EVEREST CO-OWNERS, A.B.C. versus M.P. STATE WARE HOUSING CORPORATION AND ANOTHER

Citation: [1992] SUPP. 1 S.C.R. 946 · Decided: 13-10-1992 · Supreme Court of India · Bench: S. RANGANATHAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
EVEREST CO-OWNERS, A.B.C. 
v. 
M.P. STATE WARE HOUSING CORPORATION AND ANOTHER 
OCTOBER 13, 1992 
B 
[S. RANGANATHAN AND B.P. JEEVAN REDDY, J.I.] 
Arbitration Act, 1940: 
Sections 8, 20, 31 and 33-Arbitration clause in the agreement-Sole 
C Arbitrator to be appointed by both parties-One party making application 
before Coun-Absence of Jonna/ prayer-Whether application valid under 
Section 20--Could appointing Arbitrator-Validity of-Rejection of applica-
tion for stay of Arbitration proceedings-lntetference under the Special Leave 
'jurisdiction. 
D 
Constitutipn of India, 1950: 
Anic/e 136--Special Leave jurisdictiott-Arbitration proceedings-Stay 
application-Refusal of-lnteiference with. 
E 
The appellant constructed some godowns which were let out on rent 
to Food Corporation of India for five years. During the said period of five 
years, the Respondent took the premises on rent from the Food Corpora· 
lion of India without notice to, or consent of the appellant. Snbsequently, 
the Respondent· Corporation expressed its willingness to enter into a lease 
deed with the appellant, and there was a joint inspection of the godowns 
F 
by the appellant, and some senior officials from both the Food Corpora· 
tion and the Respondent Corporation. This Committee in its report listed 
out certain damages to the premises which were to be repaired and some 
missing parts to be replaced by the Respondent. Thereafter the Respon· 
dent entered into an agreement oflease with the appellant. This agreement 
G contained an arbitration clause providing for appointment of sole Ar· 
bitrator by both the parties. 
Clause 2 of the lease agreement provided among other things, that 
in case. of any damage, the lessee would be liable for the cost of repair to 
the damage caused during the period of occupancy by the lesses. The extent 
H of damage was to be assessed by the lessors on the basis of the prevailing 
946 
EVEREST CO-OWNERS v. M.P. HOUSING CORPN. 
947 
market rates in respect of material, labour and other contingency charges. · A 
The term of the lease having come to an end, a joint inspection or 
the premises was carried out by the appellant and some officials or the 
Respondent-Corporation, and this Committee in its report enumerated a 
number or items or damages to the premises. The appellant wrote to the 
Respondent calling upon it to pay damages· to the tune or Rs.4, 76,984.SS B 
and followed it·up with a lawyer's notice. The respondent did not reply. 
Thereafter, the appellant made an application under Ss.8 and 20 of 
the Arbitration Act, before the District Judge praying for appointment of 
an Arbitrator. After following the procedure, the District Judge appointed 
a retired IAS Officer as Arbitrator. The respondent filed an application 
under S.33 of the Act raising an objection that the.lease deed was inadmis-
sible in evidence as it has not been registered under the Registration Act, 
which is still pending. The respondent also applied for stay ol' arbitration 
proceedings and the same was rejected. 
In the meantime, the arbitrator made an award. The respondent 
made an application for setting aside the award and the application is 
pending before the District Judge. 
c 
D 
The Respondent preferred two appeals before the High Court, one E 
against the appointm<nt of Arbitrator and another against the refusal to 
stay the Arbitration proceedings. The High Court set aside the appoint· 
ment of the Arbitrator. Consequently it dismissed the other appeal as 
infructuous. 
Being aggrieved by the High Court's order, the appellant preferred F 
to the present appeals. 
Allowing the appeals, this Court,. 
HELD: 1. The lease agreement itself was not denied and it is clear 
that it provides for the appointment of arbitrator and this was obviously G 
so whether both parties agreed or not. The circumstances also make it 
clear that there were disputes between the parties regarrling the. extent of 
damages to the premises during the tenancy by the respondent. Though 
there was no formal prayer requesting that the arbitration agreement be 
filed, there was clearly a valid application 'Under section 20. [9S4 A-Bl 
H 
948 
SUPREME COURT REPORTS (1992] SUPP. 1 S.C.R. 
A 
2.1. The High Court erred in setting aside the order or the District 
Judge appointing an Arbitrator. The application filed by the appellant 
before the High Court was under section 8 read with section 20 or the 
Arbitration act. In other words, there was a prayer In terms

Excerpt shown. Read the full judgment & AI analysis in Lexace.