant. The learned Arbitrator has not
secured the said liability towards the stamp duty of approx. Rs.8.27
crores, along with the liability of interest @ 18% thereon starting from
Arb.A. No.14/2014 Page 7 of 26
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8 August, 2012 (as of now approx. Rs.3.25 crores), i.e. a total sum
of Rs.11.50 crores, which is payable to the Stamp Duty Authorities of
the State of U.P., by the respondent.
9. Mr.Maninder Singh, learned Senior counsel appearing on
behalf of appellant, has referred few provisions of the sub-Lease
Deed, i.e. Clause 16 which specifically records that it substitutes
every other previous document of this transaction and Clause 4
provides that in addition to rent, the respondent shall also pay all
taxes, duties (which includes stamp duty), levies, etc. It is submitted
by the learned Senior counsel that the sub-lease was originally for 9
years, with a lock-in period of 6 years (until October, 2013). The
lease rental for 1.75 lakh sq. ft. has been paid by respondent upto
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31 March, 2013, without any demur or protest. The respondent had
also made available an amount of Rs.5.67 crores equivalent to six
months rental on the entire leased area of 1.75 lakhs sq. ft. as
security deposit, which was to be refunded to the respondent against
return of possession of the said property after adjusting any
outstanding dues.
10. On the issue of payment of rental as per sub-lease deed,
Mr.Maninder Singh, learned Senior counsel argued that it is a settled
position in law that if a contract entered into between two parties is
acted upon and is worked out, it would neither be permissible nor
open to any party under the said contract to question/challenge any
of the term/condition incorporated therein. Such a
prohibition/estoppel is a principle of public policy so as to ensure the
sanctity of the written contract. If the Courts were to permit challenge
to any concluded contract which has also been worked out and acted
Arb.A. No.14/2014 Page 8 of 26
upon by the parties, not only there would be utter chaos, there would
be no possibility of extending/securing the sanctity of contracts in any
civilized society. The Court would, in such circumstances, prohibit at
the threshold itself any ill-conceived attempt on the part of a party to
any such contract to question/challenge any of the term/condition
incorporated in any such contract. The respondent ought not have
allowed to raise the baseless/ impermissible allegation of fraud or
mistake – only with a view to attempt to wriggle out of its clear
obligations and liabilities under the unequivocal and unambiguous
terms of a registered lease agreement and to pay rent on the
stipulated area of 1,75,000 sq. ft. The reliance of the respondent
upon the Occupancy Certificate is ex facie misplaced and a dishonest
attempt to wriggle out of its contractual obligations in as much as the
completion certificate does not in any manner indicate the super built
up or chargeable area, that was the term agreed between the parties
for purposes of rental payment. The Plan annexed with the
occupancy certificate specifically uses the term “super built-up area”,
there was an apparent and utter failure on part of the respondent to
demonstrate the same.
11. As the respondent themselves had admitted that even based
on the completion certificate, the chargeable super area was
1,62,500 sq. ft. in their correspondence though, the respondent had
admittedly paid the rent for past more than 5 years on entire 1.75
lakhs sq. ft. of area, without any demur or protest. In breach of
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orders dated 20 December, 2013 of this Court, (which have even
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been continued by the learned Arbitrator wide his order dated 16
April, 2014), the respondent has not made any payment even in
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respect of the directed 1.35 lakh sq. ft. of area for the quarter starting
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from 1 April, 2014 to 30 June, 2014. Therefore, it is unlikely that
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the Respondent will make payment for balance one quarter from 1
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July, 2014 to 30 September, 2014 before vacating the said property
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on 30 September, 2014.
12. Learned counsel has referred the following decisions in support
of his submissions:-
(i) In Shyam Telelink vs. Union of India , (2010) 10 SCC 165,
the Apex Court has categorically held that once a party of
his own accord, accepts a contract on certain terms and
works out the contract, he cannot be allowed to adhere to
and abide by some of the terms of the contract which proved
advantageous to him and repudiate the other terms of the
same contract.
(ii) The Supreme Court in the case of Adhunik Steels Ltd. vs.
