Research › Search › Judgment

Himachal Pradesh High Court · body

2004 DIGILAW 315 (HP)

VALLEY IRON & STEEL CO. LTD. v. STEEL STRIPS LTD.

2004-12-01

DEEPAK GUPTA, V.K.GUPTA

body2004
JUDGMENT Deepak Gupta, J.—This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) is directed against the judgment of a learned Single Judge pf this Court dated 11.10.2004 in Arbitration Case No. 36 of 2004 whereby he has rejected the application of the appellant under Section 9 of the Act on the ground that only the Courts at Chandigarh would have jurisdiction to decide the lis in view of the agreement dated 2nd May, 2003 entered into between the parties. 2. Briefly stated, the facts necessary for decision of the present appeal are that the respondent is the owner of a manufacturing Unit known as TSS Unit - Hot Rolling Mill at village Rampur Banjaran near Dhaula Kuan, Paonta Sahib, District Sirmaur, H.P. From the pleadings of the parties it is clear that the said Unit had been lying closed for a considerable period of time. The appellant is the owner of SAB-Unit, which is engaged in the manufacturing of steel billets, ingots at village Rampur Majri near Dhaula Kuan, District Sirmaur. Since the appellant was manufacturing steel billets, ingots etc. it was interested in getting the same rolled at the Hot Rolling Mill of the respondent. In this behalf negotiations took place and finally a job work agreement dated 2nd May, 2003 (hereinafter referred to as the agreement) was entered into between the parties. As per Clause 18 of the said agreement all differences and disputes between the parties in relation to or arising out of the agreement were to be referred to arbitration under the Act. 3. Clause 19 of the Agreement reads thus : this jobbing Agreement is subject to the jurisdiction of Chandigarh Courts only". 4. There is also no dispute that the agreement in question was entered into and signed by the parties at Chandigarh on 2nd May, 2003. By this agreement the jurisdiction of the Courts in Himachal Pradesh has been ousted, by consent of parties, and it has been agreed that agreement would be subject to the jurisdiction of Chandigarh Courts only. 5. The first submission of Mr. By this agreement the jurisdiction of the Courts in Himachal Pradesh has been ousted, by consent of parties, and it has been agreed that agreement would be subject to the jurisdiction of Chandigarh Courts only. 5. The first submission of Mr. R.L. Sood, learned Senior Counsel appearing on behalf of the appellant is that the learned Single Judge has erred in deciding the question of jurisdiction and should have left the said question open for decision by the Arbitral Tribunal which would be appointed to decide the disputes between the parties. He submits that the learned Single Judge should have decided the application under Section 9 of the Act without deciding the question as to which Court would have territorial jurisdiction to decide the dispute. According to Mr. Sood, the Arbitral Tribunal alone has the power to decide the question of jurisdiction. 6. On the other hand Mr. J.L. Gupta learned Senior Counsel appearing for the respondent has refuted the contention of the appellant. He submitted that the Court alone can rule on its jurisdiction and the Court must come to the conclusion that the dispute raised arises out of the arbitration agreement. In support of his contention he has relied upon a judgment of the Supreme Court reported in Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya and another, AIR 2003 SC 2252, wherein the Honble Supreme Court has held as follows: "15. The relevant language used in Section 8 is—"in a matter which is the subject matter of an arbitration agreement." Court is required to refer the parties to arbitration. Therefore, the suit should be in respect of "a matter" which the parties have agreed to refer and which comes within the ambit of arbitration agreement. Where, however, a suit is commenced— "as to a matter" which lies outside the arbitration agreement and is also between some of the parties who are not parties to the arbitration agreement, there is no question of application of Section 8. The words a matter indicates entire subject matter of the suit should be subject to arbitration agreement." 7. To decide this contention it would be necessary to refer to certain provisions of the Act. The definition of Court given in Section 2(e) of the Act, reads as under : "2. Definitions.—(1) In this Part, unless the context otherwise requires: (a) to (d) .............. To decide this contention it would be necessary to refer to certain provisions of the Act. The definition of Court given in Section 2(e) of the Act, reads as under : "2. Definitions.