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CASE NO.: Appeal (civil)  2016 of 2006

PETITIONER: Bharat Sewa Sansthan

RESPONDENT: U. P. Electronics Corporation Limited

DATE OF JUDGMENT: 29/08/2007

BENCH: H.K. Sema & Lokeshwar Singh Panta

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO. 2016 OF 2006

Lokeshwar Singh Panta, J.

1.      Bharat Sewa Sansthan has filed this appeal challenging  the final judgment and order dated 14.09.2004 of the learned  Single Judge of the High Court of Judicature at Allahabad,  Lucknow Bench, in Writ Petition No. 3388/2004(MS) by which  the order of the learned Additional District Judge (Special  Judge, E.C. Act) Lucknow, dismissing the application filed by  the U.P. Electronics Corporation Limited [hereinafter referred  to as the ’respondent-Corporation’] under Section 8 of the  Arbitration and Conciliation Act, 1996, has been set aside with  direction to the learned Additional District Judge to refer the  matter to arbitration and both the parties are directed to  appoint their Arbitrator as per the arbitration clause in the  lease agreement. 2.      Background facts in a nutshell are as follows:  Bharat Sewa Sansthan [hereinafter referred to as the  ’appellant-Sansthan] is a charitable society registered under  the Societies Registration Act.  The main object of the  appellant-Sansthan is to work for the social, economic,  educational and cultural upliftment of the people.   The  appellant-Sansthan is the sole and exclusive owner of multi- storeyed building known as "Chandra Bhanu Gupta Smarak  Nav Chetna Kendra" located at No. 10, Ashok Marg in the city  of Lucknow (U.P.). On 11.11.1980, the respondent- Corporation took for office accommodation an area  measuring  14,925 square feet on the first floor of the multi-storeyed  building of  the appellant-Sansthan on monthly rent of Rs.  47,760/- @ Rs. 3.20p per square foot, which comprised (a)  basic rent @ Rs. 2/- per square foot amounting to Rs.  29,850/- and (b) the balance amount of Rs. 17,910/- @ Rs.  1.20p per square foot towards the ancillary services provided  for the said accommodation in the form of elevators (lifts), a  designated area for parking of vehicles, lights for public and  common passages and sewerages etc. under a lease granted by  the appellant-Sansthan to the respondent-Corporation on  01.12.1980. 3.      It is the case of the appellant-Sansthan that in the month  of June, 1981 the respondent-Corporation expressed its  requirement to the appellant-Sansthan for some additional  accommodation on the first floor of the building adjoining to  the accommodation which the respondent-Corporation had  earlier occupied for setting up a Marketing Office and a

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Registered Office of M/s Uptron India Limited, which is the  subsidiary of the respondent-Corporation.  M/s Uptron India  Limited was established for the manufacturing of electronic  equipments and components, such as the television,  computer, capacitors, process control, EPABX systems etc.  It  was mutually agreed between the appellant-Sansthan and the  respondent-Corporation that additional accommodation  measuring 3000 sq. ft. in area shall be leased out to the  respondent-Corporation w.e.f. 25.06.1981 on a monthly rent  of Rs. 9,750/- i.e. @ Rs. 3.20 per sq. ft., which comprised of (a)  basic rent @ RS. 2/- per sq. ft. amounting to Rs. 6000/- and  (b) balance amount of Rs. 3750/- @ Rs. 1.20p. per sq. ft.  towards such ancillary charges as has been included in the  case of the lease in respect of  the first portion of the  accommodation let out to the respondent-Corporation. 4.      It is further the case of the appellant-Sansthan that the  tenancy of both the portions of the accommodation let out to  the respondent-Corporation had continued without any  interruption from the respective dates of commencement of  lease, subject to periodical escalation of the rent including  other charges on the basis of mutual agreement with the  result that the consolidated monthly rent of the two portions  of the accommodation let out to the respondent-Corporation  had risen to Rs. 79,083.75p. (Rupees Seventy nine thousand  and eighty three and seventy five paise only) well before  29.07.1999, on which day the lease was determined.  The  appellant-Sansthan on 10.03.2000 filed Suit No. 16/2000 for  eviction and recovery of arrears of rent against the  respondent-Corporation in the Court of learned Additional  District Judge (Special Judge, E.C. Act) at Lucknow.  In the  said suit, the respondent-Corporation presented two  applications before the Trial Court before filing of the written  statement.  The first application being C-12 was moved under  Section 8(1) of the Arbitration and Conciliation Act, 1996 (for  short "Arbitration Act") and the second application No.C-17  was filed under Order XI Rule 14 of the Civil Procedure Code  for summoning of the original lease deeds from the appellant- Sansthan. 5.      Learned Additional District Judge (Special Judge, E.C.  Act), Lucknow, had rejected both the above-said applications.   Being aggrieved, the respondent-Corporation has assailed the  order of the Trial Court by way of Writ Petition before the High  Court.  The learned Single Judge of the High Court allowed the  writ petition and held that the learned Trial Court has wrongly  rejected the application under Section 8 of the Arbitration Act  as the subject-matter of the suit is arbitral with further  direction to the learned Additional District Judge (Special  Judge, E.C. Act), Lucknow, to refer the matter to arbitration  and both the parties may appoint their Arbitrator as per the  arbitration clause in the lease agreement. 6.      Feeling aggrieved, the appellant-Sansthan has filed this  appeal, by special leave, challenging the correctness and  validity of the impugned judgment and order of the learned  Single Judge of the High Court. 7.      When the matter came up before the Court on  24.03.2006, this Court passed the following orders:- "I.A. No. 2 of 2005 is allowed.