Orissa Manganese and Minerals Pvt. Ltd. , (2007) 7 SCC
125, in para 11 held as under:
“11. It is true that Section 9 of the Act speaks of the
court by way of an interim measure passing an
order for protection, for the preservation, interim
custody or sale of any goods, which are the subject
matter of the arbitration agreement and such interim
measure of protection as may appear to the court to
be just and convenient. The grant of an interim
prohibitory injunction or an interim mandatory
injunction are governed by well known rules and it is
difficult to imagine that the legislature while enacting
Section 9 of the Act intended to make a provision
which was de hors the accepted principles that
governed the grant of an interim injunction. Same is
the position regarding the appointment of a receiver
Arb.A. No.14/2014 Page 10 of 26
since the Section itself brings in, the concept of 'just
and convenient' while speaking of passing any
interim measure of protection. The concluding words
of the Section, "and the court shall have the same
power for making orders as it has for the purpose
and in relation to any proceedings before it" also
suggest that the normal rules that govern the court
in the grant of interim orders is not sought to be
jettisoned by the provision. Moreover, when a party
is given a right to approach an ordinary court of the
country without providing a special procedure or a
special set of rules in that behalf, the ordinary rules
followed by that court would govern the exercise of
power conferred by the Act. On that basis also, it is
not possible to keep out the concept of balance of
convenience, prima facie case, irreparable injury
and the concept of just and convenient while
passing interim measures under Section 9 of the
Act.”
(iii) In the case of Lalea Trading Limited vs. Anantraj
Projects Pvt. Ltd. , 198 (2013) DLT 339, this Court has
held that Order XXXVIII, Rule 5 will not restrict the scope of
powers of grant interim relief under the Act while securing
the ‘amount in dispute’.
13. It is submitted by the appellant that postponement of the reliefs
under Section 17 application till final adjudication makes the very
purpose of Section 17 application a great hardship which has
occurred to the appellant despite of settled law. The interim reliefs
sought before the learned Arbitrator merely prayed for securing
certain amounts and did not contain any prayer for final adjudication
of the same. Therefore, it was erroneous on the part of the learned
Arbitrator to decline the grant of relief on the reason mainly that the
Arb.A. No.14/2014 Page 11 of 26
interim relief cannot be granted as the same is auxiliary to the main
relief.
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14. Even after the order passed in Section 9 petition on 20
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December, 2013, the respondent paid rent for one quarter (from 1
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January, 2014 to 31 March, 2014) on 1.35 lakh sq. ft. area and not
for 1.75 lakhs sq. ft. of chargeable super area mentioned in sub-
Lease Deed. In view of above, the learned Arbitrator would have
decided the issue as an interim measure on the admitted position of
the matter at least in respect of chargeable super area under the sub-
lease, and to secure the interest of the appellant.
15. The learned Arbitrator with regard to the said stamp duty
liability has not secured by the impugned order despite of the fact that
the sub-lease deed does not provide any clause that the lessor would
pay the stamp duty. Therefore, as per Section 29 of Stamp Act, the
respondent was liable to pay stamp duty, unless otherwise mentioned
in lease contract. It is also submitted that the Clause 8(q) of sub-
Lease Deed cited by the respondent was not all relevant, since this
sub-clause, as also the entire main clause (8) deals only with
obligations of the respondent/lessee (and not those of the lessor).
The said sub-clause 8(q) merely stipulates that an obligation on the
respondent shall provide necessary information/
documents/assistance to enable the appellant to arrange the stamp
duty exemption under the STPI scheme of Government of India.
Whereas, the stamp duty exemption has been arranged by the
appellant in favour of the respondent under the Industrial and
Services Sector Investment Policy, 2005 of UP Government (and not
under STPI Scheme of Government of India). Moreover, this clause
Arb.A. No.14/2014 Page 12 of 26
8(q) had become superfluous, as stamp duty exemption had already
been obtained on the date of execution of sub-lease deed.
The learned Arbitrator ought to have secured the interest of the
appellant till the time respondent discharged the stamp duty liability
owned by it towards the authorities, the appellant would not be
allowed by Noida authority to further lease the said property to
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another tenant after the respondent vacates it on 30 September,
2014.
