Calcutta High Court
Hindustan Petroleum Corporation … vs Rukmani Devi Bangur And Ors on 13 March, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
IN THE HIGH COURT AT CALCUTTA
(Commercial Division)
ORIGINAL SIDE
Present: Hon'ble Justice Shampa Sarkar
APOT- 421 of 2024
With
IA NO: GA-COM/1/2024
HINDUSTAN PETROLEUM CORPORATION LIMITED
VS
RUKMANI DEVI BANGUR AND ORS.
For the appellant : Mr. Sabyasachi choudhury, Senior Adv.
Mr. Biswanath Chatterjee, Adv.
Mr. Sobhan Kumar Pathak, Adv.
For the respondents : Mr. Ranjan Bachawat, Senior Adv.
Mr. Sarosij Dasgupta, Adv.
Ms. Ratnadipa Sarkar, Adv.
Ms. Rajeshwari Prasad, Adv.
Hearing concluded on: 06.02.2025
Judgment on: 13.03.2025
Shampa Sarkar, J.:-
1. This appeal arises out of an order dated November 7, 2024, passed by
the learned Arbitrator in the arbitral proceedings between Rukmani Devi
Bangur and others and Hindustan Petroleum Corporation Limited. The
appellant before this court is the respondent in the arbitral proceedings. The
respondents herein are the claimants.
2. The order impugned was passed by the learned Arbitrator, while
disposing of two applications filed by each party under Section 17 of the
Arbitration and Conciliation Act 1996, (hereinafter referred to as the said
2Act). The appellant is aggrieved by the direction to pay Rs.22,14,894/-, to
the respondents, within four weeks from the date of the order, towards
occupational charges.
3. According to Mr. Choudhury, learned Senior Advocate for the
appellant, the direction was beyond the scope of the applications filed by
either party for interim orders, under Section 17 of the said Act. Mr.
Choudhury submitted that the purported claim of the respondents for
occupational charges between December 1, 2023, and October 31, 2024,
should have been adjudicated in the arbitral proceedings. Part of the main
relief was allowed by an interim order. Moreover, whether any sum was due
and payable to the respondents, was a matter of evidence. The issue should
have been adjudicated at the final hearing of the proceedings, after taking
into consideration the evidence that would be adduced by the parties. The
appellant was willing to hand over vacant possession of the premises in
December 2023, and had requested the respondents to take over possession
of the property. The respondents did not take any step to facilitate the
process of handing over of the keys. The premises remained vacant, but
under lock and key. The appellant did not use the property after December
2023, and as such, could not be saddled with the burden of paying
occupational charges. The keys remained with the appellant only because
the respondents did not respond to the appellant’s request to take over
possession. This aspect was completely ignored by the learned Arbitrator.
Mr. Choudhury submitted that the learned Arbitrator failed to appreciate
such conduct of the respondents and directed payment of occupational
charges for the period between December 1, 2023, and October 31, 2024, at
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the rate of Rs.2,01,354/- per month (i.e. agreed rent). The appellant had
also filed an application under Section 17 of the said Act sometime in July
2024, but the same was disposed of after five months, along with the
application filed by the respondents. The appellant could not be penalized by
imposition of occupational charges, for the period when the premises
remained unoccupied and unutilized.
4. It was submitted that the respondents filed the application under
Section 17 of the said Act, for security of money, payment of occupational
charges and other reliefs, at a belated stage, i.e., on September 2, 2024. The
learned Arbitrator ought to have considered that the said application was an
afterthought, vexatious and mala fide. When the rate of rent was in dispute,
the quantum of money paid between January 2021 and November 2023,
was also in dispute and the rent between January 2021 and November 2023
had been paid even after expiry of lease on December 2020, the direction for
further payment was unwarranted. These issues were to be adjudicated
finally, before any direction could have been passed to pay the occupational
charges. Admittedly, as the appellant did not use the property after
December 2023. The plea of the appellants of tenancy by holding over
should have been considered by the learned Arbitrator. Rents were paid
between January 2021 and November 2023, which were duly accepted by
the respondents and invoices were also raised by the respondents.
5. According to Mr. Chowdhury, the learned Arbitrator failed to take into
consideration that between January 1, 2021 and November 2023, the
appellant continued as a monthly tenant in respect of the premises in
question. The notice calling upon the respondent to vacate the premises was
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issued sometime in July 2023, and not before. By a letter dated January 13,
2024, the respondents were informed that the appellant shifted from the
subject premises with effect from December 31, 2023. The appellant
requested the respondents to take over possession of the premises within
seven days from the date of receipt of the said letter. The respondents did
not respond positively to the said letter. Under such circumstances, the
appellant was compelled to deploy security guards in the subject premises
and the electricity could not be disconnected. The appellant was willing to
carry out a joint inspection of the premises before handing over the keys.
