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HSBC Electronic Data Processing Indian Private Limited, Hyderabad, Rep. By its Vice-President Corporate Services Lead v/s CEEDEEYES Software Technology Park Private Limited, Chennai

    Arb.O.P.(Comm.Div.) No. 374 of 2022
    Decided On, 30 November 2022
    At, High Court of Judicature at Madras
    For the Petitioner: M. Narendran for M/s. King and Partridge, Advocates. For the Respondent: K.V. Babu for M/s. N. Premkumar, Advocates.

Judgment Text
(Prayer: Arbitration Original Petition filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, pleased to (a) Appoint an arbitrator to adjudicate the disputes between the Petitioner and the Respondent in terms of the Arbitration Agreement/Lease Deed dated 10.01.2017; and (b) Direct the Respondent to pay costs.)

By citing the dispute resolution clause in the lease deed dated 10.12.2017, the petitioner seeks the constitution of an arbitral tribunal to adjudicate disputes arising out of the said lease deed.2. The petitioner states that the lease was for a term of three years running from 10.03.2017 to 09.03.2020. The petitioner had paid a sum of Rs.1,16,06,000/- as aggregate security deposit and asserts that the said security deposit was not refunded. Therefore, after issuing a lawyer-s notice dated 08.09.2021, the arbitration clause was invoked by issuing a notice dated 05.04.2022 under Section 21 of the Arbitration and Conciliation Act 1996 (the Arbitration Act). By reply dated 29.04.2022, the respondent refused to co-operate in the constitution of an arbitral tribunal on the ground that the dispute raised by the petitioner is barred under the Arbitration Act. On instructions, learned counsel for the petitioner submits that the set of keys in the possession of the petitioner will be handed over to learned counsel for the respondent during the course of the day.

3. Learned counsel for the petitioner relies upon clause 26 of the lease deed. The said clause 26 is set out below:


All matters of, disputes, differences, and claims whatsoever which shall at any time arise between the parties hereto or their respective representatives or any of them touching or concerning this deed and all other documents in pursuance hereof or the construction, meaning, operations or liabilities of the parties hereto respectively or their respective representatives or any of them under or by virtue of this deed or otherwise or touching the subject matter hereof or arising out of or in relation thereto shall be resolved by mutual discussions. If such discussions are unsuccessful, the same shall be referred to arbitration by a sole arbitrator mutually appointed by the Parties in accordance with the provisions of the Arbitration and Conciliation Act, 1996 for the time being in force. Such arbitration proceedings will take place in Chennai only. The language of the Arbitration shall be English.”

Since the Section 21 notice did not result in the constitution of the arbitral tribunal, it is submitted that this petition is liable to be allowed.

4. Learned counsel for the respondent opposes this petition primarily on the ground that the dispute is within the scope of the Tamil Nadu Regulation of Rights and Responsibilities of Landlords and Tenants Act 2017 (TN Act 42 of 2017). By referring to Section 11 thereof, it is submitted that security deposits, including the refund thereof, are expressly regulated by Section 11. Learned counsel also refers to Sections 34 and 40 and points out that the jurisdiction of a civil court has been barred under the said provisions. A fortiori, learned counsel submits that an arbitral tribunal cannot exercise jurisdiction. He distinguishes the judgment of the Hon-ble Supreme Court in Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, by pointing out that the said judgment applies only if the dispute is governed by the provisions of the Transfer of Property Act, 1882, and not when the disputes are governed by provisions of a special statute. In support of this contention, he relies upon the judgment of the Calcutta High Court in Swaroop Sen v. Ajay Kumar Boral and another (2021) SCC OnLine Cal 2664, particularly paragraph 11 thereof, and the judgment of the Hon-ble Supreme Court in Suresh Shah v. Hipad Technology India Private Limited (2021) 1 SCC 529, particularly paragraph 18 thereof.

5. In view of the judgment of the Hon-ble Supreme Court in Vidya Drolia and several judgments on the scope of Section 11 which followed the said judgment, the question that arises for consideration is whether this dispute is manifestly non-arbitrable. For purposes of deciding a Section 11 petition, a prima facie and not an in depth review is called for. When TN Act 42 of 2017 is examined prima facie it does not appear to be a legislation which comprehensively deals with every facet of landlord tenant disputes. Sub section 2 of Section 40 prima facie supports such conclusion.

6. Given the fact that the TN Act 42 of 2017 does not appear prima facie to be comprehensive, it cannot be concluded that the present dispute is manifestly non-arbitrable. Consequently, the objection on this ground is rejected. However, it is open to the respond

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ent to canvass this contention before the arbitral tribunal. 7. For the reasons set out above, this Arb.O.P.(Com. Div.) No.374 of 022 is allowed by appointing Mr. Justice V.Parthiban, retired Judge of this Court, No.5069, Z Block, 12th Street, Anna Nagar, Chennai-40 (mobile no.9444094401) as the sole Arbitrator. The Arbitrator is requested to enter upon reference and adjudicate the dispute. It is open to the Arbitrator to fix the fees and expenses in relation to the arbitral proceedings in consultation with the parties.