Leave granted.

Since this appeal pertains to a charitable  institution and appears to be an urgent  matter, the appeal shall be placed on  Board for expeditious final hearing on  11th July, 2006."

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8.      It appears from the record that the appeal was called on  for hearing on 11.07.2006, when the following order came to  be passed:- "The case was argued at length by Mr.  Shanti Bhushan, learned Senior Counsel  for the appellant.  We also heard reply on  certain preliminary issues from Mr.  Manoj Swarup, learned counsel for the  respondents.  We also permit Mr. Manoj  Swarup to file additional documents in  this appeal.

In the meanwhile, the respondent \026 U.P.  Electronics Corporation Limited shall  handover peaceful vacant possession of  the area which was under the occupation  of M/s. Uptron Limited, sub-lessee of  respondent No. 1 herein, within one week  from today.  This Court will decide the  arrears of rent payable by Uptron Limited  at the next hearing.  In the meantime,  U.P. Electronics Corporation Limited  shall pay entire arrears of rent for the  portion in their occupation at the  admitted rate.

Since some details are required, we direct  both the parties to file a memo of  calculation before this Court so that this  Court will be in a position to pass a  detailed order.  Treat this matter as part- heard.

Post this matter at 2.00 p.m. on 12th  July, 2006."

9.      On 12.07.2006, this Court passed a detailed order, which  reads as follows:-  "After hearing both the parties, we passed the following  order on 11th July, 2006.

"The case was argued at length by Mr. Shanti Bhushan,  learned Senior Counsel for the appellant. We also heard  reply on certain preliminary issues from Mr. Manoj  Swarup, learned counsel for the respondent.  We also  permit Mr. Manoj Swarup to file additional documents in  this appeal.

In the meanwhile, the respondent U. P. Electronics  Corporation Ltd. shall handover peaceful vacant  possession of the area which was under the occupation of  M/s UPTRON LTD., sub-lessee of respondent No.1  herein, within one week from today.  This Court will  decide the arrears of rent payable by the UPTRON Ltd. at  the next hearing.  In the meantime, U. P. Electronics  Corporation Ltd., shall pay entire arrears of rent for the  portion in their occupation at the admitted rate.

Since some details are required, we direct both the  parties to file a memo of calculation before this Court so  that this Court will be in a position to pass a detailed  order.  Treat this matter as part-heard.

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Post this matter at 2.00 PM on 12th July, 2006."  

