Bangalore District Court
M/S Bioelectric Private Limited vs M/S Mobileum Technologies Private … on 16 January, 2025
Com AP 89/2024
KABC170017422024
IN THE COURT OF LXXXV ADDL. CITY CIVIL &
SESSIONS JUDGE, AT BENGALURU (CCH-86)
(Commercial Court)
THIS THE 16th DAY OF JANUARY 2025
PRESENT:
SRI.ARJUN. S. MALLUR. B.A.L.LL.B.,
LXXXV ADDL. CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com.A.P.NO.89/2024
BETWEEN:
M/S Bioelectric Private Limited,
A Company incorporated under the,
Companies Act, 1956,
Having its office At No.7, 9th Main,
Jayanagar 2nd Block,
Bengaluru-560 011.
Rep By Its Authorized Representative
Mr. L Jayarama
: PETITIONER/APPLICANT
(Represented by Sri. H V Devaraju Advocate)
AND
1
Com AP 89/2024
M/S Mobileum Technologies Private Limited
A Company incorporated under the,
Provisions of Companies Act, 1956, Having its registered
office at- At 7th Floor, Sigma Technology Street,
Hiranandani Gardens, Powai, Mumbai-400 076.
Rep By Its Authorized Signatory Mr. Nitesh Ranjan,
S/O. Mr. A.K.Srinavstava, Aged about 48 Years
DEFENDANT/CLAIMANT
(Represented by M/S. Mirji and Company, Advocate)
Date of Institution of 27-06-2024
the suit
Nature of the suit Arbitration Suit under Sec. 34
(suit on pronote, suit of Arbitration & Conciliation
for declaration & Act, 1996
Possession, Suit for
injunction etc.)
Date of
commencement of ---
recording of evidence
Date on which 16-01-2025
judgment was
pronounced
Total Duration · Year/s Month/s Day/s
· 00 06 20
(ARJUN. S. MALLUR)
LXXXV Addl.City Civil & Sessions Judge,
Bengaluru.
2
Com AP 89/2024
JUDGMENT
Application under Sec.34 of the Arbitration and
Conciliation Act 1996 seeking setting aside of the arbitral
award passed by the Learned Sole Arbitrator in A.C
No.384/2022 dated 28.03.2024.
Parties are referred as per their rank before the
Arbitral Tribunal.
2. Facts in brief is as under:-
The schedule premises comprises of an office
premises situated at 2nd floor, No.15, Shezan Lavelle,
Walton Road, Bengaluru-560001 having a super built-up
area of 8160 sq.ft bounded on the North:CSI property,
South: Walton Road, West: No.14 Walton Road, East: by
Lavelle Road. The claimant had taken on lease the
schedule property from the respondent and after
negotiations claimant and the respondent entered into a
registered lease deed dated 15.10.2020. The duration of
the lease is for a period of two years commencing from
15.08.2020 to 14.08.2022. Under Clause 20(iii) of the
lease deed the lessee was entitled to terminate the lease3
Com AP 89/2024with a prior written notice three months before the expiry
of the lease period without assigning any reasons or
causes for termination. The claimant exercised its option
of termination of lease by issuing a three months prior
notice on 01.04.2021 ending on 30.06.2021 and
requested the respondent to return the security deposit of
Rs.69,36,000/-. The respondent denied the right of the
claimant in terminating the lease and issued a reply notice
requesting the claimant to continue the lease till expiry by
efflux of time. Subsequently the claimant refused to
extend the lease any further beyond 30.06.2021 and
issued invocation notice seeking appointment of an
Arbitrator. The respondent refused consent for
appointment of an Arbitrator as suggested by the claimant
which led the claimant to file CMP No.356/2022 in which
the present sole arbitrator came to be appointed.
3. On service of notice the respondent appeared before
the Learned Arbitrator and filed his statement of defense
and also a counter claim contending that the claimant had
no right to terminate the tenancy before expiry of lease in
view of the correspondence between the parties wherein
the claimant has expressed his willingness to continue
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Com AP 89/2024
with the lease not only till expiry of the present lease
period but also renew the same subsequently. It is
contended in the statement of defense that in view of the
promises made by the claimant in the correspondences
made with the respondent the claimant is not supposed to
terminate the tenancy. The respondent further contended
that as the claimant could not terminate the lease he is
liable to pay rents till completion of the lease period i.e.,
14.08.2022. In that regard the respondent has raised the
bills. It is also contended that as the claimant terminated
the tenancy before the expiry of the lease period the
respondent has sustained substantial damages and
therefore raised the counter claim directing the claimant
to pay a sum of Rs.1,68,42,283/- from July 2021 till the
date of counter claim and also for interest amount of
Rs.1,46,03,968/- at 18% from the date of counter claim
till realization.
