M/s. Mehek-e-Punjab Retreat Pvt. Ltd vs Aryan Dhatu Private Limited

Subhasis Dasgupta, J

The impugned order being No.38 dated 19th June, 2018 passed by the learned Civil Judge (Junior Division), 1st Court, Barasat, 24 Parganas (North)

staying suit till the award and thereby referring the subject matter in dispute to the arbitrator on the prayer of the defendant/opposite party under

Sections 5 and 8 of the Arbitration and Conciliation Act, 1996, in connection with Title Suit No.3 of 2017 is subject of challenge in this revisional

application.

Admittedly an agreement for leave and licence dated 1st day of December, 2015 was executed between the parties. The agreement contained an

Arbitral Clause (Clause 8). The petitioner/licensee filed a suit in the court below (T.S 3 of 2017) praying for declaration of his tenancy right. In the

pending suit, the landlord/licensor/opposite party filed a petition under Sections 5 and 8 of the Arbitration and Conciliation Act for making reference to

Arbitrator for resolving the dispute pertaining to leave and licence agreement for the presence of the Arbitral Clause, contained in Clause 8, of the

agreement. The court below upon seeing the primacy of the Clause 8 contained in the leave and licence agreement referred the matter to Arbitrator

staying the suit till the award is passed by the Arbitrator.

Learned advocate for the petitioner submitted that the order making reference to Arbitrator was illegal and the pending suit ought not to have been

stayed, as the rights of the petitioner could not be determined by the Arbitrator. It was thus proposed by the learned advocate for the petitioner that

instead of making reference of the subject mater of dispute to Arbitrator, the court below ought to have adjudicated the matter in controversy between

the parties, and further stay was granted making contravention of the provisions of the law.

Learned advocate for the opposite party/landlord/licensor adverting to the copy of the final award, passed on 30.11.18 by the Arbitrator, submitted

most arduously that the instant revisional application had been rendered infructuous, on the ground that the stay of the suit was granted till the award is

passed by the Arbitrator. Thus, according to opposite party as soon as the award was passed, the stay order could not be construed to be operative

any more. It was the definite stand of the opposite party that the petitioner, now seeking relief with the aid of Article 227 of the Constitution of India

had already submitted to the jurisdiction of the Arbitrator after the subject matter in dispute was referred to the Arbitrator by the court below, and

after entering appearance, the petitioner challenged the arbitrability of the subject matter in dispute by filing an application under Section 16 of the

Arbitration and Conciliation Act, which was rejected by the Arbitrator by order dated 31st October, 2017, holding

“43. Since the right of the Respondent, if any, not protected by special Statute of Rent Control this Arbitral Tribunal has the jurisdiction to

adjudicate upon the disputes between the parties arising under or not of the said Agreement and there being no embargo under the law discussed

above I have no hesitation to hold that this Arbitral Tribunal has jurisdiction to adjudicate upon the disputes between the parties emanating from the

said agreement in respect of their rights there under.

However, other questions expecting the point of jurisdiction will remain open for contest between the parties at the time of further hearing in this

proceeding on the basis of the pleadings filed by the parties and evidence adduced in the matter.

This application under Section 16 of the Arbitration and Conciliation Act, 1996, therefore, fails and the same stands dismissed.â€​

Upon referring such facts, learned advocate for the opposite party submitted that arbitrability of the subject matter in dispute could not be allowed to

be agitated once more, when petitioner had already submitted to the jurisdiction of Arbitrator and participated successfully in the arbitration

proceeding.

Learned advocate for the opposite party further submitted that the petitioner had already challenged the award passed by the Arbitrator under Section

34 of the Act before the appropriate Appellate Authority. It was sought to establish that with the recording of award directing petitioner to be evicted,

there left nothing to be adjudicated,, and when the appeal is pending for setting aside the award, the instant revisional aplication not only had been

rendered infructuous, but also being without any merits, liable to be dismissed.

Learned advocate for the petitioner being inspired by decision, rendered by Apex Court, reported in 2017(7) Supreme 456 in the case of Himangni

Enterprises vs. Kamaljeet Singh Ahluwalia submitted that Arbitration and Conciliation Act, 1996 would not apply to tenancy dispute despite existence

of Arbitral Clause in the leave and licence agreement. It was thus sought to be established by the petitioner that civil court alone would have the

jurisdiction, and the petitioner ought not to have been relegated to the jurisdiction of Arbitrator.

