w w w . L a w y e r S e r v i c e s . i n

Ambuja Neotia Holdings Private Limited v/s Planet M Retail Limited

    A.P. No. 9 of 2015
    Decided On, 07 August 2015
    At, High Court of Judicature at Calcutta
    For the Petitioner: Abhrajit Mitra, Sr. Advocate, Sakya Sen, Sourav Ghosh, Sarvapriya Mukherjee, Arnab Basu Mullick, Advocates. For the Respondent: Rabindra Narayan Dutt, Aroon Kr. Ghosh, Shibashis Ghosh, Hare Krishn Halder, Koushik Bhattacharyya, Advocates.

Judgment Text
The defence of the respondent to this request under Section 11 of the Arbitration and Conciliation Act, 1996 is two-fold: that the claim of the petitioner is generically incapable of being arbitrable; and, that there is no arbitration agreement between the parties.

2. The respondent says that since the petitioner claims to be the superior lessor or licensor in respect of a property and seeks a dispute pertaining to the licensed premises to be adjudicated upon, the claim has to be regarded as one under the Transfer of Property Act, 1882, and, as such, incapable of adjudication in course of an arbitral reference. The respondent relies, in this context, on the view expressed by a single Bench of this court in the judgment reported at (2014) 4 CHN (Cal) 73 (Shyam Retails (India) Private Limited v. Bajaj Infracon Private limited) which was based on a previous unreported judgment of the same Bench in CO No. 3084 of 2009 (Fingertips Solutions Private Limited v. Dhanashree Electronics Limited) of December 7, 2011.

3. The matter pertains to a particular space at a popular mall known as City Centre in Salt Lake. The petitioner claims to be entitled to the said space at Unit No. E-106 at the said mall and claims that the petitioner or its predecessor-in-interest had granted a licence to Bennett, Coleman & Co. Limited in respect of the said premises. Bennett Coleman carried on business at the said unit under the name and style of Planet M. Pursuant to a slump sale, the entirety of the business pertaining to a Planet M was transferred by Bennett Coleman in favour of the respondent herein. There is no dispute that the respondent pays the monthly licence fees in respect of such unit to the petitioner, but the respondent claims that such payment is on the basis of an oral licence.

4. The petitioner relies on the arbitration clause contained in a document entitled as a sub-licence agreement executed on July 1, 2006 between, inter alia, the predecessor-in-interest of the petitioner and Bennett Coleman. Clause 3.4 of such agreement stipulates that the terms, licensor and licensee, "shall include their respective successor-in-interest."

5. By a letter dated October 3, 2014, the predecessor-in-interest of the petitioner, or the petitioner when it was known by a different name, required the respondent to vacate the premises. Such request was apparently repeated on behalf of the petitioner by a letter of July 10, 2014. The petitioner says that upon the respondent not vacating the relevant unit, a dispute has arisen between the parties which is covered by the arbitration clause contained in the sub-licence agreement to which the predecessors-in-interest of the parties herein were signatories. The petitioner refers to a notice dated November 3, 2014 by which the petitioner sought a reference of the disputes that had arisen between the parties to arbitration and nominated the petitioner's arbitrator on the proposed arbitral tribunal. The notice was duly received by the respondent, but the respondent chose to ignore the same.

6. The respondent claims that apart from the fact that there is no arbitration agreement between the parties herein, since the relationship between the parties is governed by the Transfer of Property Act, which is a special statute, there can be no reference of the disputes covered thereby to any private forum like arbitration as the same need to be adjudicated by a civil court.

7. The respondent has also referred to a judgment reported at (2014) 11 SCC 446 (Ranjit Kumar Bose v. Anannya Chowdhury) where the issue was as to whether any dispute arising out of a tenancy agreement could be resolved in arbitration in view of the bar in Section 6 of the West Bengal Premises Tenancy Act, 1997. A yet unreported Supreme Court judgment delivered on December 17, 2014 in Civil Appeal Nos. 11474 - 11475 of 2014 (International Amusement Limited v. India Trade Promotion Organisation) has also been placed by the respondent where a seemingly lucid arbitration agreement was found to not be an arbitration agreement at all.

