w w w . L a w y e r S e r v i c e s . i n



Royal Orchid Hotels Limited, Represented herein by its Authorized Representative Amit Jaiswal, Bengaluru v/s Rock Reality Private Limited, Represented by One of its Directors LMR. Antony Paul, Pune

    Civil Miscellaneous Petition No. 288 of 2018

    Decided On, 13 October 2020

    At, High Court of Karnataka

    By, THE HONOURABLE MR. JUSTICE S.R. KRISHNA KUMAR

    For the Petitioner: M.V. Sundararaman, M/s. Crestlaw Partners, Advocates. For the Respondent: M. Aruna Shyam, Advocate.



Judgment Text

(Prayer: This CMP is filed Under Section 11(4) of the Arbitration and Conciliation Act, 1996 praying to (I) Appoint, Petitioner's Nominee as the sole Arbitrator or any other arbitrator as this Hon'ble Court may deem fit and refer the disputes between the parties to arbitrator in terms of Clause 7 of the agreement dated: 17.07.2006 vide (Annexure -A); read with Clause V of Annexure -B agreement dated: 26.10.2012 and etc.)

1. In this petition filed under Section 11(4) of the Arbitration and Conciliation Act, 1996, (for short 'the Act') petitioner seeks appointment of a Sole Arbitrator to resolve the disputes between the petitioner and the respondent in terms of Clause-7 of the Agreement at Annexure-A dated 17.07.2006 and Clause-V of the Agreement at Annexure-B dated 26.10.2012. The respondent has filed its Statement of Objections and has contested the petition.

2. Briefly stated, the facts giving rise to this petition are as follows:

The Petitioner-Lessee entered into a lease agreement at Annexure-A dated 17.07.2006 with the Lessor-Just Homes Associates in respect of the schedule property. Clause-7 of the said agreement provides for resolution of disputes between the parties by reference to arbitration with the venue for arbitration and jurisdiction of the Courts being both at Pune as well as Bengaluru. Clause 2.2 stipulated that the period of lease was 10 years with a renewal for a further period of 10 years. No.4.3 of the said agreement provided for renewal of the lease.

Under a registered sale deed dated 26.09.2012, the aforesaid Just Homes Associates sold the entire property of which the schedule property was a portion in favour of the respondent herein. Pursuant thereto, a tripartite agreement at Annexure-B dated 26.10.2012 was entered into between the petitioner, respondent and M/s. Just Home Associates. Clause IV of the said agreement dated 26.10.2012 while providing that the leasehold rights of the petitioner in respect of the schedule property stood attorned under the respondent herein, made certain minor modifications to clause No.4.3 of the agreement dated 17.07.2006. However, even the modified renewal clause No.4.3 of the agreement dated 17.07.2006 as modified by the said Clause IV of the agreement dated 26.10.2012 also provided for renewal of lease for a further period of 10 years in favour of the petitioner.

Clause V of the agreement dated 26.10.2012 stipulated that except the modified renewal Clause IV, the rest of the contents of the said agreement dated 17.07.2006 would stand unvaried and unaltered. Clauses VI and VII also stipulated that the terms and conditions of the agreement dated 26.10.2012 shall form an integral part of the agreement dated 17.07.2006, that the agreement dated 26.10.2012 shall be read and construed along with the agreement dated 17.07.2006 and that the respondent herein would be bound by the terms and conditions of the agreement dated 17.07.2006.

On 05.02.2018, petitioner issued a Letter at Annexure-C to the respondent expressing its intention to get the lease renewed for a further period of 10 years in terms of the aforesaid agreements. The said Letter having been received by the respondent, no reply was sent by it. Instead a Lawyer's Notice dated 20.02.2018 at Annexure-D was issued on behalf of respondent calling upon the petitioner to vacate the schedule property as well as pay arrears of rent to the respondent. Subsequently, respondent has also instituted a suit in C.S.No.99/2018 against the petitioner before the Small Causes Judge at Pune seeking eviction of the petitioner, injunction and other relief's.

It is the contention of the petitioner that it is entitled to renewal of the lease in respect of the schedule property for a further period of 10 years by virtue of Clause 4.3 of the agreement dated 17.07.2006 as modified by Clause IV of the agreement dated 26.10.2012 and since the said claim of the petitioner was repudiated by the respondent, petitioner was entitled to specific performance of contract of the said renewal clause. It is contended that the arbitration agreement at Clause 7 of the agreement dated 17.07.2006 was made part and parcel of the agreement dated 26.10.2012 executed between petitioner and respondent by virtue of Clauses V, VI and VII of the subsequent agreement dated 26.10.2012 and consequently, any dispute between petitioner and respondent would have to be referred to arbitration in terms of Clause No.7 of the agreement dated 17.07.2006. Under these circumstances, petitioner invoked the arbitration agreement at Clause 7 of the agreement dated 17.07.2006 and issued an Arbitration Notice at Annexure-F dated 24.03.2018 to the respondent. Since the respondent neither complied with the same nor issued any reply, petitioner is before this Court by way of the present petition for appointment of an arbitrator.

3. I have heard learned counsel for the petitioner and learned counsel for the respondent and perused the material on record.

