Disputes Between Landlord & Tenant Are Arbitrable If Landlord Is Not Seeking Ejectment Under Rent Act, 1973: Punjab & Haryana HC

The Punjab & Haryana High Court while deciding an application under Section 11(5) of the Arbitration and Conciliation Act,1996 held that disputes between landlord and tenant are arbitrable if the landlord is not seeking ejectment under the Rent Act, 1973.

A Single Judge Bench of Justice Raj Mohan Singh was dealing with the petition for the appointment of an independent Arbitrator to adjudicate the dispute between the parties. The Bench in this regard stated –

"Keeping in view the nature of controversy involved in the both the cases, I find that the claim of the petitioner in respect of recovery of arrears of lease amount does not fall under the ambit of Rent Act, 1973 as the petitioner is not claiming any eviction of the respondent on the grounds available under the provisions of Rent Act, 1973. Petitioner has sought recovery of lease amount in terms of the agreement and such dispute does not fall within the exclusive jurisdiction of Rent Controller, rather can be adjudicated by the Arbitrator."

Advocate Sonia Madan represented the petitioner while Advocate Rajeev Anand represented the respondent.

Brief Facts of the Case –

A lease deed was executed between the petitioner and the respondent. The petitioner had invested his amount in the purchase of a unit on the 3rd floor in the commercial building named DLF Mega Mall located at Phase-1, DLF City, Gurgaon. The sale deed was executed and the petitioner purchased the said property in order to lease it out to generate rental income. The petitioner was approached by the respondent to take the property on lease. Consequently, the lease deed was executed between the parties. The entire tenure of the lease was a lock-in period in view of clause 2 of the lease deed. However, the respondent terminated the lease prematurely in violation of the lease agreement and stopped remitting rent since the month of April 2020.

According to clause 2 of the lease deed, neither party to the lease deed could have terminated the lease. The initial rent was enhanced in accordance with the terms and conditions of the lease deed plus GST as applicable per month. The respondent continued to remit the rent and thereafter stopped remitting the same to the petitioner. The respondent did not pay any attention to the petitioner and in violation of the terms and conditions of the lease deed, terminated the lease prematurely and thereafter issued a notice seeking a refund of the security deposit furnished by it at the time of commencement of the lease. Thereafter, the respondent approached the petitioner for an amicable resolution of the dispute, but ultimately due to the conduct of the respondent, the effort to resolve the dispute was all in vain.

The petitioner issued a notice for initiating arbitration proceedings as per the terms and conditions of the lease deed that provided a resolution of the dispute through arbitration under clause 48. But the respondent denied the same and rejected the name of the nominated Arbitrator by the petitioner and threatened to vacate the premises. Hence, the matter was before the High Court.

The High Court in the above context observed –

"The notice of termination of lease deed dated 03.07.2020 does not specify any ground for terminating the lease deed and the ground no.5 pleaded in the notice does not correspond to clause 32 of the lease deed. Evidently, the petitioner is not seeking ejectment of the respondent, rather claim of the petitioner is only in respect of recovery of rent which is being sought upto 30.06.2022 with liberty to initiate any other remedy for ejectment (if any) in terms of grounds taken in the rejoinder. The pleaded case of the petitioner cannot be read beyond the scope of pleadings. Even otherwise, the Arbitrator can decide his jurisdiction under Section 16 of the Act."

Therefore, the Court further ordered –

"For the reasons recorded hereinabove, I hereby appoint Sh. Inderjeet Mehta, Distt. & Sessions Judge, (Retd.) # 112 Sector 24, Chandigarh as the sole Arbitrator, to resolve the dispute/difference between the parties. The appointment of the Arbitrator shall be subject to the declaration to be made by him/her as required under Section 12 of Arbitration and Conciliation Act, 1996 in respect of his/her independence and impartiality to settle the dispute between the parties."

The Court also directed that the Arbitrator shall be paid a fee in accordance with the Act and the same shall be borne by both parties equally and the venue of Arbitration shall be the place as per the convenience of the Arbitrator.

Accordingly, the Court disposed of the petition.

Cause Title – Rohit Sawhney v. M/s DLF Power and Services Ltd.

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