West Bengal Premises Tenancy Act, 1997 (for short ‘the Tenancy Act’) -Vs- Arbitration & conciliation Act - Unregistered lease deed - suit for eviction and for recovery of arrears of rents and for injunction - defendant filed an application under sec.8 of arbitration Act - Trial court dismissed the application and order to file written statement - High court allowed - Apex court held that the relief claimed by the appellants being mainly for eviction, it could only be granted by the “Civil Judge having jurisdiction” in a suit filed by the landlord as provided in Section 6 of the Tenancy Act. The expression “Civil Judge having jurisdiction”will obviously mean the Civil Judge who has jurisdiction to grant the other reliefs: decree for arrears of rent, decree for recovery of arrears of proportionate and enhanced municipal taxes, a decree for
mesne profits and a decree for permanent injunction claimed in the suit. and held that the High court committed wrong and allowed the appeal and remanded the matter to trial court for filing written statement =
The appellants have inducted the respondents as tenants in respect of
a shop room measuring 600 sq. feet at HA-3, Sector-3, Salt Lake City,
Kolkata, and paying a monthly rent to the appellants. In respect of
the tenancy, the appellants and the respondents have executed an
unregistered tenancy agreement which has been notarized on 10.11.2003.
On 06.03.2008, the appellants, through their Advocates, served a
notice on the respondents terminating the tenancy and asking them to
vacate the shop premises and the notice stated that after April, 2008
the relationship of landlord and tenant between the appellants and the
respondents shall cease to exist and the respondents will be deemed to
be trespassers liable to pay damages at the rate of Rs.500/- per day
for wrongful occupation of the shop.
The respondents, however, did
not vacate the shop premises and the appellants filed Title Suit No.89
of 2008 against the respondents for eviction, arrears of rent, arrears
of municipal tax, mesne profit and for permanent injunction in the
Court of the Civil Judge (Senior Division), 2nd Court at Barasat,
District North 24-Parganas in the State of West Bengal.
In the suit,
the respondents filed a petition under Section 8 of the Arbitration
and Conciliation Act, 1996 (for short ‘the 1996 Act’) stating therein
that the tenancy agreement contains an arbitration agreement in clause
15 and praying that all the disputes in the suit be referred to the
arbitrator.
By order dated 10.06.2009, the learned Civil Judge
dismissed the petition under Section 8 of the 1996 Act and posted the
matter to 10.07.2009 for filing of written statement by the defendants
(respondents herein). =
High court
By the impugned judgment dated
16.04.2010, the High Court has held that in view of the decisions of
this Court in Hindustan Petroleum Corporation Ltd. v. Pinkcity Midway
Petroleums [(2003) 6 SCC 503], Agri Gold Exims Ltd. v. Sri Lakshmi
Knits & Wovens & Ors. [(2007) 3 SCC 686] and Branch Manager, Magma
Leasing & Finance Limited & Anr. v. Potluri Madhavilata & Anr. [(2009)
10 SCC 103], the Court has no other alternative but to refer the
disputes to the arbitrators to be appointed by the parties as per the
arbitration agreement. The High Court, however, has observed in the
impugned judgment that if any dispute is raised regarding
arbitrability of such dispute before the arbitral tribunal, such
dispute will be decided by the arbitral tribunal. =
Apex court
The High Court, therefore, was not correct in coming to the conclusion
that as per the decisions of this Court in the aforesaid three cases,
the Court has no alternative but to refer the parties to arbitration
in view of the clear mandate in Section 8 of the 1996 Act.
On the
contrary, the relief claimed by the appellants being mainly for
eviction, it could only be granted by the “Civil Judge having
jurisdiction” in a suit filed by the landlord as provided in Section 6
of the Tenancy Act.
The expression “Civil Judge having jurisdiction”
will obviously mean the Civil Judge who has jurisdiction to grant the
other reliefs: decree for arrears of rent, decree for recovery of
arrears of proportionate and enhanced municipal taxes, a decree for
mesne profits and a decree for permanent injunction claimed in the
suit.
15. For the aforesaid reasons, we allow this appeal and set aside the
impugned judgments of the High Court and the Civil Judge, Senior
Division, and remand the matter to the learned Civil Judge, Senior
Division, who will now give an opportunity to the respondents to put
in their written statements and thereafter proceed with the suit in
accordance with law. Considering the peculiar facts of this case,
there shall be no order as to costs.
2014 (March. Part )judis.nic.in/supremecourt/filename=41306
A.K. PATNAIK, V. GOPALA GOWDA
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 3334 OF 2014
(Arising out of SLP (C) No. 15165 of 2010)
Ranjit Kumar Bose & Anr. … Appellants
Versus
Anannya Chowdhury & Anr. … Respondents
J U D G M E N T
A. K. PATNAIK, J.
Leave granted.
Facts of the Case
2. The appellants have inducted the respondents as tenants in respect of
a shop room measuring 600 sq. feet at HA-3, Sector-3, Salt Lake City,
Kolkata, and paying a monthly rent to the appellants. In respect of
the tenancy, the appellants and the respondents have executed an
unregistered tenancy agreement which has been notarized on 10.11.2003.
