Non-arbitrability of licence disputes bars arbitral relief over possession and licence fee under Small Causes Court jurisdiction.

Disputes arising from an alleged licence over premises, where the claim concerns possession and licence fee, are treated as non-arbitrable when section 41 of the Presidency Small Cause Courts Act, 1882 confers exclusive jurisdiction on the Small Causes Court. On that basis, the arbitral award covering the second floor licence dispute was held vulnerable in section 34 proceedings. The award also failed insofar as it granted compensation for the first floor and a separate eighteen per cent per annum claim on property value, because possession of the first floor had already been delivered and those claims were unsupported by the pleadings and reasons. Broader jurisdictional objections were rejected because the arbitration clause was wide enough to cover the remaining property disputes.

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Issues: (i) whether disputes arising out of the alleged licence in respect of the second floor premises were arbitrable in view of section 41 of the Presidency Small Cause Courts Act, 1882; (ii) whether the arbitrator could award monetary compensation for the first floor premises and the claim for eighteen per cent per annum compensation on the value of the property; and (iii) whether the remaining jurisdictional objections to the award under the arbitration agreement were sustainable.

Issue (i): Whether disputes arising out of the alleged licence in respect of the second floor premises were arbitrable in view of section 41 of the Presidency Small Cause Courts Act, 1882.

Analysis: The claim for possession and monetary relief in relation to the second floor was founded on the pleaded arrangement by which the original petitioner was permitted to remain in occupation for three years on payment of monthly compensation. That arrangement was treated as a licence distinct from the earlier mortgage and the Memorandum of Understanding. The exclusive jurisdiction conferred by section 41 of the Presidency Small Cause Courts Act, 1882 covered disputes between licensor and licensee concerning possession and licence fee, and such disputes could not be submitted to arbitration. The objection went to the inherent competence of the arbitral tribunal and could be raised in proceedings under section 34 of the Arbitration and Conciliation Act, 1996.

Conclusion: The dispute concerning the alleged licence was not arbitrable and the award, to that extent, was liable to be set aside in favour of the petitioner.

Issue (ii): Whether the arbitrator could award monetary compensation for the first floor premises and the claim for eighteen per cent per annum compensation on the value of the property.

Analysis: The record showed that vacant possession of the first floor had already been delivered to the claimant, and the claim for compensation for unauthorised occupation of the first floor was contrary to the pleadings and the invocation notices. The separate claim for eighteen per cent per annum compensation on the value of the property arose from a subsequent, independent licence arrangement and was not covered by the Memorandum of Understanding. That claim was also unsupported by reasons in the award.

Conclusion: The compensation awarded for the first floor and the claim for eighteen per cent per annum compensation on the property value could not stand and were set aside in favour of the petitioner.

Issue (iii): Whether the remaining jurisdictional objections to the award under the arbitration agreement were sustainable.

Analysis: The objections that the reference was confined to the notice invoking arbitration, that the claims travelled beyond the arbitration clause, and that the award on title-related and mortgage-related disputes was without jurisdiction were rejected. The arbitration clause was of wide amplitude and the parties' recorded note and pleadings supported reference of the broader disputes concerning the property, apart from the legally non-arbitrable licence issue.

Conclusion: Those jurisdictional objections failed, but this did not save the award because the non-arbitrable and unsupported parts of the award were unsustainable.

Final Conclusion: The award could not be sustained insofar as it dealt with the non-arbitrable licence dispute and the unsupported compensation claims, and the petitioner obtained the substantive relief sought under the challenge petition.

Ratio Decidendi: A dispute between licensor and licensee concerning possession or licence fee of premises falling within section 41 of the Presidency Small Cause Courts Act, 1882 is not arbitrable, and an arbitral award covering such a subject-matter is vulnerable in a section 34 challenge even if the objection was not raised before the tribunal.

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