As directed Mr. Manoj Swarup, learned counsel for the  respondent-Corporation placed before us a Fax Message  from U.P. Electronics Corporation Limited in regard to  the total rent payable to the appellant upto 30.06.2006.    The Fax Message reads thus:

"U.P. ELECTRONICS CORPORATION LTD. Total rent payable to BSS upto  30.06.2006 Financial  year  Rent UIL UPLC TDS Paid       1      2       3      4        5 Upto  31.3.2001 2001-2002 3556068.75

948285.00 2367966.75

 558742.50 1188104.00

 389542.50 218145.00

 85700.00 2002-2003  948285.00   558742.50  389542.50   85700.00 2003-2004  948285.00   558742.50  389542.50   85700.00 2004-2005 948285.00   558742.50  389542.50   85700.00 2005-2006 948285.00   558742.50  389542.50   85700.00 1.04.06- 30.6.06 133335.00                 0 133335.00               0 TOTAL 8430830.75  5161682.25

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3269155.50   646650.00

From 1.4.2006 to 30.6.2006 @ Rs. 44445/- per month  (50% proposed to be retained)

UPLC Liability \026 Rs.2622505.50 (payable as per area  occupied and approved by the Management)

UPLC                   UIL Rent of Front Portion 64923.75 x 12 = Area 14925@  Rs.4.35 per sq. ft.

779085.2

389542.50      389542.50 Rent of Rear Portion 14100 x 12 = Area 3000 @ Rs.  4.72 per sq. ft. (exclusively in  the use of UPTRON) 169200      -                169200.00 Total Rent per annum    948285.00  389542.50     558742.50

According to the learned counsel for the appellant, there  is some discrepancy in regard to the calculation of rent  payable as per the agreement.  We, therefore, as an  interim measure, without going into the correctness of  the statement now placed before us, direct the U.P.  Electronics Corporation Limited to pay a sum of Rs.  32,69.155.50 to the appellant herein within four weeks  from today.  The U.P. Electronics Corporation Limited  has also deducted the tax in a sum of Rs. 6,46,650/-.   Thus, as per the fax message, the rent is calculated upto  30.6.2006.  We, therefore, direct U.P. Electronics  Corporation Limited to pay rent from 1st July, 2006 to the  appellant herein for the actual area in their occupation  as per the terms of the agreement.    The rent shall be paid on or before 10th of every  succeeding month without any default.  The respondent  shall hand over peaceful vacant possession to the  appellant herein within one week from today the portion  in the occupation of UPTRON India Limited, a sub-lessee  of respondent No.1 herein, which according to  respondent no. 1 is 60% of the total area namely, 17,925  sq. ft.  This Court will decide the arrears of rent payable  by the UPTRON India Limited at the time of final hearing.

It is also stated by the learned counsel for the appellant  that U.P. Electronics Corporation Limited has not paid  the electricity charges and water and sewerage taxes to  the authorities concerned in full.  The U.P. Electronics  Corporation Limited is directed to pay the entire arrears  to the authorities concerned within four week from today.

This order is passed as an interim measure without  prejudice to the rights and contentions of both the  parties.  It is open to both the parties to file additional  documents.

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Treat this matter as part-heard.  Post after six weeks for  reporting compliance of the aforesaid directions.  Pendency of this appeal before this Court will not prevent  the parties from settling the matter amicably."

10.     The appeal was listed for hearing on 08.09.2006, when  further following order was recorded:- "Learned senior counsel for the appellant has placed  before us a fresh calculation memo with the Statement of  Accounts duly stamped by a Chartered Accountant.  Mr.  Krishnamani, learned senior counsel appearing for the  respondent seeks time to respond to the Memo of  Calculation filed now.  Three weeks’ time is granted for  the purpose.  The respondent is directed to file reply to  this Calculation Memo within the said time.  Parties will  discuss further in regard to the possession and re- adjustment of the areas and file reply thereto.

Further directions will be made on the next adjourned  date of hearing."

  11.    On 7.11.2006, upon hearing the counsel on both sides,  this Court made the following order:- "Memo of Understanding between the parties to this  appeal filed in this Court, pursuant to this Court’s order  dated 8.9.2006, is taken on record.  A rough sketch  plan is also attached to the Memo of Settlement.  Clause  (c) of the Memo says that the respondent, namely, U.P.  Electronics Corporation Limited will vacate the portion  marked in pink as per the map within two weeks from  date of Memo of Understanding i.e. 10.10.2006.  It is  now represented by Mr. Prashant Bhushan, learned  counsel for the appellant that in spite of the  undertaking under clause (c) of Memo of Settlement, the  U.P. Electronics Corporation Limited have not vacated  the entire portion marked in pink and also constructed  wall separating the pink and green marked portion.   Since the undertaking has not been complied by M/s.  U.P. Electronics Corporation Limited further time is  given to them to comply with the undertaking by three  weeks from day.  The clause (c) of the Memorandum  shall be complied with in full and the entire portion  shall be handed over to the appellant within that time  and also the construction of the wall shall be completed  in time.

