AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2008 (1) TMI 997
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....ver vacant possession and in particular, restraining the licensor from initiating proceedings for the recovery of possession of the licensed premises. An injunction has also been sought restraining the licensor from disturbing the use and occupation of the premises by the licensee; from entering into any third party rights in respect of the licensed premises. Other consequential reliefs restraining the licensor from interfering with the use of common facilities have been sought. 2. The Respondents are licensors and the Petitioner is a licensee in respect of commercial premises consisting of Unit No. 7 in the A Wing on the first floor of a building known as Modern Centre situated at Mahalakshmi, Mumbai. The Petitioner has been in occupation of the premises from 1st January 2002. A leave and licence agreement is stated to have been initially entered into on 19th October, 2001 for a term of three years commencing from 1st January 2002 which was to expire on 31st December, 2004. According to the Petitioner a right was conferred upon it of a refusal to renew the agreement for a further two terms of three years each commencing from 31st December, 2004. On 11th January, 2005 an agreeme....
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....50,000/per day would be levied until possession was handed over. Sub clause (n) of Clause 11 of the agreement provides for a reference to arbitration in the following terms : (n) The Parties agree that all disputes arising out of or in connection with the Agreement, which cannot be settled amicably between the parties, shall be finally settled exclusively by Arbitration under the Arbitration and Conciliation Act, 1996 or any reenactment, modification or amendment thereto by three arbitrators, one to be appointed by the Conductor and one by the Client each. The two appointed arbitrators shall appoint the third Arbitrator. The Arbitration may be conducted at Mumbai. The Award of the Arbitrators shall be final, conclusive of the settlement of the disputes and binding all parties. 4. The case of the Petitioner is that it has duly performed its obligations under the agreement without breach or default and the Petitioner has been desirous of occupying the licensed premises by exercising its option of renewal. According to the Petitioner, its representatives were in dialogue with the Respondents well before the commencement of the six months period of notice requi....
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....ubsequent to the institution of the present proceedings under Section 9 of the Arbitration and Conciliation Act, 1996, a further affidavit has been filed recording that by a letter dated 4th January, 2008 the Petitioner has invoked the provision for arbitration stating that in the arbitral proceedings, the Petitioner would be seeking the following relief : (i) that the Hon'ble Arbitral Tribunal be pleased to declare that our clients have a right of renewal under the Agreement and you are bound and liable to specifically perform the same and renew the Agreement for a further period of three years on agreed terms; (ii) that this Hon'ble Arbitral Tribunal be pleased to pass an award directing you and your servants, officers, assigns or agents to specifically perform your obligation contained in the Agreement by doing all things and taking all actions as are necessary to fully and effectively carry out its obligations thereunder including without limitation to execute fresh Leave and License Agreement in terms of the Agreement; (iii) that for the aforesaid purpose, you be ordered, decreed and directed to do all a....
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....on on the expiry of the agreement. In the rejoinder which has been filed by the Petitioner it has been contended that the Petitioner has been in use and occupation since 1st January, 2002 and it was within the contemplation of the parties that the Petitioner would be entitled to a right of refusal to renew the agreement of a further two terms of three years each expiring on 31st December, 2010. Consequently, it has been submitted that the Petitioner invested a large amount in the upkeep of the licensed premises. On 17th August, 2004 the Petitioner claims to have exercised the right to renew the agreement of licence pursuant to a clause to that effect contained in the first agreement dated 19th October, 2001. It has been stated that at that stage, the Respondents had not asserted that the Petitioner had not furnished six months notice prior to the expiry of the agreement. Consequently, it has been submitted that parties had never intended that the exercise of the option of renewal within six months prior to the expiry of the agreement was of the essence of the contract. 7. The principal issue that falls for determination is whether the provisions of Section 41 of the Presidency S....
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....sewhere in the Act nonetheless, however, subject to subsection (2). The jurisdiction to entertain and try all suits and proceedings between a licensor and a licensee and/or a landlord or tenant is conferred upon the Court of Small Causes where the suit relates to the recovery of possession of immovable property or to the recovery of licence fees or charges or rent therefore, irrespective of the value of the subject matter of such suit or proceeding. The words "irrespective of the value of the subject matter of such suits or proceedings" are intended to indicate that even though the value of the subject matter would exceed the pecuniary limits on the jurisdiction of the Court, it is the Court of Small Causes which is conferred with the jurisdiction to entertain and try suits of the descriptions specified in subsection (1). However, subsection (2) carves out an exception in respect of those suits for the recovery of possession or of licence fees, rent or charges to which the Rent Act, the other Acts enunciated or any other law for the time being in force apply. The non obstante clause in Sub section (1) of Section 41 has overriding effect over all the other provisions of the Act. Tha....
