Calcutta High Court (Appellete Side)
Jalan Carbon And Chemicals Limited vs Passport Brand Clothing Company ... on 24 December, 2013
Author: Tarun Kumar Gupta
Bench: Tarun Kumar Gupta
IN THE HIGH COURT AT CALCUTTA CIVIL REVISIONAL JURISDICTION APPELLATE SIDE Present: The Hon'ble Mr. Justice Tarun Kumar Gupta C. O. No. 2555 of 2011 Jalan Carbon and Chemicals Limited Vs. Passport Brand Clothing Company Private Limited For the petitioner: Mr. Debnath Ghosh Mr. Partha Mukherjee Mr. Subhas Jana Mr. Rohit Chowdhury For the Opposite Party: Mr. Hiranmay Bhattacharyya Mr. Avijit Dey Judgement on: 24th December, 2013 Tarun Kumar Gupta, J.:-
This revisional application is directed against order dated 19th May, 2011 passed by learned Civil Judge (Senior Division), 5th Court at Alipore in Title Suit No.209 of 2009.
The petitioner as the plaintiff filed one suit being Title Suit No.209 of 2009 in the Court below against the O. P. defendant for eviction on the ground of non-payment of rent and facility charges payable by the defendant in accordance with terms and conditions as laid down in the tenancy agreement dated 1st of March, 2005 as well as facility agreement dated 1st of March, 2005 (hereafter to be referred as first agreement and second agreement respectively) entered into in between the predecessor-in- title of the petitioner plaintiff and the O. P. defendant.
The O. P. defendant appeared in said suit and filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter to be referred as the Act of 1996) alleging that the entire dispute was referable to an arbitrator under said Act of 1996 in view of a specific arbitration clause appearing in the first agreement which also covered the second agreement. After contested hearing learned trial court passed the order impugned by allowing said application under Section 8 of the Act of 1996 by observing that the entire dispute was covered by the arbitration clause and hence was referable to the arbitrator.
Mr. Debnath Ghosh, learned counsel appearing for the plaintiff petitioner, has assailed the order impugned on the following grounds.
According to him, though the agreement of tenancy dated 1st of March, 2005 contained an arbitration clause but the facility agreement of the same date did not contain any arbitration clause. According to him, the petitioner plaintiff filed the suit for eviction under the Transfer of Property Act for non-payment of both the lease rents etc. covered by the first agreement as well as facility charges covered by the second agreement. He submits that as a composite suit was filed touching both the agreements, one having an arbitration clause, and the other having no such arbitration clause, in that case there was no question of either severing the dispute covered by arbitration clause for referring the matter to the arbitrator or for referring the entire dispute to the arbitrator in view of an arbitration clause present in only one of the agreements.
He next submits that even if it is admitted for argument's sake that the arbitration clause present in the first agreement also covered the second agreement even then the dispute namely eviction of the defendant tenant on the ground of non-payment of rental and other charges is not an issue which can be decided by an arbitrator in view of the ratio of the cases as reported in 2011 (5) SCC page 532 (Booz Allen and Hamilton Inc. vs. SBI Home Finance Limited and others) 2003 (5) SCC page 531 (Sukanya Holdings (P) Ltd. vs. Jayesh H. Pandya and another) and an unreported judgment of this Court passed in C. O. 3084 of 2009. He also submits that the special leave petition against the order passed in C. O. 3084 of 2009 was dismissed in the Hon'ble Apex Court thereby affirming the observations of Hon'ble Judge made in said case. According to him the order impugned is not sustainable in law.
Mr. Hiranmay Bhattacharyya appearing for the O. P. defendant submits that in the first agreement of tenancy there is a specific clause (Clause 23) wherein it was stated that all disputes and differences by and between the parties hereto in any way relating to or connected with the Said Space and / or this agreement and/or anything done in pursuance hereof shall be referred for arbitration to be adjudicated in accordance with the Indian Arbitration Law in force. He submits that on the same date there was a further agreement relating to other facilities in between the parties of the first agreement wherein it was specifically mentioned in Clause 10 that said agreement (second agreement) shall run as co-extensive with and shall be dependent on the continuance of lease in respect of the Said Space or any extension thereof and the termination of the lease agreement shall automatically amount to termination of this agreement. He also submits that it was further stated therein that in the event the said lease agreement be renewed by the parties hereto, the terms and conditions contained herein shall apply mutatis mutandis to for each extended period of lease, save and except that the monthly compensation payable hereunder shall stand increased by 15% of the then existing monthly compensation.