4. Learned counsel for the petitioner in addition to reiterating various contentions urged in the petition and the documents on record submitted that since there exists a valid and binding arbitration clause between the parties, the dispute between the parties in relation to the claim for specific performance of the renewal clause 4.3 of the agreement dated 17.07.2006 as modified by Clause IV of the agreement dated 26.10.2012 is arbitrable and the same requires to be referred to arbitration by appointing a sole arbitrator. In support of his contentions, learned counsel places reliance upon the following decisions;

a) Govind Naik Vs. West Patent Press Co.Ltd., - ILR 1979 KAR 1401;

b) Olympus Super Structures Vs. Meena Vijay - (1999) 5 SCC 651;

(c) Solidaire India Ltd., Vs. Fair Growth Financial Services Ltd., - (2001) 3 SCC 71;

(d) Rashtriya Ispat Nigam Ltd., Vs. Verma Transport Co. - (2006) 7 SCC 275;

(e) Booz Allen & Hamilton Inc. vs. SBI Home Finance Ltd., - (2011) 5 SCC 532;

(f) Duro Felguera SA vs. Gangavaram Port Ltd., - (2017) 9 SCC 729;

(g) Indus Mobile Distribution Pvt. Ltd., vs. Data Wind Innovations Pvt. Ltd., - (2017) 7 SCC 678;

(h) Himangni Enterprises vs. Kamaljeet Singh - (2017) 10 SCC 706;

(i) Vidya Drolia vs. Durga Trading Corporation - (2019) SCC online SC 358;

(j) Mayawati Trading Pvt. Ltd., vs. Pradayuat Deb Burman - (2019) 8 SCC 714;

(k) S.Srinivasa vs. Kuttu Karan Machine Tools Ltd., - ILR 2007 KAR 2200;

(l) Uttarkhand Purv Sainik Kalyan Nigam Ltd., vs. Northern Coal Field Ltd., -(2020) 2 SCC 455;

(m) Enercon (India) Ltd., vs. Enercon GMBH - (2014) 5 SCC 1.

5. Per contra, learned counsel for the respondent while reiterating the various contentions put forth in the statement of objections as well as written submissions also submits that the dispute between the petitioner-lessee and respondent-lessor is not arbitrable and it is the Court of Small Causes alone that has exclusive jurisdiction to decide the dispute and as such, the present petition is liable to be dismissed. In support of his contentions, learned counsel places reliance upon the following decisions;

a) Nataraj Studios (P) Ltd., vs. Navarang Studios- (1981) 1 SCC 523;

b) Himangni Enterprises vs. Kamaljeet Singh - (2017) 10 SCC 706;

c) Central Warehousing Corporation vs. Fort Point Automative Pvt. Ltd., - (2010) 1 Mh.LJ 658;

d) Prakash Gobind Ram Ahuja vs. Ganesh Pandarinath Dhonde - (2016) SCC online BOM 8884;

e) Krishna Prasad vs. Shankari Rangarajan - W.P.11375/2017 dated 29.08.2018;

f) CDR G.P.Mascarenhas vs. Smt.Meena Janet Heber - CMP No.339/2017 dated 08.06.2018.

g) Mrs.Amina Ayub vs. Dr.Shetty's Medical & Aesthetic Skin Solutions Pvt. Ltd., - CMP 237/2017 dated 22.02.2019.

6. I have given my anxious consideration to the rival submissions and perused the material on record as well as the decisions relied upon by both sides. [

7. The following points arise for consideration in the present petition;

" (i) What is the scope of adjudication involved in the instant petition in the light of the provisions contained in Section 11(6-A) of the Arbitration and Conciliation Act,1996?

(ii) Whether there exists a valid and binding arbitration agreement between the petitioner and the respondent?

(iii) Whether the dispute involved in the present petition between the petitioner-lessee/tenant and respondent-lessor/landlord in relation to a claim for specific performance arising of the lease agreement dated 17.07.2006 and tripartite agreement dated 26.10.2012 is arbitrable warranting reference to arbitration?

(iv) Whether the dispute involved in the present petition between the petitioner-lessee/tenant and respondent-lessor/landlord in relation to a claim for specific performance by the Petitioner arising out of the lease agreement dated 17.07.2006 and tripartite agreement dated 26.10.2012 is arbitrable in view of the provisions contained in Section 16 and Section 26 of the Provincial Small Causes Courts Act, 1887?"

8. Re: Point No.1:

This question relates to the scope of adjudication by this Court in the present petition subsequent to addition /insertion of Section 11(6-A) to the Act. Section 11(6-A) was added by the Amendment Act of 2015 with effect from 23.10.2015 and states as follows:

"11. Appointment of arbitrators .-

(6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub- section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement".

In its recent decision in the case of Uttarakhand Purv Sainik Kalyan Nigam Limited vs. Northern Coal Field Limited - (2020)2 SCC 455 (supra), the Apex Court after reviewing all its earlier decisions held as under:

"7.3. The 2015 Amendment Act brought about a significant change in the appointment process under Section 11: first, the default power of appointment shifted from the Chief Justice of the High Court in arbitrations governed by Part I of the Act, to the High Court; second, the scope of jurisdiction under sub- section (6-A) of Section 11 was confined to the examination of the existence of the arbitration agreement at the pre-reference stage.