4. The claimant files his rejoinder to the counter claim
denying the allegations made in the counter claim and
contended that under clause 20(iii) of the registered
leased deed there was an absolute right for the claimant
to terminate the tenancy and therefore there is no
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Com AP 89/2024
requirement of claimant paying any amount as damages
as claimed under the counter claim.
5. Based on the above pleadings the Learned Arbitrator
has raised four issues. The claimant examined one
witnesses P.W.1 and got marked documents at Ex.P.1 to
P.7. The respondent examined one witness as R.W.1 and
got marked documents at Ex.R.1 to Ex.P.21.
6. Learned Sole Arbitrator upon considering the evidence
on record and after hearing the arguments of both sides
vide award dated 28.03.2024 allowed the claim in part
awarding a sum of Rs.69,36,000/- to the claimant being
the security deposit and interest at the rate of 12% p.a.
from 01.07.2021 till the date of award and future interest
at 6% p.a. from the date of award till realization. The
respondent was also awarded to receive the admitted
rents from 01.07.2021 to 04.08.2021 with interest at
12% p.a. from 01.07.2021 till the date of award and at
6% p.a. from the date of award till realization plus
additional interest at 12% p.a..
7. Aggrieved by the said award the respondent has filed
this application contending that the award passed by the
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Com AP 89/2024
Learned Sole Arbitrator is without any basis and without
considering the terms of the lease and without properly
appreciating the terms of the contract between the
parties. It is contended that the Learned Arbitrator has
grossly misread the email correspondences at Ex.R.1 to
R.5 which were duly admitted by the P.W.1 in his cross
examination which provided for an option to renew the
lease for further periods upon mutually agreed terms. It is
contended that the Learned Arbitrator proceeded to
interpret clause 20 of the lease agreement without
considering the clause 1 to 3 and 5 as termination
depended on those clauses and therefore the Learned
Arbitrator grossly erred in concluding that the claimant
was entitled to terminate the lease by invoking clause 20.
It is submitted that the Learned Arbitrator has not taken
into consideration the lease deed as a whole but has pick
and chose independent causes and arrived at an
erroneous conclusion. It is further contended that the
Learned Arbitrator failed to consider that the claimant was
not entitled to invoke the Arbitration Clause as terms of
the lease required settlement of disputes through mutual
discussions and only when no decision could be arrived
under mutual discussion the matter was required to be
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Com AP 89/2024
taken for arbitration. It is contended that the award
passed by the Learned Arbitrator is patently erroneous
and not sustainable and on these grounds sought for
setting aside the award and allow the counter claim raised
by the respondent with interest as prayed.
8. On service of notice the respondent/claimant appeared
and filed detailed statement of objections contending that
the Arbitral award passed by the Learned Sole Arbitrator
is based upon the prevailing terms and conditions of the
registered lease agreement and that the Learned
Arbitrator has meticulously considered the evidence on
record and has arrived at a just and proper conclusion. It
is submitted that the grounds urged in the petition is
more in the nature of an appeal memorandum which
cannot be permitted under Sec.34 of the Arbitration and
Conciliation Act and is against the precedents said down
by the Apex Court in various judgments. It is submitted
that the allegations made in the petition that the Learned
Arbitrator has ignored vital evidence is totally unjust and
improper and that there is absolutely no material to infer
that the award suffers from any patent illegality as held
by the Apex Court in the Delhi Metro Express Private
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Com AP 89/2024
Limited Case. The claimant would further contend that the
only issue that was required to be decided by the
Arbitrator was whether the termination of lease was in
accordance with the clause of the registered lease deed
and after considering the material on record has rightly
concluded that termination under clause 20(iii) is
absolutely valid and proper. It is submitted that the
respondent has failed to make out any case to infer that
the award passed is against public policy or there is any
patent illegality. On these grounds the respondent seeks
for dismissing the petition with exemplary costs.