—(1) In this Part, unless the context otherwise requires: (a) to (d) .............. (e) "Court" means the principal Civil Court of ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes." (Emphasis supplied) 8. Section 9 of the said Act empowers the Court to issue directions for interim measures, which can be made by the Court either before or during arbitral proceedings. This Section reads thus: "9. Interim measures etc. by Court.—A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with Section 36, apply to a Court:— (i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or (ii) for an interim measure of protection in respect of any of the following matters, namely:— (a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement; (b) securing the amount in dispute in the arbitration; (c) the detention, preservation or inspection of any property or thing which is the subject-matter or the dispute in arbitration, or as to which any question may arise therein and authorizing for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorizing any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence; , (d) interim injunction or the appointment of a receiver; (e) such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it." (Emphasis supplied) 9. A conjoint reading of the above-referred provisions of the Act clearly shows that the Court while deciding an application under Section 9 must be a Court having jurisdiction to decide the dispute. As per the definition clause "Court" has been defined as the Court having jurisdiction to decide the Us if the same had been the subject matter of a suit. Under Section 9 of the Act the Court has the same powers for making orders as it has for the purpose of and in relation to any proceedings before it. If a challenge is raised with regard to the territorial jurisdiction of the Court to decide a dispute, the Court cannot abdicate its functions and leave the adjudication of such a dispute to the Arbitral Tribunal. It is the Court alone which has the power and authority to decide about its jurisdiction. The Court cannot be a mute spectator and permit the Arbitral Tribunal to decide about the jurisdiction of the Court. No doubt, the Arbitral Tribunal can rule about its own jurisdiction but by no stretch of imagination can the Arbitral Tribunal be given the authority to rule upon the jurisdiction of the Court. 10. While deciding an application under Section 9 of the Act the Court being the Court of original civil jurisdiction shall have to exercise powers which it would have exercised with regard to any suit or other application of similar nature pending before it. In an application where the party seeks relief from the Court under the Act which is akin to relief claimed under Order 39 of the Code of Civil Procedure (hereinafter referred to as the CPC) the party shall have to satisfy the Court about the well settled principles for grant of such relief, i.e. prima facie case, balance of convenience and irreparable harm or injury. When a party files an application under Section 9, it submits to the jurisdiction of the Court and then cannot turn around and say that nothing should be said on the merits of the case. While deciding the question whether a party has a good prima facie case entitling it to obtain interim relief, the Court can definitely look into the question as to whether it has jurisdiction to entertain the case at all. While deciding the question whether a party has a good prima facie case entitling it to obtain interim relief, the Court can definitely look into the question as to whether it has jurisdiction to entertain the case at all. The provisions of Section 9 are applicable not only before the dispute is referred to Arbitration but also during the course of arbitral proceedings and at any time before it is enforced in accordance with Section 36 i.e. even after making of the Award. The jurisdiction of the Court under Section 9 is very wide and it cannot be circumscribed by the powers of the Arbitral Tribunal. Therefore, we are not inclined to accept the contention that the learned Single Judge should have decided the application under Section 9 of the Act and left the issue of jurisdiction to be decided by the Arbitral Tribunal. 