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SARADA VILAS LAW COLLEGE,

CLINICAL COURSE-II

ALTERNATIVE DISPUTE RESOLUTION SYSTEM (ADR’s)

ADR SIMULATION

BY

SHANAZ,
course teacher
Asst prof, (Ph.D. scholar
svlc, Mysore.
ARBITRATION SIMILATION EXERCISE BRIEF FACTS OF THE CASE

Guru entered into a Lease agreement with Shankar on 1st August 2021 for 11 months on a
condition that except his family i.e., wife and. 2 children no others are allowed to stay, if
violated immediate vacation of house ought to be done mentioned as per arbitration clause.
Owing to Covid-19 Guru brings his parents and in laws to his house and they stay together
till date. Shankar wants immediate vacation of the premises as per agreement.

DISPUTE RESOLUTION METHOD CHOSEN

A. ARBITRATION

1. Analysis on whether present case can be referred to Arbitration

The facts of the case specifies that the Lease agreement contains a clause with a condition
which limits the number of occupants in the premises, and any violation of that condition
will result in immediate eviction as per Arbitration clause.

Here the cause of dispute between the parties to the Contract ie the Landlord Sankar and
Tenant Guru is the breach of condition limiting the number of occupants of the let out
premises.

Since the clause specifically mentions that the dispute associated with breach of the
condition will be dealt with as per the Arbitration clause of the Lease agreement, it can be
concluded that the Contract contains an Arbitration Agreement as per section 7 of the
Arbitration and Conciliation Act, 1996.

Where there is an arbitration agreement between the plaintiff and defendant and any dispute
and claim between the plaintiff and defendant is required to be referred to arbitration and in
such circumstances the arbitration would be governed by the Arbitration and Conciliation
Act, 1996. – Marwadi Shares and Finance Pvt Limited Vs Nagjibhai Mavani – Guj High
Court.
2. Commencement of Arbitration:

Arbitration will commence on the date on which a request for that dispute to be referred to
arbitration is received by the respondent as per section 21 of the Arbitration and Conciliation
Act, 1996.

Then an arbitrator has to be appointed.

The term Arbitrator is not defined under the Arbitration and Conciliation Act, 1996.
However, in the common parlance the word “Arbitrator” means, a person/ persons to whom
a particular matter or issue in dispute is referred with the view to settle on the basis of
submission made by the conflicting parties.

As per section 10 of the Arbitration and Conciliation Act, 1996

(1) The parties are free to determine the number of arbitrators provided that such number
shall not be an even number.
(2) Failing the determination referred to in sub-section (1), the arbitral tribunal shall
consist of a sole arbitrator.

Since the Facts of the present case does not make indications on the number of arbitrators
and the mode of their appointments it is presumed that the reference was intended to a single
arbitrator.

In such cases the mode of appointment is to be necessarily by consent of parties and if the
parties do not concur in the appointment, the High court or Supreme Court or any person or
institution designated by such court will make that appointment.

As per section 11(5), both the parties have to agree within a period of 30 days for the
appointment of a sole arbitrator from the date of receipt of a request from one party from the
other party.
3. Arbitration Process - Simulation:

Here Guru the Claimant sends a letter dated 20 August 2021 to Shankar the Respondent
requesting that the dispute be referred to Arbitration and suggesting the Appointment of
Mr Harichand, a Retired High Court Judge to be the Arbitrator.

Shankar agrees to the same vide his response letter dated 22 August 2021. Thereafter a notice
of appoint of Arbitrator is issue to Mr Harichand on 23 August 2021.

Mr Harichand, conduct the Arbitration at Bengaluru, as both the Claimant and the
respondant, reside in Bengaluru and the leased property, which is the matter of dispute is in
Bengaluru.

Mr Harichand directs that a statement of claim and defence with supporting evidence, the
points at issue and the relief or remedy sought shall be furnished before the Arbitral Tribunal
within a period of 10 days ie by 03rd September 2021.
94

The Submission are received by the Arbitrator from the Counsel engaged by the Claimant
and respondent respectively on 01 September 2021.
A summary of the Submissions made by Claimant are:

I. Claimant is the owner of a residential property, being a Apartment, with number 123,
Slendor society, 11th Cross Street, Malleshwaram. The Claimant has leased the property to
the respondent for a period of 11 months. The lease agreement so
entered into with the respondent clearly specified that he reserve the right to terminate the
lease and evict the respondent if the number of people residing in the apartment exceeds 4
occupants.

