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2025 (8) TMI 111
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....ct, 1965 [hereinafter referred to as the 'KBLR Act']. The case throws up an interesting question regarding the interplay between the provisions of the Special Economic Zones Act, 2005 [hereinafter referred to as the 'SEZ Act'] and the provisions of the KBLR Act, especially in the context of the remedy of eviction of a defaulter tenant, available to a landlord under the KBLR Act. The brief facts necessary for a disposal of the original petition are as follows: 2. The developer had set up a Special Economic Zone [SEZ] for Information Technology [IT] and Information Technology Enabled Services [ITES] on 53.1809 hectares of land in Kakkanad Village. Towards this end, it had also entered into a registered lease agreement with the Government of Kerala under which it obtained possession and leasehold rights in respect of the land, together with the right to sub-lease portions of the land to entrepreneurs, as defined under the SEZ Act. The developer then approached the Central Government with a request for notifying the land as an SEZ, and approving it as a developer thereof. It is not in dispute that the SEZ was duly notified as such and that the developer too was approved by the Central....
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....ol Court was not maintainable. In particular, it was pointed out that under Section 42 of the SEZ Act, there was a statutory mandate to refer all disputes of a civil nature to the arbitrator appointed by the Central Government, especially when the State Government had not designated any court, under Section 23 of the SEZ Act, to try suits of civil nature arising in the SEZ. Referring to the decisions of the Supreme Court in Vidya Drolia & Others v. Durga Trading Corporation - [(2021) 2 SCC 1], and of the Telangana High Court in Ranganath Properties Private Limited & Others v. Phoenix Tech Zone Private Limited & Others - [(2023) SCC Online TS 507], he would contend that the lease agreement entered into between the petitioner and the developer was an integral part of the letter of approval issued to the petitioner, and hence the dispute regarding payment of alleged arrears of rent had to be seen as a dispute of a civil nature arising in the SEZ. It is his further submission that the observations in Vidya Drolia (supra) regarding non-arbitrability, were rendered in the context of private arbitrations and cannot have any bearing on statutory arbitrations as provided for under the SEZ A....
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....esolution. As per Article 14.1, it provides that all disputes, claims, controversies, and disagreements in connection with this deed shall be resolved by the parties through mutual consultations as provided therein. Article 14.2 provides that if the dispute is not resolved or if parties fails to reach an amicable settlement, then within a period of 15 days, either party may issue a written notice to other party as mentioned in Article 14.1 and then the dispute shall be subjected to arbitration as laid out in Article 14.3. As per Article 14.3 of sub-lease deed, it specifically provided that all the disputes shall be referred to and finally resolved by arbitration in accordance with the Arbitration and Conciliation Act, 1996. The forum of arbitral tribunal, the procedure to be followed in such matters are also specifically provided in Article 14.3 and 14.4 of sub-Lease deed. Therefore, it can be seen that in case of any dispute between the parties, such dispute shall be referred to an Arbitrator under the provisions of Arbitration and Conciliation Act, 1996. Further as per Article 14.4, it specifically provides that within 15 days from the date of expiry of the consultation period ....
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....rolia & others v. Durga Trading Corporation reported in 2020 KHC 6711. In paragraph 21 of the said Judgment, the Hon'ble Supreme Court held as follows. "Paragraph 21-Booz Allen & Hamilton Inc. draws a distinction between actions in personam, that is, actions which determine the rights and interests of parties themselves in the subject matter of the case, and actions in rem which refer to actions determining the title of the property and the rights of the parties not merely amongst themselves but also against all the persons at any time claiming an interest in that property. Rights in personam are considered to be amenable to arbitration and disputes regarding rights in rem are required to be adjudicated by the courts and public tribunals. The latter actions are unsuitable for private arbitration. Disputes relating to subordinate rights in personam arising from rights in rem are considered to be arbitrable. Paragraph 36 of the judgment in Booz Allen & Hamilton Inc. refers to certain examples of non-arbitrable disputes and reads: "36. The well-recognised examples of non-arbitrable disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of c....
