Rohit Sawhney vs. M/S Dlf Power And Services Limited

Facts

The petitioner, Rohit Sawhney, filed two petitions under Section 11(5) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an independent arbitrator. These petitions concerned disputes arising from two separate lease deeds executed with the respondent, M/s DLF Power and Services Ltd. In ARB No. 160 of 2021, a lease deed dated February 9, 2012, for Unit No. MS0302, was for a period from March 1, 2011, to June 30, 2022, with a lock-in period. In ARB No. 161 of 2021, a lease deed dated August 7, 2019, for Unit No. MS0303, was for a period from December 15, 2018, to June 30, 2022. The respondent stopped remitting rent from April 2020 and issued notices seeking a refund of security deposits, alleging termination of the leases. The petitioner contended that the respondent prematurely terminated the leases in violation of the lock-in periods and sought recovery of outstanding rent.

Held

The Court held that the arbitration clause in the lease deeds, which empowered the Lessee to appoint the sole arbitrator, is invalid in light of the Supreme Court's decisions in TRF Limited and Perkins Eastman Architects DPC. These judgments established that a party to the dispute cannot unilaterally appoint an arbitrator, as it compromises impartiality. Therefore, the Court found it competent to exercise its powers under Section 11(6) of the Arbitration and Conciliation Act, 1996, to appoint an independent arbitrator. Regarding the jurisdiction, the Court held that the petitioner's claim for recovery of arrears of lease amount does not fall under the exclusive jurisdiction of the Rent Act, 1973. The petitioner was not seeking eviction on grounds available under the Rent Act but rather recovery of lease amounts based on the contractual terms of the lease agreement. Consequently, such a dispute can be adjudicated by an arbitrator. The Court appointed Sh. Inderjeet Mehta, District & Sessions Judge (Retd.), as the sole arbitrator to resolve the disputes between the parties, subject to his declaration of independence and impartiality as required by Section 12 of the Act. The arbitrator was directed to complete proceedings within the specified time and to be paid fees equally by both parties.

Key Issues

1. Whether the Court has the jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996, to appoint an arbitrator when the lease deeds contain an arbitration clause (Clause 48) that designates the Lessee to appoint the arbitrator, given the Supreme Court's rulings in TRF Limited vs. Energo Engineering Projects Limited and Perkins Eastman Architects DPC vs. HSCC (India) Limited, which deem such unilateral appointment provisions invalid? 2. Whether the dispute concerning the recovery of arrears of lease amount, as claimed by the petitioner, falls within the exclusive jurisdiction of the Rent Controller under the Rent Act, 1973, or can be adjudicated by an arbitrator? Petitioner's Arguments: The petitioner argued that the arbitration clause in the lease deeds, which allowed the Lessee to appoint the arbitrator, is invalid in light of the Supreme Court judgments in TRF Limited and Perkins Eastman Architects DPC. Therefore, the Court should exercise its power under Section 11(6) to appoint an independent arbitrator. The petitioner also contended that the claim for recovery of lease arrears does not fall under the exclusive jurisdiction of the Rent Controller, as it pertains to contractual obligations under the lease deed and not eviction grounds under the Rent Act. Respondent's Arguments: The respondent argued that the petitioner's prayer, in view of the rejoinder, was effectively to get the premises vacated, which squarely falls under the jurisdiction of the Rent Act. They also referred to a notice seeking refund of security deposit after vacating the premises.