Himachal Shiksha Samiti vs H.P. Nagar Vikash Pradhikaran

A.L. Vaidya, J.—The Plaintiff is a society registered under the Societies Registration Act, 1960 while the Defendant is a body constituted under the H.P. Town and Country Planning Act, 1977 and has taken over the assets and liabilities of the erstwhile Shimla Development Authority, which had also been created under the same Act.

The Plaintiff has prayed for following reliefs to be granted in the present proceedings:

(a) the Defendant may be directed to file in Court the Arbitration agreement between the parties contained in lease deed dated 7.1.1992;

(b) the dispute between the parties may be referred to the sole arbitration of any disinterested arbitrator, appointed by this Hon''ble Court;

(c) the Plaintiff may be allowed the cost of the suit and such other further relief as may be just and proper in the facts and circumstances of the case and justice may be done with the Plaintiff.

The aforesaid reliefs have been based upon the pleas that vide lease dated 7th January, 1992, the Plaintiff has been allotted a plot of land measuring 19.4 bighas comprised in khasra number(s) 12/2, 13, 49/14/2, 15/2, 53/20/2 situate in mauja Kasumpti, by the Defendant on lease hold basis for a term of 99 years for establishing an educational institution and the aforesaid lease deed was duly registered on 7th January, 1991 at Shimla. It has been further pleaded that as per term and condition No. 3 of the lease deed, Plaintiff was required to erect a building upon the said land within a period of five years, from the date of offer of possession. The building was accordingly required to be constructed by the end of year 1996. Plaintiff further averred that on 13th January, 1995, the Defendant through its Chief Administrator, issued a show cause notice requiring the Plaintiff to show cause as to why the building has not been constructed within two years, basing its contention on the allotment letter dated 5th August, 1991, which letter was subsequently converted into lease deed dated 7th January, 1992, referred to above. The Plaintiff replied the notice vide letter dated 23rd January,1995, pointing out the fact that as per contract contained in registered lease deed dated 7th January, 1992 the period allowed for constructing the building was of five years and that the construction was in advance stage. Inspite of satisfactorily explaining the matter, Defendant in most mechanical manner vide letter dated 1st February,1995 cancelled the allotment of the land and further vide letter dated 15th February, 1995 asked the Plaintiff to clear the site. It has been alleged that as a result of the said illegal action of the Defendant a dispute has arisen between the parties, relating to the interpretation of the terms of the lease deed and also the legality of the action taken by the Chief Administrator/Chief Engineer of the Defendant, whereby the allotment was cancelled.

Plaintiff further pleaded that Arbitration Clause has been embodied as Clause-(IX) in the lease deed, thereof requiring all disputes and differences arising under the deed or in connection therewith to be referred to the sole Arbitration of the C.E.O.-cum-Chief Engineer or any other person appointed by him. According to the Plaintiff, since the actions of the Chief Administrator and Chief Engineer of the Defendant who happened to be the successors of (C.E.O.-cum-Chief Engineer) were under challenge, the Chief Administrator or the Chief Engineer have rendered themselves incapable of Arbitrating over the dispute, since they cannot be permitted to be a judge in their own cause and, as such, the dispute between the parties, which is covered by the Arbitration agreement between them, was liable to be referred to the sole arbitration of any disinterested/impartial Arbitrator.

Defendant has contested the present proceedings and in reply, it has been submitted that lease of the Plaintiff has been determined in accordance with the terms and conditions of the lease deed. It has been further pleaded that according to the allotment letter, which forms part of the lease deed, the Plaintiff was required to complete the construction within a period of two years and as the Plaintiff has not been able to complete the construction within the stipulated period and has violated the other terms and conditions of the lease deed, therefore, he was liable for eviction. Condition of five years, for completion of the construction, according to the Defendant pertains to commercial establishment and was not at all applicable to the case of the Plaintiff. The other averments as made by the Plaintiff, have not been admitted, by the Defendant in its reply.

The learned Counsel for the Defendant at the very outset has rightly submitted that on the basis of the terms and conditions of the lease deed, under reference, a dispute has arisen between the parties, which required to be settled through arbitration, as agreed between the parties. In this behalf Clause-(IX) of the lease deed has been referred, which for the sake of convenience is being reproduced hereunder:

In the event of any question dispute or difference arising under these presents or in connection therewith the same shall be referred to the sole arbitration of the CE0-cum-Chief Engineer, Shimla Development Authority or any other person appointed by him as a sole Arbitrator, whose decision shall be final and binding on the parties. Such Arbitration shall be under the provisions of Arbitration Act, 1948.

Defendant has got no objection in referring the dispute to the Arbitration, which is the relief sought by the Plaintiff also. Otherwise also, as per pleading of the parties, definitely a dispute has arisen between the parties, which can be sorted out as per terms of Clause (IX) as referred to above. The alleged dispute has arisen relating to the interpretation of the terms of the lease deed and also the legality of the action taken by the Chief Administrator/Chief Engineer of the Defendant, whereby the allotment of the land has been cancelled and the Plaintiff has been directed to clear the site.

The sole point to be gone into in the present proceedings, as submitted by the learned Counsel for the parties has been about the person to be appointed as Arbitrator.

The learned Counsel again have absolutely no dispute to the proposition that in case of present nature, appointment of Arbitrator can be made in the following three manners:

As per Clause (IX) of the lease deed, dispute is to be referred to the arbitration of CEO-cum-Chief Engineer, Shimla Development Authority, or any other person appointed by him as a sole Arbitrator. In the present case, the present Defendant admittedly being the successor of C.E.O.-cum-Chief Engineer, Shimla Development Authority, therefore, the matter can be referred to the sole Arbitration of Chief Administrator of the Defendant or any other person appointed by him.