On 06.03.2008, the appellants, through their Advocates, served a
notice on the respondents terminating the tenancy and asking them to
vacate the shop premises and the notice stated that after April, 2008
the relationship of landlord and tenant between the appellants and the
respondents shall cease to exist and the respondents will be deemed to
be trespassers liable to pay damages at the rate of Rs.500/- per day
for wrongful occupation of the shop. The respondents, however, did
not vacate the shop premises and the appellants filed Title Suit No.89
of 2008 against the respondents for eviction, arrears of rent, arrears
of municipal tax, mesne profit and for permanent injunction in the
Court of the Civil Judge (Senior Division), 2nd Court at Barasat,
District North 24-Parganas in the State of West Bengal. In the suit,
the respondents filed a petition under Section 8 of the Arbitration
and Conciliation Act, 1996 (for short ‘the 1996 Act’) stating therein
that the tenancy agreement contains an arbitration agreement in clause
15 and praying that all the disputes in the suit be referred to the
arbitrator. By order dated 10.06.2009, the learned Civil Judge
dismissed the petition under Section 8 of the 1996 Act and posted the
matter to 10.07.2009 for filing of written statement by the defendants
(respondents herein).
3. Aggrieved, the respondents filed an application (C.O. No.2440 of 2009)
under Article 227 of the Constitution of India before the Calcutta
High Court and contended that the tenancy agreement contains an
arbitration agreement in Clause 15, which provides that any dispute
regarding the contents or construction of the agreement or dispute
arising out of the agreement shall be settled by Joint Arbitration of
two arbitrators, one to be appointed by the landlords and the other to
be appointed by the tenants and the decision of the arbitrators or
umpires appointed by them shall be final and that the arbitration will
be in accordance with the 1996 Act and, therefore, the learned Civil
Judge rejected the petition of the respondents to refer the disputes
to arbitration contrary to the mandate in Section 8 of the 1996 Act.
The appellants opposed the application under Article 227 of the
Constitution of India contending inter alia that the dispute between
the appellants and the respondents, who are landlords and tenants
respectively, can only be decided by a Civil Judge in accordance with
the provisions of the West Bengal Premises Tenancy Act, 1997 (for
short ‘the Tenancy Act’). By the impugned judgment dated
16.04.2010, the High Court has held that in view of the decisions of
this Court in Hindustan Petroleum Corporation Ltd. v. Pinkcity Midway
Petroleums [(2003) 6 SCC 503], Agri Gold Exims Ltd. v. Sri Lakshmi
Knits & Wovens & Ors. [(2007) 3 SCC 686] and Branch Manager, Magma
Leasing & Finance Limited & Anr. v. Potluri Madhavilata & Anr. [(2009)
10 SCC 103], the Court has no other alternative but to refer the
disputes to the arbitrators to be appointed by the parties as per the
arbitration agreement. The High Court, however, has observed in the
impugned judgment that if any dispute is raised regarding
arbitrability of such dispute before the arbitral tribunal, such
dispute will be decided by the arbitral tribunal.
Contentions of the learned counsel for the parties
4. Learned counsel for the appellants submitted that in Hindustan
Petroleum Corporation Ltd. v. Pinkcity Midway Petroleums, Agri Gold
Exims Ltd. v. Sri Lakshmi Knits & Wovens & Ors. and Branch Manager,
Magma Leasing & Finance Limited & Anr. v. Potluri Madhavilata & Anr.
(supra), this Court has not decided as to whether the dispute between
the landlord and the tenant could be decided by the arbitrator in
accordance with the arbitration agreement between the landlord and the
tenant and the provisions of the 1996 Act or by the appropriate forum
in accordance with the law relating to tenancy. He cited the decision
of this Court in Natraj Studios (P) Ltd. v. Navrang Studios & Anr.
[(1981) 1 SCC 523], wherein it has been held that Court of Small
Causes alone and not the arbitrator as a matter of public policy has
been empowered to decide disputes between the landlord and the tenant
under the Bombay Rent Act. He also relied on the observations of this
Court in Booz Allen and Hamilton Inc. v. SBI Home Finance Limited &
Ors. [(2011) 5 SCC 532] in para 36 at page 547 that eviction or
tenancy matters governed by a special statute where the tenant enjoys
statutory protection against eviction can be decided by specified
courts conferred with the jurisdiction to grant eviction and such
disputes are non-arbitrable.
5. Learned counsel for the respondents, on the other hand, relied on the
decisions of this Court in Hindustan Petroleum Corporation Ltd. v.
Pinkcity Midway Petroleums, Agri Gold Exims Ltd. v. Sri Lakshmi Knits
& Wovens & Ors. and Branch Manager, Magma Leasing & Finance Limited &
Anr. v. Potluri Madhavilata & Anr. (supra) to support the impugned
judgment. He submitted that there can be no doubt that the Tenancy
Act will determine the rights of the landlord and the tenant in this
case, but when there is an arbitration agreement between a landlord
and a tenant, instead of the Civil Judge, the arbitrator will decide
the disputes between the landlord and the tenant by applying the
provisions of the Tenancy Act.