The Apex Court in the case referred above, upon consideration of decisions reported in (1981) 1 SCC 523 delivered in the case of Natraj studios (P)

Ltd. vs. Navrang Studios and Anr. and (2011) 5 SCC 532 delivered in the case of Booz Allen and Hamilton INC vs. SBI Home Finance Limited and

Ors. held that Civil Court alone would have the jurisdiction to decide the tenancy dispute.

In both the cases considered by the Apex Court, the reference to Arbitrator under Section 8 was challenged in a pending eviction suit of landlord,

what was originally not granted by the court below on the prayer of defendant/tenant.

In Natraj studios (P) Ltd (supra) the Apex Court upon consideration of Section 28 of the Bombay Rents, Hotel and Lodging House Control Act, 1947

and by reason of the broader consideration of the public policy held that civil court had the jurisdiction only to decide such nature of tenancy dispute

wherein eviction was sought for at the instance of landlord/plaintiff. In Booz Allen and Hamilton INC (supra) the Apex Court decided the following

propositions of law so as to consider the arbitrability of disputes.

“36. The Well-recognised examples of non-arbitrable disputes are: (I) disputes elating to rights and liabilities which give rise to or arise out of

criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters;

(iv) insolvency and winding-up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate), and (vi)

eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are

conferred jurisdiction to grant eviction or decide the disputes.

Paragraph 26 of the Himangni Enterprises (supra) may be of useful value in order to address the issue raised, which may be mentioned as hereunder:-

The Delhi Rent Act, which deals with the cases relating to rent and eviction of the premises, is a special Act. Though it contains a provision

(Section 3) by virtue of it, the provisions of the Act do not apply to certain premises but that does not mean that the Arbitration Act, ipso facto, would

be applicable to such premises conferring jurisdiction on the arbitrator to decide the eviction/rent disputes. In such a situation, the rights of the parties

and the demised premises would be governed by the Transfer of Property Act and the civil suit would be triable by the Civil Court and not by the

arbitrator. In other words, though by virtue of Section 3 of the Act, the provisions of the Act are not applicable to certain premises but no sooner the

exemption is withdrawn or ceased to have its application to a particular premises, the Act becomes applicable to such premises. In this view of the

matter, it cannot be contended that the provisions of the Arbitration Act would, therefore, apply to such premises.â€​

In the case of Booz Allen and Hamilton INC (supra) the provision of Delhi Rent Act containing the provision of Section 3 thereunder was considered,

because, it contained a provision by virtue of which the provisions of referred Act would not apply to certain premises. While making consideration of

the Delhi Rent Act, meant for realisation of rent and eviction of tenant from the premises, it was decided by the Apex Court that the presence of

Section 3 in the Delhi Rent Act would not ipso facto be applicable to such premises conferring jurisdiction on the Arbitrator to decide the eviction/rent

dispute. The Apex Court thus, held in the case of Booz Allen and Hamilton INC (supra) that in such a situation, the rights of the parties would be

governed by the Transfer of Property Act, and the civil court would be alone to adjudicate the tenancy dispute, but not the Arbitrator to decide the

same. The arbitrability of disputes was thus broadly considered by the Apex Court in the case of Booz Allen and Hamilton INC (supra) before

deciding the proposition of law.

It was thus conspicuously decided by the Apex Court that eviction or tenancy matters governed by special statute, where the tenant enjoys statutory

protection against eviction, and only the specified courts are conferred jurisdiction to grant eviction or decide the dispute.

Argument was advanced by learned advocate for the petitioner that the tenancy of the petitioner was not at all governable by the special statute, and

rather it was governable by the Transfer of Property Act, and as such the tenancy dispute, as raised by the petitioner being determinable by the

process of adjudication under the provisions of Transfer of Property Act by the civil court, ought not to have been relegated to Arbitrator allowing the

reference under Section 8 of the Arbitration and Conciliation Act.

In the case reported in 2014 (4) CHN (Cal)73 delivered in the case of Shyam Retails (India) Pvt. Limited vs. Bajaj Infracon Private Limited, as relied

upon by the petitioner, the reference to Arbitrator in connection with a suit for eviction, instituted by the landlord/plaintiff, could not be allowed to be

decided by the Arbitrator.

Reliance was placed by the learned advocate for the petitioner on a decision reported in 1999(2) CLJ 349 delivered in the case of Eastern Coils (p)

Ltd. vs. Deb Prosad Ghosh, in order to establish that civil court alone was conferred with the jurisdiction to determine a tenancy dispute.