11. The next contention of Mr. R.L. Sood, learned Senior Counsel is that in view of Section 120 of the Code of Civil Procedure the provisions of Sections 16, 17 and 20 of the Code are not applicable since the application under Section 9 of the Act has been filed in this Court in exercise of its original civil jurisdiction. This matter is no longer res integra and a Division Bench of this Court in State of H.P. and another v. M/s. Bhagzvan Finance Corporation (Private) Limited, 1980 Sim.L.C. 294, has held that Sections 16,17 and 20 of the Code do apply to the High Court of Himachal Pradesh in exercise of its original civil jurisdiction. We are in respectful agreement with the said judgment. It would however be pertinent to mention that the said judgment was delivered keeping in view the Delhi High Court "Original Side" Rules, 1967 as then applicable to the High Court of Himachal Pradesh. Now proceedings/suits filed on the original side in the High Court of H.P. are governed by the Rules known as Himachal Pradesh (Original Side) Rules, 1997. Rule 18 of Chapter (1) of the said Rules provides that except to the extent otherwise provided in the Rules, the provision of the Code shall apply to all proceedings on original side. This provision is identical with Rule 19 of Chapter (1) of the Delhi High Court Original Side Rules and, therefore, the reasoning of the above mentioned judgment shall apply with equal force in the present case. 12. Mr. This provision is identical with Rule 19 of Chapter (1) of the Delhi High Court Original Side Rules and, therefore, the reasoning of the above mentioned judgment shall apply with equal force in the present case. 12. Mr. R.L. Sood, learned Senior Counsel then argued that even if Section 16 of the Code is applicable to the proceedings filed on the original side then also this Court would have jurisdiction to hear the present dispute. According to him the present case falls under Section 16(d) of the Code since the proceedings relate to determination of any other right to or interest in immovable property. His argument is two fold. The case as set-up in the petition filed under Section 19 as also the present appeal is that the agreement dated 2nd May, 2003 was for all intents and purpose an agreement to sell but was only given the nomenclature of job work agreement. In the alternative he submits that the agreement creates in favour of the appellant an interest in immovable property and therefore Section 16(d) of the Code comes into play and will have overriding effect. His submission is that Section 20 of the Code is subject to the limitations provided in Section 16 and therefore, with regard to immovable property the proceedings can only be filed in the Court which has territorial jurisdiction over the area where the property is situate and that the parties by way of agreement cannot confer jurisdiction on any other Court even if it be the Court where part of the cause of action arises. To appreciate this argument we shall have to refer to the agreement dated 2nd May, 2003 to decide whether the proceedings are in relation to immoveable property or whether the appellant has acquired any interest in immoveable property under the said agreement. 13. Learned Senior Counsel for the appellant has taken us through each and every Clause of the agreement in support of his submissions. The salient features which emerge from the agreement are that the appellant had agreed to get its billets rolled from the respondent. Since the Unit of the respondent was lying closed for a considerable period the appellant had agreed to reimburse the respondent for all expenditure incurred for making the Hot Rolling Mill Plant operative. The appellant also agreed to purchase all consumables and stores including furnace oil etc. Since the Unit of the respondent was lying closed for a considerable period the appellant had agreed to reimburse the respondent for all expenditure incurred for making the Hot Rolling Mill Plant operative. The appellant also agreed to purchase all consumables and stores including furnace oil etc. necessary for making the Unit operative and the said stores and stocks were to be insured by the appellant at its own cost and safeguarded with its own security. The appellant was required to reimburse the respondent for payment of all charges necessary for reconnection of electricity and for actual consumption/minimum charges which the respondent would incur. The appellant was to provide the requisite manpower for running the Unit and make payment of salary, provident fund, ESI compensation etc. The appellant also undertook to carry out all repairs and maintain the plant and machinery at its own cost. During the pendency of the agreement i.e. 1.2.2003 till 30.4.2005 the respondent was not permitted to carry out the job work of any third party. The appellant had also given a security deposit of Rs. 26000000/- (Rupees Two Crores and Sixty Lacs), which was liable to be repaid by the respondent alongwith interest @ 12% p.a. after expiry of agreement. The respondent was to charge Rs. 200/- per Metric Tonne as Job Work charges for rolling the material. The appellant had undertaken to send at least 2500 Metric Tonne of material every month and it was agreed between the parties that the appellant would pay to the respondent minimum job charges of Rs. 5 lakhs per month. 