Findings of the Court
6. The relevant portion of Section 6 of the Tenancy Act 1997 is quoted
hereinbelow:
“6. Protection of tenant against eviction.—(1) Notwithstanding
anything to the contrary contained in any other law for the time
being in force or in any contract, no order or decree for the
recovery of the possession of any premises shall be made by the
Civil Judge having jurisdiction in favour of the landlord against
the tenant, except on a suit being instituted by such landlord on
one or more of the following grounds:—
………………………………………………………..”
It will be clear from the language of Section 6 of the Tenancy Act 1997
quoted above that ‘notwithstanding anything to the contrary contained in
any contract’, no order or decree for recovery of possession of any
premises shall be made by the Civil Judge having jurisdiction in favour of
the landlord against the tenant, ‘except on a suit being instituted by such
landlord’ on one or more grounds mentioned therein. It is, thus, clear that
Section 6 of the Tenancy Act overrides a contract between the landlord and
the tenant and provides that only the Civil Judge having jurisdiction can
order or decree for recovery of possession only in a suit to be filed by
the landlord.
7. Part-I of the 1996 Act is titled ‘arbitration’. Section 8 of the 1996
Act is extracted hereinbelow:
“8. Power to refer parties to arbitration where there is an
arbitration agreement.-- (1) A judicial authority before which an
action is brought in a matter which is the subject of an
arbitration agreement shall, if a party so applies not later than
when submitting his first statement on the substance of the
dispute, refer the parties to arbitration.
(2) The application referred to in subsection (1) shall not be
entertained unless it is accompanied by the original arbitration
agreement or a duly certified copy thereof.
(3) Notwithstanding that an application has been made under sub-
section (1) and that the issue is pending before the judicial
authority, an arbitration may be commenced or continued and an
arbitral award made.”
A reading of sub-section (1) of Section 8 of the 1996 Act will make it
clear that a judicial authority before which an action is brought in a
matter which is the subject of an arbitration agreement shall refer the
parties to arbitration. Without ‘an arbitration agreement’, therefore, a
judicial authority cannot refer the parties to arbitration.
8. In this case, there is an arbitration agreement in clause 15 of the
tenancy agreement, which provides that any dispute regarding the
contents or construction of the tenancy agreement or dispute arising
out of the tenancy agreement shall be settled by arbitration in
accordance with the provisions of the 1996 Act. But the words
‘notwithstanding anything in any contract’ in Section 6 of the Tenancy
Act, will override the arbitration agreement in clause 15 of the
tenancy agreement where a suit for recovery of possession of any
premises has been filed by a landlord against the tenant. Such a suit
filed by the landlord against the tenant for recovery of possession,
therefore, cannot be referred under Section 8 of the 1996 Act to
arbitration. In fact, sub-section (3) of Section 2 of the 1996 Act
expressly provides that Part-I which relates to ‘arbitration’ where
the place of arbitration is in India shall not affect any other law
for the time being in force by virtue of which certain disputes may
not be submitted to arbitration. Section 6 of the Tenancy Act is one
such law which clearly bars arbitration in a dispute relating to
recovery of possession of premises by the landlord from the tenant.
Since the suit filed by the appellants was for eviction, it was a suit
for recovery of possession and could not be referred to arbitration
because of a statutory provision in Section 6 of the Tenancy Act.
9. In Natraj Studios (P) Ltd. v. Navrang Studios & Anr. (supra), there
was a leave and licence agreement between Natraj Studios (P) Ltd. and
Navrang Studios. On 28.04.1979, Navrang Studios purported to
terminate the leave and licence agreement and called upon Natraj
Studios (P) Ltd. to hand over the possession of the studios to them.
Natraj Studios (P) Ltd. filed a suit on 08.05.1979 in the Court of
Small Causes, Bombay, for a declaration that Natraj Studios (P) Ltd.
was a monthly tenant of the studios and for fixation of standard rent
and other reliefs. Navrang Studios filed a written statement
contesting the suit. Natraj Studios (P) Ltd. filed an application
under Section 33 of the Arbitration Act, 1940 in the Bombay High Court
for a declaration that the arbitration clause in the leave and licence
agreement was invalid and inoperative. The High Court dismissed the
application. Thereafter, Navrang Studios filed an application under
Section 8 of the Arbitration Act, 1940 for appointment of a sole
arbitrator to decide the disputes and differences between the parties
under the leave and licence agreement. The High Court allowed the
application and appointed a sole arbitrator. On appeal being carried
to this Court by Natraj Studios (P) Ltd., this Court held that Section
28(1) of the Bombay Rent Act vests an exclusive jurisdiction in the
Court of Small Causes to entertain and try any suit or proceeding
between a landlord and tenant relating to the recovery of rent or
possession of any premises. This Court further held that the Bombay
Rent Act was a welfare legislation aimed at the definite social
objective of protection of tenants against harassment by landlords in
various ways and public policy requires that contracts to the contrary
which nullify the rights conferred on tenants by the Act cannot be
permitted and it follows that arbitration agreements between parties
whose rights are regulated by the Bombay Rent Act cannot be recognized
by a court of law. This decision in Natraj Studios (P) Ltd. v.
Navrang Studios & Anr. (supra) supports our conclusion that the
arbitration agreement between the landlord and tenant has to give way
to Section 6 of the Tenancy Act which confers exclusive jurisdiction
on the Civil Judge, to decide a dispute between the landlord and the
tenant with regard to recovery of possession of the tenanted premises
in a suit filed by the landlord.