II. However, the Claimant received oral compliant from other members of the Society that
the respondent has invited his extended family to reside in the apartment, causing a lot of
noise and nuisance to the others residing in the building.

III. The Claimant had feared this exact issue at the time of entering into the lease agreement
and hence clearly laid a condition that only the respondent, his wife and two children may
reside at the property.

IV. Reference in this regard is made to clause 14.3 of the Agreement which contains this
condition [reproduced below].

“14.Termination of lease
14.3 The Lessor shall have cause the lessee to evict from the scheduled property if the
number of occupants in the scheduled property exceeds 4 by giving notice of not less than 30
days.”

V. According to clause 14.3, the Claimant had served due notice to the respondent asking
him to vacate the premises within 30 days from the date of receipt of the notice.

VI. Since the respondent is not agreeing to the same, the Claimant has decided to referred the
matter to Arbitration seeking the following relief:

a. Immediate eviction of the respondent for breach of Clause 14.3 of the lease agreement.

VII. A copy of the lease agreement, the notice of eviction by the Claimant, reply furnished
by the respondent to the notice, Demand Draft for the lease and security deposit, monthly
maintenance receipts, electricity receipts have been submitted before this panel.
A summary of the Submissions made by Respondent are:

1. The Respondent works as software engineer in Infosys and he is the only breadwinner of
his family. The respondent’s parents and in-laws are aged, and live in a remote village in
Mandya.

2. Due to the extended lockdown on account of COVID and the travel restrictions imposed
in many places, the respondent submitted that he has been struggling to visit his parents and
inlaws regularly. He also claimed that, this prolonged period of isolation resulted in his
Parents suffering from acute mental and emotional distress.

3. The Respondent also submitted that, their consulting Doctor in Mandya has been
diagnosed with COVID and is under quarantine and is unable to provide consultation. And
as his parents and inlaws need immediate medical attention, they had to be accommodated
respondent’s house in Bengaluru, Malleshwaram [the property of the plaintiff].

4. However, the Claimant has cited clause 14.3 of the agreement and provided a notice
asking the respondent to vacate the premises within a period of 30 days.

5. The respondent submitted that clause 14.3 of the lease agreement is not enforceable due to
the application of Doctrine of Frustration as per section 56 of Indian Contract Act, 1872. He
submitted that, there was an impossibility of performance of the promise as neither party
envisioned that COVID outbreak would have an impact on the mental health of his family.

6. Therefore the respondent prayed that the Arbitration Tribunal should dismiss the matter
and grant any other relief as the Tribunal may deem fit.

A copy of the submissions received from each party were furnished to the other party.
Thereafter, the Arbitrator orders that a hearing be held on 04th September 2021 at 10.30 AM
for both parties to make their oral arguments and to provide an opportunity to the parties to
respond to the submission made by the opposing party.
At the hearing, the Counsel of the Claimant presents the following Arguments:

1. Section 56 of the Indian Contract Act, 1872 envisages the Frustration of a contract if the
whole purpose or basis of the contract was frustrated by the intrusion of an unexpected event
or change in circumstance which was not expected by the parties at the date of the contract.

2. While the respondent cited that the Outbreak of COVID pandemic as the reason for
applying the Doctrine of Frustration to the lease agreement. However, COVID has been in
existence in India since March 2020 with frequent and stringent lockdowns and movement
restrictions. There has been a constant threat of the pandemic extending into Multiple waves.

3. The respondent, having experienced COVID-19 pandemic restrictions for last 18 months,
and being fully aware of these circumstances at the time of entering into the contract, has
submitted to the absolute condition that only his immediate family consisting of himself, his
wife and two children shall stay in the apartment and that he may, in case of a breach of this
condition, be evicted.

4. This being the position, the defence of frustration, that too within one month of the
execution of lease cannot be availed as an excuse for the breach of condition cited in clause
14.3 of the contract

5. Further, As per sec. 108 (b)(e) of TPA, the lease can only be avoided on following
grounds:

Flood, Fire, Violence of a Mob, or any other irresistible force which results in destruction of
property and becomes unfit for occupation. And COVID cannot be a valid reason for
avoidance of lease.