16. Lastly, as per the appellant, the factual position is that even
after adjusting the rent amounting to Rs.3.15 crores approx. paid by
respondent in January, 2014 and after appropriating security of
5.65 crores towards rent payable on of chargeable super area of
1.75 lakhs sq. ft., as provided in sub-lease deed, the respondent
would still be liable to pay the lease rentals for the period starting
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from 1 October, 2013 and until 30 September, 2014 (i.e. for an
approx. period of one year). The unpaid and residual amount of
rentals would come to approx. Rs.15.75 crores and in addition to as
submitted above, the liability towards the stamp duty, which is to be
paid by the respondent, is to the tune of approx. Rs.11.50 crores
(Rs.8.27 crores as originally demanded + 3.25 crores towards
interest @ 18% as mentioned in the demand). As against the total
liability owned by the respondent to the tune of approx. Rs.27.25
crores (i.e. Rs.11.50 crores towards stamp duty + Rs.15.75 crores on
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account of rent), on the day of vacating the premises on 30
September, 2014, the appellant has been only secured to the extent
of Rs.10 crores under the bank guarantee provided by the
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respondent pursuant to directions of this Court dated 20 December,
Arb.A. No.14/2014 Page 13 of 26
2013. It is stated that at the interim stage, the amount on account of
rent and encumbrance on said property to the tune of Rs.17.25
crores which remains unsecured, be secured.
17. The prayer is made in the present appeal that the appropriate
orders be passed by this Court, so as to ensure that on the date of
decision by the learned Arbitrator, the appellant is not left in lurch for
recovery of the amounts due.
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18. By impugned order dated 16 April, 2014, the learned Arbitrator
observed that the matter is likely to be concluded shortly. The matter
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is now listed for evidence on 7 , 8 and 9 August, 2014.
19. The list of disputes as agreed between the parties are as
follows:
a. What is the ‘chargeable sub-lease area’ of the leased
premises for which rent is payable by the respondent to
claimant?
b. Whether respondent is stopped from disputing the
‘chargeable sub-lease area’ specified in the deed of sub-
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lease dated 29 September, 2007 read with amended to
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sub-lease deed dated 21 October, 2008?
c. Whether either party is guilty of any fraud or
misrepresentation in regard to the area to be charged for
rent?
d. Whether any provision of the contract is vitiated by mistake?
e. Whether the area of 1,35,342 sq. ft. shown in the occupancy
certificate is the ‘chargeable sub-lease area’?
Arb.A. No.14/2014 Page 14 of 26
f. Whether claimant is entitled to Rs.12,34,47,210/- as arrears
of rent from April – June 2013 to October – December 2013
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as also the rent (Part) from 1 January, 2014?
g. Assuming the demand by the stamp authorities/Noida for
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payment of stamp duty on the deed of sub-lease dated 29
September, 2007, is valid and payable, who is liable to bear
and pay the same – whether the respondent as the tenant or
claimant as the landlord?
h. Whether respondent is entitled to Rs.15,07,73,138/- from
claimant, by way of refund of excess rent paid by the
respondent?
i. What is the rate of rent and other charges payable during the
reminder of the leased period?
j. Whether the party who is found liable to pay any amount to
the other party, is liable to pay interest on the amount due to
the other party and if so, at what rate and for what period?
k. Who is liable to bear the costs and how much.
20. Mr.Suhail Dutt, learned Senior counsel appearing on behalf of
the respondent, has argued that the filing of an appeal by appellant is
totally unnecessary and wastage of the time of the Court. Issues in
matters are already framed. All the disputes between the parties are
likely to be decided in the next couple of months. The learned sole
Arbitrator has already fixed the date of evidence of the parties. As far
as paying the stamp-duty is concerned, he argues that it is liability of
the appellant as per terms and conditions of the sub lease deed.
The said issue on merit has to be determined by the learned sole
Arb.A. No.14/2014 Page 15 of 26
Arbitrator. Even otherwise, interim orders are passed by the
Allahabad High Court against the demand of Noida Authority, the said
orders are continuing. No prejudice would be caused to the appellant
if ultimately the said issue is finally decided by the learned Arbitrator.
As far as paying of rental is concerned, his client is paying rent with
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effect from January, 2014 onward as per order dated 20 December,
2013 on the area of 1,35,000 sq. ft. The claim of the appellant is that
the land rent is payable at @ 1,75,000 sq. ft. The said issue is
disputed one and is determinable by the learned Arbitrator, the same
cannot be finally decided in the present appeal.