10. The High Court, however, has relied on three decisions of this Court
to hold that it is for the arbitral tribunal to decide under Section
16 of the 1996 Act whether it has the jurisdiction to decide the
dispute between the appellants and the respondents. We may
distinguish those cases from the facts of the present case.
11. In Hindustan Petroleum Corporation Ltd. v. Pinkcity Midway Petroleums
(supra), Hindustan Petroleum Corporation Ltd. stopped supply of
petroleum products to the dealer and the dealer filed a civil suit in
the Court of Civil Judge, Rewari, for a declaration that the order
stopping supply of petroleum product was illegal and arbitrary.
Hindustan Petroleum Corporation Ltd. filed a petition under Section 8
of the 1996 Act praying for referring the dispute pending before the
Civil Court to the arbitrator as per Clause 40 of the Dealership
Agreement. The Civil Judge dismissed the petition and Hindustan
Petroleum Corporation Ltd. filed a revision before the High Court, but
the High Court also dismissed the revision. Hindustan Petroleum
Corporation Ltd. thereafter filed an appeal before this Court and this
Court held that Section 8 of the 1996 Act in its clear terms mandates
a judicial authority before whom an application is brought in a
matter, which is the subject-matter of an arbitration agreement, to
refer such parties to the arbitration. In this case, the arbitration
agreement contained in Clause 40 of the Dealership Agreement was not
hit by a statutory provision like the one in Section 6 of the Tenancy
Act providing that the dispute shall be decided only by a Civil Judge
in a suit notwithstanding a provision in the contract to the contrary.
12. In Agri Gold Exims Ltd. v. Sri Lakshmi Knits & Wovens & Ors. (supra),
the parties had entered into a memorandum of understanding in relation
to the business of export and the memorandum of understanding
contained an arbitration clause that in case of any dispute between
the two parties, the same shall be referred to arbitration, by two
arbitrators, nominated by each of the parties and the award of the
arbitrators shall be binding on both the parties. Agri Gold Exims
Ltd. filed a suit in the District Court at Vijayawada for recovery of
an amount of Rs.36,14,887/- and for future interest on a sum of
Rs.53,79,149/-. Sri Lakshmi Knits & Wovens filed an application under
Section 8 of the 1996 Act for referring the dispute to the arbitral
tribunal in terms of the arbitration agreement contained in the
memorandum of understanding. This application, however, was dismissed
by the District Court, but on revision the High Court reversed the
order of the District Court and referred the parties to arbitration.
Agri Gold Exims Ltd. carried an appeal to this Court and this Court
reiterated that Section 8 of the 1996 Act is peremptory in nature and
in a case where there exists an arbitration agreement, the Court is
under obligation to refer the parties to arbitration in terms of the
arbitration agreement, relying on Hindustan Petroleum Corporation Ltd.
(supra). In this case again, there was no statutory bar to
arbitration like the one in Section 6 of the Tenancy Act providing
that the dispute can only be decided by the Civil Judge in a suit.
13. In Branch Manager, Magma Leasing & Finance Limited & Anr. v. Potluri
Madhavilata & Anr. (supra), Magma Leasing Limited Public United
Company (for short ‘Magma’) and Smt. Potluri Madhavilata (for short
‘hirer’) entered into an agreement of hire-purchase for the purchase
of a motor vehicle whereunder the hirer was required to pay hire-
purchase price in 46 instalments. When the instalments were not
paid, Magma seized the vehicle and sent a notice to the hirer saying
that the hire-purchase agreement has been terminated. The hirer then
filed a suit against Magma in the Court of the Senior Civil Judge for
recovery of possession of the vehicle and for restraining Magma from
transferring the vehicle. Magma filed a petition before the Civil
Judge under Section 8 of the 1996 Act praying that the dispute raised
in the suit be referred to an arbitrator in terms of Clause 22 of the
Hire-Purchase Agreement, which contained the arbitration agreement.
This Court reiterated that Section 8 is in the form of legislative
command to the court and once the prerequisite conditions are
satisfied, the Court must refer the parties to arbitration. In this
case again, there was no statutory bar to arbitration like Section 6
of the Tenancy Act providing that the dispute can only be decided by a
Civil Judge.
14. The High Court, therefore, was not correct in coming to the conclusion
that as per the decisions of this Court in the aforesaid three cases,
the Court has no alternative but to refer the parties to arbitration
in view of the clear mandate in Section 8 of the 1996 Act. On the
contrary, the relief claimed by the appellants being mainly for
eviction, it could only be granted by the “Civil Judge having
jurisdiction” in a suit filed by the landlord as provided in Section 6
of the Tenancy Act. The expression “Civil Judge having jurisdiction”
will obviously mean the Civil Judge who has jurisdiction to grant the
other reliefs: decree for arrears of rent, decree for recovery of
arrears of proportionate and enhanced municipal taxes, a decree for
mesne profits and a decree for permanent injunction claimed in the
suit.
