Punjab-Haryana High Court
Dayal Chand vs The Union Of India And Ors. on 7 January, 1970
Equivalent citations: AIR 1971 PUNJAB AND HARYANA 23
JUDGMENT Mahajan, J.
1. This order will dispose of Civil Revision Nos. 845, 846 and 847 of 1969. The facts in all these petitioners are similar and it is for that reason that they will be disposed of by a single judgment. These petitioners are directed against the order of the learned District Judge affirming on appeal the decision of the trial Court in an application under Sections 11, 12 and 30 of the Indian Arbitration Act. The applicants are lessees from the Estate Officer, Chandigarh. The lease deeds were executed on the 22nd of January, 1957, and were for a period of 11 months. In all these lease deeds, clause 13 is the arbitration clause on the basis of which the entire controversy had arisen in the Courts below as well as before us. It is common ground that there was no fresh agreement of lease executed after the expiry of the period of lease, that is, 11 months, but the lessees continued to hold over. The Estate Officer decided in the year 1965 to eject the lessees under the provisions of the Public Premises (Eviction of Unauthorised Occupants) Act after terminating the tenancy.
When these notices were issued to the lessees they invoked clause 13 of the original leases and asked that the disputes relating to the termination of their tenancy, should be referred to arbitration. Their case was that at the time of auction of these leases in the year 1957, there was a term of the auction that those who were the successful bidders would be given priority when similar leases were to be auctioned when the new bus stand was erected in Section 17. This bus stand was erected in the year 1962 and as they had not been given that option, they were entitled to an alternative accommodation before they were evicted. The Estate Officer agreed that the dispute be referred to arbitration and it was referred to the arbitration of the Chief Administrator, however, obtained legal opinion and the Law Department gave the option that under the terms of the lease, such a reference was not competent. Therefore, he declined to enter upon the reference.
This led to the present application under Sections 11, 12 and 30 of the Arbitration Act. This application was opposed by the Estate Officer. It is of interest to note that the stand taken up b the Estate Officer in the first instance was that as the award had been given, no reference was competent. But in view of the fat that the other party was not given notice of the arbitration proceedings, the stand was shifted and now the stands is that there was no arbitration agreement at all and, therefore, there was no question of any reference being made to the Chief Administrator. The Controversy that was before the trial Court is well indicated by the issues that were framed. The issues are as follows :
1. Whether the agreement between the parties to refer the dispute to the Arbitrator was not valid ?
2. What is the effect of the reference of the disputes to the Arbitrator ?
3. Whether the reference was made under mistake of law ?
4. Whether the reference was beyond the terms of the agreement ? If so, what is its effect ?
5. Whether the Arbitrator misconducted himself or refused to act and should be removed ?
6. Whether a new Arbitrator should be appointed ?
7. Relief.
2. The trial Court came to the conclusion that there was no subsisting agreement of reference with regard to the disputes that were sought to be settled by the Arbitration, that the reference to arbitration was of no consequence, that the reference to the arbitration had been made in a mistaken view of law but that was no ground to avoid the reference, that the reference was beyond the terms of the agreement, that the Arbitrator had not misconducted himself but in fact refused to act and that no case had been made out for the appointment of the new Arbitrator. Against this decision, an appeal was preferred to the learned District Judge and the learned District Judge took the view that no appeal was competent. However, the learned District Judge proceeded to decide the entire controversy on the merits as well and affirmed the decision of the trial Court. Against this decision, the present petitions for revision have been preferred.
3. It is not necessary to go into the question whether the order of the trial Court was appealable or not because we can examine the validity of the order of the trial Court in the exercise of our revitional jurisdiction. Therefore, we have not proceeded to determine this question.
4. In our opinion, the decision of the trial Court as well as of the learned District Judge must stay on a very short ground which will now be stated. It is common ground that the tenants did hold over. What is the effect of a tenant holding over, is now beyond the pale of controversy in view of the decision of the Federal Court in Kai Khushroo Benzonjee Capadia v. Bai Jerbai Hirjibhov Warden, AIR 1949 FC 124. Mukherjea, J. ( as he then was) who spoke for the majority of the Court, while dealing with the position of a tenant holding over, observed as follows :-
"This argument, though plausible at first sight, does not appear to me t be sound. It is perfectly right that the tenancy which is created by the 'holding over' of a lessee or under-lessee is new tenancy in law even though many of the terms of the old lease might be continued in it, by implication ; and it cannot be disputed that to bring new tenancy into existence, they must be a bilateral act. What Section 116, T. P. Act, contemplates is that on one side there should be an offer of taking a renewed or fresh demise evidenced by the lessee's or sub-lessee's continuing in occupation of the property after his interest has ceased and on the other side there must be a definity assent to this continuance of possession by the landlord expressed by acceptance of rent or otherwise. It can scarcely be disputed that the assent of the landlord which is founded on acceptance of rent must be acceptance of rent as such ana in clear recognition of the tenancy right asserted by the person who pays it. "
It is, therefore, clear that after the expiry of the period fixed in the original leases, the original contract of tenancy came to an end and a new contract of tenancy came into being. Of course, by implication, the terms of lease embodied in the original contract would be deemed to be their terms of lease in the new contract. It has been held by two learned Judges of the Calcutta High Court in Lachminarain Bhareodan v. Hoara Miller & Co. , ILR 41 Cal 35 = (AIR 1914 Cal 294) and Bahadur Mull Chaudhuri v. Nagar Mull Madan Gopal, ILR (1941) 1 Cal 451 = (AIR 1941 Cal 534), that an arbitration clause in an old contract does not ipso facto become an arbitration clause in the new contract. Therefore, on the parity of reasoning it must be held that the arbitration clause, that is, clause 13 in the lease deed, does not become ipso facto a clause of the new contract of lease under Section 116 of the Transfer of Property Act.
