Urban World Motors Pvt Ltd and Anr v. Mrs. Sweta Jalan

ORDER Date : 29.09.2023

Heard Mr. S. Chamaria, learned counsel for the petitioners. 2) By filing this application under Article 227 of the Constitution of India, the petitioners have challenged the legality of the order dated

07.09.2023, passed by the one-man learned Arbitral Tribunal of the learned former Judge of this Court. 3) It is not in dispute that the learned sole arbitrator was appointed by virtue of an order dated 19.04.2023, passed by this Court in an application under Section 11(6) of the Arbitration and Conciliation Act, 1996. Thereupon the respondent, as claimant before the learned Arbitral Tribunal, had filed her claim petition. Under 6 (six) head of claim, the prayers made in the said claim petition, numbered as Arb. Petition No. 03/2023, are as under:-

(i) Claim no.1: monetary award against the petitioner herein for an amount of Rs.1,04,01,059/- (Rupees One crore four lakh one thousand fifty nine only), being the arrear rent;

(ii) Claim no.2: monetary award against the petitioner herein for an amount of Rs.19,54,395/- (Rupees Nineteen lakh fifty four thousand three hundred ninety five only), being the loss suffered by the respondent on account of non-deposit of TDS by the petitioner;

(iii) Claim no. 3: monetary award against the petitioner for an amount of Rs.65,00,000/- (Rupees sixty five lakh only), being the loan amount;

(iv) Claim no. 4: pendente lite and future interest @ 18% per annum;

(v) Claim no. 5: Cost of the arbitration proceeding as accrued.

4) The petitioner, on appearance before the learned Arbitral Tribunal, had filed a petition under Section 16 of the Arbitration and Conciliation Act, 1996 to question the maintainability of the arbitration proceeding on Page No.# 3/8 ground of lack of jurisdiction. In the said petition, inter alia, it was stated to the effect that the subject matter before the learned Arbitral Tribunal was a commercial dispute between two parties as envisaged under Section 2(c) of the Commercial Courts Act, 2015 and thus, the subject matter was within the domain of the Commercial Courts alone. Therefore, as envisaged under Section 10 of the Commercial Courts Act, 2015, the commercial dispute of specified value was required to be adjudicated before the Commercial Courts, and that as the petitioner was a defaulted in payment of rent, the adjudication was required to be made under the provisions of the Assam Tenancy Act, 2021. It was also projected in the said petition that the tenancy agreement was an unregistered document, for which the arbitration proceeding was not maintainable and that the transactions through which alleged loan was given was an offence under the Money Laundering Act, 2002 as well as under Assam Money Lenders (Amendment) Act, 1968. 5) The respondent herein had contested the said petition. 6) The learned Arbitral Tribunal, by the impugned order, had rejected the petition filed by the petitioner under Section 16 of the Arbitration and Conciliation Act, 1996. 7) The learned counsel for the petitioner had referred to the various grounds of this application and the provisions of the Commercial Courts Act, 2015 and the Assam Tenancy Act, 2021 and it was submitted that the learned Arbitral Tribunal did not have the competence or jurisdiction to adjudicate tenancy dispute or in respect of a claim which was more than the specified value. It was also submitted that the tenancy agreement, being unregistered, would not be admissible in the arbitration proceeding. In support of the submissions, reliance has been placed on the following case citations, Page No.# 4/8 viz., (i) Booz Allen and Hamilton Inc. v. SBI Housing Finance Ltd., (2011) 5 SCC 532, (ii) Jaycee Housing Pvt. Ltd. & Ors. V. Registrar (General Orissa High Court, Cuttack & Ors., (2023) 1 SCC 549, (iii) N.N. Global Mercantile Pvt. Ltd. V. Indo Unique Flame Ltd. & Ors., (2023) 7 SCC 1. 8) The first point taken up is whether the arbitration agreement, which is contained in the purported Agreement of Sub-Let dated 01.09.2016, was valid in the absence of registration and payment of proper stamp value. In this regard, it may be relevant to extract herein below the observations made by the 5-Judge Bench of the Supreme Court of India in the case of N.N. Global Mercantile Pvt. Ltd. (supra), which has been cited by the learned counsel for the petitioners:-