15. For the aforesaid reasons, we allow this appeal and set aside the
impugned judgments of the High Court and the Civil Judge, Senior
Division, and remand the matter to the learned Civil Judge, Senior
Division, who will now give an opportunity to the respondents to put
in their written statements and thereafter proceed with the suit in
accordance with law. Considering the peculiar facts of this case,
there shall be no order as to costs.
.....……………..…….J.
(A. K. Patnaik)
....…………..……….J.
(V. Gopala Gowda)
New Delhi,
March 07, 2014.
-----------------------
16
mesne profits and a decree for permanent injunction claimed in the suit. and held that the High court committed wrong and allowed the appeal and remanded the matter to trial court for filing written statement =
The appellants have inducted the respondents as tenants in respect of
a shop room measuring 600 sq. feet at HA-3, Sector-3, Salt Lake City,
Kolkata, and paying a monthly rent to the appellants. In respect of
the tenancy, the appellants and the respondents have executed an
unregistered tenancy agreement which has been notarized on 10.11.2003.
On 06.03.2008, the appellants, through their Advocates, served a
notice on the respondents terminating the tenancy and asking them to
vacate the shop premises and the notice stated that after April, 2008
the relationship of landlord and tenant between the appellants and the
respondents shall cease to exist and the respondents will be deemed to
be trespassers liable to pay damages at the rate of Rs.500/- per day
for wrongful occupation of the shop.
The respondents, however, did
not vacate the shop premises and the appellants filed Title Suit No.89
of 2008 against the respondents for eviction, arrears of rent, arrears
of municipal tax, mesne profit and for permanent injunction in the
Court of the Civil Judge (Senior Division), 2nd Court at Barasat,
District North 24-Parganas in the State of West Bengal.
In the suit,
the respondents filed a petition under Section 8 of the Arbitration
and Conciliation Act, 1996 (for short ‘the 1996 Act’) stating therein
that the tenancy agreement contains an arbitration agreement in clause
15 and praying that all the disputes in the suit be referred to the
arbitrator.
By order dated 10.06.2009, the learned Civil Judge
dismissed the petition under Section 8 of the 1996 Act and posted the
matter to 10.07.2009 for filing of written statement by the defendants
(respondents herein). =
High court
By the impugned judgment dated
16.04.2010, the High Court has held that in view of the decisions of
this Court in Hindustan Petroleum Corporation Ltd. v. Pinkcity Midway
Petroleums [(2003) 6 SCC 503], Agri Gold Exims Ltd. v. Sri Lakshmi
Knits & Wovens & Ors. [(2007) 3 SCC 686] and Branch Manager, Magma
Leasing & Finance Limited & Anr. v. Potluri Madhavilata & Anr. [(2009)
10 SCC 103], the Court has no other alternative but to refer the
disputes to the arbitrators to be appointed by the parties as per the
arbitration agreement. The High Court, however, has observed in the
impugned judgment that if any dispute is raised regarding
arbitrability of such dispute before the arbitral tribunal, such
dispute will be decided by the arbitral tribunal. =
Apex court
The High Court, therefore, was not correct in coming to the conclusion
that as per the decisions of this Court in the aforesaid three cases,
the Court has no alternative but to refer the parties to arbitration
in view of the clear mandate in Section 8 of the 1996 Act.
On the
contrary, the relief claimed by the appellants being mainly for
eviction, it could only be granted by the “Civil Judge having
jurisdiction” in a suit filed by the landlord as provided in Section 6
of the Tenancy Act.
The expression “Civil Judge having jurisdiction”
will obviously mean the Civil Judge who has jurisdiction to grant the
other reliefs: decree for arrears of rent, decree for recovery of
arrears of proportionate and enhanced municipal taxes, a decree for
mesne profits and a decree for permanent injunction claimed in the
suit.
15. For the aforesaid reasons, we allow this appeal and set aside the
impugned judgments of the High Court and the Civil Judge, Senior
Division, and remand the matter to the learned Civil Judge, Senior
Division, who will now give an opportunity to the respondents to put
in their written statements and thereafter proceed with the suit in
accordance with law. Considering the peculiar facts of this case,
there shall be no order as to costs.
A.K. PATNAIK, V. GOPALA GOWDA
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 3334 OF 2014
(Arising out of SLP (C) No. 15165 of 2010)
Ranjit Kumar Bose & Anr. … Appellants
Versus
Anannya Chowdhury & Anr. … Respondents
J U D G M E N T
A. K. PATNAIK, J.
Leave granted.
Facts of the Case
2. The appellants have inducted the respondents as tenants in respect of
a shop room measuring 600 sq. feet at HA-3, Sector-3, Salt Lake City,
Kolkata, and paying a monthly rent to the appellants. In respect of
the tenancy, the appellants and the respondents have executed an
unregistered tenancy agreement which has been notarized on 10.11.2003.
