Manju Kundnani vs. Mohit Rathore

Held

The Court held that a dispute exists between the parties, as evidenced by the registered lease agreement dated 12.11.2021, which contains an arbitration clause. The applicant has raised claims regarding non-payment of rent and arrears of rent, and has issued a notice to the non-applicant. Since the non-applicant has not filed any reply to the notice or the present application, the Court found no opposition to the existence of a dispute. Consequently, the Court allowed the application for the appointment of an arbitrator. The Court appointed Shri Sushil Palo, Former Judge, High Court of M.P., as the sole arbitrator to resolve the dispute. The arbitrator is directed to issue notices, fix the date and venue for arbitration at Jabalpur, and parties are to deposit necessary charges and fees as per the M.P. Arbitration Center Rules, 2019. The Court also noted that other provisions of Section 15(3)(4) of the Arbitration and Conciliation Act, 1996, will apply to a substitute arbitrator.

Facts

The applicant, Manju Kundnani, is the owner of a commercial property in Jabalpur. She entered into a registered lease agreement with the respondent, Mohit Rathore, on 12.11.2021, for a period of three years commencing from 01.10.2021. The monthly rent was ₹1,18,000/-, inclusive of GST, with a 2.5% annual enhancement. The respondent defaulted in rent payments from 07.01.2022 and vacated the premises on 31.12.2023 without providing the mandatory two months' prior notice. The applicant claims arrears of rent amounting to Rs. 30,35,200/- and late payment charges of Rs. 47,95,907.34, totaling Rs. 78,31,107.34. Additionally, the applicant claims Rs. 7,28,000/- for damages caused to the property. Despite a legal notice dated 01.11.2025, the respondent failed to clear dues or compensate for damages. The applicant invoked the arbitration clause and sought the appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

Key Issues

1. Whether a dispute exists between the parties that warrants the appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, given the alleged non-payment of rent, late payment charges, and damages to the leased property? Petitioner's arguments: The petitioner argued that a valid lease agreement exists, and the respondent has breached its terms by defaulting on rent payments, failing to provide notice before vacating, and causing damage to the property. These breaches have led to significant financial claims, establishing a dispute that falls within the scope of the arbitration clause in the lease agreement. The petitioner relied on the lease agreement dated 12.11.2021 and the subsequent legal notice dated 01.11.2025. Revenue/State's arguments: None appears for the respondent, though served. Therefore, no arguments were recorded for the respondent.