449.1. As can be seen, the Court equated existence and validity and it was held that a contract only exists if it is valid. And it is valid only if it is enforceable. As far as the issue in the present case is concerned, the authors' Comments in Russell on Arbitration, 85 [Supra at note 58; Chapter 7, P. 369] (24th Edition) in the context of English law provide useful pointers in this context: "Existence and Validity of the arbitration agreement ... the Court draws a distinction between existence of the arbitration agreement, which is likely to be a matter for the Court (unless a stay under the inherent jurisdiction is granted) and its validity, which wherever possible should be left to the arbitrators." [emphasis in original]

449.2 I have already discussed that in the Indian regime, the Arbitrator under Section 16 has the jurisdiction to decide on "existence" and "validity". A plain reading of Section 11(6A) would show that the examination by Court is confined only to "existence" and not even "validity". Moreover, in the present reference, we are only concerned with the formal requirement of stamping and not arbitrability. Applying contextual interpretation to render an arbitration agreement void on the formal requirement of stamping would defeat the very purpose of the Arbitration Act, 1996. A document cannot be rendered invalid or unenforceable especially if the defect is curable under the Stamp Act, 1899 as noted earlier. Moreover, none of the provisions in the Stamp Act, 1899 have the effect of rendering a document invalid. Thus, we Page No.# 5/8 find the position in Vidya Drolia (supra) to the extent that it relies on Garware (supra) to be incorrect.

¶453The objective behind the enactment of the Arbitration Act, 1996 was to, inter alia, avoid procedural complexity and the delay in litigation before Courts. Impounding and stamping at the Section 11 stage would frustrate the very purpose of the amended Arbitration Act, 1996 as the enforcement of arbitration agreements would be stalled on an issue, which is capable of being resolved at a later stage. To defer stamping to the stage of the arbitrator would in my view achieve the objective of both the Arbitration Act, 1996 and the Stamp Act, 1899.

9) Therefore, the mandate of the decision in the case of N.N. Global Mercantile Pvt. Ltd. (supra) is that it should be left to the learned Arbitrator to decide about the validity of the agreement, which, in the opinion of this Court, would also include the power of the learned Arbitral Tribunal to examine if the tenancy agreement would be admissible in the arbitration proceeding. 10) The next issue as to whether in light of the provisions of the Assam Tenancy Act, 2021, the dispute is not arbitrable and as the claim is of more than the specified value, the Commercial Courts alone would have jurisdiction to adjudicate the dispute, is examined. 11) From the nature of claim made in the claim petition filed before the learned Arbitrator, it appears that the claims only relate to money claim. The learned counsel for the petitioner could not convince the Court that if a suit is filed before the Civil Court and/or a Commercial Court, such a suit can be anything other than a money suit. He could not show that any claim made in the arbitration claim petition could exclusively be adjudicated by a Rent/Civil Court. 12) It may be mentioned that notwithstanding that the Commercial Page No.# 6/8 Courts Act, 2015 had been enacted, yet the parties entered into an agreement containing arbitration clause with eyes wide open. 13) The learned counsel for the petitioner had placed heavy reliance on the case of Booz Allen and Hamilton Inc. (supra), and Jaycee Housing Pvt. Ltd. (supra). In the said context, it may be mentioned that in the case of Suresh Shah v. Hipad Technology India Pvt. Ltd., (2020) 0 Supreme (SC) 716 [equivalent to (2021) 1 SCC 529], a 3-Judge Bench of the Supreme Court of India after considering the case of Booz Allen and Hamilton Inc. (supra), had held as follows:-

¶16Such equitable protection does not mean that the disputes relating to those aspects between the landlord and the tenant is not arbitrable and that only a Court is empowered to waive the forfeiture or not in the circumstance stated in the provision. In our view, when the disputes arise between the landlord and tenant with regard to determination of lease under the TP Act, the landlord to secure possession of the leased property in a normal circumstance is required to institute a suit in the Court which has jurisdiction. However, if the parties in the contract of lease or in such other manner have agreed upon the alternate mode of dispute resolution through arbitration the landlord would be entitled to invoke the arbitration clause and make a claim before the learned Arbitrator. Even in such proceedings, if the circumstances as contained in Section 114 and 114A of TP Act arise, it could be brought up before the learned Arbitrator who would take note of the same and act in accordance with the law qua passing the award. In other words, if in the arbitration proceedings the landlord has sought for an award of ejectment on the ground that the lease has been forfeited since the tenant has failed to pay the rent and breached the express condition for payment of rent or such other breach and in such proceedings the tenant pays or tenders the rent to the lessor or remedies such other breach, it would be open for the Arbitrator to take note of Section 114, 114A of TP Act and pass appropriate award in the nature as a Court would have considered that aspect while exercising the discretion.