21. Mr.Dutt, learned Senior counsel has also contended that the
appellant is trying to seek the relief of similar nature as under
provision of Order XXXVIII Rule 5 CPC in absence of any pleadings.
The appellant is not entitled to seek such relief in the petition under
Section 9 of the Act nor it is under the power of Court to pass an
order of interim measure similar to the provisions of Order XXXVIII
Rule 5 CPC, particularly, in the present appeal which is filed against
the order passed under Section 17 of the Act where jurisdiction or
power is limited. Even learned Arbitrator might not have possibly
issued such direction which would go beyond the reference or
arbitration agreement. None of the decisions referred by the
appellant are applicable in the present matter as there are no
prescribed pleadings and requirement of relief under Order XXXVIII
Rule 5 CPC available nor any case is made out by the appellant as
argued in the present appeal. The scope of interference in appeal is
much narrower than that of the Court who is hearing an appeal
against the order passed under Section 9 of the Act. He argued that
Arb.A. No.14/2014 Page 16 of 26
both issues involved in the present appeal are subjudiced before the
learned Arbitrator. The respondent is well-known and reputed
company who is neither trying to dispose of the whole or any part of
its property nor about to remove the whole or any part of his property
from the local limits of the jurisdiction of the Court. Thus, the
apprehension of the appellant is without any basis who is
unnecessarily creating panic. It might be because of counter-claim
filed by the respondent and/or his client who has decided to vacate
the tenanted premises.
22. On the aspect of stamp-duty, it is submitted by the respondent
that the relief of depositing the entire amount of stamp duty as prayed
by the appellant is erroneous, baseless and misconceived because of
the following reasons:-
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(i) As per Clause 8(q) of the sub-Lease Deed dated 29
September, 2007, a duty was caste upon the sub-lessor, i.e.
the appellant to ensure the availment of Stamp Duty
exemption. Thus, all the conditions which were necessary
for exemption from payment of stamp duty were to be
complied by the appellant alone.
(ii) The Stamp/Noida Authorities wrongly addressed various
notices to the respondent alleging that certain conditions
which were imperative for exemption for payment of the
stamp duty were not complied with by the allottee, which is
the appellant/SBPL and not the respondent, thus demanding
a payment of approx. Rs.8 crores towards the payment of
stamp duty.
Arb.A. No.14/2014 Page 17 of 26
23. Mr.Dutt, learned Senior counsel has referred the
correspondence exchanged between his client and the Authority. In
the written submissions, the following details are given:-
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(i) A notice dated 9 August, 2012 was addressed to the
respondent by the Assistant Stamp Commissioner alleging that the
allottee, i.e. appellant has failed to adhere to the following:-
(a) get the approval of development plan,
(b) obtain completion certificate after completing construction
on 40% part of the approved covered area, and
(c) inform completion of unit and functioning thereof.
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(ii) A second notice dated 8 October, 2012 was issued by the
Stamp Authorities calling for the deposit of the alleged stamp duty
along with interest.
(iii) Pursuant to receipt of the aforesaid notice, the respondent vide
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its letter dated 29 October, 2012 categorically stated that the
respondent was not the allottee of the said property and was only a
sub-lessee. It was further stated that such conditions were to be
fulfilled by the allottee, i.e. the appellant and not the respondent.
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(iv) Subsequent thereto, the respondent in its letter dated 20
November, 2012 addressed to the IG Stamps and Registration,
Government of UP requested withdrawal of the said demand notices
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dated 9 August, 2012 and 8 October, 2012 on the ground that the
said notices have been wrongly issued to the respondent.
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(v) Noida Authority addressed a notice dated 5 February, 2013 to
the respondent stating therein that the respondent has not complied
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with the conditions as mentioned in the permission letter dated 26
July, 2007. It is pertinent to mention that the permission letter dated
Arb.A. No.14/2014 Page 18 of 26
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26 July, 2007 was addressed and issued to the sub-lessor, i.e.
appellant and not the respondent. Still all such conditions were
complied with.
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(vi) Another notice dated 12 February, 2013 was sent by the
Noida Authority to the respondent raising a new stand and
demanding stamp duty.