8. The petitioner contends that the Supreme Court judgment reported at (2011) 5 SCC 532 (Booz Allen and Hamilton Inc v. SBI Home Finance Limited) has been misread in the judgments of Shyam Retails and Fingertips Solutions. The petitioner says that the Transfer of Property Act cannot be regarded as a special statute, though any Rent Control Act which makes a departure from the provisions of the Transfer of Property Act in certain cases may be seen to be a special statute. The petitioner refers to a judgment reported at (1999) 5 SCC 651 (Olympus Superstructures Private Limited v. Meena Vijay Khetan) which is described to be the parent case in considering the efficacy of an arbitration agreement governed by the 1996 Act.

9. The petitioner relies on a sentence from a judgment reported at (2004) 9 SCC 772 (Bharat Petroleum Corporation Limited v. P. Kesavan) to demonstrate that the Transfer of Property Act is a general statute. The judgment in Ranjit Kumar Bose is also placed by the petitioner to suggest that the Supreme Court held against arbitration in that case since the tenancy was governed by a special statute and not by the general law under the Transfer of Property Act.

10. The petitioner has carried a single Bench opinion reported at (2011) 5 CHN (Cal) 340 (Orient Paper & Industries Limited v. Shaun Automobiles Private Limited) which interpreted Booz Allen. The petitioner says that the judgments in Shyam Retails and Fingertips Solutions did not notice the previous judgment of a coordinate determination in Orient Paper. The petitioner cites a recent judgment of June 3, 2015 delivered by another single Bench of this court in GA No. 1343 of 2015 with CS No. 389 of 2014 (Diamond Apartments Private Limited v. Abanar Marketing Limited) where both Orient Paper and Fingertips Solutions were noticed but the view in Fingertips Solutions was not accepted since it did not consider the opinion expressed in Orient Paper.

11. There was once a conservative view that certain reliefs could never be granted by an arbitrator. It was accepted, for instance, that no judgment in rem could be passed by an arbitral tribunal and only judgments in personam could be issued in arbitral references. There was also a view that since the grant of a relief of specific performance of a contract involved the exercise of a degree of discretion, a relief of such nature could only be granted by a civil court and not by a private, consensual forum. The myth as to the civil courts' exclusive domain to deal with a claim of specific performance of a contract was blown in an unreported judgment of a Division Bench of this court rendered on January 27, 1998 in APO 498 and 499 of 1997 (Keventer Agro Limited v. Segram Co. Limited), which was approved by the Supreme Court in Olympus Superstructures at paragraph 36 of the report by quoting the following passage from the Division Bench judgment of this court:

" merely because the sections of the Specific Relief Act confer discretion on courts to grant specific performance of a contract does not mean that parties cannot agree that the discretion will be exercised by a forum or their choice. If the converse were true, then whenever a relief is dependent upon the exercise of discretion of a court by statute e.g. the grant of interest or costs, parties could be precluded from referring the dispute to arbitration."

12. In Booz Allen, the primary issue that arose was whether the disputes between the parties to that matter were capable of adjudication by a private forum or they had to be exclusively dealt with by the domain of public fora. The Supreme Court discussed the concept of "arbitrability" and observed that there were three facets to it: whether the disputes were capable of adjudication by arbitration; whether the disputes were covered by the arbitration agreement; and, whether the parties had referred the disputes to arbitration. In discussing the first aspect of arbitrability, the following view was expressed at paragraphs 35 and 36 of the report:

"35. The Arbitral Tribunals are private fora chosen voluntarily by the parties to the dispute, to adjudicate their disputes in place of courts and tribunals which are public fora constituted under the laws of the country. Every civil or commercial dispute, either contractual or non-contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of the Arbitral Tribunals is excluded either expressly or by necessary implication. Adjudication of certain categories of proceedings are reserved by the legislature exclusively for public fora as a matter of public policy. Certain other categories of cases, though not expressly reserved for adjudication by public fora (courts and tribunals), may be necessary implication stand excluded from the purview of private fora. Consequently, where the cause/dispute inarbitrable, the court where a suit is pending, will refuse to refer the parties to arbitration, under Section 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such disputes.

