Licensor-licensee disputes over possession and licence fees in Greater Bombay are non-arbitrable despite an arbitration clause.

A dispute arising from a licensor-licensee arrangement in Greater Bombay concerning possession and recovery of licence fee or rent falls within the exclusive jurisdiction of the Small Causes Court. Section 41(1) of the Presidency Small Causes Court Act, 1882 bars such disputes from arbitral determination, and Section 2(3) of the Arbitration and Conciliation Act, 1996 preserves that statutory exclusion. An arbitration clause cannot override the legislative bar where the controversy directly concerns possession and charges under the licensor-licensee relationship. The arbitral reference was therefore beyond jurisdiction, the dispute was non-arbitrable, and the award was set aside.

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Issues: Whether a dispute arising from a licensor-licensee arrangement concerning possession and licence fees in Greater Bombay, despite an arbitration clause, falls within the exclusive jurisdiction of the Small Causes Court and is therefore non-arbitrable.

Analysis: The agreement and surrounding conduct showed exclusive possession of the premises with recurring licence fee or rent payments, and the controversy directly related to recovery of possession and charges arising from a licensor-licensee relationship. Section 41(1) of the Presidency Small Causes Court Act, 1882 confers exclusive jurisdiction on the Small Causes Court over such disputes, and Section 2(3) of the Arbitration and Conciliation Act, 1996 preserves statutory bars to arbitration. The existence of an arbitration clause cannot override the statutory exclusion, and the objection to jurisdiction went to the root of the matter. Once the dispute was found to be within the Small Causes Court's domain, the arbitral reference itself was beyond competence.

Conclusion: The dispute was held to be non-arbitrable and the Arbitrator was held to have no jurisdiction to decide it.

Final Conclusion: The award was set aside because the subject matter belonged exclusively to the Small Causes Court and could not be determined by arbitration.

Ratio Decidendi: A dispute between licensor and licensee relating to possession or recovery of licence fee or rent in Greater Bombay is within the exclusive jurisdiction of the Small Causes Court and is not arbitrable merely because the agreement contains an arbitration clause.

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