7.4. Prior to the coming into force of the 2015 Amendment Act, much controversy had surrounded the nature of the power of appointment by the Chief Justice, or his designate under Section 11. A seven- Judge Constitution Bench of this Court in SBP & Co. v. Patel Engg. Ltd. [SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] defined the scope of power of the Chief Justice under Section 11. The Court held that the scope of power exercised under Section 11 was to first decide:

(i) whether there was a valid arbitration agreement; and

(ii) whether the person who has made the request under Section 11, was a party to the arbitration agreement; and

(iii) whether the party making the motion had approached the appropriate High Court. 7.5. Further, the Chief Justice was required to decide all threshold issues with respect to jurisdiction, the existence of the agreement, whether the claim was a dead one; or a time-barred claim sought to be resurrected; or whether the parties had concluded the transaction by recording satisfaction of their mutual rights and obligations, and received the final payment without objection, under Section 11, at the pre- reference stage. The decision in Patel Engg. [SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] was followed by this Court in Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] , Master Construction [Union of India v. Master Construction Co., (2011) 12 SCC 349 : (2012) 2 SCC (Civ) 582] , and other decisions.

7.6. The Law Commission in the 246th Report [ Amendments to the Arbitration and Conciliation Act, 1996, Report No. 246, Law Commission of India (August 2014), p. 20.] recommended that:

"33. ... the Commission has recommended amendments to Sections 8 and 11 of the Arbitration and Conciliation Act, 1996. The scope of the judicial intervention is only restricted to situations where the court/judicial authority finds that the arbitration agreement does not exist or is null and void. Insofar as the nature of intervention is concerned, it is recommended that in the event the court/judicial authority is prima facie satisfied against the argument challenging the arbitration agreement, it shall appoint the arbitrator and/or refer the parties to arbitration, as the case may be. The amendment envisages that the judicial authority shall not refer the parties to arbitration only if it finds that there does not exist an arbitration agreement or that it is null and void. If the judicial authority is of the opinion that prima facie the arbitration agreement exists, then it shall refer the dispute to arbitration, and leave the existence of the arbitration agreement to be finally determined by the Arbitral Tribunal."

(emphasis supplied)

7.7. Based on the recommendations of the Law Commission, Section 11 was substantially amended by the 2015 Amendment Act, to overcome the effect of all previous judgments rendered on the scope of power by a non obstante clause, and to reinforce the kompetenz-kompetenz principle enshrined in Section 16 of the 1996 Act. The 2015 Amendment Act inserted sub-section (6-A) to Section 11 which provides that:

"(6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub- section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement."

(emphasis supplied)

7.8. By virtue of the non obstante clause incorporated in Section 11(6-A), previous judgments rendered in Patel Engg. [SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] and Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] , were legislatively overruled. The scope of examination is now confined only to the existence of the arbitration agreement at the Section 11 stage, and nothing more.

7.9. Reliance is placed on the judgment in Duro Felguera S.A. v. Gangavaram Port Ltd. [Duro Felguera S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764. Refer to TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] , wherein this Court held that: (SCC p. 759, para 48) "48. ... From a reading of Section 11(6-A), the intention of the legislature is crystal clear i.e. the court should and need only look into one aspect--the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to that is simple -- it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement."

(emphasis supplied)

7.10. In view of the legislative mandate contained in Section 11(6-A), the Court is now required only to examine the existence of the arbitration agreement. All other preliminary or threshold issues are left to be decided by the arbitrator under Section 16, which enshrines the kompetenz-kompetenz principle.

7.11. The doctrine of "kompetenz-kompetenz", also referred to as "comptence-comptence", or "comptence de la recognized", implies that the Arbitral Tribunal is empowered and has the competence to rule on its own jurisdiction, including determining all jurisdictional issues, and the existence or validity of the arbitration agreement. This doctrine is intended to minimise judicial intervention, so that the arbitral process is not thwarted at the threshold, when a preliminary objection is raised by one of the parties. The doctrine of kompetenz-kompetenz is, however, subject to the exception i.e. when the arbitration agreement itself is impeached as being procured by fraud or deception. This exception would also apply to cases where the parties in the process of negotiation, may have entered into a draft agreement as an antecedent step prior to executing the final contract. The draft agreement would be a mere proposal to arbitrate, and not an unequivocal acceptance of the terms of the agreement. Section 7 of the Contract Act, 1872 requires the acceptance of a contract to be absolute and unqualified [Dresser Rand S.A. v. Bindal Agro Chem Ltd., (2006) 1 SCC 751. See also BSNL v. Telephone Cables Ltd., (2010) 5 SCC 213 : (2010) 2 SCC (Civ) 352. Refer to PSA Mumbai Investments Pte. Ltd. v. Jawaharlal Nehru Port Trust, (2018) 10 SCC 525 : (2019) 1 SCC (Civ) 1] . If an arbitration agreement is not valid or non- existent, the Arbitral Tribunal cannot assume jurisdiction to adjudicate upon the disputes. Appointment of an arbitrator may be refused if the arbitration agreement is not in writing, or the disputes are beyond the scope of the arbitration agreement. Article V(1)(a) of the New York Convention states that recognition and enforcement of an award may be refused if the arbitration agreement "is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made".