When the matter came up for hearing on 8.9.2006, the  learned senior counsel appearing for the respondent  had sought some time to respond to the Memo of  Calculation filed and that three weeks’ time was granted  for the purpose.  So far no response has been filed to  the Memo of Calculation.  The respondent is directed to  file the response to Memo of Calculation within two  weeks from today.

Call after four weeks for reporting compliance."

12.     Again on 26.02.2007, the following order came to be  passed:- "Mr. Prashant Bhushan, learned counsel for the  appellant placed before us a Statement in respect of the  amount due in regard to 60% area occupied b y the  respondent and their subsidiaries upto June, 2006.  A

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copy of the said Statement has also been furnished to  the learned counsel for the respondent.  Post after two  weeks for filing response by the respondent."  

13.  In terms of the above extracted interim orders passed by  this Court on a number of hearings, the appellant-Sansthan  submitted its statement of accounts in which a total sum of  Rs. 95,09,467.50 has been claimed as arrears of rent for the  Front Block and the Tower Block, measuring 17,925 sq. ft. of  area, out of which a sum of Rs.32,69,155.50 in terms of  interim order dated 12.07.2006 passed by this Court has been  paid to the appellant-Sansthan by the respondent-Corporation  for 40% area in its occupation.    In addition to the arrears of  rent from July 1997 to June 2006, the appellant-Sansthan  has claimed a sum of Rs.6,46,645.00 in regard to TDS  Certificates.  Further, a sum of Rs.13,38,492.43 has been  claimed on account of water & sewerage tax from July 1997 to  June 2006.  The appellant-Sansthan has also claimed a sum  of Rs.40,95,867/- on account of  interest at the rate of 12%  p.a. on the arrears of rent in relation to 15,925 sq. ft. area  which was let out to the respondent-Corporation in the year  1980. 14.  In response to the order of this Court, the respondent- Corporation has filed affidavit dated 18.11.2006 along with  details of calculations of arrears of rent of 40% area; arrears of  rent of 60% area and also details of calculation of amount for  water & sewerage tax.  The stand of the respondent- Corporation in the affidavit is that in pursuance to the interim  order of this Court dated 12.07.2006, a sum of  Rs.32,69,155.50 towards arrears of rent (Rs.25,95,310.50 as  rent and Rs.6,73,845.00 as TDS] for the 40% portion, which  was actually occupied by the respondent-Corporation, has  been paid to the appellant-Sansthan.  The respondent- Corporation stated that as per its statement of calculation and  after deduction of the amount already paid in pursuance to  the interim order of this Court, the amount payable in respect  of the portion which was under occupation of M/s Uptron  India Limited and the possession thereof has already been  handed over to the appellant-Sansthan (subject to the  adjustment made in the MOU dated 10.10.2006) comes to  Rs.75,47,368.50 which is more than what has been calculated  and indicated by the appellant-Sansthan in paragraph 6 of its  affidavit dated 06.09.2006 and an amount of Rs.6,46,645.00  is taken into account twice and shown as paid in excess. 15.   It is also submitted that during the pendency of this case  and in compliance of order dated 12.07.2006, another sum of  Rs.3,97,161.00 was also paid to the appellant-Sansthan.   Thus, the total payment made by the respondent-Corporation  to the appellant-Sansthan towards water & sewerage tax  comes to Rs.5,95,238.80 for the area which is in possession of  the respondent-Corporation.  The respondent-Corporation  contended that as per the calculation sheet annexed with the  affidavit-in-reply, the balance amount comes to Rs.24,558.20  towards water & sewerage tax for the portion in possession of  respondent-Corporation, which is also tendered to the  appellant-Sansthan by Cheque No.275979 dated 12.10.2006  of Andhra Bank, Lucknow.  The balance amount of  Rs.9,26,763.00  towards water & sewerage tax is due in regard  to the portion vacated by M/s Uptron India Limited and the  possession of that area has already been handed over to the  appellant-Sansthan.   16.  The Divisional Incharge (Personnel), working in the  respondent-Corporation in his reply affidavit to calculation  statement filed by the appellant-Sansthan on 26.02.2007,  states that in terms of the order dated 12.07.2006 of this

