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2017 DIGILAW 2847 (MAD)

Indian Oil Corporation Ltd. v. K. L. Kumar Prop. Hotel Temple City

2017-08-23

T.RAVINDRAN

body2017
ORDER : It is not in dispute that the suit property belongs to the petitioner. Claiming that the suit property has been taken on lease from the petitioner and alleging that the petitioner is attempting to dispossess the respondent from the suit property unlawfully, the respondent has laid the suit in O.S.No.120 of 2016 against the petitioner for permanent injunction. It is the case of the respondent that he has taken the suit property on lease from the petitioner as per the agreement entered into between them on 30.07.2009 and the renewal agreement entered into between them, dated 01.08.2014. On receipt of the summons in the said suit, it is found that the petitioner has preferred an application in I.A.No.1015 of 2016 under Section 8 of the Arbitration and Conciliation Act (hereinafter, referred to as “the Act”) seeking for a direction from the Court to refer the subject matter of the suit for arbitral adjudication as per Clause-13 of the agreement/renewal agreement entered into between the parties as above mentioned. The said application having been resisted by the respondent by filing a counter inter alia alleging that the arbitration clause contained in the agreements above mentioned do not cover the relief sought for in the suit levied by the respondent and further, when the alleged agreements entered into between the parties above mentioned are being questioned by the respondent as invalid as such, according to the respondent, the petitioner is not entitled to seek for a direction from the Court to refer the subject matter for arbitral adjudication. 2. The Court below, on a consideration of the rival contentions put forth by the respective parties, accepted the case of the respondent and resultantly, dismissed the application preferred by the petitioner. Aggrieved over the same, the present civil revision petition has been filed. 3. It is case of the petitioner that only a leave and licence agreement had been entered into between the parties on 30.07.2009 in respect of the suit property and the same had been renewed by the agreement, dated 01.08.2014. Further, according to the petitioner, inasmuch as the respondent had not paid the licence fee as mandated under the agreements above mentioned, it had made a demand of the same from the respondent and also terminated the licence by issuing a notice, dated 05.04.2016. Further, according to the petitioner, inasmuch as the respondent had not paid the licence fee as mandated under the agreements above mentioned, it had made a demand of the same from the respondent and also terminated the licence by issuing a notice, dated 05.04.2016. It is found that the contents of the above said notice have been repudiated by the respondent by issuing a reply, dated 20.04.2016 and thereafter, the respondent seems to have levied the suit in O.S.No.120 of 2016 against the petitioner for the relief of permanent injunction as above stated. 4. As already adverted to, it is the case of the respondent that only a lease arrangement has been entered into between the parties under the above mentioned agreements and not the leave and licence agreement as put forth by the petitioner and in such view of the matter, according to the respondent, the petitioner cannot evict the respondent from the suit property unlawfully and the petitioner could evict him from the suit property only under the due process of law. 5. The Court below has mainly noting that the agreement entered into between the parties, particularly, renewal agreement, dated 01.08.2014, entered into between the parties being engrossed on a stamp paper purchased during March 2015, coming to the conclusion that the said renewal agreement cannot be termed as a valid agreement entered into between the parties and further, the Court below also on the footing that the arbitration clause contained in the agreements do not cover the relief sought for in the suit preferred by the respondent and for other reasons, dismissed the application preferred by the petitioner. 6. A reading of Section 8 of the Act would go to show that a judicial authority before which an action is brought in a matter, which is the subject of an arbitration agreement, shall refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists. In this matter, we need not to go into the question as to whether the agreement, dated 30.07.2009 or the renewal agreement, dated 01.08.2014 are the leave and licence agreements as projected by the petitioner or only the lease agreements as claimed by the respondent. In this matter, we need not to go into the question as to whether the agreement, dated 30.07.2009 or the renewal agreement, dated 01.08.2014 are the leave and licence agreements as projected by the petitioner or only the lease agreements as claimed by the respondent. However, it is not in dispute that both agreements contain the