7.12. The legislative intent underlying the 1996 Act is party autonomy and minimal judicial intervention in the arbitral process. Under this regime, once the arbitrator is appointed, or the tribunal is constituted, all issues and objections are to be decided by the Arbitral Tribunal.

7.13. In view of the provisions of Section 16, and the legislative policy to restrict judicial intervention at the pre-reference stage, the issue of limitation would require to be decided by the arbitrator. Sub-section (1) of Section 16 provides that the Arbitral Tribunal may rule on its own jurisdiction, "including any objections" with respect to the existence or validity of the arbitration agreement. Section 16 is as an inclusive provision, which would comprehend all preliminary issues touching upon the jurisdiction of the Arbitral Tribunal. The issue of limitation is a jurisdictional issue, which would be required to be decided by the arbitrator under Section 16, and not the High Court at the pre-reference stage under Section 11 of the Act. Once the existence of the arbitration agreement is not disputed, all issues, including jurisdictional objections are to be decided by the arbitrator".

It is also necessary to state that certain provisions of the Act were once again sought to be amended by Amending Act 33 of 2019. Along with amendments to other provisions, Section 3 of the said Amending Act seeks to omit Section 11(6-A). However, in this context, it is relevant to state that in the only Government Notification dated 30.08.2019 whereby other provisions of the said Amending Act were notified, Section 3 of the Amending Act which seeks to omit Section 11(6-A) of the Act has not been notified. It follows there from that as on today, Section 11(6-A) of the Act continues to remain in the statute book and is in force and consequently, the decision of the Apex Court in Uttarakhand's case (supra) reiterating its earlier decisions qua Section 11(6-A) would continue to be applicable to the facts of the instant case.

The effect/impact of omission of Section 11(6-A) of the Act by Amending Act 33 of 2019 also came up for consideration before a Three Judge Bench of the Apex Court in the case of Mayavati Trading Private Limited v. Pradayuat Deb Burman - (2019)8 SCC 714 (supra), wherein it was held that omission of Section 11(6-A) would not be resuscitate the law that was prevailing prior to Amendment Act of 2015; rather, the entire scheme of 2019 amendment is to strengthen and deepen what was sought to be achieved by insertion of Section 11(6-A), i.e., to confine power of Court to examination of existence of arbitration agreement, nothing more, nothing less by leaving all other preliminary issues to be decided by arbitral tribunal; omission of Section 11(6-A) will not alter this position in any way which would be squarely applicable to facts of instant case.

Under these circumstances, I am of the considered opinion that by virtue of Section 11(6-A) of the Act as well as the decisions of the Apex Court in Uttarakhand's case and Mayavati Trading's case (supra), the scope of adjudication for this Court in the present petition is restricted / confined / limited to examining whether there exists an arbitration agreement between the parties and all and every other issue/contention of any of the parties will have to necessarily be decided by the arbitral tribunal.

Point No.1 is answered accordingly.

9. Re: Point No.2:

It is an undisputed fact that a lease agreement dated 17.07.2006 was entered into between the petitioner-lessee and erstwhile lessor-Just Homes. It is also not in dispute that subsequent to the aforesaid Just Homes selling the schedule property to the respondent, a tripartite agreement dated 26.10.2012 was entered into between the petitioner- lessee, respondent-lessor and erstwhile lessor-Just Homes In this context, it would be necessary to refer to certain clauses in both the aforesaid agreements:

Clause 2.6 of the Lease Agreement dated 17.07.2006 reads as under:

"2.6. The Rent shall be exclusive of all o any payments including power/electricity, water charges, telephones, maintenance and running costs of the furniture & fixtures, equipments, installations including the Air Conditioners & Generators to be provided in the premises and the same shall be bone and paid by the Second Party alone, during the period of this lease. It is hereby clarified that during the Lease period JHA shall be responsible for paying the Municipal Taxes subject to maximum limit of S.3.50/- per sq. and per month. Any increase thereof shall be borne and paid by the parties equally, In the event ROHL shall be liable to reimburse its share with an interest @ 12% p.a., and in the event of 3 months consecutive failure on the part of ROHL, then JHA shall be entitled to terminate this Agreement. Any arrears in this regard to occupation of the Premises by the ROHL will be borne by JHA".

Similarly, Clause 4.3 of the Lease Agreement dated 17.07.2006 reads as under:

"4.3. Subject to ROHL performs and observes the terms and covenants under this Agreement and the lease deed, then upon expiry of the initial period of 10(Ten) years, the lease herein agreed to be created may be extended, subject to ROHL having paid to the JHA an average less rent amount of Rs. 50/- per Sq.ft. per month during the initials period of 10 years, and in such event JHA shall agree to extend the annum of the " Net Sales" generated by ROHL subject to minimum lease rent amount of S. 60/- per Sq.ft. with an escalation of 15% after 3 years. In case the average yield over first 10 years is less than s. 50/- per sq.ft. per month, then in that parties shall execute and register a fresh lease deed".