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(vii) The respondent replied to the notice dated 5 February, 2013
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vide its letter dated 15 February, 2013 stating that while all the
above said conditions were applicable to the sub-lessor.
(viii) The Assistant General Manager, Noida addressed a letter
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dated 4 June, 2013 to the respondent stating therein that no clear
instructions have been received by the Noida Authority with respect
to payment of stamp duty as the issue in that respect is pending
before this Court and no requisite proceedings on the notices dated
th th
5 February, 2013 and 12 February, 2013 would be initiated till the
outcome of the decision of the said proceedings.
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(ix) A letter dated 25 June, 2013 was sent by Noida Authority to
the respondent stating that a suit has been filed by M/s EXL India Pvt.
Ltd. before the High Court of Allahabad against the notice of recovery
sent by the Department in which stay has been granted on the
recovery proceedings till the final decision of this Court.
(x) During the pendency of the arbitration proceedings, the Stamp/
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Noida Authorities inspite of stating in its notice dated 4 June, 2013
that no action will be taken with respect to payment of stamp duty as
the issue was subjudiced before the Allahabad High Court, issued the
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notice dated 28 April, 2014 along with internal decisions dated 19
th
March, 2014 and 9 April, 2014 demanding payment of stamp duty
Arb.A. No.14/2014 Page 19 of 26
as Patta conditions have not been adhered to. In the table where the
name of the respondent appears, the violation is “maps not
sanctioned” which was again the responsibility of the sub-lessor, i.e.
the appellant and such liability by no means can be fastened on the
respondent.
24. Having heard the learned Senior counsel appearing on behalf
of both parties and also having gone through the issues framed in the
matter, it is evident that issues framed cover all the disputes raised by
both parties. If any issue in appeal is decided on merit, it would
definitely affect either of the parties. It appears to me that the main
contention of the appellant is that the liabilities of the respondent uptil
September, 2014 are to be secured by this Court as it would be
difficult for him to recover the rental and amount payable to the
Authority towards stamp duty from the respondent once they vacate
the tenanted premises.
25. At the time of hearing of appeal, Mr.Dutt, learned Senior
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counsel, does not dispute that sub Lease Deed dated 29
September, 2007 contained the specific clause that the super built up
area or chargeable lease area on which rent is payable is 1,75,000
sq. ft. Counsel has also admitted that the respondent in its letter
st
dated 1 July, 2013 has alleged that super built up or chargeable
sub-leased area ought to have been 1,62,411 sq. ft. and not 1,75,000
sq. ft. as mentioned in sub Lease Deed. Counsel has also not denied
that the respondent for five years had been paying rent on the basis
of 1,75,000 sq. ft. area who had stopped paying the rent at that rate
@ 1,75,000 sq. ft. from April, 2013. His explanation is that the rent
on the basis of 1,75,000 sq. ft. is not being paid by his client in view
Arb.A. No.14/2014 Page 20 of 26
of certain admissions made by the appellant in the Authority at the
time of obtaining Occupancy Certificate. And in view of the
admissions made, it is his client who has to recover the huge amount
from the appellant. In this regard, a counter-claim in the arbitration
proceedings was filed for a sum of Rs.15,07,73,138/- along with
interest towards refund of additional rent paid by the respondent to
the appellant. The respondent is paying and undertakes to pay rental
till the date of occupation of the premises on the area of 1,35,000 sq.
ft.
26. In the present case, the matter is put up for evidence and is
likely to be final decided within couple of months, particularly, when
the learned Arbitrator has kept the matter on urgent mode. There are
no pleading in the applications or any evidence is produced that the
respondent is about to dispose of property and is about to remove the
property from the local limits of jurisdiction of this Court. In the case
of National Shipping Company of Saudi Arabia vs. Sentrans
Industries Limited , AIR 2004 Bom. 136, the Division Bench of
Bombay High Court held as under:
“10. Section 9, in the Act of 1996 is a substantive provision
which empowers the Court to pass an interim order before or
during Arbitral proceedings or any time after the making of
the Arbitral Award but before it is executed under Section 36.
