Application for Appointment of Arbitrator filed under Section 11 of the Arbitration and Conciliation Act, 1996 not admissible only on basis that Landlord-Tenant disputes allow for Arbitrator: Calcutta High Court
The landlord-tenant disputes are arbitrable but landlord-tenant disputes covered and governed by rent control legislation would not be arbitrable when specific court or forum has been given exclusive jurisdiction to apply and decide special rights and obligations as was provided by the Supreme Court in the case of Vidya Drolia and Other’s case. But it was not applicable in the case of Swaroop Sen v. Ajay Kumar Boral &amp; Anr.[AP/512/2019] through the Hon’ble Court of Calcutta through the single bench led by Hon’ble Mr Justice Rajesh Bindal. The facts of the concerned case are that the application was filed under section 11(6) of the Arbitration and Conciliation Act,1996 for the appointment of an arbitrator in a tenant-landlord matter. The counsel from the applicant side argued that there was an arbitration clause in the lease and license agreement dated August 10, 1987 between both the parties. Further, the albatross proceedings could not be commenced as both the parties fail to appoint an umpire. Thus, an application was filed for the appointment of arbitrator. It had been greatly argued through the Vidya Drolia and Others vs. Durga Trading Corporation, (2021) [2 SCC 1], that landlord/tenant disputes or arbitrable, and resend that through the readings in the Vidya Drolia and Other’s case, any issue regarding the arbitrability of a dispute was also to be decided by an arbitrator, the counsel for the applicant pleaded. The counsel for the respondent side submitted that the arguments raised by the applicant’s counsel were not applicable in this hand as the 1997 act had come after the signing of the lease agreement also that the present agreement was a mere Leave and License agreement rather a lease agreement. The court after a perusal of Section 3(c) of the Arbitration and Conciliation Act, 1996, decided that for exemption from application the provisions of the 1997 Act, the lease deed has to be registered after the commencement of the 1997 Act, which came into force w.e.f. July 10, 2001. In the case in hand, neither the agreement in question is lease agreement nor the same was signed after the coming into force of the 1997 Act as the agreement is dated August 10, 1987. The court also took notice, “the Vidhya Drolia and Other’s case also does not come to the rescue of the applicant for the reason that long drawn complicated arguments are not required to be addressed and considered in dealing with the arguments raised regarding non-arbitrability of the dispute in question. Once it is found that the dispute is non-arbitrable, it will be waste of time to refer the same for arbitration.” The High Court of Calcutta dismissed the application for the appointment of the arbitrator.
IN THE HIGH COURT AT CALCUTTA ORIGINAL CIVIL JURISDICTION Original Side) Reserved on: 29.09.2021 Pronounced on: 01.10.2021 A.P. No. 5119 … .Applicant(s) SWAROOP SEN Through : Mr. Sanjib Dawn Advocate AJAY KUMAR BORAL AND ANOTHER Through : Mr. Swatarup BanerjeeMr. Manik Lal De Mr. Ratul Biswas Coram : HON’BLE MR. JUSTICE RAJESH BINDAL CHIEF JUSTICEO R D E R The present application has been filed under Section 11(6) of the Arbitration and Conciliation Act 1996 for appointment of an arbitrator. The learned Counsel for the applicant submitted that there is an arbitration Clause in the lease and license agreement dated August 10 1987 signed between the parties. In terms thereof both the parties had appointed one arbitrator each. However they failed to appointed an umpire. As a result the arbitral proceeding could not commence. The applicant has filed the present petition seeking direction for appointment of arbitrator. A.P. No. 5119 The judgment of Hon’ble the Supreme Court in Vidya Drolia and Others vs. Durga Trading Corporation 2 SCC 1 was referred to in support of the argument that landlord tenants disputes are arbitrable. The case in hand does not fall in the exception clause. Section 105 of the Transfer of Property Act defines ‘lease’. Whereas in terms of Section 3(c) of the West Bengal Premises Tenancy Act 1997the dispute in the present case is not governed by the aforesaid Act. Hence the present application may be accepted and an arbitrator be appointed for resolution of the dispute. On the other hand learned Counsel for the respondent submitted that the argument raised by the learned Counsel for the applicant that the 1997 Act is not applicable in the case in hand is misconceived as the agreement in the case in hand was signed before coming into force of the aforesaid Act. He further submitted that it is not a lease agreement