arbitration clause and a reading of the arbitration clause contained in the agreements would go to show that the parties have agreed that any dispute and/or difference of any nature whatsoever or regarding any right, liability, act, omission on account of any of the parties hereto arising out of or in relation to the agreement shall be referred to the sole arbitration as detailed thereunder. It is, therefore, found that the parties have agreed to refer the dispute of all nature whatsoever arisen out of the agreements entered into between them. In such view of the matter, the Court below, as rightly argued by the learned senior counsel for the petitioner, has misled itself into holding that the arbitral clause contained in the agreements entered into between the parties does not cover the relief sought for by the respondent in the suit. 7. As already adverted to, the Court below has mainly dismissed the application preferred by the petitioner on the footing that the agreements in question seem to be invalid agreements, particularly, the renewal agreement as it had been engrossed in a stamp paper purchased during March, 2015. However, as rightly argued by the learned senior counsel for the petitioner, the Court below has failed to note that the said agreement is the basis on which the respondent has levied the suit against the petitioner. A reading of the plaint filed by the respondent in O.S.No.120 of 2016 would go to show that the respondent has relied only upon the said agreement for sustaining his case and when the position is as above, the contention put forth by the respondent that the said agreement is invalid or concocted etc., cannot be accepted in any manner. It is, therefore, as rightly argued by the learned senior counsel for the petitioner, the Court below has been carried away by the fact that inasmuch as the renewal agreement had been engrossed on a stamp paper purchased subsequent to the agreement, the same cannot be construed as a valid agreement entered into between the parties. It is, therefore, as rightly argued by the learned senior counsel for the petitioner, the Court below has been carried away by the fact that inasmuch as the renewal agreement had been engrossed on a stamp paper purchased subsequent to the agreement, the same cannot be construed as a valid agreement entered into between the parties. But, forgetting for a moment, that the respondent himself has based his suit only upon the said agreement. In such view of the matter, when the above said agreement is the foundation for the laying of the suit by the respondent against the petitioner seeking for the relief of permanent injunction, the respondent cannot be allowed to contend that the said agreement is an invalid agreement for the reasons stated by him. Therefore, it is found that the Court below had committed an error in holding that the renewal agreement as such is an invalid agreement and therefore, it has jurisdiction to determine the said question during the course of trial and hence, the subject matter cannot be referred to the arbitral adjudication. 8. As regards the question as to whether the arbitration clause contains the determination of the issues raised by the respondent, the learned senior counsel for the petitioner straightaway placed reliance upon the decision reported in (2003) 6 SCC 503 [Hindustan Petroleum Corpn. Ltd. vs. Pinkcity Midway Petroleums]. In the above cited decision, the Apex Court has explained the scope of Section 8 of the Act vis-a-vis the terms of the arbitration clause as follows:- “14. This Court in the case of P. Anand Gajapathi Raju v. P.V.G. Raju [ 2000 (4) SCC 539 ] has held that the language of Section 8 is peremptory in nature. Therefore, in cases where there is an arbitration clause in the agreement, it is obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an arbitrator. Therefore, it is clear that if, as contended by a party in an agreement between the parties before the Civil Court, there is a clause for arbitration, it is mandatory for the Civil Court to refer the dispute to an arbitrator. Therefore, it is clear that if, as contended by a party in an agreement between the parties before the Civil Court, there is a clause for arbitration, it is mandatory for the Civil Court to refer the dispute to an arbitrator. In the instant case the existence of an arbitral clause in the agreement is accepted by both the parties as also by the courts below but the applicability thereof is disputed by the respondent and the said dispute is accepted by the courts below. Be that as it may, at the cost of repetition, we may again state that the existence of the arbitration clause is admitted. If that be so, in view of the mandatory language of Section 8 of the Act, the courts below ought to have referred the dispute to arbitration. 