The Arbitration agreement contained in Clause 7 of the Lease Agreement dated 17.07.2006 reads as under:

"7. DISPUTE RESOLUTION AND JURISDICTION

7.1.1. In the event a dispute or difference arises in connection with or in relation to this Agreement including in relation to the validity of the termination of this Agreement between the parties shall be entitled to refer such dispute or difference to arbitration.

7.1.2. The arbitration shall be conducted by a panel of three arbitrators, comprised of one (1) arbitrator appointed by each party and the third (3) arbitrator appointed by the two (2) arbitrators appointed as above.

7.1.3. The venue for such arbitration shall be Pune/ Bangalore and the jurisdiction will be of the courts in Pune/ Bangalore.

7.1.4. All arbitration proceedings shall be conducted in English.

7.1.5. The arbitration shall be governed by The Arbitration and Conciliation Act, 1996 or modification or re-enactment thereof.

7.1.6 The arbitration award shall be in writing and shall be final and binding on the parties.

7.1.7. The arbitrators shall have the power to award the costs and reasonable expenses (including reasonable fees of counsel) incurred in the arbitration as also interest on any amounts payable by a party to another.

7.1.8 When any dispute or difference is referred to arbitration, except for the matters under dispute, the parties shall continue to exercise their remaining respective rights and fulfill their remaining respective obligations under this Agreement".

So also, Clauses IV, V, VI and VII of the Tripartite Agreement dated 26.10.2012 entered into between the petitioner-lessee, respondent-lessor and erstwhile lessor- Just Homes read as under:-

"IV In view of the transfer effected as per clause II above, at the request of the First Partly and after negotiations, the Third Party has agreed to attorn the license in favour of the Second Party on the condition that Clause No.4.3 of the Leave and License Agreement, shall be henceforth read as:

" Subject to ROHL performs and observes the terms and covenants under this Agreement, then upon expiry of the initial period of 10 (Ten) years, the lease herein agreed to be created may be extended, subject to ROHL having paid to the Rock Reality Pvt. Ltd., an average lease rent amount of Rs.42/- per sq.ft. per month during the initials period of 10 years, and in such event Rock Realty Pvt.Ltd., shall extend the lease for another terms of the years with a Lease Rent amount equivalent to 30% of the " Net Room Sales" generated by ROHL, subject to a minimum lease rent amount of Rs.50/- per sq.ft. per month, with an escalation of 15% every three years. In case the average yield over first 10 years is less than Rs. 42/- per sq.ft. per month, then in the case ROHL shall pay the shortfall to renew the lease. In the aforesaid, the parties shall execute and register a fresh lease deed."

V. All other terms and conditions contained in the Leave and License Agreement shall remain unvaried and unaltered.

VI. All parties herein agree and confirm that the terms contained herein shall form an integral part of the Leave and License Agreement dated 17th July 2006, and shall be read and construed along with the Leave and License Agreement dated July 17, 2006.

VII. The Second Party hereby confirms that it will be bound by the terms of the Leave and License Agreement and shall be liable to the Third Party for the refund of the Security Deposit subject to the deductions, if any, as per the terms, of the Leave and License Agreement".

As can be seen from Clause 7 of the lease agreement dated 17.07.2006, there exists an arbitration agreement between the petitioner-lessee and erstwhile lessor-Just Homes wherein it was agreed that any dispute between both of them would be resolved by reference to arbitration. It is therefore clear that the said Clause 7 of the lease agreement dated 17.07.2006 constitutes a valid and binding arbitration agreement between petitioner and Just Homes.

As stated supra, Clauses 2.6 and 4.3 of the lease agreement dated 17.07.2006 provide for term of the lease to be for a period of 10 years as well as for renewal of the term for a further period of 10 years. A perusal of Clause IV of the lease agreement dated 26.10.2012 while providing that the leasehold rights of the petitioner in respect of the schedule property stood attorned under the respondent herein, Clause IV made certain minor modifications to renewal clause No.4.3 of the agreement dated 17.07.2006. However, even the said modified renewal clause No.4.3 of the agreement dated 17.07.2006 as modified by the said Clause IV of the agreement dated 26.10.2012 also provided for renewal of lease for a further period of 10 years in favour of the petitioner.

Clause V of the agreement dated 26.10.2012 stipulated that except the modified renewal Clause IV, the rest of the contents of the said agreement dated 17.07.2006 would stand unvaried and unaltered. Clauses VI and VII also stipulated that the terms and conditions of the agreement dated 26.10.2012 shall form an integral part of the agreement dated 17.07.2006, that the agreement dated 26.10.2012 shall be read and construed along with the agreement dated 17.07.2006 and that the respondent herein would be bound by the terms and conditions of the agreement dated 17.07.2006.