rather it is merely a Leave and Licence agreement. In response the learned Counsel for the applicant submitted that in terms of findings recorded in para 154.4 in Vidya Drolia and Others’s casethe issue regarding arbitrability of a dispute is also to Heard the learned Counsel for the parties and perused the be decided by an arbitrator. The clause of the agreement on which reliance was placed by the learned Counsel for the applicant is extracted below: In the event of any dispute between the parties to these presents in connection with the observant of the terms and conditions of this Agreement the matter shall be referred to A.P. No. 5119 the Arbitration of two Arbitrators one to be appointed by each of the parties to these presents with the power to such Arbitrators to appoint an Umpire and the decision of the majority of the Arbitrators shall be binding on both the parties to these presents and all the provisions of Indian Arbitration Act shall apply.” The aforesaid agreement which is termed to be a Leave and Licence agreement was signed on August 10 1987. The aforesaid facts are not in dispute. Hon’ble the Supreme Court in Vidya Drolia and Others’s case while dealing with the issue regarding arbitrability of a landlord tenant dispute while overruling the earlier judgment in Himangni Enterprises v. Kamaljeet Singh Ahluwalia 10 SCC 706 held that landlord tenant’s dispute which are covered and governed by the rent control legislation would not be arbitrable. Para 80 thereof is extracted below: In view of the aforesaid we overrule the ratio laid down in Himangni Enterprises and hold that landlord tenant disputes are arbitrable as the Transfer of Property Act does not forbid or foreclose arbitration. However landlord tenant disputes covered and governed by rent control legislation would not be arbitrable when specific court or forum has been given exclusive jurisdiction to apply and decide special rights and obligations. Such rights and obligations can only be adjudicated and enforced by the specified court forum and not through arbitration.” Argument raised by the learned Counsel for the applicant that the provision of the 1997 Act are not applicable is with reference to the Leave and Licence agreement in question is merely to be noticed and A.P. No. 5119 reproduced hereunder: to— rejected. Section 3(c) thereof on which reliance was placed upon is “3. Exemption.—Nothing contained in this Act shall apply a) b) c) any tenancy where the lease with due consent of the tenant x x x x x x x x has been registered under the Registration Act 1908 after the commencement of this Act and the fact of such consent has been recorded instrument so registered ” A perusal of the aforesaid clause shows that for exemption from application the provisions of the 1997 Act the lease deed has to be registered after the commencement of the 1997 Act which came into force w.e.f. July 10 2001. In the case in hand neither the agreement in question is lease agreement nor the same was signed after the coming into force of the 1997 Act as the agreement is dated August 10 1987. Para 154.4 in the Vidya Drolia and Others’ casealso does not come to the rescue of the applicant for the reason that long drawn complicated arguments are not required to be addressed and considered in dealing with the arguments raised regarding non arbitrability of the dispute in question. Once it is found that the dispute is non arbitrable it will be waste of time to refer the same for arbitration. Para 154.4 is extracted below: “154.4. Rarely as a demurrer the court may interfere at Section 8 or 11 stage when it is manifestly and ex facie certain that the arbitration agreement is non existent invalid or the disputes are non arbitrable though the nature and facet of non arbitrability would to some extent determine the level and A.P. No. 5119 nature of judicial scrutiny. The restricted and limited review is to check and protect parties from being forced to arbitrate when the matter is demonstrably “non arbitrable” and to cut off the deadwood. The court by default would refer the matter when contentions relating to non arbitrability are plainly arguable when consideration in summary proceedings would be insufficient and inconclusive when facts are contested when the party opposing arbitration adopts delaying tactics or impairs conduct of arbitration proceedings. This is not the stage for the court to enter into a mini trial or elaborate review so as to usurp the jurisdiction of the Arbitral Tribunal but to affirm and uphold integrity and efficacy of arbitration as an alternative dispute resolution mechanism.” For the reasons mentioned above I do not find any merit in the present application. The same is accordingly dismissed. RAJESH BINDAL Chief JusticeKOLKATA 