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....ions can only be adjudicated and enforced by the specified court/forum and not through arbitration, and also held that in eviction or tenancy matters given by special statutes and when the tenant enjoys statutory protection, only the specified court has been conferred jurisdiction." 18. In Suresh Shah v. Hipad Technology India Private Ltd. reported in 2021 (1) SCC 529, the division bench of the Hon'ble Supreme Court held that, "The disputes arising under the Rent Acts will have to be looked at from a different view point and therefore not arbitrable in those cases. This is for the reason that notwithstanding the terms and conditions entered into between the landlord and tenant to regulate the tenancy, if the eviction or tenancy is governed by a special statute, namely, the Rent Act the premises being amenable to the provisions of the Act would also provide statutory protection against eviction and the courts specified in the Act alone will be conferred jurisdiction to order eviction or to resolve such other disputes. In such proceedings under special statutes the issue to be considered by the jurisdictional court is not merely the terms and conditions entered into between the lan....
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....ot be seen that arbitration clause can be involved in a rent control petition. The contention of the respondent that by way of exhibit B4, the petitioner has issued mutual conciliation notice also in no way affect the maintainability of the present rent control petition filed under section 11(2) (b) of the KBLR Act. Thus, it can be very well found on the basis of settled position of law, that the proceedings under the KBLR Act are not arbitrable. Hence the parties in this proceedings cannot be relegated to arbitration proceedings. Therefore, the rent control petition is not hit by arbitration clause in Sub-lease deed dated 25.01.2017 executed between the parties and therefore issue No.1 is found in favour of the petitioner and it is answered accordingly." 8. Similarly, the findings that negative the arguments advanced regarding the overriding effect of the provisions of the SEZ Act are contained in paragraphs 20 to 31 of the impugned order, which read as follows: "20. Issue No. 2: Now the second contention regarding maintainability by the learned counsel for the respondent is with respect to the bar of this Court to try this case by virtue of Sections 23, 42 and 51 of the SEZ Ac....
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.... "51. Act to have overriding effect: The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act." 21. In this context, it is also necessary to note that the petition schedule building is situated in a Special Economic zone covered under the SEZ Act. If so, as per section 23 of the SEZ Act, it provides that the state government, in which the special economic Zone is situated, may with the concurrence of Chief Justice of the High Court of that state, designate one or more courts to try all suits of a civil nature arising in the special economic zone and no court, other than the designated court shall try any dispute or conduct the trial of any such cases. Even then, it is admitted by both counsels before this court that, no such designated courts were constituted so far. So, then it comes to section 42 of the SEZ Act. From a bare perusal of Section 42 as referred to above, it can be seen that in case of any dispute, which comes within the special economic zones, like the place where the petition schedule building is si....
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....only those enactments which were already in force on the date of commencement of the rent control act and they do not include the public premises act, which was enacted subsequent to the rent control act". But even then, it is pertinent to note that in above decision, the central act as well as the state act provides for eviction, which operates in under the same field, but as far as the instant case is concerned, in the SEZ Act, there is apparently no provision provided for eviction proceedings as contemplated in the special enactment, KBLR Act. 24. The learned counsel for the respondent also placed reliance on the decisions of the Hon'ble Supreme Court in Solidaire India Ltd v. Fair Growth Financial services Ltd and Ors reported in (2001) 3 SCC 71 and also in Maruti Udyog v. Ram Lal and others reported in (2005) 2 SCC 638 which discusses about the effect of non-obstante clauses and it was held that, "It is well settled that when both statutes containing non-obstante Clauses are special statutes, an endeavor should be made to give effect to both of them. In case of conflict, the later shall prevail". The respondent also places his reliance on the decision of the Hon'ble Telangan....
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....tenant will become remediless and thus the very purport of the legislature in enacting the KBLR Act itself will fail. Moreover, under SEZ Act, the comparative hardships, bona fide requirements as in KBLR Act cannot be looked into. 26. Being so, when the petitioner and the respondent voluntarily entered into a lease deed containing various terms and conditions with respect to the tenancy and having all the characteristics of a tenancy and also considering the rights and liabilities of the parties to the sub-lease agreement and the different guidelines for transaction between them, they cannot be simply termed as a developer and entrepreneur. Since they voluntarily entered into a sub-lease agreement as referred to above, and having the characteristics of the transaction between them as landlord and tenant, they can only be termed as a landlord and tenant within the meaning as provided under the KBLR Act. Therefore, the contention raised by the learned counsel for the respondent in in that that aspect aspect is not also sustainable. 27. Furthermore, the Special Economic Zones Act, 2005, which primarily aims to promote exports and facilitate trade, falls under Entry 42 of the Union....