Due to the laches and negligence on the part of the respondents to accept
the request of the appellant with regard to holding a joint inspection and
their taking over the keys and possession of the premises in the month of
January 2023 itself, the vacant premises remained locked up, and the keys
remained in the custody of the appellant.
6. The failure of the respondents to take appropriate steps at the proper
time, in spite of requests by the appellant, could not be treated as delay in
handing over possession. The learned Arbitrator wrongly opined that, until
the premises were vacated and handed over, occupational charges would be
payable by the respondents at the admitted rate of rent. In this case, non-
delivery of vacant possession upon handing over keys were impossible, due
to the non-cooperation of the respondents. There was no deliberate intention
to occupy the premises even after shifting from the same.
7. Mr. Ranjan Bachawat, learned Senior Advocate for the respondents
submitted that, the appellant occupied the premises after expiry of the lease
on December 31, 2020. On the pretext of negotiating with the respondents
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for execution of a fresh deed of lease upon enhancement of monthly rent,
the appellant continued to occupy the premises without handing over the
keys. Substantial damage had been caused to the subject premises.
Payment of rent for the period January 2021 to November 2023, to the tune
of Rs.59,73,564.18/- could not be accepted as payment of the admitted
rent. A lesser amount had been paid.
8. The specific case of Mr. Bachawat was that the appellant may have
vacated the premises, but did not take any initiative to hand over the keys to
the landlord. Rather, the security guard was asked to take over the keys,
but the security guard was not authorized to accept the same. The process
of handing over vacant possession required certain formalities to be
complied with. A joint meeting between the parties should have been held.
The process would be complete, upon the landlord taking note of the
damage the property had sustained.
9. Mr. Bachawat pointed out that, upon analysis of the letters that were
on record, the learned Arbitrator came to a specific finding that the
appellant did not hand over possession of the premises to the respondents.
The keys were retained by the appellant. The respondents were not willing to
receive the keys to the premises from the appellants, without ascertaining
the damage caused to the subject premises during the past 23 years, when
the appellant was in possession.
10. The learned Arbitrator further came to the conclusion that, the
respondents did not pay any rent between December 2023 and October
2024. The letter dated February 8, 2024 indicated that the respondents gave
a proposal to the appellant to depute an authorized officer of the appellant
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for conducting a joint inspection of the subject premises for ascertainment
of the extent of damage that the subject premises had sustained and
thereafter, the keys would be taken over by the respondents/claimants. No
document was forthcoming from the end of the appellant which would
persuade the learned Arbitrator to hold that the appellant had taken an
initiative for the joint inspection of the premises before offering to hand over
the keys of the subject premises to the respondents. The appellant did not
respond to the letter dated February 8, 2024 written by the respondents.
11. In July 2024, the appellant filed an application for appointment of
special officers to carry out the inspection of the premises and for a direction
upon the appellant to accept the keys of the premises. According to the
learned Arbitrator, as the appellant did not respond positively to the
proposal of the respondents to conduct joint inspection of the premises
before taking over the keys of the subject premises, but came up with the
application for interim orders after five months for holding the joint
inspection, the respondents should be made liable to pay the admitted rent
at the rate of Rs.2,01,354/- per month for the period between December 1,
2023 and October 31, 2024, without prejudice to the rights and obligations
of the parties, which would be decided finally in the arbitration proceedings.
The appellants were adequately protected by the order.
12. Having heard learned counsel for the respective parties, this court
deems it necessary to document the facts leading to the filing of the
applications. Sometime in the year 2007, the appellant obtained lease of the
premises, upon execution of a registered deed of lease dated January 10,
2007, in respect of premises located at 6 Church Lane, 2nd floor, Kolkata,
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700001, measuring 12,592 square feet. The lease was for a period of 20
years, commencing from January 1, 2021 and ending on December 31,
2020. The monthly rent payable was Rs.2,01,354/. The lease deed also
contained a renewal clause. The appellant contended to have continued to
remain in the premises even after the expiry of the lease, upon payment of
rent on and from January 1, 2021, as a monthly tenant. The said rents were
allegedly accepted by the respondents by granting receipts and the appellant
claimed tenancy by holding over, for the period it was in possession, after
expiry of the lease. Allegedly, negotiations for grant of a fresh lease were
going on.
13. The respondents, on the other hand, determined the lease by a notice
dated July 21, 2023, and asked the appellant to hand over vacant
possession of the premises in question. The respondents refused to accept
monthly rent on and from December 2023, and also did not accept the keys
of the premises.
14. The negotiations failed. The appellant claimed to have vacated the
premises with effect from December 31, 2023. By a letter dated January 13,
2024, the appellant requested the respondents to take possession of the
premises and accept delivery of keys.