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Hon’ble Court, the entire amount is paid in respect of the  portion in possession of the respondent-Corporation.   The  possession of 60% area which was previously in use and  occupation of M/s Uptron India Limited, which is a Sick  Industrial Company, has already been given to the appellant- Sansthan and the payment of rent for the said area is not  covered under the directions of this Court.   It is stated that  the calculation chart submitted by the appellant-Sansthan  showing the amount due and payable pertains to 60% portion  for which rent was paid by M/s Uptron India Limited through  the respondent-Corporation and the first part of the  calculation chart filed by the appellant-Sansthan indicating  total amount of Rs.66,74,131.50 due, is in respect of 60%  portion of the leased area. It is also stated that the  respondent-Corporation was always ready and willing to make  payment of agreed rent for the portion under its occupation  and, in fact, it had tendered the amount, which was not  accepted by the appellant-Sansthan.  It is also stated in the  affidavit that Clause I(3) of the lease agreement as alleged by  the appellant-Sansthan is not applicable in the present case  and as such no interest at the rate of 12%, as claimed, is  payable and the appellant-Sansthan has calculated the  interest on total amount of rent payable in respect of total area  including the one which was under use and occupation of M/s  Uptron India Limited.  17.   We have heard the learned counsel for the parties and  examined the material on record.  18.   Shri Shanti Bhushan, learned senior counsel appearing  on behalf of the appellant-Sansthan, submitted that this Court  in exercise of its jurisdiction under Article 142 of the  Constitution of India for doing complete justice to the  appellant-Sansthan is empowered to pass an order of payment  of arrears towards water & sewerage tax and payment of  interest at the rate of 12% p.a. on the arrears of rent in terms  of the agreement.  He submitted that sending the matter at  this stage to the Arbitrator will prolong the agony of the  appellant-Sansthan in getting its legitimate claims settled as  per the calculation statement submitted before this Court in  terms of its interim orders.  19.  Per contra, Shri Manoj Swarup, learned counsel for the  respondent-Corporation, submitted that the balance amount  of arrears of rent, payment of water & sewerage tax and the  amount of interest as claimed by the appellant-Sansthan in its  calculation statement cannot be decided by this Court in the  absence of any satisfactory and tangible evidence appearing on  record of this appeal.  He next submitted that in terms of the  clause of the Agreement, this Court will be slow in exercise of  its jurisdiction under Article 142 of the Constitution of India  as the parties are governed by the procedure of the Arbitration  Act, which is speedy and less expensive for effective  adjudication of the dispute in issue.  20.   We have carefully considered the respective contentions  of the learned counsel for the parties. 21.   It is not in dispute that on 11.11.1980 the respondent- Corporation took from the appellant-Sansthan an area  measuring 14,925 sq. ft. on monthly rent under a lease  agreement.  In June 1981, the appellant-Sansthan let out  additional accommodation measuring 3000 sq. ft. area on  monthly rent for setting up Marketing Office of M/s Uptron  India Limited, which is the subsidiary of the respondent- Corporation.  The appellant-Sansthan filed suit for recovery of  arrears of rent and ejectment of the respondent-Corporation  from the demised premises.  In the trial court, the respondent- Corporation preferred two applications, i.e. one under Section  8(1) of the Arbitration Act and second under Order XI Rule 14