A conjoint reading of Clause 7 of the Lease Agreement dated 17.07.2006 and Clauses V, VI and VII of the tripartite agreement dated 26.10.2012 executed between petitioner, Just Homes and respondent will clearly indicate that all parties had unequivocally agreed and covenanted with each other that except Clause No.4.3 which was modified, all other terms and conditions in the lease agreement dated 17.07.2006 including the arbitration agreement at Clause 7 would be incorporated and made part and parcel of the tripartite agreement dated 26.10.2012 and that any dispute between all 3 parties including petitioner and respondent would have to be resolved by reference to arbitration in terms of Clause No.7 of the agreement dated 17.07.2006. In other words, notwithstanding the fact that the respondent was not a party to the lease agreement dated 17.07.2006, the express terms and conditions stipulated and agreed by all 3 parties including the petitioner and respondent in the tripartite agreement dated 26.10.2012 which made the earlier agreement dated 17.07.2006 an integral part of the subsequent agreement dated 26.10.2012 is sufficient to show that there exists a valid and binding arbitration agreement between the petitioner and respondent and any dispute between them in relation to the lease agreement dated 17.07.2006 and/or tripartite agreement dated 26.10.2012 will have be resolved by reference to arbitration.

Under the aforesaid facts and circumstances, I am of the considered opinion that there exists a valid and binding arbitration agreement between petitioner and respondent. Point No.2 is accordingly answered in the affirmative.

10. Re: Point No.3:

The next question that arises for consideration is whether the dispute involved in the present petition between the petitioner-lessee/tenant and respondent- lessor/landlord in relation to a claim for specific performance arising of the lease agreement dated 17.07.2006 and tripartite agreement dated 26.10.2012 is arbitrable warranting reference to arbitration. It is contended by the respondent that since the disputes between the petitioner-lessee/tenant and respondent- lessor/landlord arise out of a lease agreement dated 17.07.2006 and agreement dated 26.10.2012, in view of the decisions of the Apex Court in the cases of Nataraj Studios (P) Ltd. vs. Navrang Studios And Another - (1981) 1 SCC 523 and Himangni Enterprises vs. Kamaljeet Singh Ahluwalia - (2017)10 SCC 706, the dispute between the parties is not arbitrable and the provisions of the Act are not applicable to the schedule property.

In this context, it is relevant to state that in Nataraj's case (supra), the question that fell for consideration before the Apex Court was with regard to the right of landlord/lessor to seek possession/eviction of the tenant/lessee from the demised premises which was governed by the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. Under those circumstances, since the tenant/lessee was a protected/statutory tenant under the aforesaid Rent Act, the Apex Court came to the conclusion that the designated small causes court under the Rent Act alone had the jurisdiction to adjudicate upon the right of the landlord/lessor to seek possession /eviction of the tenant /lessee and the said dispute was not arbitrable and the Arbitrator did not have jurisdiction to decide the matter.

The facts of the case on hand as revealed by the plaint in C.S.99/2018 filed before the small causes court, Pune by the respondent against the petitioner indicate that respondent has specifically averred at paragraphs 6 and 13 of the plaint that the petitioner(defendant in the suit) is not a protected /statutory tenant under the Maharashtra Rent Control Act and that the parties are governed by the provisions of the Transfer of Property Act. Under these circumstances, the said decision of the Apex Court in Nataraj's case (supra) rendered in a fact situation qua the Maharashtra Rent Control Act whereby the lessee/tenant was a statutory/protected tenant is not applicable to the facts of the instant case in which the petitioner- lessee/tenant is neither a protected/statutory tenant in respect of the schedule property to which the Rent Control Act is not applicable.

In Himangni's case (supra), the Apex Court was dealing with a petition filed by a landlord/lessor seeking eviction of his tenant/lessee from the premises in question and for other consequential relief's. Under those circumstances, in particular, in view of the relief's of eviction/possession and other consequential relief's sought for by the landlord/lessor, the Apex Court, placing reliance upon its earlier decisions in Nataraj's case (supra) and Booz Allen and Hamilton Inc. v. SBI Home Finance Limited & Ors. -(2011)5 SCC 532 held that the dispute was not arbitrable. As stated supra, the decision of the Apex Court in Nataraj's case (supra) has no application to the facts of the instant case. Further, in Booz Allen's case (supra), while dealing with types of cases that are not arbitrable, it was held as follows:

"36. The well-recognised examples of non- arbitrable disputes are: (i) disputes relating 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.

As is clear from the dictum in Booz Allen's case (supra), only 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 have been held to be non-arbitrable disputes. In fact, at paragraph 43 of its judgment in Booz Allen's case, while dealing with the jurisdiction of an Arbitrator to grant specific performance of contracts relating to immovable property, the Apex Court reiterated its earlier view in the case of Olympus Superstructures Private Limited v. Meena Vijay Khetan & Ors. - (1999)5 SCC 651 and held as under:

"43. A different perspective on the issue is found in Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan [(1999) 5 SCC 651] where this Court considered whether an arbitrator has the power and jurisdiction to grant specific performance of contracts relating to immovable property. This Court held: (SCC p. 668, para 34)

"34. ... We are of the view that the right to specific performance of an agreement of sale deals with contractual rights and it is certainly open to the parties to agree, with a view to shorten litigation in regular court to refer the issues relating to specific performance to arbitration. There is no prohibition in the Specific Relief Act, 1963 that issues relating to specific performance of contract relating to immovable property cannot be referred to arbitration. Nor is there such a prohibition contained in the Arbitration and Conciliation Act, 1996 as contrasted with Section 15 of the English Arbitration Act, 1950 or Section 48(5)(b) of the English Arbitration Act, 1996 which contained a prohibition relating to specific performance of contracts concerning immovable property."