15. The question then would arise: what would be the role of the Civil Court when an argument is raised that such an arbitration clause does not apply to the facts of the case in hand. Learned counsel for the appellant contends that it is a matter which should be raised before the arbitrator who is competent to adjudicate upon the same and the Civil Court should not embark upon an inquiry in regard to the applicability of the arbitration clause to the facts of the case. While learned counsel appearing for the respondent contends that since the applicability of the arbitration clause to the facts of the case goes to the very root of the jurisdiction of the reference to arbitration, this question will have to be decided by the Civil Court before referring the matter to arbitration even in cases where there is admittedly an arbitration clause. The answer to this argument, in our opinion, is found in Section 16 of the Act itself. It has empowered the Arbitral Tribunal to rule on its own jurisdiction including rule on any objection with respect to the existence or validity of the arbitration agreement. That apart, a Constitution Bench of this Court in Konkan Rly. Corpn. Ltd. v. Rani Construction (P) Ltd. [ (2002) 2 SCC 388 ] with reference to the power of the arbitrator under Section 16 has laid down thus: "21. It might also be that in a given case the Chief Justice or his designate may have nominated an arbitrator although the period of thirty days had not expired. Corpn. Ltd. v. Rani Construction (P) Ltd. [ (2002) 2 SCC 388 ] with reference to the power of the arbitrator under Section 16 has laid down thus: "21. It might also be that in a given case the Chief Justice or his designate may have nominated an arbitrator although the period of thirty days had not expired. If so, the Arbitral Tribunal would have been improperly constituted and be without jurisdiction. It would then be open to the aggrieved party to require the Arbitral Tribunal to rule on its jurisdiction. Section 16 provides for this. It states that the Arbitral Tribunal may rule on its own jurisdiction. That the Arbitral Tribunal may rule "on any objections with respect to the existence or validity of the arbitration agreement" shows that the Arbitral Tribunal's authority under Section 16 is not confined to the width of its jurisdiction, as was submitted by learned counsel for the appellants, but goes to the very root of its jurisdiction. There would, therefore, be no impediment in contending before the Arbitral Tribunal that it had been wrongly constituted by reason of the fact that the Chief Justice or his designate had nominated an arbitrator although the period of thirty days had not expired and that, therefore, it had no jurisdiction." (emphasis supplied) 16. It is clear from the language of the Section, as interpreted by the Constitution Bench judgment in Konkan Railway (supra) that if there is any objection as to the applicability of the arbitration clause to the facts of the case, the same will have to be raised before the concerned Arbitral Tribunal. Therefore, in our opinion, in this case the courts below ought not to have proceeded to examine the applicability of the arbitration clause to the facts of the case in hand but ought to have left that issue to be determined by the Arbitral Tribunal as contemplated in Clause 40 of the Dealership Agreement and as required under Sections 8 and 16 of the Act.” 9. Therefore, as seen from the above decision of the Apex Court, if there is any objection as to the applicability of the arbitration clause to the facts of the case, the same will have to be raised only before the Arbitral Tribunal concerned and the Court below should not have endeavoured to assume the jurisdiction of Arbitral Tribunal on itself by holding that it has got the jurisdiction to decide the matter. In the light of the above position, it is found that the Court below has committed a serious error in dismissing the application preferred by the petitioner. 10. The learned senior counsel for the petitioner, in support of her contentions, also relied upon the decisions reported in AIR 2015 SC 1303 [M/s. Sundaram Finance Limited and another vs. T. Thankam], 2017 (3) CTC 94 [Hema Khattar and another vs. Shiv Khera] and 2017 (3) CTC 548 [Ananthesh Bhakta and others vs. Nayana S. Bhakta and others]. The principles of law outlined in the above cited decisions are taken into consideration and followed as applicable to the facts and circumstances of the case at hand. 11. Per contra, the learned counsel for the respondent placed reliance upon the decisions reported in 1995 MLJ 639 [Mrs.Zeenath Beevi vs. M/s. N.V.K. Mohamed Sultan Rowther and Sons Limited and others] AIR 2008 Ker 234 [Prakash K. Raghavendra Rao vs. M/s. Sriram Transport Finance Co. Ltd., and another], AIR 1996 Bom 116 [Mario Shaw vs. martin Fernandez and another] and AIR 1991 SC 993 [Smt.I sabella Johnson vs. M.A. Susai (dead) by Lrs.]