On 06.03.2008, the appellants, through their Advocates, served a
notice on the respondents terminating the tenancy and asking them to
vacate the shop premises and the notice stated that after April, 2008
the relationship of landlord and tenant between the appellants and the
respondents shall cease to exist and the respondents will be deemed to
be trespassers liable to pay damages at the rate of Rs.500/- per day
for wrongful occupation of the shop. The respondents, however, did
not vacate the shop premises and the appellants filed Title Suit No.89
of 2008 against the respondents for eviction, arrears of rent, arrears
of municipal tax, mesne profit and for permanent injunction in the
Court of the Civil Judge (Senior Division), 2nd Court at Barasat,
District North 24-Parganas in the State of West Bengal. In the suit,
the respondents filed a petition under Section 8 of the Arbitration
and Conciliation Act, 1996 (for short ‘the 1996 Act’) stating therein
that the tenancy agreement contains an arbitration agreement in clause
15 and praying that all the disputes in the suit be referred to the
arbitrator. By order dated 10.06.2009, the learned Civil Judge
dismissed the petition under Section 8 of the 1996 Act and posted the
matter to 10.07.2009 for filing of written statement by the defendants
(respondents herein).
3. Aggrieved, the respondents filed an application (C.O. No.2440 of 2009)
under Article 227 of the Constitution of India before the Calcutta
High Court and contended that the tenancy agreement contains an
arbitration agreement in Clause 15, which provides that any dispute
regarding the contents or construction of the agreement or dispute
arising out of the agreement shall be settled by Joint Arbitration of
two arbitrators, one to be appointed by the landlords and the other to
be appointed by the tenants and the decision of the arbitrators or
umpires appointed by them shall be final and that the arbitration will
be in accordance with the 1996 Act and, therefore, the learned Civil
Judge rejected the petition of the respondents to refer the disputes
to arbitration contrary to the mandate in Section 8 of the 1996 Act.
The appellants opposed the application under Article 227 of the
Constitution of India contending inter alia that the dispute between
the appellants and the respondents, who are landlords and tenants
respectively, can only be decided by a Civil Judge in accordance with
the provisions of the West Bengal Premises Tenancy Act, 1997 (for
short ‘the Tenancy Act’). By the impugned judgment dated
16.04.2010, the High Court has held that in view of the decisions of
this Court in Hindustan Petroleum Corporation Ltd. v. Pinkcity Midway
Petroleums [(2003) 6 SCC 503], Agri Gold Exims Ltd. v. Sri Lakshmi
Knits & Wovens & Ors. [(2007) 3 SCC 686] and Branch Manager, Magma
Leasing & Finance Limited & Anr. v. Potluri Madhavilata & Anr. [(2009)
10 SCC 103], the Court has no other alternative but to refer the
disputes to the arbitrators to be appointed by the parties as per the
arbitration agreement. The High Court, however, has observed in the
impugned judgment that if any dispute is raised regarding
arbitrability of such dispute before the arbitral tribunal, such
dispute will be decided by the arbitral tribunal.
Contentions of the learned counsel for the parties
4. Learned counsel for the appellants submitted that in Hindustan
Petroleum Corporation Ltd. v. Pinkcity Midway Petroleums, Agri Gold
Exims Ltd. v. Sri Lakshmi Knits & Wovens & Ors. and Branch Manager,
Magma Leasing & Finance Limited & Anr. v. Potluri Madhavilata & Anr.
(supra), this Court has not decided as to whether the dispute between
the landlord and the tenant could be decided by the arbitrator in
accordance with the arbitration agreement between the landlord and the
tenant and the provisions of the 1996 Act or by the appropriate forum
in accordance with the law relating to tenancy. He cited the decision
of this Court in Natraj Studios (P) Ltd. v. Navrang Studios & Anr.
[(1981) 1 SCC 523], wherein it has been held that Court of Small
Causes alone and not the arbitrator as a matter of public policy has
been empowered to decide disputes between the landlord and the tenant
under the Bombay Rent Act. He also relied on the observations of this
Court in Booz Allen and Hamilton Inc. v. SBI Home Finance Limited &
Ors. [(2011) 5 SCC 532] in para 36 at page 547 that eviction or
tenancy matters governed by a special statute where the tenant enjoys
statutory protection against eviction can be decided by specified
courts conferred with the jurisdiction to grant eviction and such
disputes are non-arbitrable.
5. Learned counsel for the respondents, on the other hand, relied on the
decisions of this Court in Hindustan Petroleum Corporation Ltd. v.
Pinkcity Midway Petroleums, Agri Gold Exims Ltd. v. Sri Lakshmi Knits
& Wovens & Ors. and Branch Manager, Magma Leasing & Finance Limited &
Anr. v. Potluri Madhavilata & Anr. (supra) to support the impugned
judgment. He submitted that there can be no doubt that the Tenancy
Act will determine the rights of the landlord and the tenant in this
case, but when there is an arbitration agreement between a landlord
and a tenant, instead of the Civil Judge, the arbitrator will decide
the disputes between the landlord and the tenant by applying the
provisions of the Tenancy Act.
Findings of the Court
6. The relevant portion of Section 6 of the Tenancy Act 1997 is quoted
hereinbelow:
“6. Protection of tenant against eviction.—(1) Notwithstanding
anything to the contrary contained in any other law for the time
being in force or in any contract, no order or decree for the
recovery of the possession of any premises shall be made by the
Civil Judge having jurisdiction in favour of the landlord against
the tenant, except on a suit being instituted by such landlord on
one or more of the following grounds:—
………………………………………………………..”