According to Mr. Bhattacharyya as the parties were same and properties were same and the second agreement was found to be dependent on the first agreement the arbitration clause specifically appearing in the first agreement also covered the disputes arising out of second agreement. He next submits that the arbitration clause of the first agreement is wide enough to cover the disputes arising out of second agreement. He submits that the case laws as referred by learned counsel for the petitioner plaintiff are not applicable in this case as the facts were distinguishable. According to him, in the case of Booz Allen (supra) it was held that only eviction suit governed by special statutes cannot be decided by an arbitrator but in this case the suit was filed not under any special statute namely West Bengal Premises Tenancy Act but under a general statute namely Transfer of Property Act. He next submits that the judgment of M/s. Finger Tips Solution Private Limited (supra) is also not applicable as in that case the dispute was found not to be covered under the arbitration agreement whereas in the present case the entire dispute was covered by the arbitration agreement by necessary implication. He further submits that when there is a prima facie arbitration clause and the dispute is referable to the arbitrator in terms of said clause then the court has no option but to refer the matter to the arbitrator. He next submits that the plea that the matter cannot be decided by an arbitrator may very well be taken before the arbitrator for being dealt with under Section 16 of the Act of 1996. In this connection he refers a case law reported in 2011 (5) CHN (CAL) 340 (Orient Paper & Industries Ltd. vs. Shaun Automobiles Pvt. Limited). He lastly submits that when there is an arbitration clause the court is under a statutory obligation to refer the dispute to the arbitrator. In this connection he placed reliance upon a case reported in (2010) 4 SCC page 584 (Anannya Chowdhury & Anr. vs. Ranjit Kumar Bose & Anr.).
There is no dispute that there were two agreements both dated 1st of March, 2005 in between the predecessor-in-title of he petitioner plaintiff and O. P. defendant. Admittedly, both the agreements were executed on the same date dated 1st of March, 2005 relating to the same property. Admittedly, in the first agreement creating tenancy there was an arbitration clause under clause 23 which runs as follows:-
"All disputes and differences by and between the parties hereto in any way relating to or connected with the Said Space and / or this agreement and/ or anything done in pursuance hereof shall be referred for arbitration to be adjudicated in accordance with the Indian Arbitration Law in force. Such Arbitrator shall have the right to proceed summarily and to make interim and non-speaking awards."
The second agreement did not contain any specific arbitration clause but contains a clause to show that the second agreement was dependent on the first agreement and would run co-extensive with the first agreement but there was no specific mention of referring disputes to the arbitrator.
Clause 10 of said second agreement runs as follows:-
"This agreement shall run as co-extensive with and shall be dependent on the continuance of lease in respect of the Said Space or any extension thereof and the termination of the lease agreement shall automatically amount to termination of this agreement. In the event the said lease agreement be renewed by the parties hereto, the terms and conditions contained herein shall apply mutatis mutandis to for each extended period of lease, save and except that the monthly compensation payable hereunder shall stand increased by 15% of the then existing monthly compensation."
The points for determination in this matter is - (1) whether the Arbitration Clause 23 appearing in the first agreement also covered the disputes arising out of the second agreement of the same date in view of Clause 10 of the second agreement read with Clause 23 of the first agreement (2) If the above answer is in the affirmative then whether suit for eviction filed under Transfer of Property Act is referable to the arbitrator.