Since we are concerned with Section 9(ii)(b), it may be
noticed that it provides for an interim measure of protection
for securing the amount in dispute in the Arbitration. Sort of
clarification it also provides that the Court shall have the
same power for making orders as it has for the purpose of
and in relation to any proceeding before it. Such provision as
enacted in Section 9, is a provision that enables a party to
apply for interim protection if action of the other party to the
Agreement providing for Arbitration is either in breach of the
Arb.A. No.14/2014 Page 21 of 26
terms of the Agreement or is unequitable, unfair on in breach
of Natural Justice. The order under Section 9(ii)(b) is in the
nature of interim protection order. In a special provisions of
the nature like Section 9(ii)(b), we are afraid, exercise of
power cannot be restricted by importing the provisions of
Order 38, Rule 5 of the Civil Procedure Code as it is. It is
true and as has been held by the Supreme Court in ITI Ltd.,
2002 (5) SCC 510, that for want of specific exclusion of the
Code of Civil Procedure in the Act of 1996, it cannot be
inferred that the Code was not applicable but that would not
mean that provisions of Code have to be read into as it is
when the Court exercises its powers as prescribed in the Act
of 1996. The procedural aspects provided in the Code about
which the Act of 1996 is silent, needless to say, when the
Court exercises its substantive power under the Act of 1996
shall be applicable but the guiding factor for exercise of
power by the Court under Section 9(ii)(b) has to be whether
such order deserves to be passed for justice to the cause.
The provisions of Order 38, Rule 5, C.P.C. cannot be read
into the said provision as it is nor can power of the Court in
passing an order of interim measure under Section 9(ii)(b) be
made subject to the stringent provision of Order 38, Rule 5.
The power of the Court in passing the protection order to
secure the amount in dispute in the Arbitration before or
during Arbitral proceedings or at any time of making of the
Arbitral amount but before or during Arbitral proceedings or at
any time of making of the Arbitral amount but before it is
enforced cannot be restricted by importing the provisions set
out in Order 38 of C.P.C. but has to be exercised ex debito
justitiae and in the interest of justice. The Court while
considering the Application for interim protection under
Section 9(ii)(b) is guided by equitable consideration and each
case has to be considered in the light of its facts and
circumstances. The interim protection order contemplated
under Section 9(ii)(b) is granted by the Court to protect the
interest of the party seeking such order until the rights are
finally adjudicated by the Arbitral Tribunal and to ensure that
the Award passed by Arbitral Tribunal is capable of
enforcement. Though the power given to the Court under
Section 9(ii)(b) is very wide and is not in any way controlled
Arb.A. No.14/2014 Page 22 of 26
by the provisions of the Code but such exercise of power,
obviously, has to be guided by the paramount consideration
that the party having a claim adjudicated in its favour
ultimately by the Arbitrator is in a position to get the fruits of
such adjudication and in executing the Award. While dealing
with the Application for direction to the other party to deposit
the security of the amount in dispute in the Arbitration, the
Court also has to keep in mind the drastic nature of such
order and unless a clear case not only on the merits of the
claim is made out but also the aspect that denial of such
order would result in grave injustice to the party seeking such
protection order in as much as in the absence of such order,
the Applicant party succeeding before the Arbitral Tribunal
may not be able to execute the Award. The obstructive
conduct of the opposite party may be one of the relevant
considerations for the Court to consider the Application under
Section 9(ii)(b) . The party seeking protection order under
Section 9(ii)(b) ordinarily must place some material before the
Court, besides the merits of the claim that order under
Section 9(ii)(b) is eminently needed to he passed as there is
likelihood or an attempt to defeat the A ward, though as
indicated above, the provisions of Order 38, Rule5, C.P.C.