It will be clear from the language of Section 6 of the Tenancy Act 1997
quoted above that ‘notwithstanding anything to the contrary contained in
any contract’, no order or decree for recovery of possession of any
premises shall be made by the Civil Judge having jurisdiction in favour of
the landlord against the tenant, ‘except on a suit being instituted by such
landlord’ on one or more grounds mentioned therein. It is, thus, clear that
Section 6 of the Tenancy Act overrides a contract between the landlord and
the tenant and provides that only the Civil Judge having jurisdiction can
order or decree for recovery of possession only in a suit to be filed by
the landlord.
7. Part-I of the 1996 Act is titled ‘arbitration’. Section 8 of the 1996
Act is extracted hereinbelow:
“8. Power to refer parties to arbitration where there is an
arbitration agreement.-- (1) A judicial authority before which an
action is brought in a matter which is the subject of an
arbitration agreement shall, if a party so applies not later than
when submitting his first statement on the substance of the
dispute, refer the parties to arbitration.
(2) The application referred to in subsection (1) shall not be
entertained unless it is accompanied by the original arbitration
agreement or a duly certified copy thereof.
(3) Notwithstanding that an application has been made under sub-
section (1) and that the issue is pending before the judicial
authority, an arbitration may be commenced or continued and an
arbitral award made.”
A reading of sub-section (1) of Section 8 of the 1996 Act will make it
clear that a judicial authority before which an action is brought in a
matter which is the subject of an arbitration agreement shall refer the
parties to arbitration. Without ‘an arbitration agreement’, therefore, a
judicial authority cannot refer the parties to arbitration.
8. In this case, there is an arbitration agreement in clause 15 of the
tenancy agreement, which provides that any dispute regarding the
contents or construction of the tenancy agreement or dispute arising
out of the tenancy agreement shall be settled by arbitration in
accordance with the provisions of the 1996 Act. But the words
‘notwithstanding anything in any contract’ in Section 6 of the Tenancy
Act, will override the arbitration agreement in clause 15 of the
tenancy agreement where a suit for recovery of possession of any
premises has been filed by a landlord against the tenant. Such a suit
filed by the landlord against the tenant for recovery of possession,
therefore, cannot be referred under Section 8 of the 1996 Act to
arbitration. In fact, sub-section (3) of Section 2 of the 1996 Act
expressly provides that Part-I which relates to ‘arbitration’ where
the place of arbitration is in India shall not affect any other law
for the time being in force by virtue of which certain disputes may
not be submitted to arbitration. Section 6 of the Tenancy Act is one
such law which clearly bars arbitration in a dispute relating to
recovery of possession of premises by the landlord from the tenant.
Since the suit filed by the appellants was for eviction, it was a suit
for recovery of possession and could not be referred to arbitration
because of a statutory provision in Section 6 of the Tenancy Act.
9. In Natraj Studios (P) Ltd. v. Navrang Studios & Anr. (supra), there
was a leave and licence agreement between Natraj Studios (P) Ltd. and
Navrang Studios. On 28.04.1979, Navrang Studios purported to
terminate the leave and licence agreement and called upon Natraj
Studios (P) Ltd. to hand over the possession of the studios to them.
Natraj Studios (P) Ltd. filed a suit on 08.05.1979 in the Court of
Small Causes, Bombay, for a declaration that Natraj Studios (P) Ltd.
was a monthly tenant of the studios and for fixation of standard rent
and other reliefs. Navrang Studios filed a written statement
contesting the suit. Natraj Studios (P) Ltd. filed an application
under Section 33 of the Arbitration Act, 1940 in the Bombay High Court
for a declaration that the arbitration clause in the leave and licence
agreement was invalid and inoperative. The High Court dismissed the
application. Thereafter, Navrang Studios filed an application under
Section 8 of the Arbitration Act, 1940 for appointment of a sole
arbitrator to decide the disputes and differences between the parties
under the leave and licence agreement. The High Court allowed the
application and appointed a sole arbitrator. On appeal being carried
to this Court by Natraj Studios (P) Ltd., this Court held that Section
28(1) of the Bombay Rent Act vests an exclusive jurisdiction in the
Court of Small Causes to entertain and try any suit or proceeding
between a landlord and tenant relating to the recovery of rent or
possession of any premises. This Court further held that the Bombay
Rent Act was a welfare legislation aimed at the definite social
objective of protection of tenants against harassment by landlords in
various ways and public policy requires that contracts to the contrary
which nullify the rights conferred on tenants by the Act cannot be
permitted and it follows that arbitration agreements between parties
whose rights are regulated by the Bombay Rent Act cannot be recognized
by a court of law. This decision in Natraj Studios (P) Ltd. v.
Navrang Studios & Anr. (supra) supports our conclusion that the
arbitration agreement between the landlord and tenant has to give way
to Section 6 of the Tenancy Act which confers exclusive jurisdiction
on the Civil Judge, to decide a dispute between the landlord and the
tenant with regard to recovery of possession of the tenanted premises
in a suit filed by the landlord.
10. The High Court, however, has relied on three decisions of this Court
to hold that it is for the arbitral tribunal to decide under Section
16 of the 1996 Act whether it has the jurisdiction to decide the
dispute between the appellants and the respondents. We may
distinguish those cases from the facts of the present case.