In such case referred above, reference to Arbitrator was challenged, and upon seeing the omnibus nature of arbitration clause contained in the

agreement, not conspicuously revealing the range of differences, to be decided by the Arbitrator, and also being denuded of vital elements that the

parties would be bound by the result of arbitration with regard to difference, the Co-ordinate Bench of this court held that it was the civil court alone to

decide the eviction suit filed by the landlord and not by the Arbitrator. The case in hand is distinguishable from the factual matrix contained in such

decision on the ground that the presence of the arbitral clause is not in dispute between the parties and it is not a controversial issue that the parties

would not abide by the decision of the Arbitrator.

By referring such citations, discussed above, the sole effort of the petitioner was to establish that it was the civil court alone to decide the pending suit,

wherein the petitioner had sought for a declaration with respect to his tenancy right, based on leave and licence agreement. Whether an agreement is

entered into between the parties by way of licence or a lease, conduct of the parties is one of the determinative factors.

Learned advocate for the opposite party/landlord/licensor countered such decisions, as relied upon by the petitioner, taking shelter upon a decision

rendered by Apex Court recently on 28.02.2019 reported in 2019(4) SCALE 749 in the case of Vidya Drolia vs. Durga Trading Corporatio nand

submitted that the ratio decided in the case of Himangni Enterprises (supra), wherein decisions of the Apex Court rendered in the case of Natraj

studios (P) Ltd (supra) and Booz Allen and Hamilton INC (supra) were considered, had been defused to a considerable extent, when the Apex Court

in an unambiguous terms observed that the judgement in Himangni Enterprises (supra) will require a re-look by Bench of three Hon’ble Judges of

this court, and accordingly referred the matter for resolving the issue on the ground whether the provision of the Transfer of Property act was against

the arbitrability or not. This aspect, as specifically founded by the Apex Court in the case of Vidya Drolia (supra) could not be answered in the case of

Himangni Enterprises (supra)

It would be profitable here to refer relevant paragraph of the observation made by the Apex Court in the case of Vidya Drolia (supra) which me be

mentioned as hereunder:

“19. A perusal of both the aforesaid judgments, therefore, shows that the Transfer of Property Act situation between a landlord and tenant is very

far removed from the situation in either Nataraj Studios 9supra) or in sub-paragraph (vi) of paragraph 36 of Booz Allen (supra). We are, therefore, of

the respectful view that the question involved in a Transfer of Property Act situation cannot possibly be said to have been answered by the two

decisions of this Court, as has been stated in paragraph 18 of the said judgment.â€​

Whether the Transfer of Property Act is against the arbitrability or not, thus remained unanswered till date.

Pending decision of such issue, now it is for the court to determine whether the court below was justified in granting stay order till the award is passed,

and thereby allowing reference under Section 8 of the Act to Arbitrator or not. Admittedly an award was passed on 30.11.2018 which is under

challenge for setting aside the award. The petitioner now challenging the arbitrability of the dispute admittedly had taken part, in the arbitration

proceeding, and thereby submitted himself to the jurisdiction of Arbitrator. The jurisdiction of the arbitrator was challenged by filing an application

under Section 16 of the Arbitration and Conciliation Act, which was rejected by the Arbitrator recording a reasoned order, dated 31st October, 2017,

the reference of which had already been mentioned hereinabove.

The jurisdiction of the Arbitrator challenged under Section 16(2) of the Arbitration and Conciliation Act, though set at rest by the Arbitrator, but the

same is appealable one in view of the provisions incorporated in Sections 37(2)(a) of Arbitration and Conciliation Act. 1996. It is not clear, if any,

appellate remedy was sought to be availed of in order to challenge the arbitrability against the decision, reached by the Arbitrator in application of the

provisions under Section 16 of the Arbitration and Conciliation Act, 1996. The petitioner having admittedly participated in the arbitration proceeding,

even after challenging the arbitrability of the dispute before the Arbitrator and further having challenged the award under Section 34 of the Act, the

court is of the view that the instant revisional application has been rendered infructuous. Interference does not call for. The court below while granting

stay order till the decision of the award, and thereby facilitating reference to Arbitrator upon seeing presence of the arbitral clause, committed no

illegality, far to speak of alleged perversity in the order under challenge. The impugned order would thus go unaltered.

The revisional application fails being without any merits.

With the observation and direction the revisional application stands disposed of.

Urgent certified copy of this order, if applied for, be given to the appearing parties as expeditiously as possible upon compliance with the all necessary

formalities.