5. The matter can be looked at from another point of view. Can it be said that an arbitration clause is a clause relating to a lease ? Lease is defined in Section 105 of the Transfer of Property Act, as follows :-
"A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express of implied, or in perpetuity in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee who accepts the transfer on such terms. "
Section 108 deals with the rights and liabilities of a lessor. In other words they broadly indicate the basic terms and conditions which are usually to be found in lease deeds. Arbitration clauses in lease deeds are really independent contract. They are put in order to settle the disputes that may arise concerning the terms and conditions of a lease. This, in the very nature of things, clearly denotes that the arbitration clause can, in no sense, be said to be a term of the lease within the meaning of Section 116 of the Transfer of Property Act. It is for this reason that it cannot be held, as contended by Mr. Dhingra, learned counsel for the petitioner, that clause 13, by reason of Section 116 of the Transfer of Property Act, becomes a clause of the new contract of lease by reason of the lessees holding over. The learned counsel, for his contention, that when a tenant hods over, the old terms of the lease, by implication, can become the terms of the new contract of lease, placed reliance upon Ittipennaa Amma Devaki Amma v. Krishna Kammathi Ramachandra Kammathi, AIR 1955 Trav-Co. 146, Alphanso Pinto v. Thukru Hengsu, AIR 1955 Mad 206, Badal v. Ram Bharosa, AIR 1938 All 649, Binany Properties Private Ltd. v. M. Gulamali Abdl Hossain and Co. , AIR 1967 Cal 390, Nandalal Das v. Monmatha Nath Ghose, AIR 1962 Cal 597.
These cases, however, do not deal with an arbitration clause. So far as the terms of leases are concerned, the decision of the Federal Court in Kai Khushroo's case, AIR 1949 FC 124 is exact in line with the decisions referred to by the learned counsel. In fact no exception was taken to these decisions by the learned counsel for the respondent. Unless arbitration clause is treated as a term of the lease, as contemplated by Section 116 of the Transfer of Property Act, it cannot be said that it will be available to a tenant holding over. In fact the observationions of the learned Judges of the Calcutta High Court in Damadoar Shah v. Union of India, AIR 1959 Cal 526, clearly point out that arbitration agreement is an independent contract just as a lease is an independent contract and, therefore, in our opinion, an independent contract cannot be treated as term of the contract of lease.
The matter when examined in either perspective admits of no two opinion. Even to bring the case of a tenant holding over under Section 116 of the Transfer of Property Act, it was observed by the learned Judges of the Federal Court in Kai Khushroo's case. AIR 1949 FC 124 that the parties had to be ad idem and they were treated to be ad idem because the tenant continued in possession and the land lord accepted the stipulated rent. Similarly, in order to bring in the contract of arbitration for the settlement of a dispute between the parties, the parties have to be ad idem and there is no evidence that the parties were ad idem, that the disputes arising in the new contract of lease were to be settled by arbitration. Clause (13) in the lease deed relating to arbitration had come to an end with the contract, of lease after the stipulated period had expired. In this view of the matter, we entirely agree with the decision of the Courts below.
6. The last, contention of the learned counsel is based on the decision of this Court in Shori Lal v. Sardari Lal, ILR (1962) 2 Punj 468 = (AIR 1963 Punj 165), Sheo Narain v. Bala Rao, AIR 1932 All 248, and Smt. Dulari Devi v. Rajendra Prakash, AIR 1959 All 711. These cases have no relevance whatsoever, so far as the present controversy is concerned. It is not a case where a new contract of arbitration was agreed to between the parties. The mere fact that a reference is made, will not clothe the Arbitrator with jurisdiction unless there is a contract to refer a dispute arising under it to arbitration. It was on a mistaken notion that the Estate Officer thought that the old clause 13 held the field and it was on that basis that he referred the dispute to the Chief Administrator, Capital Project. Mr. Dhingra failure and frankly conceded that there was no fresh agreement of reference after the earlier contract of lease, in which Clause 13 figured, had come to an end. But he stressed the fact that when he made recourse to clause 13 and the respondent agreed to refer the disputes to arbitration, it amounted to a new contract. We are unable to agree with the contention. As already observed, parties have to be ad idem with regard to a contract to refer their disputes for settlement throughout arbitration. The circumstances of these case clearly show that this is not the case. No other contention has been advanced.
7. For the reasons recorded above, these petitioners fail and are dismissed but there will be no order as to costs.
Sandhawalai, J.
8. I agree.
9. Revisions dismissed.