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.... of certain premises which was extended. The agreement was in force on 1st February, 1973 when Section 15A was inserted into the Rent Act, the consequence of which was that a person who was in occupation as a licensee on the aforesaid date was deemed to have become a tenant of the landlord. The licence was terminated upon which the Appellant filed a declaratory suit in the Small Causes Court. The First Respondent filed an application for the appointment of an arbitrator for determining the dispute under the leave and licence agreement and an order was passed by this Court allowing the application. Prior thereto an application had been filed by the Appellant under Section 33 of the Arbitration Act for a declaration that the arbitration clause in the licence agreement was invalid. The application was dismissed by this Court. Dealing with the question as to whether a dispute of the nature could be arbitrable, the Supreme Court held as follows : The Bombay Rent Act is a welfare legislation aimed at the definite social objective of protection of tenants against harassment by landlords in various ways. It is a matter of public policy. The scheme of the Act shows tha....
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....tion 28 of the Rent Act of 1947. The Court upheld the correctness of the view taken in the judgment of the Full Bench of this Court in Dattatraya Krishna Jangam v. Jairam Ganesh Gore AIR1965Bom177 that a suit for injunction against a landlord for restraining him from forcibly evicting the tenant from possession of the premises would lie within the exclusive jurisdiction of the Small Causes Court. The Supreme Court held that once the Plaintiff contends that he is a licensee of the suit premises and the Defendant is a licensor and he seeks the assistance of the Court on that basis to protect his possession, it would be a suit between a licensee and licensor relating to the recovery of possession. In a given case, the Supreme Court noted an injunction suit purely based on previous peaceful possession and a subsequent threatened dispossession may stand on an entirely different footing and may not attract the sweep of Section 41(1), but the suits before the Supreme Court in that case were based on the allegation that the Plaintiffs were licensees on monetary considerations who apprehended dispossession not in accordance with law at the hands of the licensors. Such a suit would attract t....
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....sdiction to deal with such a dispute vested with the Small Causes Court under Section 41. The relief sought in the arbitration petition was a direction to the Respondent to hand over possession of certain premises, in the alternative for the appointment of a Receiver with a direction to collect compensation from the Respondent and the furnishing of security towards the claim in arbitration. The Division Bench upheld the judgment of a Learned Single Judge and observed thus : ...the Court would have due regard to the fact that the with matters between licensors and licensees or between landlords and tenants on the Small Causes Court. Rent Control Legislation constitutes a statutory regulation of the relationship between landlords and tenants and between Licensors and licensees in the public interest and as a matter of protecting public welfare. The question whether the Small Causes Court has exclusive jurisdiction must be understood in the backdrop of the object which the legislature intended to subscribe. A comprehensive remedy has been provided. Subsection (1) of Section 42 provides an appeal from a decree or order made by the Court of Small Causes exercising ....
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.... and the ground which weighed with the Supreme Court in Natraj Studio in excluding the applicability of an arbitration agreement in the field would apply here as 0well. 14. The appeal before the Division Bench arose out of a judgment of Mr. Justice D.K. Deshmukh. While confirming the correctness of the view taken by the Learned Single Judge this Court held that it was in agreement with a similar view taken by the Learned Judge in Siemens Limited v. Captech Online Pvt. Ltd. (Arbitration Petition 99 of 2004 decided on 22nd August, 2005). The Division Bench observed that it was in agreement with the following observations contained in the judgment of Mr. Justice Deshmukh : It can now be taken as a settled law that when the legislature creates special forum for adjudication of disputes of a particular nature then by necessary implication, jurisdiction of the Court of Original Civil Jurisdiction to entertain those disputes is barred by necessary implication. The legislature by enacting Section 41 created a special forum for adjudication of disputes between the licensor and licensee in relation to recovery of licence fee and recovery of possession. Section 41 als....