14. According to Mr. R.L. Sood, learned Senior Advocate, the respondent had agreed to sell the entire Unit for a consideration of Rs. 7.08 crores. However, due to the proceedings pending before the Board for Industrial and Financial Reconstruction (BIFR) and in view of the restraint order passed by the High Court of Rajasthan instead of executing an agreement to sell the job work agreement was entered into between the parties. He further submits that the entire expenses of re-establishing and running the Unit including expenses of electricity, excise, taxes etc. He further submits that the entire expenses of re-establishing and running the Unit including expenses of electricity, excise, taxes etc. were to be borne by the appellant which shows that for all intents and purposes the possession of the Unit was with the appellant and that this was done in furtherance of the agreement between the parties whereby the respondent had agreed to sell the Unit to the appellant. He has drawn our attention to various other documents especially letter dated 15.4.2003 of M/s. Jagat Jyoti Steels (Annexure P-2). However, when confronted with the terms of the agreement where there is nothing to show that the agreement was actually an agreement to sell, Mr. R.L. Sood, learned Senior Counsel submitted that for the purpose of this appeal he does not press his contention that the said agreement is actually an agreement to sell and confines his submission to the ground that this agreement created an interest in the property in favour of the appellant and therefore this Court alone would have jurisdiction to hear and decide the petition. 15. Mr. R.L. Sood, learned Senior Counsel then submitted that the agreement read as a whole makes it is clear that it was the appellant who was to provide the entire funds for the re-establishment of the Unit and its maintenance. He has vehemently contended that the deposit of Rs. 2.60 crores as security by the appellant with the respondent was a clear indicator to show that an interest had been created in the immovable property in favour of the appellant. He laid great emphasis on the condition in the agreement that the same would be valid upto 30th April, 2005 and also that the parties had agreed that the agreement cannot be terminated in terms of Clause 17 before 30.4.2005. He further submits that at least his client had a right in the immovable property that is the land, factory and houses till 30.4.2005 and he cannot be dispossessed from the same. He also submits that as per the terms of the agreement the respondent was to do the jobbing work of the appellants raw material only and could not do the work of any other party. 16. He also submits that as per the terms of the agreement the respondent was to do the jobbing work of the appellants raw material only and could not do the work of any other party. 16. In the application under Section 9 of the Act the appellant had sought the following relief : "It is, therefore, respectfully prayed that ad interim injunction order be passed in favour of the petitioner Company and against the Respondent, its agents or employees or any persons claiming through or under the Respondent Company from in any manner interfering with the peaceful and exclusive use, occupation, possession and enjoyment of the petitioner Company with respect to manufacturing Unit known as PSS Unit, Hot Rolling Mill and Housing Colony attached thereto located at Village Rampur Banjaran, near Dhaula Kuan (Paonta Sahib), District Sirmaur, and further from withholding or disconnecting directly or indirectly the water and electricity supply to the said PSS Unit and the Housing Colony thereof or such other interim relief or injunction as this Honble Court deems fit and proper be also passed in this petition. Such interim injunction order be passed till the final decision of the dispute between the parties by the Arbitrator in the interest of law and justice." 17. According to Mr. Sood, learned Senior Counsel for the appellant the relief of interim injunction sought by him with regard to the immovable property is a relief covered under Section 16(d) of the Code and can only be granted by the Court in which the immovable property is situate. His contention is that Section 20 of the Code is not applicable and the Courts at Chandigarh will have no jurisdiction since the immovable property is situated within Himachal Pradesh. In support of his contention he has relied upon a judgment delivered by Allahabad High Court in case titled Om Prakash and another v. Amar Singh and others, AIR 1973 Allahabad 555. Para 9 of the said judgment reads as follows: "9. The purpose of Section 16 appears to be to give jurisdiction regarding a suit in respect of immovable property to a Court whose limbs might not be able to reach the property, as this would not only facilitate inspection of property but make the processes of Court reach the property without necessitating the intervention of any other Court. The purpose of