15. The specific case of the appellant was that, from December 2023, the
subject premises had been lying vacant and the appellant did not have any
other alternative, but to keep the same under lock and key, as the
respondents had refused to take over possession of the vacant premises,
with an ulterior motive and for monetary gain. The respondents invoked
arbitration and filed an application for appointment of an Arbitrator. The
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said application was allowed by the referral court and the learned Arbitrator
was appointed. The parties filed their statement of claim and defense. The
appellant filed two applications, one under Section 16 of the said Act and
one under Section 17 of the said Act. The application under Section 16 of
the said Act was dismissed on contest on October 1, 2024.
16. The prayers in the said application under Section 17 are quoted
below:-
“(a) An Order be passed appointing the Advocates-on-Record of
both parties as Special Officers without remuneration to make
inspection of the said subject premises being 6, Church Lane,
2nd Floor, Kolkata 700001;
(b) An Order be passed giving appropriate Direction upon the
Claimant for Accepting the keys of the subject premises from
the respondent;
(c) Alternatively, Joint Special Officers/Receivers SO appointed
to take possession of the subject premises and the keys of the
subject premises;
(d) Ad interim order in terms of prayers above;
(e) Costs of and incidentals to this application be borne by the
claimant;
(f) Such other or further order or orders be passed and/or
direction or directions be given in favour of the
Applicant/Respondent as this Learned Arbitral Tribunal may
deem fit and proper;”
17. The respondents also filed an application under Section 17 of the said
Act. The respondents prayed for the following orders:-
“a) The Respondent be directed to secure the amount in dispute by
depositing with this Learned Tribunal, a sum of Rs.9,47,67,472.62
or such other sum as may be determined by this Learned Tribunal,
as mentioned in paragraph 18 hereof;
b) The Respondent be directed to pay an amount of Rs.28,86,011.82
to Claimants, as mentioned in paragraph 19 hereof;
c) The Respondent be directed to pay occupational charges to the
Claimants at the rate of Rs.25,63,101.60 per month or such other
amount as may be determined by this Learned Tribunal, until the
present reference is decided by this Learned Tribunal or until the
Respondent hands over the vacant and peaceful physical
possession of the said property to the Claimants;
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d) Ad interim orders / directions be passed in terms of the prayers
above;
e) Costs of and incidental to this application be directed to be paid
by the Respondent; and
f) Such further or other order or orders be passed and/or direction
or directions be given as this Learned Arbitral Tribunal may deem
fit and proper.”
18. Both the applications were heard by the learned Arbitrator and
disposed of analogously, by the order impugned.
19. The issue before this court is whether the learned Arbitrator erred in
directing payment of admitted rent, in the facts and circumstances narrated
hereinabove. This court finds from the order impugned that in paragraph 2
of the order, the learned Arbitrator summarized the submissions of the
learned Senior Advocate for the appellant. The points raised by the appellant
were discussed.
20. In paragraphs 3 to 5, the submissions of the learned Senior Advocate
for the respondents were recorded in detail. Upon considering the rival
contentions of the parties, the learned Arbitrator rightly laid down the
parameters to be satisfied, for grant of interim orders as prayed for by the
respondents in their application. The learned Arbitrator observed as
follows:-
“(i) a strong prima facie case must be made out by the claimants,
(ii) the balance of convenience ought to be in favour of passing an
interim order i.e. the Tribunal is required to examine and weigh the
hardship caused to the claimants as consequences of refusal of
interim relief with the hardship caused to the respondent as
consequences of grant of interim relief,
(iii) a strong possibility of diminution of assets of the respondent must
be made out even if there may not be actual attempt to dispose of the
property by the respondent to defeat or delay realisation of impeding
arbitral Award, and
(iv) the Tribunal cannot ignore the basic principles of the Code of Civil
Procedure, though the power to grant interim relief u/s 17 of the
10Arbitration Act, 1996, is not curtailed by the rigours of procedural
technicalities under Civil Procedure Code.”
21. In my opinion, the learned Arbitrator rightly balanced the convenience
and inconvenience of the parties and weighed the hardships that may be
caused to the rival parties in refusing and/or allowing the prayers of the
respondents, before passing the order impugned. The fact that there was no
possibility of diminution of assets of the appellant was considered, before
denying the claim of the respondents for security of the amount of
Rs.9,47,67,472.62/-. The learned Arbitrator rightly held that the decision in
Bijay Kumar Manish Kumar HUF vs. Ashwin Bhanulal Desai reported in
2024 INSC 445, would not support the case of the respondents. The
amount claimed by the respondents in their application were denied on the
following grounds:-
a) It was, prima facie, established that the appellant had paid
monthly rent to the respondents during the period of negotiation
between January 1, 2021, and November 30, 2023, although, the
amount was disputed.
b) The amount of Rs.9,47,67,742/- which was calculated to be the
mesne profit could not be accepted to be final at the interim stage,
when the amount of rent was disputed by the appellant and the
total amount claimed as mesne profit was in the nature of
unliquidated damages.
c) The calculation could be finally arrived at, upon weighing the
evidence and at the final disposal.