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....45 of List I. The State Financial Corporations Act comes under Entry 43 of List I of the Seventh Schedule. There is no conflict between the Securitisation Act and the Kerala Buildings (Lease and Rent Control) Act. They operate in different fields. It is well settled that the question of repugnancy between the law made by Parliament and the law made by the State Legislature may arise only in cases: where both the legislations occupy the same field with respect to any of the matters enumerated in the Concurrent List. The Securitisation Act and the Kerala Buildings (Lease and Rent Control) Act were enacted respectively under List I and List III of the Seventh Schedule. They occupy different fields. Therefore, Art.254 of the Constitution does not apply and it cannot be held that the Kerala Buildings (Lease and Rent Control) Act is repugnant to the Securitisation Act and hence void. The Securitisation Act is not a later law with respect to the same matter as that of the Rent Control Act. There is no specific provision in the Securitisation Act affecting the operation of the Kerala Buildings (Lease and Rent Control) Act." Likewise, in the instant case, also, the SEZ Act being a Central A....
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....ic Zone is one which comes under serial No. 20, but the petitioner is seen separately scheduled as serial No.101 therein. 31. Furthermore with respect to the contention of the respondent that, since the dispute is between a developer and entrepreneur as per sections 3 and 4 of the SEZ Act, it is to be referred to arbitration. But as aforementioned, in this petition, the parties are not claiming as a developer and entrepreneur, but only as a lessor and lessee, which the exclusive purview of KBLR Act. Therefore, by applying the doctrine of harmonious construction, though nough the tenanted premises falls within a special economic zone, it can be seen that the operation of SEZ Act and KBLR Act are entirely different, and that the relief sought for in this petition is not one coming within the SEZ Act. Further, KBLR Act being a social welfare legislation has to be given a purposive interpretation. Thus, for the aforesaid reasons, the rent control petition is found maintainable and not hit by Sections 23, 42 and 51 of the SEZ Act. Hence, issue No. 2 is also found in favour of the petitioner and it is answered accordingly." 9. Also of relevance are the discussions and finding of the R....
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.... so far formulated. So as of now, the petitioner cannot be termed to be in unauthorized occupation. And further mere apprehension of the respondent that the petitioner company will be dissolved in future is not a ground to challenge the maintainability of this rent control petition. 34. Further, the contention of the learned counsel for the respondent is that eviction proceedings in a special economic zone is governed by the PPEUO Act, by placing reliance on decision, Jayalakshmi v. Union of India reported in 2006 KHC 175, in which it was held that PPEUO Act while over rent control legislation. Going through exhibit A2, as per notification No. S.O 464(E) dated 01.03.2011, it can be seen that the petitioner as a private organization who has proposed to set up a sector specific special economic zone for information technology and information technology enabled services. Also, by way of exhibit A3, a letter of approval dated 21.04.2008 obtained by the petitioner is also produced and a perusal of which Clause vii, states that the developer shall abide by all the local laws, rules, regulations, or bylaws in that area. On perusing exhibit A5 dated 16.12.2024, which is issued by the Ass....
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....ion. 37. Further in M/s. Jain Ink Manufacturing Company v. Life Insurance Corporation of India and Another reported in 1980 (4) SCC 435, the Hon'ble Supreme Court held that, "So far as the Premises Act is concerned it operates in a very limited field in that it applies only to a limited nature of premises belonging only to particular sets of individuals, a particular set of juristic persons like companies, corporations or the Central Government. Thus, the Premises Act has a very limited application. Secondly, the object of the Premises Act is to provide for eviction of unauthorised occupants from public premises by a summary procedure so that the premises may be available to the authorities mentioned in the Premises Act which constitute a class by themselves." It was further held that, "Thus, it would appear that both the scope and the object of the Premises Act is quite different from that of the Rent Act. The Rent Act is of much wider application than the Premises Act inasmuch as it applies to all private premises which do not fall within the limited exceptions indicated in S.2 of the Premises Act. The object of the Rent Act is to afford special protection to all the tenants or....
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....ies was not arbitrable. While the said decision of the Supreme Court does indeed hold that landlord-tenant disputes falling under the ambit of rent control legislations would be non-arbitrable, we feel it would be profitable to consider some of the other aspects pertaining to arbitrability of a dispute that were discussed in the said judgment. Initially, the court drew a distinction between adjudication of actions in rem and adjudication of actions in personam. Pointing out that the distinction between the two turns on their power as res judicata, the court observed as follows at paragraphs 48 and 49 which read as follows: "48. A judgment in rem determines the status of a person or thing as distinct from the particular interest in it of a party to the litigation; and such a judgment is conclusive evidence for and against all persons whether parties, privies or strangers of the matter actually decided. Such a judgment "settles the destiny of the res itself" and binds all persons claiming an interest in the property inconsistent with the judgment even though pronounced in their absence. 21 By contrast, a judgment in personam, "although it may concern a res, merely determines the ri....