Section 16 appears to be to give jurisdiction regarding a suit in respect of immovable property to a Court whose limbs might not be able to reach the property, as this would not only facilitate inspection of property but make the processes of Court reach the property without necessitating the intervention of any other Court. In a suit for injunction to restrain the defendant from interfering with an immovable property occasion can arise where the Court may be required to extend its hand to the property directly. Such an occasion will arise if the injunction is not obeyed. Order 21, Rule 32 provides for various processes which the Court may take where the defendant does not obeyed the injunction. Clause (5) of Rule 32 of Order 21 provides that in lieu of or in addition to the processes indicated in clauses (1) to (4), the Court may direct that the act required to be done by the judgment-debtor may be done so far as practicable by the decree holder or some other person appointed by the Court at the cost of the judgment-debtor. The illustration given to clause (5) states that where A erects a building which renders uninhabitable a property belonging to B and A declines to obey a decree directing him to remove the building, the injunction may be executed by removal of the building itself. Similarly, the Court may have to deal with the property in matters of interim injunctions. The Court within whose territorial jurisdiction the property lies will be in the best position to deal with the matter. A suit for injunction in respect of an immovable property, can therefore be no exception for the applicability of Section 16(d), C.P.C. and has to be instituted in the Court in whose territorial jurisdiction the property lies." 18. He has also relied upon Bengal Glass & Silicate Works v. Lalit Mohan Bijlani and another, AIR 1986 Calcutta 57, which we feel has no applicability since that case related to a suit for declaration of tenancy rights. He also relied upon Radharaman Choudhary v. Gulab Thaknr and others, AIR 1959 Patna 50, in support of his contention. In that case a Division Bench of the Patna High Court was considering the meaning of the word "interest" under Order 21 Rule 89 CPC. Relevant portion of Order 21 Rule 89 reads as follows: "89. He also relied upon Radharaman Choudhary v. Gulab Thaknr and others, AIR 1959 Patna 50, in support of his contention. In that case a Division Bench of the Patna High Court was considering the meaning of the word "interest" under Order 21 Rule 89 CPC. Relevant portion of Order 21 Rule 89 reads as follows: "89. Application to set aside sale on deposit.—(1) Where immovable property has been sold in execution of a decree, any person claiming an interest in the property sold at the time of the sale or at the time of making the application, or acting for or in the interest of such person, may apply to have the sale set aside on his depositing in Court...” 19. A Division Bench of the Patna High Court in the above mentioned case has held that the word interest should be construed very liberally and should be given very wide import to enable a party to apply for setting aside the sale under Order 21 Rule 89. 20. Mr. R.L. Sood, learned Senior Counsel also relied upon the definition of interest in land given in "Words and Phrases, Legally Defined, Second Edition, edited by John B. Saunders", which reads thus: "Interest, in relation to land, includes any estate in land and any right over land, whether the right is exercisable by virtue of the ownership of an interest in land or by virtue of a licence or agreement, and in particular includes sporting rights (National Parks and Access to the Countryside Act 1949, Section 114)’ 21. On the other hand Mr. J.L. Gupta, learned Senior Counsel appearing on behalf of the respondent has submitted that the entire case of the appellant is based on the premise that the agreement is an agreement to sell property. He has taken us through various documents in support of his contention to show that the agreement was in all respects a job work agreement only and no interest in immovable property had been created in favour of the appellant. He particularly drew the attention of this Court to the various clauses of the agreement whereby the respondent was to seek permission and pay amounts to the various authorities for restarting the plant even though these amounts were to be reimbursed by the appellant. He particularly drew the attention of this Court to the various clauses of the agreement whereby the respondent was to seek permission and pay amounts to the various authorities for restarting the plant even though these amounts were to be reimbursed by the appellant. He referred to Clause 4 of the agreement whereby the respondent was to get the plant and machinery insured in its own name though the