9. Heard the Learned Counsel appearing for the
petitioner and the Learned Counsel for the respondent
and perused the entire material on record. Learned
Counsel for the petitioner has also filed the sequence of
events in a tabular form and also has relied upon several
decisions of the Apex Court.
10. The points that arise for my consideration are as
under:
(1) Whether the petitioner substantiates that the
impugned award passed by the Learned Sole9
Com AP 89/2024Arbitrator in A.C.No.384/2022 dated
28.03.2024 is in breach of public Policy of
Indian Law and suffers from patent illegality
appearing on the face of it requiring it to be set
aside?
(2) What order?
11. My finding on the above Points are: –
Point No.1: In the Negative.
Point No.2: As per final order
for the following:
REASONS
12. POINT NO.1:- It is not in dispute that the claimant
was a tenant under the respondent in the schedule
premises. It is also not in dispute that the tenancy was
under the registered lease deed dated 15.10.2020 which
was initially for a period of two years with an option for
renewal subject to mutual understanding and the lease
was to commence from 15.08.2020 till 14.08.2022. It is
also not in dispute that under the said lease the claimant
has made a security deposit of Rs.69,36,000/-. The
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Com AP 89/2024
amount of monthly rents payable is also not in dispute
between the parties.
13. The bone of contention between the parties is with
respect to the claimant issuing the termination notice as
per the clause 20(iii) of the registered lease deed
terminating the lease within the two years period by
issuing a three months prior notice and asking for refund
of the security deposit. According to the claimant clause
20(iii) provided for termination of the lease at the option
of the lessee i.e., the tenant by invoking three months
prior notice. Per contra it is the contention of the
respondent that the claimant could not have terminated
the lease before the expiry of the period of two years and
the correspondences between the respondent and the
claimant indicated willingness to extend the lease
mutually and therefore the termination is bad in law and
hence award could not be sustained.
14. Before appreciating the rival contentions it would be
just and proper to refer to the decisions relied upon by
the Learned Counsel for the petitioner and take note of
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Com AP 89/2024
the observations made by the Apex Court and the Hon’ble
Delhi High Court in the following decisions:
1. (2019) 15 SCC 131, Ssangyong Engineering and
Construction Company Limited vs. National
Highways Authority of India (NHAI), wherein at para
31 it has been observed as under:
Para 31: The third juristic principle is that a
decision which is perverse or so irrational that no
reasonable person would have arrived at the same
is important and requires some degree of
explanation. It is settled law that where:
(i) a finding is based on no evidence, or
(ii) an Arbitral Tribunal takes into account
something irrelevant to the decision which it
arrives at; or
(iii) ignores vital evidence in arriving at its
decision, such decision would necessarily be
perverse.
2. AIR 2021 Supreme Court 4661, PSA SICAL
Terminals Pvt. Ltd. vs. Board of Trustees of
V.O.Chidambranar Port Trust Tuticorin and Others,
where in with respect to scope of Sec.34 of the Arbitration
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Com AP 89/2024
and Conciliation Act it has been observed in para 42 and
43 as under:
Para 42: It will thus appear to be a more than
settled legal position, that in an application under
Section 34, the court is not expected to act as an
appellate court and reappreciate the evidence. The
scope of interference would be limited to grounds
provided under Section 34 of the Arbitration Act.
The interference would be so warranted when the
award is in violation of “public policy of India”,
which has been held to mean “the fundamental
policy of Indian law”. A judicial intervention on
account of interfering on the merits of the award
would not be permissible. However, the principles
of natural justice as contained in Section 18 and
34(2)(a)(iii) of the Arbitration Act would continue
to be the grounds of challenge of an award. The
ground for interference on the basis that the
award is in conflict with justice or morality is now
to be understood as a conflict with the “most basic
notions of morality or justice”. It is only such
arbitral awards that shock the conscience of the
court, that can be set aside on the said ground. An
award would be set aside on the ground of patent
illegality appearing on the face of the award and
as such, which goes to the roots of the matter.
However, an illegality with regard to a mere
erroneous application of law would not be a
ground for interference. Equally, reappreciation of
evidence would not be permissible on the ground
of patent illegality appearing on the face of the
award.
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Com AP 89/2024
Para 43: A decision which is perverse, though
would not be a ground for challenge under “public
policy of India”, would certainly amount to a
patent illegality appearing on the face of the
award. However, a finding based on no evidence
at all or an award which ignores vital evidence in
arriving at its decision would be perverse and
liable to be set aside on the ground of patent
illegality.