. The principles of law outlined in the above cited decisions are also taken into consideration and followed as applicable to the facts and circumstances of the case at hand. 12. In the light of the above discussions, when it is found that the respondent himself has levied the suit in O.S.No.120 of 2016 only based upon the renewal agreement above mentioned, his contention that the same is an invalid agreement cannot be accepted as such. 12. In the light of the above discussions, when it is found that the respondent himself has levied the suit in O.S.No.120 of 2016 only based upon the renewal agreement above mentioned, his contention that the same is an invalid agreement cannot be accepted as such. Equally, the contention that the said agreement or the earlier agreement entered into between the parties are only the lease agreements and not the leave and licence agreements has to be determined only by the arbitrator and therefore, when there is no dispute that the agreements involved in the matter contain the arbitration clause and when as per the decision of the Supreme Court, the arbitrator has only the jurisdiction as to the determination of all the issues involved in the matter, even the relief sought for by the respondent in the suit and when the arbitration clause of the agreements concerned provides for the resolution of all the disputes between the parties pertaining to the agreements, it is found that the Court below has assumed the jurisdiction of the Arbitral Tribunal, which in fact it does not have and thereby erred in dismissing the application preferred by the petitioner. 13. The learned counsel for the respondent also submitted that the petitioner itself has laid a suit in O.S.No.135 of 2016 against the respondent for the relief of permanent injunction and by the same, according to him, the petitioner has itself admitted that the arbitration clause does not envisage the resolution of the disputes, which had arisen between the parties, by the arbitrator and the above conduct of the petitioner would go to show that the application preferred by it in the respondent's suit is not maintainable. However, as rightly argued by the learned senior counsel for the petitioner, the above said suit in O.S.No.135 of 2016 has not been based upon mainly on the agreements entered into between the parties concerned. As already adverted to, it is not in dispute that the petitioner is the owner of the property. Therefore, it is found that the petitioner as the owner of the property concerned has levied the suit against the respondent for the relief sought for in the said suit. As already adverted to, it is not in dispute that the petitioner is the owner of the property. Therefore, it is found that the petitioner as the owner of the property concerned has levied the suit against the respondent for the relief sought for in the said suit. In such view of the matter, it is found that the pendency of O.S.No.135 of 2016 by itself would not in any manner disentitle the petitioner from claiming the relief sought for in the application laid by it in O.S.No.120 of 2016. Even assuming for the sake of argument that the subject matter involved in O.S.No.135 of 2016 should also be referred to the arbitral adjudication, nothing prevented the respondent from invoking the law with reference to the same for seeking arbitral adjudication of the said issue also by the arbitrator concerned. 14. The invalidity of the agreements in question seems to have been projected by the respondent only during the course of the enquiry in I.A.No.1015 of 2016. In the plaint, there is no whisper of the invalidity of the agreements entered into between the parties. Even in the counter, it has not been specifically referred that the agreements entered into between the parties are invalid. The only point that has been raised in the counter is that the agreements in issue are being questioned. It is therefore found that only during the course of arguments in the above said application, the respondent seems to have projected the defence of the invalidity of the agreements in question, particularly, the renewal agreement, dated 01.08.2014 and therefore, as reasoned above, when the said agreement is the base for the respondent to lay the suit against the petitioner in O.S.No.120 of 2016, it is improper on the part of the respondent to raise the plea of invalidity of the agreements in question to defeat the relief sought for by the petitioner in I.A.No.1015 of 2016. In view of the foregoing reasons, the impugned order does not stand scrutiny in the eyes of law and therefore, it is liable to be set aside. 15. Resultantly, the fair and decreetal orders, dated 25.11.2016, passed in I.A.No.1015 of 2016 in O.S.No.120 of 2016, on the file of the District Munsif Court, Melur, are set aside and the application in I.A.No.1015 of 2016 is allowed. 15. Resultantly, the fair and decreetal orders, dated 25.11.2016, passed in I.A.No.1015 of 2016 in O.S.No.120 of 2016, on the file of the District Munsif Court, Melur, are set aside and the application in I.A.No.1015 of 2016 is allowed. Consequently, the suit levied by the respondent in O.S.No.120 of 2016 fails and the same is dismissed. Accordingly, the civil revision petition is allowed with costs. Consequently, connected miscellaneous petitions are closed.