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.... and interests of third parties or without presence of others, an effective and enforceable award is not possible. Prime objective of arbitration to secure just, fair and effective resolution of disputes, without unnecessary delay and with least expense, is crippled and mutilated when the rights and liabilities of persons who have not consented to arbitration are affected or the collective resolution of the disputes by including non-parties is required. Arbitration agreement as an alternative to public fora should not be enforced when it is futile, ineffective, and would be a no result exercise." 12. The court then went on to examine the circumstances under which non-arbitrability could be implied. At paragraphs 54 and 55 of the judgment, the court found that implicit non-arbitrability is established when by mandatory law the parties are quintessentially barred, from contracting out and waiving the adjudication by the designated court or the specified public forum. In other words, when the statutory scheme suggests that there is no choice, the person who insists on a remedy must seek his remedy before the forum specified in the statute and before no other forum. The recourse to pr....
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.... not be any inconsistency or repugnancy between the provisions of the mandatory law and arbitration as an alternative. Conversely and in a given case when there is repugnancy and inconsistency, the right of choice and election to arbitrate is denied. This requires examining the "text of the statute, the legislative history, and 'inherent conflict" between arbitration and the statute's underlying purpose" with reference to the nature and type of special rights conferred and power and authority given to the courts or public forum to effectuate and enforce these rights and the orders passed. When arbitration cannot enforce and apply such rights or the award cannot be implemented and enforced in the manner as provided and mandated by law, the right of election to choose arbitration in preference to the courts or public forum is either completely denied or could be curtailed. In essence, it is necessary to examine if the statute creates a special right or liability and provides for the determination of each right or liability by the specified court or the public forum so constituted, and whether the remedies beyond the ordinary domain of the civil courts are prescribed. When the answer ....
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....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." 15. As can be seen from the above, landlord-tenant disputes covered and governed by rent control legislations would not be arbitrable because a specific court or forum has been given exclusive jurisdiction to apply and decide special rights and obligations. However, the above observations have to be read in the context in which they were made. Not all tenancies are covered and governed by rent control legislations and it is only those 'pure tenancy' agreements, wherein the creation of the tenancy is the sole purpose of the agreement and brings into existence the landlord-tenant relationship between the parties, that can be seen as covered and governed by rent control legislations and therefore non-arbitrable. There may be myriad circumstanc....
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....n that context, it is trite that if the dominant intention of the two statutes is different and they cover different subject matters, then merely because the two statutes refer to some allied or cognate subjects, they cannot be seen as covering the same field. On the facts before us, when an aspect of tenancy that is apparently covered by both statutes is examined for the purposes of determining the statute that will govern the tenancy, we have to first determine whether the essence of the relationship between the parties is one of landlord-tenant so as to bring it within the ambit and coverage of the rent control legislation? If, on the other hand, the essence of the relationship between the parties is not that of landlord-tenant, but of developer-entrepreneur under the SEZ Act, then the dispute in question would fall within the scope of the SEZ Act, even if there is an incidental aspect of landlord-tenant relationship involved. We might in this context draw an analogy with the doctrine of pith and substance, that is employed to determine the constitutional validity of a statute by examining whether the legislation entrenches into an area earmarked for a different legislature. The....
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....i Masterplan, as available in the respondent's website, and an extract of which is produced by the appellants as Ext.P28, describes the SEZ as an Industrial Township and this description also finds mention in Ext.P11 sub-lease deed entered into between the appellant and the respondent, where the latter is referred to as the "Township authority". The above aspects assume significance because Section 17 of the 1999 Act clearly states that the KBLR Act, 1965 shall not apply to any premises belonging to the Industrial Township authority under Section 15 of the 1999 Act. It is clear therefore that under the scheme of SEZ's as regulated by the SEZ Act and the allied State legislations, leased premises within the SEZ are not covered or governed by the KBLR Act, 1965. Conclusion: 18. The upshot of the above discussions is that we are of the view that the remedy chosen by the respondent to evict the petitioner firm was not one that was available to it in law. As per the scheme of the SEZ Act, the dispute regarding non-payment of arrears of rent and other charges has to be seen as integral to the larger issue of whether the petitioner firm is entitled to continue in the SEZ as an 'entrepre....