Rajinder Oberoi vs State Of J&K & Ors

Sanjay Dhar, J

1) The petitioner has filed the instant writ petition challenging order No.NAC/Tg/02.Estt/438 dated 02.10.2002, passed by Secretary, Municipal Committee, Gulmarg/Tangmarg, whereby lease in favour of the petitioner in respect of the building situated at site No.221-A, Gulmarg, has been cancelled. Challenge has also been thrown to communication No.DULB/CC/NF/2708 dated 02.06.2004, issued by Director, Urban Local Bodies, Kashmir, as also communication No.DULB/Gen/1087/ 2076 dated 11.06.2004 along with corrigendum dated 23.06.2004, whereby allotment of the aforesaid property has been made in favour of Mr. Ghulam Qadir Palla, respondent No.7 herein.

2) It is the case of the petitioner that the property in question was leased out to him by virtue of a lease deed dated 17th May, 1989, executed between her and respondent No.2, whereafter a supplementary lease deed was executed on 16th July, 1989, and a clause was incorporated in the lease deed whereby the petitioner was given right to mortgage the lease hold rights for the purpose of raising loan in connection with construction and commissioning of the project during the currency of the lease. It is averred that the building was leased out to the petitioner for carrying on the business of hotel/restaurant and bar for promotion of tourism initially for a period of 15 years renewable for a further period of 15 years. According to the petitioner, pursuant to the execution of the lease deed, she took over possession of the demised premises whereafter she obtained loan of Rs.40.00 lacs from the State Financial Corporation for the purpose of completion of construction work at the site. It is averred that due to onset of militancy in the year 1990, the petitioner had to migrate outside Kashmir Valley, as such, she could not undertake further construction activities in the demised premises. However, when the valley limped back to normalcy, the petitioner returned to the Valley and started completing the balance construction work but due to her political affiliations, respondents No.2 and 3 started interfering in petitioner’s completion of construction work on the demised premises.

3) The petitioner, it seems, had filed a writ petition bearing No.08/2004 challenging the action of respondents No.2 and 3. In the objections filed by the respondents to the said writ petition, a stand was taken by them that the lease of the demised premises in favour of the petitioner has been cancelled in terms of communication dated 2nd October, 2002. Accordingly, the petitioner withdrew the aforesaid writ petition and filed the instant petition challenging the communication of cancellation of lease deed.

4) It is contended in the petition that the lease of the petitioner relating to the demised premises has been cancelled during the currency of initial lease period of 15 years in violation of covenants of the lease deed. It is further contended that the petitioner has raised huge loans by mortgaging the leasehold rights in terms of the covenants of the lease deed and by cancellation of the lease deed, the petitioner has been put to loss. It is also contended that the lease of the petitioner has been terminated without serving any notice to her. It is further contended that the covenants of the lease deed do not permit the respondents to cancel the lease deed on the grounds other than those incorporated in the said lease deed and, as such, the action of the respondents is without sanction of law.

5) The official respondents have contested the writ petition by filing a reply thereto. At the very outset, the respondents have submitted that the subject matter of the writ petition is covered by the Arbitration clause contained in the lease deed and the same is required to be referred to Arbitrator in view of the provisions contained in Section 8(1) of the Arbitration and Conciliation Act. It has been submitted that as per Clause (24) of the lease deed, which is subject matter of the instant writ petition, the disputes arising in this case are required to be referred to arbitration. On merits, the official respondents have submitted that the petitioner failed to put the demised premises to the desired use and she did not complete the construction within a reasonable time. It has been further submitted that the petitioner left the construction incomplete and did not start any hotel business in the premises thereby depriving the Municipal Committee of rental income. It has been also contended that the petitioner has failed to maintain the demised premises in accordance with the terms of the agreement thereby causing huge losses to the valuable asset belonging to the Municipal Committee. It is averred that the petitioner has been served with notices and a notice was also published in the newspaper on 17.02.1999 but despite this, the petitioner did not respond to these notices compelling the official respondents to cancel the lease deed.

6) It is pertinent to mention here that respondent No.7 has not chosen to contest the petition and he has been set exparte in terms of order dated 30.03.2016.

7) I have heard learned counsel for the parties and perused the material on record.

8) During the course of hearing, the parties have expressed their inclination to refer the dispute which has arisen between them to arbitration in terms of Clause (24) of the lease deed, which reads as under:

“24. In case of any dispute/difference or question if any arise between the parties in respect of any provision of this agreement as the subject matter thereof, shall be referred to arbitration mutually agreed the decision of the arbitration will be final and binding upon the parties.

9) From a perusal of the aforesaid clause, it is clear that the disputes or differences arising between the parties in respect of the provisions of the lease deed and the subject matter thereof are required to be referred to the arbitration. In fact, the official respondents have, at the very first available opportunity, submitted in their reply that the subject matter of the case is governed by the arbitration clause.

10) As already noted, the dispute between the parties relating to the lease of the premises in question made in favour of the petitioner vide the lease deed dated 17th of May, 1989. While the petitioner claims that the lease has been cancelled on the grounds that were not available to the official respondents in terms of the lease deed and that the official respondents could not have cancelled her lease during the currency of the lease period, the official respondents, on the other hand, have disputed this and submitted that their action is perfectly in accordance with the terms of the lease deed, inasmuch as the petitioner had failed to complete the construction within a reasonable period and she had failed to setup the hotel/restaurant, the purpose for which lease was granted in her favour. Having regard to the nature of controversy involved in the case, it is clear that the dispute between the parties arises out of the terms of the lease deed which is subject matter of the instant petition. The same squarely falls within the purview of the Arbitration clause contained in the lease deed.

11) Accordingly, the dispute arising in this petition between the parties is referred to the arbitration and Hon’ble Mr. Justice M. K. Hanjura, former Judge of this Court, is appointed as the sole Arbitrator for determination of the dispute. The learned Arbitrator shall enter upon the reference and proceed with the arbitral proceedings in accordance with the law governing the field. The learned Arbitrator shall fix his own fee.

12) The petition is disposed of in above terms.

13) The record produced by the respondents be returned back.

14) Copy of the order be sent to the learned Arbitrator for information.