"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 criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes."

13. Within a few months of the judgment in Booz Allen being delivered, its scope fell for consideration in Orient Paper on a request under Section 11 of the 1996 Act before the designate of the Chief Justice of this court. The objection raised by the respondent, as would be evident from paragraph 2 of the report, was that since the petitioner therein sought, in effect, the respondent's eviction from an immovable property, the dispute relating thereto would not be arbitrable. In response to such objection, the petitioner asserted that the quantum of monthly rent would take the matter beyond the pale of the West Bengal Premises Tenancy Act, 1997 for the relationship between the parties to be governed by the Transfer of Property Act. The judgment in Booz Allen was cited by the respondent to thwart the reference. The view in Booz Allen was interpreted thus in Orient Paper:

"5. The judgment that the respondent has relied on does not make every dispute between a landlord and tenant, or between an owner of any premises and the occupier, incapable of being adjudicated upon in arbitration. The relevant sub-heading (sic, sub-clause) is carefully worded and involves at least three conditions: that the matter has to be governed by a special statute; that the tenant must enjoy statutory protection against eviction under such special statute; and, that the jurisdiction under such special statute must only be conferred on specified Courts."

14. In Fingertips Solutions, what fell for consideration was an order passed on a petition under Section 8 of the 1996 Act for reference of the disputes that formed the subject-matter of a civil suit to arbitration. The existence of the arbitration agreement was not in dispute. The single Bench relied on paragraph 36 of the report in Booz Allen and held as follows:

"21. The issue of eviction is essentially an issue which could be adjudicated and/or decided by the court as it involved various question relating to the granting of the relief under the different provisions of the Transfer of Property Act. The cumulative effect of the judgment of this court in case of Eastern Coils (P) Ltd. (supra) and the Supreme Court in case of Booz Allen and Hamilton Inc (supra) that the eviction or a recovery proceeding under the special statute or where the express power is conferred upon the court which necessarily implies the exclusion of the private Fora."

15. It was the same thought which permeated in Shyam Retails as it was observed, on the strength of Fingertips Solutions, "that the dispute covered under the Transfer of Property Act is to be decided by the Civil Courts; despite existence of the arbitration clause "

16. The judgment in Fingertips Solutions was cited in course of a petition under Section 8 of the 1996 Act in the matter pertaining to Diamond Apartments. The following paragraphs from the unreported judgment capture the essence thereof:

"This judgment (Orient Paper), however, was not cited and, accordingly not considered in M/s. Fingertips Solutions Pvt. Ltd. (supra).

"That the dispute governed by the State Tenancy Act being held to be a special statute would debar an arbitrator to arbitrate such dispute is no more open to debate in view of Booz Allen (supra) and Ranjit kumar Bose (supra). However, an eviction proceeding upon service of notice to Section 106 of the Transfer of Property Act may not be treated alike as Transfer of Property Act is a general law and the State Tenancy Act is special law. In fact, West Bengal Premises Tenancy Act was held to be a special statute in Ranjit Kr. Bose (supra). The fundamental question is if the defendant having raised a plea to the jurisdiction of the arbitrator to decide the dispute on the ground that it is not arbitrable could it have objected to the continuation of the suit on the ground that the arbitrator is only competent to decide the said issue in view of Section 16 of the Arbitration and Conciliation Act. In my view, the answer has to be in the negative."

17. There can be no two views that the Transfer of Property Act is the general law governing immovable properties and the right to recover possession of an immovable property, whereas Rent Control Acts like the West Bengal Premises Tenancy Act, 1997 carve out an exception in certain cases based on certain intelligible criteria, like the quantum of rent in the 1997 Act. The sixth clause in paragraph 36 of the report in Booz Allen does not cover all eviction or tenancy matters; it is pointed in its qualification of eviction or tenancy matters and keeps such matters outside the purview of arbitration which are "governed by a special statute where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes." In the matter pertaining to Ranjit Kumar Bose a suit was filed for eviction and the defendant-tenants applied for the reference of the disputes to arbitration on the strength of an arbitration clause contained in the unregistered tenancy agreement. The Supreme Court interpreted Section 6 of the 1997 Act and the non-obstante clause governing the same to imply that possession in such case could only sought before a "civil court having jurisdiction" and not otherwise. The matter did not involve a dispute under the Transfer of Property Act.

