2024 (10) TMI 1123 - SC - Indian Laws

Supreme Court upholds arbitrator appointment for lease disputes, rejects Public Premises Act override argument

CENTRAL WAREHOUSING CORPORATION & ANR. Versus M/s SIDHARTHA TILES & SANITARY PVT. LTD

The SC dismissed an appeal challenging HC's appointment of arbitrator under Section 11 of Arbitration and Conciliation Act, 1996. Appellant argued Public ... Overriding effect of Public Premises Act, 1971 over the Arbitration and Conciliation Act, 1996 - error or not in appointing the arbitrator while exercising the jurisdiction under Section 11 of the Arbitration and Conciliation Act, 1996. Whether the Public Premises Act, 1971 overrides the Arbitration and Conciliation Act, 1996? - HELD THAT:- The dispute that is raised in the Section 11 application relate to promises and reciprocal promises arising out of the agreement dated 26.09.2012. The right of renewal as well as the legality and propriety of the enhanced demand arose during the subsistence of the agreement. It will be on the interpretation, construction and the obligations arising out of the agreement that the respondent’s claim rests - The original lease as it were, validly subsisted till 11.09.2015 and the dispute between the parties related to the period commencing from 12.09.2012 to 11.09.2015, when the lease expired. The Public Premises Act would not even cast a shadow on this period. In so far as the dispute relating to this right of renewal is concerned, it depends on the terms of the agreement. The Public Premises Act neither bars nor overlaps with the scope and ambit of proceedings that were initiated under the Arbitration and Conciliation Act. Whether the High Court committed any error in appointing the arbitrator while exercising the jurisdiction under Section 11? - HELD THAT:- The revision of storage charges occurred during the subsistence of the contract. Its legality and propriety will depend on the terms of the agreement dated 26.09.2012. Similarly, the right of renewal will also be based on and a construct of the said agreement. These two disputes will undoubtedly arise out of the agreement between the parties and the resolution of such disputes is clearly covered by the arbitration clause. There are no hesitation in rejecting the petition and it is further held that the appellant must bear the costs for this unnecessary litigation which is quantified at Rs. 50,000/- - appeal dismissed. Issues:1. Whether the Public Premises Act, 1971 overrides the Arbitration and Conciliation Act, 1996.2. Whether the High Court committed any error in appointing the arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.Analysis:1. The Supreme Court examined whether the Public Premises Act, 1971 supersedes the Arbitration and Conciliation Act, 1996. The Court determined that the dispute raised in the Section 11 application pertained to promises and reciprocal promises arising from an agreement dated 26.09.2012, including the right of renewal and the legality of enhanced demands during the agreement's subsistence. The Court clarified that the Public Premises Act deals with ejectment of unauthorized occupants from public premises and does not overlap with the arbitration proceedings initiated under the Arbitration Act. The Court concluded that the Public Premises Act did not affect the arbitration clause's applicability.2. Regarding the appointment of the arbitrator by the High Court under Section 11, the Supreme Court reviewed the High Court's decision. The Court found that the revision of storage charges and the right of renewal were disputes arising from the agreement dated 26.09.2012. These disputes fell within the scope of the arbitration clause in the agreement. Referring to a previous judgment, the Court emphasized that the referral court's role under Section 11(6) is limited to examining the existence of an arbitration agreement, without delving into a detailed inquiry. The Court upheld the High Court's decision to appoint an arbitrator and dismissed the appeal, directing the arbitral tribunal to resume proceedings promptly.3. The Supreme Court held that the appellant must bear the costs of the litigation and quantified the costs at Rs. 50,000. Additionally, the Court directed the arbitral tribunal to resume proceedings and strive to deliver the award expeditiously, as the arbitration proceedings were stayed pending the appeal's outcome. Ultimately, the appeal was dismissed in accordance with the Court's orders.