3. (2022) 1 SCC 131, Delhi Airport Metro Express
Private Limited vs. Delhi Metro Rail Corporation
Limited, wherein at para 29 of the judgment it has been
observed as under:
Para 29: Patent illegality should be illegality which
goes to the root of the matter. In other words,
every error of law committed by the Arbitral
Tribunal would not fall within the expression
‘patent illegality’. Likewise, erroneous application
of law cannot be categorised as patent illegality.
In addition, contravention of law not linked to
public policy or public interest is beyond the scope
of the expression ‘patent illegality’. What is
prohibited is for courts to re-appreciate evidence
to conclude that the award suffers from patent
illegality appearing on the face of the award, as
courts do not sit in appeal against the arbitral
award. The permissible grounds for interference
with a domestic award under Section 34(2-A) on
the ground of patent illegality is when the
arbitrator takes a view which is not even a14
Com AP 89/2024possible one, or interprets a clause in the contract
in such a manner which no fair-minded or
reasonable person would, or if the arbitrator
commits an error of jurisdiction by wandering
outside the contract and dealing with matters not
allotted to them. An arbitral award stating no
reasons for its findings would make itself
susceptible to challenge on this account. The
conclusions of the arbitrator which are based on
no evidence or have been arrived at by ignoring
vital evidence are perverse and can be set aside
on the ground of patent illegality. Also,
consideration of documents which are not supplied
to the other party is a facet of perversity falling
within the expression ‘patent illegality’.
4. Judgment of the Apex Court in Civil Appeal
No.837-838 of 2022 dated 01.02.2022. Indian Oil
Corporation Ltd. vs. M/s Shree Ganesh Petroleum
Rajgurunagar, wherein with respect to what would
amount patent illegality of an award at para 44 to 47 of
the judgment it has been observed as under:
Para 44:An Arbitral Tribunal being a creature of
contract, is bound to act in terms of the contract
under which it is constituted. An award can be
said to be patently illegal where the Arbitral
Tribunal has failed to act in terms of the contract
or has ignored the specific terms of a contract.
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Com AP 89/2024
Para 45. However, a distinction has to be drawn
between failure to act in terms of a contract and
an erroneous interpretation of the terms of a
contract. An Arbitral Tribunal is entitled to
interpret the terms and conditions of a contract,
while adjudicating a dispute. An error in
interpretation of a contract in a case where there
is valid and lawful submission of arbitral disputes
to an Arbitral Tribunal is an error within
jurisdiction.
Para 46. The Court does not sit in appeal over the
award made by an Arbitral Tribunal. The Court
does not ordinarily interfere with interpretation
made by the Arbitral Tribunal of a contractual
provision, unless such interpretation is patently
unreasonable or perverse. Where a contractual
provision is ambiguous or is capable of being
interpreted in more ways than one, the Court
cannot interfere with the arbitral award, only
because the Court is of the opinion that another
possible interpretation would have been a better
one.
Para 47. In Associate Builders (supra), this Court
held that an award ignoring the terms of a
contract would not be in public interest. In the
instant case, the award in respect of the lease
rent and the lease term is in patent disregard of
the terms and conditions of the lease agreement
and thus against public policy. Furthermore, in
Associate Builders (supra) the jurisdiction of the
Arbitral Tribunal to adjudicate a dispute itself was
not in issue. The Court was dealing with the16
Com AP 89/2024circumstances in which a Court could look into the
merits of an award.
5. (2022) 17 SCC 81, Brij Raj Oberoi vs. The
Secretary, Tourism and Civil Aviation Department
and another, wherein at para 15 of the judgment it has
been observed as under:
Para 15: It is well settled that clauses in a lease
deed cannot be read and construed in isolation.
The lease deed is to be construed as a whole.
6. 2023 SCC Online DEL 3293, DAG Private Limited
vs. Ravi Shankar Institute for Music and Performing
Arts.