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.... were contested by the tenants upto the Supreme Court without any success. Subsequently an agreement was executed between the Appellant and the Respondent under which the Respondent agreed to vacate the premises in its occupation upon which the Appellant agreed to allot on a rental basis certain premises in the reconstructed building. The Respondent filed a suit for specific performance which was decreed by a Learned Single Judge. The issue which arose before the Division Bench of this Court was whether in a suit for specific performance of an agreement to lease new premises, jurisdiction would lie before the Court of Ordinary Civil Jurisdiction and not the Small Causes Court. The Division Bench held that the agreement was executed between a landlord and tenant and in pursuance thereof the tenant agreed to vacate the premises to enable the landlord to demolish the building and construct a new structure. The landlord undertook to allot premises in the newly constructed building. The Division Bench held that the Rent Act provided a specific procedure for the delivery of possession of new premises in the event that a tenant had to vacate old premises for the purpose of construction of....
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....ever, when the parties to such an agreement undisputedly disclose a clear admission on their part about existence of landlord tenant relationship in respect of the premises which are sought to be vacated in terms of the agreement in that regard, and further disclose an intention to continue the said relationship even in respect of a new premises in the new building on completion of construction thereof in place of the old building to be demolished, it cannot be said that such an action would be merely for a specific performance of the agreement; it would be essentially an action for specific performance of the agreement for continuation of the existing leasehold rights. 18. Now in the background of these authorities, if the facts of the present case are considered, the following facts emerge before the Court as reflecting an undisputed position : i) The Respondents are the licensors and the Petitioner is a licensee in respect of the commercial premises to which the dispute relates; ii) There was a license agreement dated 11th January, iii) The occupation of the Petitioner is relatable to the agreement of licence a....
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.... doubt that the relief sought relates to the recovery of possession. 20. But Counsel appearing for the Petitioner urged that while invoking the arbitration, the Petitioner in its letter dated 4th January, 2008 has only sought specific performance. That, however, would only be an isolated appreciation of the real nature of the dispute. The letter dated 4th January, 2008 when read in its entirety would clearly demonstrate that parties had a preexisting relationship of a licensor and licensee and that in pursuance of a provision for renewal contained in the agreement, the Petitioner was seeking a continuation of that relationship. Apart from a decree for specific performance, the Petitioner seeks consequential directions against the Respondents to do all necessary things and to take all necessary actions to fully and effectively carry out their obligations including without limitation, the execution of a fresh leave and licence agreement. This is, therefore not a case where parties have entered into an agreement to create an agreement of licence in future and a bare relief of specific performance is sought for the implementation of such an agreement. 21. On behalf of the Petitio....
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....andlord and tenant and /or a licensor and licensee. Similarly the judgment of the Calcutta High Court in Debendra Nath Chowdhury v. Southern Bank Ltd. AIR 1960 Cal 626 . was also rendered on an interpretation of Clause 12 of the Letters Patent. Reliance was sought to be placed on the judgment of the Division Bench in Raghubir Narayan Lotlikar v. G.A. Fernandes AIR1953Bom76 . That was a case in which the Plaintiff - landlord had instituted ejectment proceedings against the tenant in the small causes Court. An agreement was arrived at under which the tenants were to give reasonable facilities to the landlord for repairing the property, but the landlord agreed not to eject any of the tenants. Upon the repairs being complete, the tenants were to be given premises in substitution. The landlord instituted a suit for the specific performance of the agreement. A Learned Single Judge held that this Court had no jurisdiction to try the suit for specific performance. The Division Bench held in appeal that Section 28 of the Rent Act applied only to those suits between a landlord and a tenant where a landlord has become entitled to possession or recovery of the premises. and under the Transfer ....
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....t. It is now a well settled principle of law that the determination of a tenancy is not a condition precedent for a landlord to sue for eviction under the provisions of rent control legislation. The fundamental basis of the judgment in Lotlikar's case is thus overruled by the law laid down by the Supreme Court. 22. In the alternative, it was urged by Learned Counsel for the Petitioner that the words "or any other law for the time being in force" in Sub section (2) of Section 41 will cover the Arbitration and Conciliation Act, 1996. While considering this submission it must be noted that Sub Section (2) of Section 41 is an exception to the principle contained in Sub Section (1). The underlying purpose of conferring exclusive jurisdiction on the Court of Small Causes has been referred to in the judgment of the Supreme Court in Natraj Studios. The Supreme Court held, having regard to the salutary public purpose underlying the legislation that arbitration agreements between parties whose rights are regulated by the Bombay Rent Act cannot be recognised by a Court of law. Among the Acts referred to in the Sub section (2) is the Rent Act of 1947. Section 28 of....