In case, the person referred to above, cannot be legally appointed, as per Clause (IX) of the lease deed a person agreeable to both of the parties can be appointed as a sole arbitrator.

In case, parties do not agree on the name of any common person to be appointed as Arbitrator, in that event, Court has got ample power to appoint an Arbitrator to whom the dispute can be referred for making his award.

It has been rightly contended on behalf of the Plaintiff, that the Chief Administrator of H.P. Nagar Vikas Pradhikaran, who is Defendant himself, cannot be made a judge to decide the dispute and with this background it is submitted that neither Chief Administrator nor any person appointed by him should be made an Arbitrator in the present case.

There are two principles which govern natural justice. The first principle is that nobody shall act as a Judge in his own cause. The principle corresponds to the Latin maxim "Nemo debet esse judex in propria causa". This principle means that justice should not only be done, but should manifestly appear to be done. Needless to say, justice appears to be done, only when the dispenser of justice is a detached person, free from bias. Such person should neither be a party directly to the subject matter of dispute nor should be interested in that indirectly by a predisposition in favour of or against the parties. Here, in the present case Chief Administrator is a party himself and under the aforesaid principle of natural justice, it would not be legally admissible to make him a judge of the dispute of which he was one of the party. The bias in that event would be writ large, no matter, the Chief Administrator is a man of integrity and impartiality, in that event in case the Chief Administrator is made arbitrator, justice shall not appear to be done, as was the requirement of principles of natural justice. Clause (1), as such, will not be applicable.

The Court has asked the parties to propose various names, out of whom, some body could be appointed as an Arbitrator, but sorry to note names proposed in the court by the parties did not contain even a single name for which the parties agreed.

Lastly, both the learned Counsel have prayed that an Arbitrator be appointed by the Court itself and they have in this behalf urged that in order to decide the present dispute between the parties, a person having a legal background shall be helpful in disposing of the matter, referred to him. It has been submitted that a lawyer, if appointed, as Arbitrator in this case, will meet the ends of justice.

In view of the foregoing reasons, present application is accepted and as a consequence thereof Kanwar Kuldip Singh, Advocate, of this High Court is appointed as an Arbitrator to whom the dispute be referred for making an award after hearing the parties in accordance with law. The Arbitrator''s provisional fee is fixed at Rs. 10,000/- which shall be equally shared by the parties. Present suit stands accordingly disposed of. The Registry is directed to do the follow up action without any undue delay.

O.M.P. No. 21 of 1995.

In the aforesaid arbitration-proceedings, the present petition has been preferred by the Plaintiff-applicant with the prayer that Defendant be restrained by means of ad-interim injunction from dispossessing the applicant from the land given to it on lease vide lease dated 7th January, 1992, during the pendency of the arbitration proceedings and also from giving effect to the notices dated 1st February, 1995 and 15th February, 1995 during the arbitration proceedings.

It has been pleaded in the present petition that on the basis of the perusal of the suit referred to above, it would be clear that Plaintiff-applicant has a strong prima-facie case with all chances of its success. It has also been alleged that the Defendant has asked the applicant to clear the site within three days of 15.2.1995 and the Defendant was likely to use force to dispossess the applicant and the applicant in such an eventuality will suffer irreparable loss and injury for which no monitary compensation would'' be afforded, especially when the applicant has invested very substantial amount in the construction and a block of the building has already reached the third slab level. It is also averred that students are studying in the school and are also likely to suffer irreparable loss in the event of dispossession of the applicant. According to the applicant already a school is running in the premises and the applicant has also provided residential accommodation to the students in the disputed site and has invested huge amount which makes balance of convenience in favour of the applicant.

This petition has been contested on behalf of the Defendant-Respondent.

In a case of present nature, Plaintiff has to first of all establish a prima-facie case in his favour, which means the prima-facie existence of a right and its infringement by the opposite party. The Plaintiff-app1icant is a society and running a school on the land under reference, where some building has already been constructed and students are not only being taught but some residential accommodation has also been provided. As referred earlier, the disputed site has been allotted in favour of the applicant, through a lease deed, for a period of 99 years, under certain terms and conditions of the lease deed. Regarding the cancellation of the lease deed and handing over the site in favour of the Defendant coupled with the interpretation of various terms and conditions of the lease deed a dispute has arisen between the parties which has already been ordered to be referred for arbitration. In such circumstances, prima-facie Plaintiff-applicant has a right as a lessee to remain in occupation of the leased premises alongwith constructions raised thereupon till the lease is held to have been legally cancelled. Needless to say, order of cancellation is under arbitration and in case, operation of the same is not stayed or the Plaintiff-applicant is evicted from the leased land, the entire arbitration proceedings shall be rendered infructuous and irreparable loss in a way would be caused not only to the Plaintiff-applicant but to the students who are being imparted education in the school, constructed on the leased land. The balance of convenience, as such, would be in favour of the grant of reliefs asked for.

Thus, on the basis of the aforesaid circumstances, present in this case, it would be in the interest of justice that operations of letters dated ,1.2.1995 and 15.2.1995, with respect to the cancellation of the lease deed and clearing of the site within three days are suspended during the finalisation of the arbitration proceedings and the Defendant-Respondent during those proceedings shall not in any manner dispossess or try to dispossess the applicant-Plaintiff from the disputed land, under reference. This petition stands disposed of accordingly.