11. In Hindustan Petroleum Corporation Ltd. v. Pinkcity Midway Petroleums
(supra), Hindustan Petroleum Corporation Ltd. stopped supply of
petroleum products to the dealer and the dealer filed a civil suit in
the Court of Civil Judge, Rewari, for a declaration that the order
stopping supply of petroleum product was illegal and arbitrary.
Hindustan Petroleum Corporation Ltd. filed a petition under Section 8
of the 1996 Act praying for referring the dispute pending before the
Civil Court to the arbitrator as per Clause 40 of the Dealership
Agreement. The Civil Judge dismissed the petition and Hindustan
Petroleum Corporation Ltd. filed a revision before the High Court, but
the High Court also dismissed the revision. Hindustan Petroleum
Corporation Ltd. thereafter filed an appeal before this Court and this
Court held that Section 8 of the 1996 Act in its clear terms mandates
a judicial authority before whom an application is brought in a
matter, which is the subject-matter of an arbitration agreement, to
refer such parties to the arbitration. In this case, the arbitration
agreement contained in Clause 40 of the Dealership Agreement was not
hit by a statutory provision like the one in Section 6 of the Tenancy
Act providing that the dispute shall be decided only by a Civil Judge
in a suit notwithstanding a provision in the contract to the contrary.
12. In Agri Gold Exims Ltd. v. Sri Lakshmi Knits & Wovens & Ors. (supra),
the parties had entered into a memorandum of understanding in relation
to the business of export and the memorandum of understanding
contained an arbitration clause that in case of any dispute between
the two parties, the same shall be referred to arbitration, by two
arbitrators, nominated by each of the parties and the award of the
arbitrators shall be binding on both the parties. Agri Gold Exims
Ltd. filed a suit in the District Court at Vijayawada for recovery of
an amount of Rs.36,14,887/- and for future interest on a sum of
Rs.53,79,149/-. Sri Lakshmi Knits & Wovens filed an application under
Section 8 of the 1996 Act for referring the dispute to the arbitral
tribunal in terms of the arbitration agreement contained in the
memorandum of understanding. This application, however, was dismissed
by the District Court, but on revision the High Court reversed the
order of the District Court and referred the parties to arbitration.
Agri Gold Exims Ltd. carried an appeal to this Court and this Court
reiterated that Section 8 of the 1996 Act is peremptory in nature and
in a case where there exists an arbitration agreement, the Court is
under obligation to refer the parties to arbitration in terms of the
arbitration agreement, relying on Hindustan Petroleum Corporation Ltd.
(supra). In this case again, there was no statutory bar to
arbitration like the one in Section 6 of the Tenancy Act providing
that the dispute can only be decided by the Civil Judge in a suit.
13. In Branch Manager, Magma Leasing & Finance Limited & Anr. v. Potluri
Madhavilata & Anr. (supra), Magma Leasing Limited Public United
Company (for short ‘Magma’) and Smt. Potluri Madhavilata (for short
‘hirer’) entered into an agreement of hire-purchase for the purchase
of a motor vehicle whereunder the hirer was required to pay hire-
purchase price in 46 instalments. When the instalments were not
paid, Magma seized the vehicle and sent a notice to the hirer saying
that the hire-purchase agreement has been terminated. The hirer then
filed a suit against Magma in the Court of the Senior Civil Judge for
recovery of possession of the vehicle and for restraining Magma from
transferring the vehicle. Magma filed a petition before the Civil
Judge under Section 8 of the 1996 Act praying that the dispute raised
in the suit be referred to an arbitrator in terms of Clause 22 of the
Hire-Purchase Agreement, which contained the arbitration agreement.
This Court reiterated that Section 8 is in the form of legislative
command to the court and once the prerequisite conditions are
satisfied, the Court must refer the parties to arbitration. In this
case again, there was no statutory bar to arbitration like Section 6
of the Tenancy Act providing that the dispute can only be decided by a
Civil Judge.
14. The High Court, therefore, was not correct in coming to the conclusion
that as per the decisions of this Court in the aforesaid three cases,
the Court has no alternative but to refer the parties to arbitration
in view of the clear mandate in Section 8 of the 1996 Act. On the
contrary, the relief claimed by the appellants being mainly for
eviction, it could only be granted by the “Civil Judge having
jurisdiction” in a suit filed by the landlord as provided in Section 6
of the Tenancy Act. The expression “Civil Judge having jurisdiction”
will obviously mean the Civil Judge who has jurisdiction to grant the
other reliefs: decree for arrears of rent, decree for recovery of
arrears of proportionate and enhanced municipal taxes, a decree for
mesne profits and a decree for permanent injunction claimed in the
suit.
15. For the aforesaid reasons, we allow this appeal and set aside the
impugned judgments of the High Court and the Civil Judge, Senior
Division, and remand the matter to the learned Civil Judge, Senior
Division, who will now give an opportunity to the respondents to put
in their written statements and thereafter proceed with the suit in
accordance with law. Considering the peculiar facts of this case,
there shall be no order as to costs.
.....……………..…….J.
(A. K. Patnaik)
....…………..……….J.
(V. Gopala Gowda)
New Delhi,
March 07, 2014.
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