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CPC for summoning of the original lease deed from the  appellant-Sansthan.  The learned Additional District Judge  (Special Judge, E.C. Act), Lucknow, has rejected both the  applications.  The High Court in writ petition filed by the  respondent-Corporation against the order of the trial court,  allowed the application of the respondent-Corporation filed  under Section 8(1) of the Arbitration Act.  It was the specific  case of the respondent-Corporation before the High Court that  the original agreements are in the possession of the appellant- Sansthan, whereas the stand of the appellant-Sansthan was  that the original agreements are not in its possession.  The  respondent-Corporation placed on record of the trial court  photocopies of the agreements along with an application under  Section 8(1) of the Arbitration Act.  The High Court, in our  view, has rightly held that the photocopies of the lease  agreements could be taken on record under Section 8 of the  Arbitration Act for ascertaining the existence of arbitration  clause.  Thus, the dispute raised by the appellant-Sansthan  against the respondent-Corporation in terms of the arbitration  clause contained in the lease agreement is arbitral.  22.  Now, the question pressed before us is whether we  should, in exercise of our power and jurisdiction under Article  142 of the Constitution of India as submitted by Shri Shanti  Bhushan, grant the payment of balance of arrears of rent,  payment of balance arrears of water & sewerage tax and  interest on the arrears of rent to the appellant-Sansthan,  which amounts are disputed by the respondent-Corporation  before us.  The nature and ambit of the power of this Court  under Article 142 of the Constitution of India, no doubt, is  meant to do complete justice between the litigating parties,  but at the same time this Court has to bear in mind that the  power is conceived to meet the situations which cannot be  effectively and appropriately tackled by the existing provisions  of law.  Human and equitable approach should be balanced to  do complete justice to both the parties and not be tilted in  favour of either party without ignoring the statutory  provisions.  This Court in exercise of its jurisdiction can grant  appropriate relief where there is some manifest illegality, or  where there is manifest want of jurisdiction, or where some  palpable injustice is shown to have resulted to the parties.   23.    In the light of above factual aspects, the claim relating to  balance arrears of rent, balance arrears of water & sewerage  tax and rate of interest on payment of arrears of rent raised by  the appellant-Sansthan in its calculation statement filed  before this Court is at variance with the calculation statement  submitted by the respondent-Corporation.  The respondent- Corporation has denied the payment of interest to the  appellant-Sansthan.  The above-said disputed claims can be  appropriately tackled and adjudicated upon by the Arbitrator  in terms of the arbitration clause.  The main objectives of the  Arbitration Act is to make provision for an arbitral procedure  which is fair, efficient and capable of meeting the needs of the  specific arbitration and to minimise the supervisory role of  courts in the arbitral process and to permit an arbitral  Tribunal to use mediation, conciliation or other procedures  during the arbitral proceedings in settlement of disputes, etc.  etc.  This Court ordinarily will not be obliged to bypass the  provisions of the Arbitration and Conciliation Act, 1996 in  exercise of its power and jurisdiction under Article 142 of the  Constitution of India.   24.   In the backdrop of this case, we do not find it a fit case to  grant relief to the appellant-Sansthan as claimed by it in its  calculation statement which is vehemently disputed by the  respondent-Corporation.  Therefore, the contention of the  appellant-Sansthan that this Court can grant the payment of

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balance amount of arrears of rent and arrears of water &  sewerage tax and interest on arrears of rent detailed in  calculation statement submitted before this Court, does not  merit acceptance.    25.   Shri Shanti Bhushan, learned senior counsel, has fairly  stated that in Civil Suit No.16/2000 the appellant-Sansthan  has not claimed the arrears of rent and water & sewerage tax  for the additional area of 2000 sq. ft., which was subsequently  let out to the respondent-Corporation, as such the claim to  that extent in terms of the calculation statement filed before  this Court is not pressed in this appeal.  He submitted that for  claiming the relief for 2000 sq. ft. area, the appellant- Sansthan will take appropriate proceedings before the  Court/Forum.  We do not wish to express any views on this  aspect of the matter in this appeal.      26.   In this view of the matter, we do not find any perversity  or infirmity in the order of the High Court to warrant any  interference.    27.   For the afore-stated reasons, the appeal deserves and it  is accordingly dismissed.  The order of the learned Single  Judge dated 14.09.2004 passed in Writ Petition No.3388  (M/S) of 2004 shall stand affirmed. However, the parties are  left to bear their own costs.    28.   Before parting, we may make it clear that any observation  made in this judgment shall not be construed as an  expression of opinion on the merits of the case.  The dispute  raised by the parties shall be adjudicated upon by the  Arbitrator(s) on its own merit in accordance with law.