¶17On the other hand, 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 Page No.# 7/8 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 landlord and tenant but also other aspects such as the bonafide requirement, comparative hardship etc. even if the case for eviction is made out. In such circumstance, the Court having jurisdiction alone can advert into all these aspects as a statutory requirement and, therefore, such cases are not arbitrable. As indicated above, the same is not the position in matters relating to the lease/tenancy which are not governed under the special statutes but under the TP Act.

¶18In the backdrop of the above discussion, we are of the considered view that insofar as eviction or tenancy relating to matters governed by special statutes where the tenant enjoys statutory protection against eviction whereunder the Court/Forum is specified and conferred jurisdiction under the statute alone can adjudicate such matters. Hence in such cases the dispute is non-arbitrable. If the special statutes do not apply to the premises/property and the lease/tenancy created thereunder as on the date when the cause of action arises to seek for eviction or such other relief and in such transaction if the parties are governed by an Arbitration Clause; the dispute between the parties is arbitrable and there shall be no impediment whatsoever to invoke the Arbitration Clause. This view is fortified by the opinion expressed by the Coordinate Bench while answering the reference made in the case of Vidya Drolia wherein the view taken in Himangni Enterprises is overruled.

14) Hence, the case of Booz Allen and Hamilton Inc. (supra), and Jaycee Housing Pvt. Ltd. (supra), cited by the learned counsel for the petitioner does not help the petitioner in any manner. 15) Hence, in light of the discussions above, the grounds on which this present application has been filed, does not merit admission of this revision and issuance of notice upon the respondents. 16) It may also be pertinent to mention that the Gauhati High Court has framed Gauhati High Court Superintendence of Tribunal Rules, 1992, and that the Schedule thereto does not include the Arbitrator and/or Arbitral Page No.# 8/8 Tribunal. In the light of above, this Court is of the considered view that the power of superintendence under Article 227 of the Constitution ought not to be exercised in this present case in hand. We hasten to add that the observations made herein is qua this case and is not intended to be cited as a precedent on the question that this Court cannot exercise its superintending power over Arbitral Tribunals under its jurisdiction and the question is left open to be decided in a more appropriate case. 17) For the reasons assigned above, the Court does not find merit in the challenge and therefore, this application stands dismissed at the 'motion' stage without issuance of notice upon the respondent. 18) Let a copy of this order be transmitted by e-mail to the learned Arbitral Tribunal for making it a part of record.

JUDGE Comparing Assistant

PageoNo.#o1/8 GAHC010211402023 ooooooo ooooooooooooooo ooooooooooooooooTHEoGAUHATIoHIGHoCOURTo (HIGHoCOURToOFoASSAM,oNAGALAND,oMIZORAMoANDoARUNACHALoPRADESH)o CaseoNo.o:oCRP(IO)/318/2023o URBANoWORLDoMOTORSoPVToLTDoANDoANRo AoCOMPANYoINCORPORATEDoUNDERoTHEoPROVISIONoOFoCOMPANYoACT,o 2013oHAVINGoREGISTERoOFFICEoATo22oG.S.oROAD,oCHRISTIANoBASTI,o 781005,oKAMRUPo(M)oASSAM,oREPRESENTEDoBYoMANAGINGoDIRECTORo MR.oATIKURoRAHMAN 2:oATIKURoRAHMAN oS/OoLATEoABIDURoRAHMAN oMANAGINGoDIRECTOR oURBANoWORLDoMOTORSoPVT.oLTD. o22oG.S.oROAD oCHRISTIANoBASTI o781005 oKAMRUPo(M)oASSAo VERSUSo MRS.oSWETAoJALANo W/OoSRIoRAJESHoKUMARoJALAN,oR/OoHOUSEoNOo17,oGAYATRIoKUNJo CHITRALEKHAoPATH,oNEARoGNRCoHOSPITALoSUPERoMARKET,oP.O.oANDo P.S.-DISPUR,oKAMRUPo(M),oPIN-781006,oASSAM AdvocateoforotheoPetitionerooooo:oMR.oSoCHAMARIAo AdvocateoforotheoRespondento:oo oooooooooooooooooooooooooooooooooooooooooo oooooooooooooooooooooooooooooooooooooooooooo Page No.# 2/8 BEFORE HONOURABLE MR. JUSTICE KALYAN RAI SURANA