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2019 DIGILAW 432 (ALL)

U. P. Industrial Cooperative Association Ltd. v. Rajendra Kumar Dhingra

2019-02-18

MANOJ KUMAR GUPTA

body2019
ORDER : Manoj Kumar Gupta, J. 1. The instant revision is directed against the judgment and decree dated 11.12.2009 whereby SCC Suit No.10 of 2007 filed by the plaintiff-respondent in the Court of Small Causes for recovery of arrears of rent and mesne profits and for eviction of the revisionists, has been decreed. The trial court has held that the revisionists have defaulted in payment of rent; that notice dated 1.2.2007 given to the revisionists was duly served upon them; that it was a valid notice and was not waived as alleged by the revisionists; that rent of the premises being above Rs.2000/-, the building under tenancy of the defendants was exempt from the provisions of U.P. Act No.13 of 1972; that the revisionist, which is a Cooperative Society, is not covered under Section 80 CPC; that Clause 12 of the lease agreement dated 27.7.1998 providing that the dispute arising out between the parties from the lease agreement, would be decided by the arbitrator, is no more in operation, the lease agreement having expired in the year 2000. Therefore, the dispute was not liable to be referred to the arbitrator. 2. Learned counsel for the revisionists submitted that by virtue of Clause 12 of the lease agreement dated 27.7.1998, the dispute raised in the suit was liable to be referred to the Arbitrator and the court below erred in entertaining the suit. He further submitted that the issue relating to arbitrability of the dispute should have been referred for decision by the Arbitrator under Section 16 of the Arbitration and Conciliation Act, 1996. The trial court erred in going into the said aspect. He further submitted that the suit was bad for want of notice under Section 117 of the U.P. Cooperative Societies Act, 1965 (hereinafter referred to as 'the Act'). 3. On the other hand, learned counsel for the plaintiff-respondent submitted that where the relief claimed is for recovery of arrears of rent and for eviction of a tenant, the dispute has to be decided by the Judge Small Causes/Civil Court and it could not be referred for decision by an Arbitrator. In support of his contention, he has placed reliance on the judgment of the Supreme Court in Himangi Enterprises vs. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706 . In support of his contention, he has placed reliance on the judgment of the Supreme Court in Himangi Enterprises vs. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706 . He further submitted that the defendants have not raised any plea regarding non-maintainability of the suit for want of notice under Section 117 of the Act, therefore, the said plea cannot be raised for the first time before this Court. 4. In Himangi Enterprises the Supreme Court was considering an identical plea as has been raised by the revisionists in regard to the dispute being referred for arbitration in terms of the lease agreement. The Supreme Court, after considering its two earlier decisions in Natraj Studio (P) Ltd. vs. Navrang Studio, (1981) 1 SCC 523 and Booz Allen & Hamilton Inc. vs. SBI Home Finance Ltd, (2011) 5 SCC 532 held that a suit filed for eviction of tenant after determining the lease, could only be decided by a Civil Court/Court of Small Causes and not by Arbitrator. The relevant observations are quoted below :- “18. In our considered opinion, the question involved in the appeal remains no longer res integra and stands answered by two decisions of this Court in Natraj Studios (P) Ltd. vs. Navrang Studios & Another, 1981(1) SCC 523 and Booz Allen & Hamilton Inc. vs. SBI Home Finance Ltd. & Ors., (2011) 5 SCC 532 against the appellant and in favour of the respondent. 19. So far as Natraj Studio’s case (supra) is concerned, there also, the landlord had filed a civil suit against the tenant in the Small Causes Court, Bombay claiming therein the tenant's eviction from the leased premises. There also, the tenant was inducted pursuant to "leave and licence" agreement executed between the landlord and the tenant. The tenant filed an application under Section 8 of the Arbitration Act, 1940 contending therein that since the "leave and licence" agreement contained an arbitration clause for resolving all kinds of disputes arising between the parties in relation to the “leave and licence” agreement and the disputes had arisen between the parties in relation to the “leave and license” agreement, such disputes could only be resolved by the arbitrator as agreed by the parties in the agreement. It was contended that the civil suit was, therefore, not maintainable and the disputes for which the suit has been filed be referred to the arbitrator for their adjudication. 20. It was contended that the civil suit was, therefore, not maintainable and the disputes for which the suit has been filed be referred to the arbitrator for their adjudication. 