insurance premium was to be reimbursed by the appellant. Further the respondent was to keep its own security personnel at its own cost for the safety and security of the plant, machinery, equipment and building. He also pointed out that at the conclusion of the agreement the security deposit was to be returned by the respondent to the appellant alongwith interest @ 12% p.a. from the date of its deposit. He also submitted that though there was an embargo that during the pendency of the agreement the respondent would not process the raw material of any other party there was no bar to the respondent processing its own raw material. Mr. Gupta referred to letter dated 15.4,2003 written by Jagat Jyoti Steel Pvt. Ltd. wherein they have made offer of Rs. 7.08 crores to purchase the property of the respondent. The respondent vide letter dated 25.4.2003 (Annexure P-4) had rejected the said offer and therefore there is no question of the appellant acting on behalf of Jagat Jyoti Steels. He therefore submits that the allegation of the appellant that the agreement dated 2nd May, 2003 was in pursuance to the understanding entered into between the respondent and M/s. Jagat Jyoti Steel Pvt. Ltd. is not at all correct. He has also referred to Annexure P-16 which is a copy of the Resolution of Jagat Jyoti Steels nominating the appellant to negotiate for the purchase of the property of the respondent. This Resolution is dated 14th April, 2003. However, the letter of Jagat Jyoti Steel whereby they themselves made the offer is dated 15th April, 2003. He, therefore, submits that this Resolution is just a procured document and cannot be used to assist the petitioner. 22. Mr. J.L. Gupta learned Senior Counsel, referred to various documents to show that the appellant was paying minimum amount of Rs. However, the letter of Jagat Jyoti Steel whereby they themselves made the offer is dated 15th April, 2003. He, therefore, submits that this Resolution is just a procured document and cannot be used to assist the petitioner. 22. Mr. J.L. Gupta learned Senior Counsel, referred to various documents to show that the appellant was paying minimum amount of Rs. 5 lakhs per month as per the terms of the agreement and as and when more material was being roiled higher amount was paid by the appellant to the respondent. According to the respondent, the appellant has not sent any material for job work since April, 2004 and even the minimum amount of Rs. 5 lakhs per month has not been paid since then, Mr. J.L. Gupta, learned Senior Counsel submitted that a combined reading of the pleadings, agreement and the other documents leads to only one conclusion that the agreement was only a job work agreement whereby the respondent had agreed to process the raw material provided by the appellant. No right was created in favour of the appellant in the immovable property consisting of the factory, land and buildings. Since the parties had agreed that the Civil Courts at Chandigarh alone would have jurisdiction, the jurisdiction of this Court is ousted and this case is not covered under Section 16 (d) of the Code. In Associated Hotels of India Ltd v. R.N. Kapoor, AIR 1959 SC 1262 the Honble Supreme Court held as follows : "if a document gives only a right to use the property in a particular way or under certain terms while it remains in possession and control of the owner thereof, it will be a licence. The legal possession, therefore, continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose, But for the permission, his occupation would be unlawful. It does not create in his favour any estate or interest in the property. 23. The legal possession, therefore, continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose, But for the permission, his occupation would be unlawful. It does not create in his favour any estate or interest in the property. 23. The Honble Supreme Court has further held as follows: ".....The following propositions may, therefore, be taken as well-established: (1) To ascertain whether a document creates a licence or lease, the substance of the document must be preferred to the form; (2) the real test is the intention of the parties—whether they intended to create a lease or a licence; (3) if the document creates an interest in the property, it is a lease; but, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence; and (4) if under the document a party gets exclusive possession of the property, prima fade he is considered to be a tenant, but circumstances may be established which negative the intention to create a lease." 