M/S OTTIMO VISUALS vs M/S ESSEL HOUSING PVT LTD
$~274
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 28.02.2024
+ FAO (COMM) 19/2024
M/S OTTIMO VISUALS ….. Appellant
Through: Mr. Gourav Prasad, Advocate.
versus
M/S ESSEL HOUSING PVT LTD ….. Respondent
Through: Mr. Siddharth Mittal and Ms. Shilpa G. Mittal, Advocates.
CORAM:
HON’BLE MR. JUSTICE VIBHU BAKHRU
HON’BLE MS. JUSTICE TARA VITASTA GANJU
VIBHU BAKHRU, J.
CM APPL. 12139/2024
1. The present appeal was listed on 14.02.2024 and the learned counsel for the appellant had sought to withdraw the present appeal with liberty to file afresh. This Court was not inclined to grant any such liberty. The learned counsel for the appellant instead of proceeding to advance submissions, had unconditionally withdrawn the above appeal.
2. The appellant has now filed an application seeking restoration of the aforesaid appeal contending that the learned counsel did not fully comprehend the import of withdrawal of the appeal unconditionally. Although we are not convinced of this reason, we accede to the request for hearing the appeal on merits and, accordingly, allow the present application.
FAO (COMM) 19/2024
3. The appellant has filed the present appeal impugning an order dated 09.10.2023 whereby the appellants petition [O.M.P. (COMM) No. 05/2023 captioned M/s Ottimo Visuals v. M/s Essel Housing Projects Pvt. Ltd.] under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter A&C Act) was dismissed by the learned Commercial Court.
4. The appellant had preferred the aforementioned petition impugning an arbitral award dated 16.10.2022 (hereafter the impugned award). The said arbitral award was rendered in the context of the disputes that had arisen between the parties in connection with the lease deed dated 06.11.2015 (hereafter the lease deed). The respondent had claimed that it was in possession of the building consisting of lower ground floor, ground floor and first floor known as Essel Tower Club in a residential group housing society called Essel Towers located at Village Sukhrali and Sarhaul, MG Road, Gurugram, Haryana.
5. The respondent had leased the first floor of the said premises admeasuring 11730 sq. ft. to the appellant (hereafter demised premises). The lease deed indicates that the appellant had inspected the demised premises and was completely satisfied in respect of the same. However, it appears that the appellant had paid rent for the demised premises to the respondent only till March, 2020. It is alleged that they were in default of rent to the extent of approximately ?8,00,000/-. However, the appellant failed to pay the rent thereafter and consequently, the respondent terminated the lease deed with effect from 30.06.2020. Notwithstanding, the termination of the lease deed, the appellant did not hand over the vacant possession of the demised premises.
6. In view of the above, the respondent invoked the arbitration clause of the lease deed and the disputes were referred to arbitration. The appellant contested the said claim essentially on the two grounds. First, it challenged the title of the respondent to the demised premises. It claimed that in terms of the Haryana Apartment Ownership Act, 1983, the demised premises were required to be handed over the Resident Welfare Association/Apartment Owners Association. Second, the appellant claimed that it had vacated the demised premises and handed over possession thereof to the Essel Tower Resident Welfare Association (hereafter ETRWA).
7. The Arbitral Tribunal considered the aforesaid pleas, and made an award in favour of the respondent. The Arbitral Tribunal rejected the appellants defence that it was not in arrears of rent and, therefore, the lease deed could not be terminated. The Arbitral Tribunal also held that the statement of accounts submitted by the respondent clearly belied the said contention. After examining the material placed on record, the Arbitral Tribunal concluded that the total arrears of rent amount, amounting to ?8,66,833/- were payable by the appellant to the respondent along with the Goods and Services Tax (hereafter GST) as applicable. In addition, the Arbitral Tribunal held that the appellant was liable to pay damages for wrongful occupation of the demised premises from 20.06.2020 to 30.01.2022 at the rate of ?2,00,000/- per month, and quantified the said amount at ?38,66,666/-. Additionally, the appellant was held liable to pay ?2,00,000/- per month during the course of the arbitral proceedings quantified from 01.02.2022 to 30.10.2022, quantified at ?18,00,000/. The Arbitral Tribunal did not accept that the appellant had handed over the possession of the demised premises and accordingly also directed that the appellant would be liable to pay damages for wrongful occupation at the rate of ?2,00,000/- plus GST till handing over of the possession of the demised premises.
8. In addition, the Arbitral Tribunal also awarded interest at the rate of 12% per annum on the awarded amount of ?38,66,666/- from 01.02.2022 till 14.10.2022 and future interest from 15.10.2022 at the rate of 18% per annum on arrears of rent of ?8,66,833/- [?38,66,666/- and ?18,00,000/-] from the date of award till the date of payment.
9. The Arbitral Tribunal also faulted the appellant for raising unnecessary disputes and accordingly, awarded the costs quantified at ?3,04,843/-.
10. The appellant preferred an application under Section 34 of the A&C Act challenging the impugned award on essentially three grounds. First, that the disputes involved the ETRWA and, therefore, could not be referred to arbitration. Second, that a suit was pending between the parties and an application under Section 8 of the A&C Act had been filed, therefore, the Arbitral Tribunal did not have jurisdiction to proceed till the suit was decided. And third, that the common area maintenance was transferred to ETRWA and the demised premises fell in the common area which is under a dispute.
11. It is contended that the Arbitral Tribunal had failed to appreciate that in terms of the Haryana Apartment Ownership Act, 1983, the respondent had no title in respect of the said demised premises. The learned Commercial Court rejected the said contentions and, in our opinion, rightly so. The contentions advanced by the appellant are insubstantial. There is no dispute that the appellant had taken the demised premises on lease from the respondent. The lease deed having been terminated, the appellant was required to hand back possession of the demised premises. It is not disputed that the appellant neither paid any rent nor handed over possession of the demised premises after termination of the lease deed. No doubt, there is a dispute between the respondent and the ETRWA, however, the appellant can take no advantage of the same. The said dispute did not, however, absolve the appellant from paying rent.
12. The contention that respondent was precluded from invoking the arbitration clause as a suit was pending between the parties, wherein an application under Section 8 of the A&C Act was pending is erroneous. A plain reading of Section 8 of the A&C Act indicates that the pendency of an application cannot preclude the arbitral proceedings. Sub-section (3) of Section 8 of the A&C Act expressly provides that notwithstanding that an application has been made under Sub-section (1) of Section 8 of the A&C Act and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.
13. The present appeal is unmerited. The appeal is dismissed with cost quantified at ?1,00,000/-.
VIBHU BAKHRU, J
TARA VITASTA GANJU, J
FEBRUARY 28, 2024
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FAO (COMM) 19/2024 Page 2 of 2