20. This Court (Three Judge Bench) speaking through O. Chinnappa Reddy, J. rejected the application filed by the tenant under Section 8 of the Act and held, inter alia, that the civil suit filed by the landlord was maintainable. It was held that the disputes of such nature cannot be referred to the arbitrator. This is what Their Lordships held as under: “24. In the light of the foregoing discussion and the authority of the precedents, we hold that both by reason of Section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 and by reason of the broader considerations of public policy mentioned by us earlier and also in Deccan Merchants Cooperative Bank Ltd. v. Dalichand Jugraj Jain, AIR 1969 SC 3120, the Court of Small Causes has and the arbitrator has not the jurisdiction to decide the question whether the respondent licensor landlord is entitled to seek possession of the two Studios and other premises together with machinery and equipment from the appellant licensee-tenant. That this is the real dispute between the parties is abundantly clear from the petition filed by the respondents in the High Court of Bombay, under Section 8 of the Arbitration Act seeking a reference to Arbitration. The petition refers to the notices exchanged by the parties, the respondent calling upon the appellant to hand over possession of the Studios to him and the appellant claiming to be a tenant or protected licensee in respect of the Studios. The relationship between the parties being that of licensor-landlord and licensee-tenant and the dispute between them relating to the possession of the licensed demised premises, there is no help from the conclusion that the Court of Small Causes alone has the jurisdiction and the arbitrator has none to adjudicate upon the dispute between the parties.” 21. Yet in another case of Booz Allen & Hamilton Inc. (supra), this Court (two Judge Bench) speaking through R.V. Raveendran J. laid down the following proposition of law after examining the question as to which cases are arbitrable and which are non-arbitrable: “36. Yet in another case of Booz Allen & Hamilton Inc. (supra), this Court (two Judge Bench) speaking through R.V. Raveendran J. laid down the following proposition of law after examining the question as to which cases are arbitrable and which are non-arbitrable: “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.” 22. Keeping in view the law laid down by this Court in aforementioned two decisions and applying the same to the facts of this case, we have no hesitation to hold that both the Courts below were right in dismissing the appellant's application filed under Section 8 of the Act and thereby were justified in holding that the civil suit filed by the respondent was maintainable for grant of reliefs claimed in the plaint despite parties agreeing to get the disputes arising therefrom to be decided by the arbitrator. (emphasis supplied) 5. Learned counsel for the revisionists tried to distinguish the judgments in Booz Allen & Hamilton Inc. and Natraj Studio by submitting that those were rendered in the background that the Rent Control Act was applicable to the tenanted premises. It is urged that where the building is not covered by the Rent Control Act, principles laid down in those judgments would not apply. 6. However, this Court is unable to accept the said submission as the same point was also raised before the Supreme Court in Himangi Enterprises, but was repelled, observing thus :- “23. The learned counsel for the appellant, however, argued that the provisions of the Delhi Rent Act, 1995 are not applicable to the premises by virtue of Section 3 (1) (c) of the Act and hence the law laid down in the aforementioned two cases would not apply. We do not agree. 24. The Delhi Rent Act, which deals with the cases relating to rent and eviction of the premises, is a special Act. We do not agree. 24. The Delhi Rent Act, which deals with the cases relating to rent and eviction of the premises, is a special Act. Though it contains a provision (Section 3) by virtue of it, the provisions of the Act do not apply to certain premises but that does not mean that the Arbitration Act, ipso facto, would be applicable to such premises conferring jurisdiction on the arbitrator to decide the eviction/rent disputes. In such a situation, the rights of the parties and the demised premises would be governed by the Transfer of Property Act and the civil suit would be triable by the Civil Court and not by the arbitrator. In other words, though by virtue of Section 3 of the Act, the provisions of the Act are not applicable to certain premises but no sooner the exemption is withdrawn or ceased to have its application to a particular premises, the Act becomes applicable to such premises. In this view of the matter, it cannot be contended that the provisions of the Arbitration Act would, therefore, apply to such premises. 