Point No. (1):-
Mr. Bhattacharyya, learned counsel for the O. P. defendant, has tried to impress upon this Court that as the Arbitration Clause 23 of the first agreement has specifically laid down that all disputes and differences by and between the parties hereto in any way relating to or connected with the Said Space and / or this agreement and / or anything done in pursuance hereof was referable to an arbitrator the disputes between the parties over the same property even covering second agreement are liable to be referred to the arbitrator in terms of this clause 23. In this connection he has also placed Clause 10 of the second agreement to submit that said second agreement was to run co-extensive with and being dependent on the continuation of the lease created by the first agreement and that in case of renewal of the lease the terms and conditions of the second agreement shall apply mutattis mutandis to for each extended period of lease, save and except variation of the monthly compensation as noted therein.
As regarding facilities to be given to the leasee by the lessor and the terms thereof were covered by a separate agreement. The dispute between the parties arising out of second agreement should be governed by the conditions of second agreement. The Arbitration Clause 23 of the first agreement of tenancy cannot be extended so as to cover dispute, if any, arising out of second agreement in the absence of a specific averment to that effect either in the first agreement or in the second agreement. It is true that as per clause 10 of the second agreement, said second agreement being facility agreement was co-extensive and dependent on the continuation of the lease and was liable to be terminated on termination of the lease. But that does not mean that the arbitration clause appearing in the first agreement will automatically be applicable in case of disputes and differences arising between the parties over the second agreement. Again, the clause 10 of the second agreement that in the event said lease agreement be renewed by the parties hereto the terms and conditions contained herein shall apply mutatis mutandis to for each extended period of lease, save and except some variation of the monthly compensation payable, does not mean that the arbitration clause appearing in the first agreement will be applicable to the second agreement. It only shows that the terms and conditions of the second agreement will be applicable mutatis mutandis, save and except the variation of the monthly compensation for the extended period of lease. From the above discussions it is clear that even if two agreements are read side by side with special reference to arbitration clause 23 in the first agreement and the dependency clause 10 appearing in the second agreement still it cannot be said that there is an automatic conclusion that the arbitration clause 23 appearing in the first agreement also covered the disputes arising out of the second agreement.
Now the question is whether in spite of absence of specific arbitration clause in the second agreement it should be presumed that as parties were same and the properties were same and both the agreements were executed on the same date the arbitration clause 23 appearing in the first agreement should be presumed to be applicable in case of second agreement also.
Section 9 of the Code of Civil Procedure runs as follows:-
"The courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of civil nature excepting suits of which their cognizance is either expressly or implicidly barred.
Explanation -I - A suit in which the right to property or to an office is contested is a suit of a civil nature, notwithstanding that such right may depend entirely on the decision of questions as to religious rites or ceremonies.
Explanation-II - For the purposes of this Section, it is immaterial whether or not any fees are attached to the office referred to in Explanation I or whether or not such office is attached to a particular place.
On plain reading of Section 9 of the Code of Civil Procedure it appears that said section gives jurisdiction to try all suits of civil nature by a civil court excepting those which are expressly or implicidly barred by any other law. Admittedly, if there is an arbitration clause in any document then the matter should be decided by the arbitrator and on that score the jurisdiction of the civil court is barred. However, the general principle is that the document excluding the jurisdiction of a civil court should be construed strictly. I have already stated that on plain reading of those agreements with special reference to arbitration clause 23 of the first agreement and continuation clause 10 of the second agreement, it does not appear that arbitration clause of the first agreement also covered the disputes and differences, if any, arising out of the second agreement. In this connection it is also pertinent to note that when the same parties made those two agreements over the same property on the same date then it was expected that the arbitration clause should have been incorporated in both the documents if parties wanted settlement of their disputes arising out of both the documents through an arbitrator. The averments in clause 10 in the second agreement that in the event the said lease agreement (first agreement) be renewed by the parties hereto, the terms and conditions contained herein (second agreement) shall apply mutatis mutandis to for each extended period of lease, save and except the monthly compensation rate only means that this facility agreement (second agreement) will be deemed to continue with the same clauses so long the lease period continued after renewal. By no stretch of imagination said Clause 10 of the second agreement can be interpreted as adoption of the arbitration clause of the first agreement mutatis mutandis to the second agreement also. Accordingly, I am of the opinion that the second agreement i.e., facility agreement though executed on the same date and between the same parties relating to the same property did not contain any arbitration clause and that the arbitration clause of the first agreement was not referable to the second agreement.