6. Further, the respondent did not indicate to the Claimant the idea of bringing his parents
and in-laws for staying in the premises, nor did he seek approval from his client for
exemption to clause 14.3 temporarily to accommodate his request of bringing his parents and
inlaws to stay with him, at any time previously.

7. The Claimant were only made aware of this breach upon oral complaints received from
the society.

8. The Claimant also stressed on the rationale for including the specific restriction in the
Contract, and submitted that it was done to ensure adherence to the Bye-laws of the society
and in order to comply with fire safety norms and building regulations which puts limitations
on the number of persons residing per sq. meter, to ensure safe evacuation in the case of any
emergencies.

9. Therefore, Under the Contract Act, 1872 if the contract expressly contains a term
according to which, the Contract should stand discharged, then in such case the dissolution
of the contract would have to take place under the terms of the contract itself.

And for this reason the Claimant sought for the immediate eviction of the respondent from
the premises.

10. In addition, the Claimant also sought for compensation for the maintenance of additional
members in the family, including damages for loss of reputation, and time and efforts to be
spent resolving the complaint from the society.
At the hearing, the Counsel of the Respondent presented the following Arguments:

1. With respect to Society Bye-laws quoted by the Claimant’s counsel [which was entered
into evidence], as per clause 96 of the said Bye laws, it allows for relaxation of any of the
rules mentioned therein on a case by case basis.

2. This being an exceptional circumstance, it was pleaded that respondent be allowed to

3. The Counsel also submitted that the respondent was also ready to pay any reasonable extra
charges towards maintenance and usage of common facilities.

4. However, on the matter of eviction, the Counsel for the respondent submitted that, as per
section 27 of the Karnataka Rent Act, 1999, the Claimant’s plea for a decree for eviction on
the basis of breach of clause 14.3 of the lease deed, should not be allowed, as it does fall
within the conditions which is permissible under section 27 of the Karnataka Rent Act, 1999
for eviction of a tenant.

5. The Counsel also reiterated that, the respondent has been regular in payment of Rent,
maintenance, electricity and other miscellaneous charges.
ARBITRAL AWARD
After hearing the submissions made by both the parties, and the decision of the Arbitral was:

1. Since both the parties to the dispute have entered into a written contract which contains a
clause for Arbitration, this Tribunal can adjudicate on the matter.

2. On the first question before the Tribunal, ie whether Clause 14.3 of the Lease Agreement
is valid, and can it be enforced: agreeing with the submission made by the counsel for
respondent, I am of the view that COVID has been prevalent for the last 18+ month, and the
lockdowns are not a new feature. Hence, Doctorin of Frustration does not apply to this
contract.

3. However, since clause 14.3 calls for eviction of the respondant in case of breach of
contract, and it is not in consonance with section 27 of the Karnataka Rent Act, 1999, this
Tribunal cannot order, the eviction of the respondant.

4. In light of the above finding, in order to compensate for the additional costs incurred by the
Claimant due to increased wear and tear of the property as the number of occupants has
increased, the Tribunal awards the following sum to the Claimant:

a) A sum of Rs. 2000/- per head [for additional occupants of the property] per month shall be
paid by the Respondant towards maintenance and other miscellaneous cost to the Claimant
till the period of stay of the addition occupant.

b) The Respondent shall pay arrears of maintenance as calculated for the period commencing
from the date of filing of this application.

c) On the matter of damages sought by the Petitioner, this Tribunal’s award of compensation
as previously mentioned would meet the ends of justice.
AWARD ON COSTS

There is no award on costs as both parties have shared their respective costs.

DISPOSAL OF RECORD

Twelve months after the Tribunal has notified the final award to the Parties, the arbitrator
shall be at liberty to dispose of the record of the arbitration, unless the Parties ask that the
documents be returned to them or to their counsel.

IMMUNITY OF THE ARBITRATOR

The Parties shall not seek to make the Tribunal liable in respect of any act or omission in
connection with any matter related to this arbitration. The Parties shall not require the
member of the Tribunal to be a party or witness in any other proceedings arising out of or in
connection with this arbitration.

Order pronounced on 04the September 2021, at Bengaluru, the place of Arbitration.