are not required to be satisfied. The statutory discretion given
to the Court under Section 9(ii)(b) must be exercised
judicially in accordance with established legal principles and
having regard only to relevant considerations. In our view,
this is the proper approach for consideration of the
Application for interim relief under Section 9(ii)(b) and we
hold that the provisions of Order 38, Rule 5 of the Civil
Procedure Code cannot be read as it is and imported in
Section 9 of the Act of 1996. We also hold without hesitation
that the Court is competent to pass an appropriate protection
order of interim measure as provided under Section 9(ii)(b)
outside the provisions of Order 38, Rule 5, Code of Civil
Procedure. Each case under Section 9(ii)(b) of the Act of
1996 has to be considered in its own facts and circumstances
and on the principles of equity, fair play and good
conscience. The power of the Court under Section 9(ii)(b)
cannot be restricted to the power conferred on the Court
Arb.A. No.14/2014 Page 23 of 26
under Civil Procedure Code though analogous principles may
be kept in mind.” (Underlining added)
27. Even as of today, it is not the case of the appellant that the
respondent is in any manner removing any property from the
jurisdiction of the Court and/or is incapable of obeying the orders of
this Court. The provisions of Order XXXVIII Rule 5 of CPC enumerate
that the defendant may be called upon to furnish security for
production of property at any stage of a suit, if the Court is satisfied
that the defendant with intent to obstruct or delay execution of any
decree that may be passed against him or that the defendant is about
to dispose of whole or any part of his property from the local
jurisdiction of such Court, then such Court may direct the defendant
within a time to be fixed by it to furnish such security in such sum as
may be specified in the order.
28. The respondent has also furnished a bank guarantee of a sum
of Rs.10 crores in favour of the Registrar General of this Court in
th
terms of the order dated 20 December, 2013 passed by this Court.
Security amount of about Rs.5.67 crores is also lying with the
appellant.
29. Even, as per the appellant, Rs.15.75 crores on account of rent
is due as per area of 1,75,000 sq. ft. as per Sub-lease Deed.
30. Under these circumstances, I am not inclined to interfere with
the impugned order on this issue of securing amount as mentioned
by the appellant, though I find force in the submission of Mr.Maninder
Singh, learned Senior counsel, on legal issue that if the contract
entered between the parties has been acted upon by the tenant
under the sub-lease deed in respect of the area mentioned in lease
Arb.A. No.14/2014 Page 24 of 26
deed, the tenant is liable to pay the amount unless some fraud has
been committed by the owner upon the tenant on execution of
document.
31. In view of deposit of amount and security amount lying with the
appellant, I feel that the reasonable amount on this issue is already
secured, coupled with the fact that the respondent-Company is
capable to clear all amount within no time if the award is passed
against them. Thus, the contention of the appellant on this issue
cannot be accepted. The other reason is that the matter is likely to be
decided at an early date.
32. It is settled law that normally, the Appellate Court is slow to
interfere with the discretionary jurisdiction of the trial Court unless
Court finds that discretion has been exercised arbitrarily, capriciously,
perversely or where the Court has ignored settled principles of law.
The Appellate Court may not reassess the material and seek to reach
conclusion different from the one reached by the Court below. Even
interference by High Court while sitting under the jurisdiction of
Section 37 of the Act is not permissible on finding given by the
learned Arbitrator on factual aspect.
33. As far as securing of amount towards the stamp duty is
concerned, it is a disputed issue. The appellant has sought a relief
for deposit of the amount demanded by the Stamp/Noida Authorities
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which cannot be granted in view of the order dated 29 May, 2014
wherein the Allahabad High Court has passed a restraint order
against the Noida Authority from insisting upon payment of the stamp
duty demand until further orders in Writ Petition No.28028 of 2014.
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The said writ is listed on 9 July, 2014. In the application under
Arb.A. No.14/2014 Page 25 of 26
Section 17 of the Act, the appellant had prayed for payment of stamp
duty and the rent @ 1,75,000 sq. ft. whereas in the appeal under
Section 37 of the Act, the appellant has sought his prayers by
seeking the security of the stamp duty and/or payment of the same.
34. The said dispute with Noida Authority is sub-judiced and is still
pending in Court and it is yet to be determined as to whether the
stamp duty is payable or not to the Noida Authority. The appellant
needs interim protection for the nature of amount in advance. It is the
admitted position that there is no case of the appellant that the
respondent is not capable to remit the said amount, in case the
findings in the Award are against the respondent. Before the learned
Arbitrator it is yet to be determined as to whether the said amount is
payable by the appellant or the respondent. This court cannot go into
the merit of this issue.
35. Thus, at this stage, the relief sought by the appellant to secure
amount is not called for. The appellant, however, is at liberty to move
an application for interim protection in case of change of
circumstances.
36. There is no infirmity in the impugned order.
37. The appeal is therefore dismissed.
(MANMOHAN SINGH)
JUDGE
JUNE 13, 2014
Arb.A. No.14/2014 Page 26 of 26