Syed Sadat Abdul Masud, J. - (1.) This is an application on behalf of Moulin Rouge Private Ltd., under Sec. 33 of the Arbitration Act, 1940, for determination of scope of arbitration clause being clause No. 21 of an agreement executed between the Petitioner and New Delhi Municipal Committee on September 23, 1966. The Petitioner has asked for various other reliefs including an injunction restraining the New Delhi Municipal Committee from referring the alleged disputes to arbitration or from proceeding in any way with the purported reference. The application has been made under the following circumstances:
(2.) By the said agreement in writing dated September 23 1966, the Respondent agreed to grant a licence and/or lease to the Petitioner to run a hotel business at a building to be constructed by the Respondent on certain terms and conditions. The relevant portion of the said agreement are set out below: This Agreement executed at Delhi this 23rd day of September 1966, between the New Delhi Municipal Committee, Parliament Street, New Delhi, hereinafter called (the Committee and the licensor) of the one part and M/s. Moulin Rouge (P.) Ltd., a joint stock company duly incorporated under the Indian Companies Act, 1913 having its registered office at Calcutta (hereinafter called the licensee) which terms shall include their successors, administrators, executors and assigns etc. of the other part. Whereas the licensor has agreed to grant the licence, to use the building (the details of which are given in the Annexure 'A') proposed to be constructed by them at Chanakyapuri, Delhi (New Delhi), for the purpose of housing a hotel of 5 -star standard and which building the licensee has agreed to take on licence basis on terms and conditions mentioned hereafter. NOW THIS AGREEMENT WITNESSETH: (1) That in consideration of the licence money and the licensee's, agreeing to the covenants hereto reserved and contained, the said licensor has agreed to grant the licence to use the proposed building with all the fittings, fixtures and furniture for a term of ten years. The licensee shall have the option to have the licence renewed for a further period of ten years on the same terms and conditions as incorporated in this agreement. (2) That the sum of Rs. 1,72,000 deposited by the licensee shall remain with the licensor as security for the due performance of the terms of this indenture and the same shall be returnable only on the successful completion of the licence period. The said security deposit shall be invested by the licensor in any profitable manner but the licensee shall be entitled to the entire amount of interest or profit received from the said investment of the security deposit. (3) That the period of licence shall commence from the date of intimation to the licensee that the building is complete in accordance with the plans annexed herewith and fit for occupation and he shall be at liberty to take charge thereafter at any time but not later than 15 days from the aforesaid date of the intimation. The liability of the licensee with respect to the licence money shall commence from the said date of intimation and not from the date of occupation. (4) The time stipulated for completion of the building is expected to be 3 £ years from the date of actual start of the building at site during which period the licensee, shall be required to complete furnishing, interior decorations, carpeting and kitchen equipment installations at their own costs according to 5 -star classification of the hotel. (5) That the licence fees for the use of building and its fixtures, fittings, etc. shall be Rs. 16,70,000 per annum. The entire amount for the licence fees for the first year shall be payable as and when the licencees are intimated with respect to the completion of the buildings and with respect to their being called upon to take charge thereof. After the expiry of the first year from the date of the intimation, the licence fees shall be payable monthly in advance by the 7th of each month at the rate of Rs. 1,39,166 -66 P. (6) That all other charges and taxes except the ground rent and house tax for all the super -structures shall be payable by the licensee from the date of handing over the charge of the building by the licensor to the licensee. (7) That if the said licensee makes a default in any payment or in the payment of any two instalments of the monthly licence fees or ceases to do business or commits breach of the terms of this agreement the licensor, notwithstanding the amount deposited with them as security, shall have the option to determine the licence and assume charge of the entire building and to recover all the licence fees and other dues up -to -date, as also the licence fees payable for the remaining period of the agreement in full with all taxes and charges payable thereunder less the actual amount of the licence money realised by the licensor from their parties. (8) That the licensee, at their own cost, will keep the building and other installations fully insured against fire and theft for the amount of Rs. 1 crore from the date they assume the charge of the building. (9) That the licensee shall abide by all the rules and regulations made and to be made under the Prevention of Food Adulteration Act as well as those bye -laws framed under the Punjab Municipal Act. (10) That the authorised officers of the licensor shall have the right to inspect the hotel premises at any time with a view to examining the state and condition of the building and other equipment installed thereon; besides for the purpose of examining whether the licensee is complying with the provisions of appropriate law and with respect to which they are empowered to do so. (11) That the licensee shall not make any additions or alterations in the building without the prior permission of the licensor in writing and the same, if necessary, to meet the requirement of 5 -star hotel shall not be withheld and when permitted by the licensor, the said additions or alterations shall be carried out by the licensee at their own cost. However, the licensees would not be entitled to any compensation for any additions or alterations carried out by them in the building and the same shall vest in the licensor. (12) That the licensee shall be responsible to keep the entire premises, building, fittings and fixtures and all other installations including the air -conditioning plant, lights, fans etc. and shall also be liable to carry out all essential and necessary repairs to keep the premises in habitable condition and in a neat and befitting manner, lit their own cost. (13)That the licensee will be liable to maintain the lawns open spaces in good condition at their own cost. (14) That the hotel shall be styled by the name of 'International Hotel'. The name, however, if so desired, may be changed before the actual opening of the hotel with the mutual consent of both the parties. (15) That the licensee during the tenure of his licence shall not transfer, assign or