18. In the matter pertaining to International Amusement Limited, proceedings were instituted against the appellant under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971. The appellant cited the arbitration agreement with the respondent authority to resist the proceedings under the 1971 Act. But the Supreme Court interpreted the clause and held that it did not amount to an arbitration agreement. Such aspect of the judgment is not relevant in the present context. The ratio of the judgment, however, appears to be that when proceedings under a special statute governing the subject-matter of a matrix contract covered by an arbitration agreement had been instituted, the arbitration agreement could not be cited to scuttle the proceedings under the special statute.

19. In Bharat Petroleum, cited by the petitioner, the legal question that arose was whether the provisions of the Burmah Shell (Acquisition of Undertakings in India) Act, 1976 was a special act qua the Transfer of Property Act. Paragraphs 11 and 12 of the report are instructive:

"11. The said Act is a special statute vis-a-vis the Transfer of Property Act which is a general statute. By reason of the provisions of the said Act, the right, title and interest of Burmah Shell vested in the Central Government and consequently in the appellant Company. A lease of immovable property is also an asset and/or right in an immovable property. The leasehold right, thus, held by Burmah Shell vested the in the appellant. By reason of sub-section (2) of Section 5 of the Act, a right of renewal was created in the appellant in terms whereof in the event of exercise of its option, the existing lease was renewed for a further term on the same terms and conditions. As noticed hereinbefore, Section 11 of the Act provides for non obstante clause.

"12. As would appear from the preamble of the Transfer of Property Act, the same applies only to transfer by act of parties. A transfer by operation of law is not validated or invalidated by anything contained in the Act. A transfer which takes place by operation of law, therefore, need not meet the requirement of the provisions of the Transfer of Property Act or the Indian Registration Act."

20. The question that has arisen here does not require a detailed discussion on when one statute may be regarded as special qua another. For the present purpose it is only necessary to notice that if a tenancy is governed by the provisions of any Rent Control Act which confers exclusive jurisdiction on any civil court or like forum to adjudicate the matters covered thereby, the parties cannot contract out of such statute and agree to have their disputes resolved in a private forum. That is the essence of the sixth clause in paragraph 36 of the report in Booz Allen; and, that is how such clause was interpreted in Orient Paper. Since the previous contrary view in Orient Paper was not noticed either in Fingertips S

Please Login To View The Full Judgment!
olutions or in Shyam Retails, it was the opinion in Orient Paper that was accepted in Diamond Apartments. The dictum in Fingertips Solutions and Shyam Retails is, thus, found to be unacceptable. 21. The first objection raised by the respondent that the disputes that have arisen are incapable of being arbitrable does not hold any water. 22. However, the second objection is insurmountable since there does not appear to be any arbitration agreement between the parties, though the commercial terms in the sub-licence agreement to which the predecessors-in-interest of the parties herein were signatories may govern the relationship between the parties herein. Except in certain specified cases, like a charter-party, when an agreement refers to a previous agreement and incorporates the clauses thereof in the subsequent agreement by the mere reference, only the commercial clauses get incorporated and an arbitration clause cannot be deemed to have been incorporated by implication in the subsequent agreement unless it is specifically referred to and included. Similarly, when two parties enter into an agreement and the same is governed by an arbitration clause, the arbitration clause has to be regarded as personal to the parties and the assignees of the rights of the parties to the matrix contract do not necessarily inherit the arbitration clause unless it is demonstrated that they had agreed to adhere to the same in addition to the substantive terms of the matrix contract. 23. Since it cannot be said that the arbitration clause contained in the sub-licence agreement binds the parties herein, there is no question of the disputes that have arisen between the parties in respect of the immovable property being sent to arbitration. 24. AP No. 9 of 2015 is dismissed. There will be no order as to costs. 25. Urgent certified website copies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities. Petition dismissed.