24. In BM. Lull (dead) by his legal representatives v. M/s. Dunlop Rubber Co. (India) Ltd. and another, AIR 1968 SC175 wherein the question was whether an agreement whereby the employer has permitted the employee to occupy some accommodation for residential premises creates an interest in immoveable property, the Honble Supreme Court held as follows : "......all the terms of the agreement are consistent with the expressed intention that the officer is permitted to occupy the flat as a licensee and nothing in the agreement shall be deemed to create the relationship of landlord and tenant. The agreement on its true construction read in the light of the surrounding circumstances operates as a license and not as a tenancy. It creates no interest in the land. It gives only a personal privilege or license to the servant to occupy the premises for the greater convenience of his work’ This view has been followed in Chandy Varghese and others v. K. Abdul Khader and others, JT 2003 Vol. 7 SC 293. 25. In Smt. Parimal Mitra and others v. Paresh Chandra Hazra and others, AIR 1982 Cal 361, the plaintiff was a tenant in the building situate at Puri in Orissa. 7 SC 293. 25. In Smt. Parimal Mitra and others v. Paresh Chandra Hazra and others, AIR 1982 Cal 361, the plaintiff was a tenant in the building situate at Puri in Orissa. The landlord took the tenant to Calcutta and compelled him to sign an agreement surrendering his tenancy rights. The tenant thereafter filed a suit in the Calcutta that he was compelled to sign some papers fraudulently, which he latter came to know were a resolution and an agreement surrendering his tenancy rights. He prayed that the agreement was illegal, collusive, void and not binding upon him. An objection was raised on behalf of the landlord that the suit could not be tried by the City Civil Court Calcutta for want of jurisdiction since the property was situate in Orissa and the document created an interest in property. A single Judge of the High Court of Calcutta held that a part of the cause of action has arisen in Calcutta and though the cancellation of the agreement may result in reviving the tenancy rights of the tenant the suit could not be said to be one for determination of a right to or interest in immovable property. 26. We do not propose to enter into the merits of the dispute except so far as it is necessary to decide the issue of jurisdiction. A perusal of the agreement in this case shows that the petitioner was not in possession, much less exclusive possession of the property in dispute. What the agreement shows is that the employees of the appellant had a right to enter the property and process the raw material of the petitioner in the factory belonging to the respondent. Some of the employees of the petitioner were also permitted to reside in the Factory but that by itself will not prima facie create any right in the property in favour of the petitioner. The agreement, which contains the arbitration clause, does not create any right or interest in the property in favour of the petitioner. At best it permits the petitioner to use the property in question even though the legal possession remained that of the respondent. The mere permission to use the factory or the residences attached with it would not create a right in the property. At best it permits the petitioner to use the property in question even though the legal possession remained that of the respondent. The mere permission to use the factory or the residences attached with it would not create a right in the property. Applying the law as laid down by the Honble Supreme Court in the judgments referred to hereinabove we are of the considered view that the agreement does not confer any right in immoveable property in favour of the appellant. 27. Since, in our view, the agreement does not confer any right in immoveable property in favour of the appellant the provisions of Section 16(d) CPC are not applicable. The proceedings are governed by Section 20 CPC. The parties were therefore free to agree that the Courts at Chandigarh only would have jurisdiction to try proceedings/suits arising out of the agreement. 28. In view of the above discussion we uphold the judgment of the learned Single Judge whereby he held that it is the Courts at Chandigarh alone who should have jurisdiction to entertain the dispute in view of Clause 19 of the agreement. The appeal being devoid of merit is therefore dismissed. No order as to costs. 29. Interim order passed on 18th October, 2004 and extended from time to time, as well as modified on 26 October, 2004 shall stand vacated immediately and forthwith. We also wish to place it on record that the observations made by us in our order dated 26th October, 2004 should be treated confined only with a view to evolving an interim arrangement between the parties as would subsist till the decision of this appeal. The observations made in that order accordingly shall not be construed as any expression of opinion by this Court with respect to the merits of the controversy between the parties. Appeal dismissed. -