25. We have gone through the decisions cited by the learned counsel for the appellant in support of her contention. Having gone through the same, we are of the considered opinion that firstly, some decisions are rendered by the High Court; secondly, remaining decisions are distinguishable on facts; and lastly, in the light of two authoritative decisions of this Court, which are directly on the point and continue to hold the field, no reliance can be placed by the learned counsel for the appellant on any decision of the High Court. Indeed, any such decision of the High Court, which has taken view contrary to the view of this Court, the same stands overruled. Such is the case here”. 7. Section 16 of the Act confers power to the arbitral tribunal to rule on its own jurisdiction. Undoubtedly, in exercise of the said power, it can also decide the issue of arbitrability of the dispute. Now, under Section 8, a dispute could be referred to arbitrator only if the action brought before the court is subject to an arbitration agreement. It shall refuse to refer the dispute to arbitration if it finds that prima facie no valid arbitration agreement exists. Now, under Section 8, a dispute could be referred to arbitrator only if the action brought before the court is subject to an arbitration agreement. It shall refuse to refer the dispute to arbitration if it finds that prima facie no valid arbitration agreement exists. Thus, the court, under Section 8, before referring the dispute is enjoined with the duty to find out if there exists a valid arbitration agreement in respect of the dispute which is subject matter of the suit. It cannot mechanically refer the dispute to the arbitral tribunal merely because the arbitration agreement provides for the dispute being referred to the arbitral tribunal even if the provision therefor is not valid as the dispute itself is such that it is not arbitrable. Thus, the other limb of the argument of learned counsel for the revisionists has also no force and is accordingly rejected. 8. Coming to the next submission of learned counsel for the revisionists regarding want of notice under Section 117 of the Act, it is worthwhile to mention that the said plea was not raised by the defendants before the court below. Nonetheless the same being a legal plea, this Court considers it appropriate to dwell upon the the same. Section 117 of U.P. Co-operative Societies Act, 1965 provides as under :- “117. Notice necessary in suits.---No suit shall be instituted against a co-operative society or any of its officers in respect of any act relating to the constitution, management or the business of the society until the expiration of two months next after notice in writing has been delivered to the Registrar, or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims; and the plaint shall contain a statement that such notice has been so delivered or left.” 9. Under Section 117 of the Act, a suit could not be instituted against a Cooperative Society or its officer in respect of any act relating to constitution, management or business of the society until the expiration of two months next after notice in writing has been delivered to the Registrar stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims. The dispute in the suit brought by the plaintiff-respondent is not in relation to constitution, management or business of the society, albeit the society may be doing business from the disputed shop. The dispute between the parties was in respect of rights flowing out of the contract of tenancy between them whereunder the plaintiff-respondent was seeking recovery of arrears of rent and eviction from the tenanted premises. Thus, in any view of the matter, the suit instituted by the plaintiff-respondent would not fail for want of notice under Section 117 of the Act. 10. Learned counsel for the revisionists submitted that the revisionists have duly deposited the arrears of rent in compliance of Order 15 Rule 5 CPC, but still decree for recovery of arrears of rent has been passed. 11. The amount which the revisionists have deposited before the trial court, could be withdrawn by the plaintiff in pursuance of the decree of arrears of rent passed in his favour by the trial court. The revisionists need not deposit the said amount over again. The above clarification duly takes care of the submission of learned counsel for the revisionists. 12. In the end, counsel for the revisionists stated that the revisionists are ready to enhance rent to the present market value. However, counsel for the plaintiff-respondent submitted that the shop is required for personal need of the plaintiff and thus it is not possible to accept the proposal. In any case the revisionists are free to approach the plaintiff-respondent with their proposal, if they so wish. 13. In view of the foregoing discussion, this Court finds no merit in the instant revision. It is accordingly dismissed.