sublet the building or any portion thereof permanently or temporarily to anybody else without the prior permission in writing of the licensor. However, in accordance with the practice of running a modern hotel business he may allow temporary licences of small portions of the demised premises for purposes of being used as shopping centre by different shops and business houses, but the licensee shall be responsible for the conduct of the various shop -keepers and others so accommodated and shall be further responsible to see that they quit the premises on termination of the licence period. The sublicense shall not get any rights over and above the rights and privileges of the licensee. (16) That the licensee would use the building only for the purpose of running a first class hotel of international standard of 5 -star classification and would not use the building for any purpose other than that. (17) That in the event of any breach of any of the conditions of this agreement the licensor shall have the right to terminate the licence after duly serving the licensee first with a show -cause notice in writing of a period of not less than three, months and thereafter, if there is no proper and satisfactory explanation to the show -cause notice the licensor shall serve a final notice of termination which notice shall also be of a period of three months and after the service of the final notice, the licensee shall render himself liable not only for the forfeiture, of the security deposit, but also to make up the loss, if any, incurred by the licensor in consequence thereof. (18) That on the expiry of the licence period and in the event of the licence having been terminated earlier, on the expiry of the notice period, the licensee shall hand over the charge of the entire premises, buildings, fittings and fixtures and all other installations belonging to the licensor according to the Schedule to be prepared at the time of taking charge of the said premises building, fittings and fixtures and other installations without any obstruction. (19) That in the event of the termination of the licence as mentioned in Clause 18 above, the licensor shall have the option to retain the furnishing, interior decorations, carpeting, other fittings, machinery apparatus and other gadgets and installations belonging to the licensee on payment of reasonable compensation. (20) That the licensor shall carry out the construction work in accordance with the approved plans and designs, (subject to any reasonable and appropriate deviations that may be necessary in the interest of the building and the design) and the licensor would also consider, during the construction, any suggestions that may be made by the licensee with respect to design modifications architecture or any other work necessary in accordance with the standard of 5 -star hotel. (21) That in the event of any dispute between the licensee and the licensor regarding the cancellation of licence, compensation or any other terms of the licence, the same shall be referred to the sole arbitration of the Administrator, Delhi, whose decision shall he final and binding on the parties. The said agreement contains reciprocal obligations on the part of the Petitioner and the Respondent. The Respondent is expected to complete the building within 3 years and the Petitioner is to complete furnishing, interior decorating etc. in the building during the said period. It is alleged by the Respondent that the Petitioner has not discharged their part of obligation to furnish the building by furnishing the constructed portion of the building in accordance with Clause 4 of the said agreement. The Petitioner, however, has stated that the have taken all preliminary steps to fulfil their part of the obligations and that their obligation to furnish the said building will expire ion March 23,' 1970. The Respondent by a letter dated February 21, 1968, served a notice on the Petitioner at its office in Calcutta under Clause 17 of the said agreement to explain within 3 months as to why the agreement should not be cancelled and the security money amounting to Rs. 1,72,000 deposited by the Petitioner forfeited. The Petitioner by its letter dated May 18, 1968, denied the allegations of the Respondent and challenged the Respondent's right to serve the said notice without performing its part of the obligations under the said agreement. Thereafter, by a letter dated September 27, 1968, the Respondent sought to raise a dispute under the said agreement and wanted to refer the alleged dispute to the sole arbitration of the Administrator, Union Territory of Delhi, under Clause 21 of the said agreement. The Petitioner by a letter dated January 20, 1969, denied the Respondent's contentions and also existence of any alleged dispute covered by the said arbitration clause. By a telegram dated January 21, 1969, tile Respondent -referred the alleged dispute to the Lieut. Governor of Delhi as the sole Arbitrator on January 27, 1969. The Respondent also caused a publication on January 20, 1969, in the newspaper 'Hindustan Times' alleging that the Petitioner was committing a breach of the said agreement and that the alleged disputes were going to be referred to arbitration. The Petitioner's grievance, is that the Respondent by not performing its obligations in completing and in handing over to the Petitioner the said building portion by portion for simultaneously furnishing the same in terms of the Clause 4 of the said agreement, has caused and is causing substantial loss to the Petitioner in breach of the said agreement. The Petitioner has now made the present application to prevent the Respondent from proceeding with the alleged reference to arbitration.
(3.) Mr. R.C. Deb, counsel on behalf of the Petitioner, has contended that the disputes raised between the parties referred to a period prior to the grant of licence and as such, the arbitration clause is not attracted and the purported reference is not warranted in law. The words used in the said arbitration clause show that the parties agreed to refer a limited class of disputes to arbitration. The disputes between the parties relating to the said agreement dated September 23, 1966, are not the disputes which are referable to arbitration under Clause 21. On a proper construction of the said agreement, according to them, reference to arbitration can only arise after grant of the licence. It is urged that the licence agreed to be granted was a licence for user of a thirteen -storied building for running a hotel business. The construction of the said building has not yet been completed. It was only on the intimation by the Respondent to the effect that the building is complete, the grant of licence would arise. Under Clause 5 of the agreement the annual licence fee is to be paid by the Petitioner to the Respondent amounting to Rs. 16,70,000. It has been, therefore, argued that the purported reference of the dispute to the Lieut. Governor of Delhi should be set aside and stopped.;