22. The learned Arbitrator held that even if, a prima facie, case for
security had been made out, the quantum claimed as mesne profit was still
in the realm of un-ascertained damages.
23. Moreover, the learned Arbitrator was of the view that there was no
possibility of depletion of the assets of the respondents, which was a public
sector undertaking. The balance of convenience did not tilt in favour of the
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respondents, and an interim order to provide security for the amount
calculated and disclosed by Annexure C to the application under Section 17
of the said Act, was correctly denied.
24. In the opinion of the learned Arbitrator, respondents/claimants were
not entitled to any security of the estimated mesne profits, during the
pendency of the arbitral reference. Moreover, the learned Arbitrator also held
that the direction upon the appellant to pay occupational charges at the rate
of Rs.25,63,101/- per month, could not be decided without evidence. The
rate of rent was in dispute.
25. The next question for determination before the learned Arbitrator, i.e.,
whether the respondents were entitled to an interim order for the balance
amount of admitted rent on account of the appellant having occupied the
premises between January 2021 to November 2023, the learned Arbitrator
held that the dispute with regard to the amount of rent deposited during the
said period could not be resolved without scanning the evidence and, such
issue would be decided at the final stage of the hearing.
26. Thus, the learned Arbitrator refused to direct the respondents to pay
the balance amount of rent, over and above the amount of Rs.59,73,564/-,
which was deposited towards rent from January 1, 2021 to November 30,
2023.
27. The learned Arbitrator came to the conclusion that the appellant had
not deposited any rent in favour of the respondents during December 1,
2023 to October 31, 2024. The admitted position was that the keys of the
subject premises had not been handed over to the respondents till the date
of the order. The letter of the respondents dated February 8, 2024 clearly
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indicated that the respondents had given a proposal to the appellant to
depute an authorized officer for conducting a joint inspection of the subject
premises, for ascertainment of the damage that may have been caused to
the premises and thereafter, hand over the keys to the representative of the
respondents.
28. No document was produced by the appellant to show that any
initiative had been taken by the appellant for holding the joint inspection
and for handing over the keys. On July 19, 2024, the application was filed
by the appellant under Section 17 of the said Act, for appointment of special
officers to carry out the inspection work and for a direction upon the
respondents to accept the keys. The filing of the applications indicates that
the appellant had not taken steps for a joint inspection, earlier.
29. The learned Arbitrator was of the view that the respondents remained
silent, without responding to the proposal for holding a joint inspection
made by the respondents by letter dated February 8, 2024. The prayers of
the appellant in the application under Section 17 of the said Act were more
or less akin to the proposal of the respondents in their letter dated February
8, 2024.
30. Under such circumstances, the learned Arbitrator rightly held that the
period during which the keys were not handed over to the respondents,
should be treated to be in the occupation of the appellant and the appellant
should pay occupational charges at the rate of the applicable rent of
Rs.2,01,354/- per month and directed payment of Rs.22,14,894/-.
31. The learned Arbitraor also left the adjudication of the amount payable
as occupational charges, to be finally decided at the time of disposal of the
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arbitral proceeding. Thus, the payment and acceptance of the amount will
abide by the result of the arbitral proceedings. In the event the appellant is
successful in the arbitral proceeding, the said amount can be refunded to
the appellant and, if the appellant is unsuccessful, the said amount can be
adjusted with the mesne profit to be calculated finally in the arbitral
proceeding.
32. In the decision of Sarup Singh Gupta v. S. Jagdish Singh reported
in (2006) 4 SCC 205, the Hon’ble Apex Court noted and observed that, in
the event of termination of lease, the Courts had followed the practice of
permitting the landlord to receive rent every month by way of compensation
for the use and occupation of the premises at an amount equal to the
monthly rent payable by the tenant.
33. The delay in handing over the premises, prima facie, entitled the
respondents to the agreed rent. The respondents could have generated an
income from the property, had the premises been handed over in the proper
manner, in December, 2023, when the shifting took place.
34. Admittedly the physical possession of the premises in question, were
handed over in the presence of the learned Special Officers, who were
appointed by the learned Arbitrator.
35. The order impugned does not call for any interference. The amount
directed to be paid by the appellant shall be paid within a period of six
weeks from date of this judgment and the respondents shall accept the
amount. The only modification to the order impugned is that, the
respondents shall file an undertaking before the learned Arbitrator that, in
the event the appellant is successful and the claim is dismissed, the amount
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shall be refunded to the appellant within two weeks from the disposal of the
arbitral proceedings upon publication of the award.
36. Accordingly, the appeal and the connected application are disposed of.
37. Parties are directed to act on the server copy of this judgment.
(Shampa Sarkar, J.)
