Issues Falling Within The Exclusive Jurisdiction Of Estate Officer Under The Public Premises Act, Are Non-Arbitrable: Delhi High Court

The bench of Justice Yashwant Varma was considering a petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) seeking reference of the dispute concerning the computation of ground rent by the Delhi Development Authority (DDA) with respect to the plot leased to the petitioner. The petitioner further sought adjudication of the validity of determination of lease by the DDA.

The court observed that the PP Act was enacted for the purpose of setting up a speedy machinery for eviction of persons found to be in unauthorized occupation of public premises. Further, Section 15 of the PP Act ousts the jurisdiction of courts in respect of eviction of persons from public premises and in relation to other connected aspects.

The court remarked that though the Estate Officer under the PP Act is not entitled to go into questions of competing ownership, all other issues of determination which relate to the occupation of public premises and questions incidental to it, would clearly fall within the exclusive jurisdiction of the Estate Officer.

The bench thus concluded that the disputes raised by the petitioner were non-arbitrable and therefore, dismissed the petition.

The petitioner, S.S. Con-Build Pvt Ltd, applied for conversion of the plot leased to it by the DDA, from leasehold to a freehold property. The same was not allowed by the DDA on the ground that the petitioner had failed to pay arrears of ground rent. After the petitioner failed to clear its outstanding dues, its lease was cancelled by the DDA.

The petitioner invoked the arbitration clause contained in the lease deed and filed a petition under Section 11 of the A&C Act before the Delhi High Court, seeking reference of the dispute to arbitration.

DDA opposed the petition on the ground that the dispute raised by the petitioner fell within the exclusive jurisdiction of the Estate Officer under the PP Act and therefore, it could not be referred for arbitration.

Perusing the facts of the case, the court reckoned that the dispute essentially revolved around the quantification of the ground rent payable by the petitioner to the DDA, and the consequential determination of the lease.

The bench observed that the PP Act was promulgated for empowering the appropriate governments to take effective steps for ridding public premises of unauthorised occupants. It reckoned that the PP Act is not a general or omnibus statute pertaining to unauthorized occupation of premises. It is concerned principally and solely with “public premises”, as defined in Section 2(e) of the PP Act.

It further took note of the jurisdiction exercised by the Estate Officer under the PP Act. “Sections 4 and 5 are principally concerned with eviction of unauthorised occupants from public premises. For the purposes of exercising jurisdiction under the PP Act, the Estate Officer proceeds on two basic postulates: (a) the subject matter of proceedings being public premises as defined and (b) the occupant being found to be in unauthorised occupation,” the court noted.

Perusing the definition of “unauthorised occupation” contained in Section 2(g) of the PP Act, the court observed that the moment a person is found to be in occupation of public premises without authority or where its continuance is found to be unauthorized as a result of the tenure having expired or the lease being determined, it would be sufficient to commence proceedings under the PP Act. Further, in terms of Section 7, the Estate Officer is additionally empowered to draw proceedings in relation to computation and recovery of arrears of rent and damages for unauthorised occupation.

The court reckoned that the Delhi High Court in India Trade Promotion Organization vs International Amusement Limited, 2007 SCC OnLine Del 981, had taken note of the exclusive jurisdiction conferred upon the Estate Officer to adjudicate and rule upon all questions arising from or under the PP Act. The court had categorically held that the matters which were governed exclusively by the provisions of the PP Act, were non-arbitrable.

The bench thus concluded, “Viewed in light of the aforesaid principles, the Court finds that the occupation of public premises is a subject matter which appears to be exclusively administered and governed by the provisions of the PP Act.”

It therefore held that the disputes in relation to eviction, arrears of rent, and payment of damages, are all issues which are statutorily ordained to be tried only in accordance with the procedure prescribed under the PP Act and by the adjudicatory authorities designated under it.

It further observed that the provisions of the PP Act are reflective of the legislature’s intention to debar the parties from seeking resolution of disputes falling under the PP Act by way of arbitration. “The PP Act creates special rights and liabilities in favour of contracting parties. It also constructs a special adjudicatory mechanism for resolution of disputes and which is statutorily anointed with exclusivity. Contracting parties thus cannot assert a waiver of jurisdiction or claim resolution of disputes falling within the ambit of the PP Act to be resolved by way of arbitration,” the court said.

Referring to the facts of the case, the bench observed that the petitioner was claiming rights and interests in the subject property by virtue of a lease executed in its favour by the DDA. Once the lease was determined, the petitioner could fall within the ambit of “unauthorised occupation” under Section 2(g) of the PP Act.

Once it is admitted that the property is a public premises and is occupied by a person who is asserted to be in unauthorized occupation, the provisions of the PP Act would immediately come into play and the jurisdictional bars would become operational, the court said.

The court further held that the principal dispute raised by the petitioner pertaining to its liability to pay ground rent, the demands raised in connection to it, and the validity of the determination of the lease, would undoubtedly fall within the domain of the PP Act.

“The Court is thus of the firm opinion that not only are the disputes of which reference is sought covered under the ambit of the PP Act, they would undoubtedly fall within the parameters of the authority conferred upon the Estate Officer. In the absence of any question having been raised with respect to the title of DDA over the leased premises, it cannot possibly be accepted that the dispute falls outside the scope of the PP Act,” the bench concluded.

Thus, holding that the disputes raised were non-arbitrable, the court dismissed the petition.

Case Title: S.S. Con-Build Pvt Ltd vs Delhi Development Authority

Citation: 2023 LiveLaw (Del) 406

Dated: 09.05.2023

Counsel for the Petitioner: Mr. Kunal Tandon, Mr. Saurabh Dev, Ms. Madhavi Khare, Advs

Counsel for the Respondent: Mr. Dayan Krishnan, Sr. Adv. with Mr. Sanjay Katyal, SC with Ms. Chand Chopra, Mr. Anish Dhingra, Mr. Nakul Ahuja, Mr. Sukhrit Seth, Mr. Nihal Singh and Mr. Gautam Yadav, Advs. for DDA

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