15. With these observations of the Apex Court and
Hon’ble Delhi High Court in the background to appreciate
the rival contentions between the parties the entire case
of the plaintiff would fall within the ambit of the registered
lease deed which has been produced and marked in
evidence before the Learned Sole Arbitrator at Ex.P.1. As
mentioned above the claimant has invoked clause 20(iii)
of the registered lease deed and has terminated the lease
at its side. Clause 20 of the registered lease deed17
Com AP 89/2024provides for termination of the lease. According to the
terms of the lease deed the lease between the parties can
be terminated under four grounds. Firstly by efflux of time
i.e., lapse of two years period. Secondly the lessee
committing any terms of the breach of the contract by
giving an advance notice of such default by the lessor and
within 30 days of receipt of notice the tenant was required
to vacate the premises failure to which the lessor would
have the right to tenant terminate the lease by issuing a
three months prior notice. Thirdly the lessee would be
entitled to terminate the lease by a prior notice of 3
months before the expiry of the lease terms without
assigning any reason or cause for termination. Lastly by
virtue of any order of the Court it is required to terminate
the lease. Among these four grounds in the present case
has been terminated a the option of the lessee by
invoking clause 20(iii) i.e., the third ground. On a plain
reading of clause 20(iii) it clearly stipulates that the
tenant has the option to terminate the lease by issuing a
three months prior notice before expiry of the lease term
without assigning any reason for termination.
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Com AP 89/2024
16. Clause 2 of the registered lease deed provides the
duration of the lease which is for two years commencing
from 15.08.2020 ending on 14.08.2022. Renewal of lease
is given an option which is based on mutually agreed
terms between the parties. No where under the entire
lease deed there is any clause which stipulates that the
lease has been mutually extending beyond 14.08.2022.
Likewise there is also no specific clause which says before
the expiry of lease i.e., 14.08.2022 the lessee cannot on
its end terminate the lease. On the other hand clause
20(3) clearly stipulates that the lease can be terminated
by the lessee by issuing a 3 months prior notice even
before expiry of the lease period without assigning any
reason. The same has been done by the claimant in this
case. Prior to termination three months notice is given
under Ex.P.2 dated 31.03.2021 and the thereafter the
lease is terminated with effect from 30.06.2021. The
Learned Counsel for the petitioner has made much
emphasis upon the documents at Ex.R.1 to R.5 which
were only the correspondences indicating the intention to
continue the lease. No doubt the claimant has admitted
those documents but in those documents there is any
mention that the lessee has agreed to continue the
19
Com AP 89/2024
tenancy beyond 14.08.2022. On the other hand these
emails at Ex.R.1 to R.5 which is admitted by P.W.1 in the
cross examination only stipulates the intention to continue
the lease but these correspondences have culminated in
the registered lease deed which is brought into existence
after the correspondences at Ex.R.1 to R.5 which clearly
stipulates that lease is for two years ending by
14.08.2022 with an option to continue upon mutually
agreed terms. Much prior to expiry of the lease period the
termination clause has been invoked by the lessee under
clause 20(3) and therefore the termination of the lease by
the lessee cannot be said to be in breach of the terms of
the registered lease agreement to be held as improper
and illegal. On the other hand the termination of the lease
by the lessee is strictly in accordance with the terms of
the registered lease which cannot be found fault with and
therefore the conclusion arrived by the Learned Arbitrator
in holding that the termination of the lease is just and
proper and directing the respondent to refund the security
deposit with interest thereon is based upon proper
interpretation of the terms of the contract and proper
appreciation of the evidence and material on record and
therefore the impugned award passed by the Learned
20
Com AP 89/2024
Arbitrator is neither opposed to public policy of Indian Law
nor is in violation of any law nor there is any patent
illegality appearing on the face of it rendering it to be
vitiated and set aside. Accordingly, I answer Point No.1
in the Negative.
17. POINT NO.2:- For the aforesaid reasons, I proceed
to pass the following.
ORDER
Application filed by the applicant under
Sec.34 of Arbitration and Conciliation Act
1996 is dismissed with costs.
Office is directed to send back the
original records to the Arbitration and
Conciliation Centre Bengaluru under proper
identification and acknowledgment.
(Dictated to the Stenographer Grade-III, transcribed by her, corrected and then
pronounced by me in open court on this the 16th day of January, 2025)
Digitally signed by ARJUN
ARJUN SRINATH SRINATH MALLUR
MALLUR Date: 2025.01.17 18:06:48
+0530
(ARJUN. S. MALLUR)
LXXXV Addl.City Civil & Sessions Judge,
Bengaluru.
21
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