Coming to the facts of the instant case, the dispute between the parties arises out of a claim of the petitioner- lessee/tenant against the respondent-lessor/landlord for specific performance of the renewal clause in the subject agreements in relation to the schedule immovable property under the provisions of the Specific Relief Act and Transfer of Property Act. Under these circumstances, having regard to the relief's of specific performance sought for by the petitioner-tenant/lessee in the instant case as contradistinguished with the facts involved i the decision of the Apex Court in Himangni's case (supra) wherein the landlord/lessor had sought for the relief's of eviction/possession, the said decision is also not applicable to the facts of the instant case. Accordingly, no reliance can be placed upon either of the decisions of the Apex Court in Himangni's case or Nataraj's case (supra) by the respondent in support of its contention that the dispute between petitioner and respondent is not arbitrable.

Under these circumstances, applying the law laid down by the Apex Court in Olympus Superstructure's case and Booz Allen's case (supra), I am of the considered opinion that the dispute involved in the present petition between the petitioner-lessee/tenant and respondent-lessor /landlord in relation to a claim for specific performance arising of the lease agreement dated 17.07.2006 and tripartite agreement dated 26.10.2012 is an arbitrable which is capable of being resolved by reference to arbitration.

Point No.3 is accordingly answered in the affirmative.

11. Re: Point No.4:

The last question that arises for consideration in this petition is whether the dispute involved in the present petition between the petitioner-lessee/tenant and respondent-lessor/landlord in relation to a claim for specific performance by the Petitioner arising out of lease agreement dated 17.07.2006 and tripartite agreement dated 26.10.2012 is arbitrable in view of the provisions contained in Sections 16 and 26 of the Provincial Small Causes Courts Act, 1887(for short, 'the said Act of 1887').

In this context, it is the specific contention of the respondent that by virtue of the aforesaid provisions of the said Act of 1887, it is the small causes court alone that has sole and exclusive jurisdiction to decide the dispute between the parties. In this regard, a suit in C.S.99/2018 has already been filed by the respondent against the petitioner before the small causes court, Pune for eviction and other relief's in respect of the schedule property and the same is pending adjudication. In the said suit, the petitioner herein contended that the small causes court did not have jurisdiction to decide the suit. The said contention of the petitioner was negatived by the small causes court inter-alia holding that the small causes court alone had the jurisdiction to decide the matter.

Aggrieved by the said order, petitioner preferred a revision petition before the Bombay High Court which was also dismissed and the said finding regarding jurisdiction of the small causes court having attained finality, the same operates as res-judicata against the petitioner in the present petition. It is also submitted that a Three Judge Bench of the Maharashtra High Court in the case of Central Warehousing Corporation vs. Fortpoint Automotive Pvt. Ltd., - (2010)1 Mh.L.J 658 has held that disputes between a landlord and tenant are not arbitrable and they fall within the exclusive jurisdiction of the Small causes court by virtue of Section 41 of the Presidency Small Causes Courts Act, 1882 which is in pari materia with Section 26 of the said Act of 1887. It is therefore contended that by virtue of Sections 16 and 26 of the said Act of 1887 and the decision of the Maharashtra High Court (supra), the dispute between the petitioner and respondent is not arbitrable and the same will have to be decided by the small causes court and as such, the present petition seeking appointment of an arbitrator is not maintainable and is liable to be dismissed. In order to appreciate the said contentions, it is necessary to refer to Sections 16 and 26 of the said Act of 1887 which read as under:

"16. Exclusive jurisdiction of Courts of Small Causes.--Save as expressly provided by this Act or by any other enactment for the time being in force, a suit cognizable by a Court of Small Causes shall not be tried by any other Court having jurisdiction within the local limits of the jurisdiction of the Court of Small Causes by which the suit is triable.

26. Suits or proceedings between licensors and licensees or landlords and tenants for recovery of possession of immovable property and licence fees or rent, except those to which other Acts apply, to lie in Court of Small Causes.--

(1) Notwithstanding anything contained elsewhere in this Act, but subject to the provision of sub-section (2), the Court of Small Causes shall have jurisdiction to entertain and try all suits and proceedings between in licensor and licensee, or a landlord and tenants, relating to the recovery of possession of any immovable property situated in the area within the local limits of the jurisdiction of the Court of Small Causes, or relating to the recovery of the licence fee or charges or rent therefor, irrespective of the value of the subject matter of such suits or proceedings.

(2) Nothing contained in sub-section (1) shall apply to suits or proceedings for the recovery of possession of any immovable property or of licence fee or charges or rent thereof, to which the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, the Bombay Government Premises (Eviction) Act, 1955, the Bombay Provincial Municipal Corporations Act, 1919 or the Maharashtra Housing and Area Development Act, 1976, or any law for the time being in force, apply".

A perusal of Section 26(1) of the said Act of 1887 (supra), will indicate that the Small Causes Court has jurisdiction to decide suits relating to the following disputes viz.,

(a) Suit for recovery of possession of immovable property;

(b) Suit for recovery of licence fee;

(c) Suit for recovery of charges;

(d) suit for recovery of rent.