Admittedly, the petitioner plaintiff filed the composite suit for non- payment of rent and other charges in violation of the first agreement as well as for non-payment of facility charges in violation of the second agreement. As the claim of the petitioner plaintiff exceeded the permissible limit prescribed in the West Bengal Premises Tenancy Act, 1997, he had to file said eviction suit under the relevant provisions of the Transfer of Property Act. There is no dispute that if a suit filed in a civil court clubbed the reliefs arising out of two agreements, one of which has an arbitration clause and the other having no such clause, then there is no scope of severing the portion of claim arising out of the agreement having arbitration clause for referring the matter to an arbitrator. In that case the competent civil court is entitled to try the entire suit as it was framed. Accordingly, point No.1 is decided in the negative. In view of said decision point No.2 becomes redundant and requires no determination but for academic interest.
Point No.2 Mr. Hiranmay Bhattacharyya, learned counsel appearing for the O. P. defendant, submits that the case of Booz Allen and Hamilton Inc. (supra) as referred by learned counsel of the petitioner plaintiff noted some well recognized examples of non-arbitral disputes in para 36 of said judgment. According to him, eviction of tenancy matters governed by special statutes where tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes are beyond the scope of arbitration. According to him, the suit in the present case was filed under Transfer of Property Act and not under special statute of eviction namely West Bengal Premises Tenancy Act and hence said case law has no application.
He next submits that the ratio of M/s. Finger Tips Solution Private Limited (supra) is also not applicable in this case as the dispute in said case was not covered by an arbitration clause whereas in this case the entire dispute was covered by the Arbitration Clause of the first agreement.
But I have already stated at the time of disposing of the point No.1 that the entire dispute covering both the agreements was not covered by the Arbitration Clause appearing in the first agreement only. In the case of M/s. Finger Tips Solution Private Limited (supra) this court has further held that the issue of eviction under Transfer of Property Act involves various questions relating to granting of relief under different provisions of Transfer of Property Act, 1882 and that said dispute also is non-arbitral. It further appears that the judgment of the Hon'ble Single Bench passed in the case of M/s. Finger Tips Solution Private Limited was not disturbed by the Hon'ble Supreme Court by rejecting the Special Leave filed against said order vide order dated 9th of April, 2013 in Special Leave to appeal (Civil No.S-6239 of 2012).
He next submits that after reference to the arbitrator the petitioner plaintiff could have taken the plea that said dispute was beyond the scope of arbitration under Section 16 of the arbitration Act of 1996. In support of his contention he refers a case law reported in 2011 (5) CHN (Cal) 340 (Orient Paper & Industries Ltd. vs. Shaun Automobiles Pvt. Ltd.). There is no denial that if any dispute is raised before an arbitrator as to the jurisdiction of said forum to entertain the dispute, then said forum had the authority under Section 16 of said Act of 1996 to decide as to whether said dispute should be adjudicated in said forum or not. But that does not mean that whenever a party will pray for referring the dispute to the arbitrator in view of an alleged arbitration clause in the agreement, the court will blindly forward the matter to the arbitrator disregarding the objection of the other side as to its existence as well as arbitrability, on the ground that learned arbitrator may decide said issue under Section 16 of said Act of 1996. However, there is no denial that when there is an arbitration agreement and it is found that the entire dispute is referable to the arbitrator then learned court should refer the dispute to the arbitrator under Section 8 of the Act of 1996. I am of the opinion that eviction or tenancy matters governed by the Transfer of Property Act also may be decided in the court of law unless the court is satisfied that the entire dispute was covered by an Arbitration Clause and that the nature of the dispute does not call for deciding intricate questions of law and that the dispute may effectively be decided in the forum of arbitration. The point No.2 stands disposed of accordingly.
Accordingly, the order impugned dated 19th of May, 2011 is hereby set aside directing learned Trial Court to proceed with the pending title suit as per law.
Urgent photostat certified copy of this judgment be supplied to the learned counsels of the parties, if applied for.
(Tarun Kumar Gupta, J.)