As can be seen from the above, only the aforesaid categories of cases/disputes between landlord and tenant can be decided by the Small Causes Courts under Section 26 of the said Act of 1887. Consequently, only the aforesaid categories of cases/disputes enumerated under Section 26(1) can be tried only by the Court of Small Causes which has exclusive jurisdiction over the same and not by any other Court or arbitrator. It is in this context that the Maharastra High Court in the case of Central Warehousing (Supra), came to the conclusion that the dispute between landlord and the tenant in relation to the aforesaid categories of cases/disputes are not arbitrable and an arbitrator cannot be appointed to decide the said cases/disputes.

In the instant case, it is not in dispute that the claim of the petitioner - lessee/tenant against the respondent- lessor / landlord is for specific performance of the renewal clause in the Agreements. In other words, the claim in the present petition for specific performance does not fall within any one of the aforesaid categories of cases / disputes enumerated under Section 26(1) of the said Act of 1887 and consequently, it cannot be said that the dispute between the petitioner and respondent in the instant case is not arbitrable on account of Section 16 of the Act of 1887.

In this context, it is also r

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elevant to state that Section 15(1) r/w Second Schedule to the Act of 1887 describes the various categories of cases over which the Small Causes Court does not have jurisdiction. Entry No.15 to the Second Schedule contemplates that a Small Causes Court does not have jurisdiction to decide a suit for specific performance relating to immovable property. As stated supra, the dispute involved in the present petition is in relation to a claim for specific performance relating to the schedule immovable property which is incapable of being decided by the Small Causes Court which does not have jurisdiction to decide the dispute on account of the aforesaid provisions contained in the said Act of 1887. Under these circumstances, it cannot be said that the dispute in the present petition is not arbitrable and that the same has to be decided by the Small Causes Court; as stated supra, the Small Causes Court does not have jurisdiction to decide the present dispute for specific performance in relation to the Schedule immovable property. As such, the said contention urged on behalf of the respondent deserves to be rejected. Insofar as the contention urged by the respondent with regard to the finding of the Small Causes Court as well as the Bombay High Court that the Small Causes Court has jurisdiction to decide C.S.99/2018 filed by the respondent - landlord against the petitioner-tenant is concerned, a perusal of the said orders will indicate that the same arose out of a contention urged on behalf of the petitioner that the dispute was a commercial dispute warranting adjudication by the designated commercial court under the Commercial Courts Act and not by the Small Causes Court. In this backdrop, both the Small Causes Court and the Bombay High Court came to the conclusion that the Small Causes Court had jurisdiction qua the contention of the petitioner that the Commercial Court was the proper court. A perusal of the said orders, will also indicate that the question / issue with regard to arbitrability of the dispute qua the Small Causes Court was neither considered nor adjudicated by either the Small Causes Court or the Bombay High Court. Under these circumstances, the contention of the respondent that the issue with regard to jurisdiction of the Small Causes Court has attained finality and operates as resjudicata against the petitioner is misconceived and deserves to be rejected. To reiterate, only disputes in relation to the reliefs of possession, recovery of rent, licence fee etc., are to be decided by the Small Causes Court and the relief of specific performance stand statutorily excluded from the jurisdiction of the Small Causes Court under the provisions of the said Act of 1887. Under these circumstances, in the face of the undisputed fact that the dispute in the present petition involves a claim for specific performance put forth by the petitioner - tenant in relation to the schedule immovable property, the present dispute is clearly arbitrable and is capable of being referred for resolution by appointing an arbitrator. In view of the aforesaid facts and circumstances, I am of the considered opinion that the dispute involved in the present petition between the petitioner-lessee/tenant and respondent-lessor/landlord in relation to a claim for specific performance by the Petitioner arising out of lease agreement dated 17.07.2006 and tripartite agreement dated 26.10.2012 is arbitrable and the same deserves to be referred to arbitration by appointing a sole arbitrator ion terms of Clause No.7 of the Lease Agreement dated 17.07.2006 r/w the Tripartite Agreement dated 26.10.2012 entered into between the petitioner and the respondent. Point No.4 is accordingly answered in the affirmative. 12. In the result, I pass the following; ORDER (i) This Civil Miscellaneous Petition is hereby allowed; (ii) Sri.Justice K.N.Phaneendra, Former Judge of this Court is appointed to act as the Sole Arbitrator to enter upon reference in the present case with the venue as the Arbitration & Conciliation Centre - Bengaluru (Domestic & International), East Wing, 'Khanija Bhavan', Race Course Road, Bengaluru-1; (iii) All claims and contentions of any of the parties including jurisdiction, limitation, etc., are left open to be decided by the Arbitral Tribunal; (iv) A copy of this order be sent forthwith to the Arbitration & Conciliation Centre - Bengaluru (Domestic & International), East Wing, 'Khanija Bhavan', Race Course Road, Bengaluru-1 for proceeding further in the matter, on administrative side and also to Sri.Justice K.N.Phaneendra, Former Judge of this Court to the address available with the said Arbitration & Conciliation Centre, Bengaluru; (v) Registry is directed to return all original documents produced by any of the parties after obtaining Photostat copies of the same.
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