The High Court of Calcutta in a petition filed under Section 8 of the Arbitration and Conciliation Act held that while the tenancy may be established by conduct, arbitration cannot be inferred from the parties' conduct alone.
Brief Facts:
The defendant entered into a monthly tenancy agreement in 2006 with the original landlady for the premises in question. The said agreement was valid for 5 years. Two incidental agreements regarding the tenancy were also signed along with the main agreement. All these agreements contained an arbitration clause to refer any dispute to arbitration. The original lady passed away in 2012 and left behind her legal heir who also passed away 6 years later. Thereafter, the petitioner took ownership of the premises as the subsequent legal heir. He terminated the tenancy agreement of the Defendant by sending a notice under Section 106 of the Transfer of Property Act, 1882. Defendant refused to vacate the premises after which Plaintiff filed a suit for the recovery of possession in the high court, in response to which Defendant filed an application under Section 8 of the Arbitration and Conciliation Act for referring the dispute to arbitration.
Contentions of the Petitioner:
The learned counsel appearing on behalf of the petitioner argued that the tenancy agreement expired by efflux of time in the year 2011. Therefore, the original tenancy is not subsisting today. It is further argued that the scope of the arbitration agreement was restricted to disputes and differences falling within the ambit of the original tenancy itself which cannot be widened or extended to include all the disputes and differences between the parties. Thirdly, it is argued that an unregistered or unstamped document creating tenancy cannot be looked into and relied upon.
Contentions of the Respondent:
The learned counsel appearing on behalf of the Respondent argued that the genesis of the Defendant’s tenancy is the agreement dated 27th January 2006 containing an arbitration clause. These arbitration agreements are still applicable. Referring to Vidya Drolia & Ors. Vs. Durga Trading Corporation [(2021) 2 SCC 1] it is submitted that landlord–tenant disputes governed by the Transfer of Property Act, 1882 are arbitrable. Further reliance was placed on Reva Electric Car Company [(2012) 2 SCC 93] to argue that termination of the agreement does not stand in the way of settling disputes arising out of the contract.
Observations of the court:
The court noted that tenancy was created based on an agreement dated January 27, 2006, by the predecessor-in-interest of the Plaintiff. The original tenancy agreement, along with two other incidental agreements, contained an arbitration clause. However, all agreements expired after five years. Despite the expiration, the tenancy continued under different successors, including the present Plaintiffs, with rent increases, but without any renewed agreements.
Further, it was noted that there was no explicit agreement showing that disputes related to tenancies should be resolved through arbitration. Additionally, the other two incidental agreements were not renewed, and there was no written indication that disputes between the parties should be referred to arbitration, as required by Section 7 of the Arbitration and Conciliation Act, 1996. Further, the court stated that while a tenancy may be established by conduct, arbitration cannot be inferred from the parties' conduct alone. The original agreement had a clause stating that disputes under the tenancy agreement should be referred to arbitration, but as the tenancy was renewed and novated, the parties were not in agreement regarding the applicability of the arbitration clause.
The decision of the Court:
The court concluded that there is no arbitration clause as contemplated under Section 7 of the Arbitration and Conciliation Act, 1996 to refer the present disputes to arbitration and dismissed the application.
Case Title: Tarit Mitra and Anr. vs Sharad Goenka
Coram: Hon’ble Mr. Justice Sugato Majumdar
Case No.: CS/19/2022
Advocate for the Petitioner: Mr. Mr. Sakya Sen, Mr. Sukrit Mukherjee, Ms. Somali Bhattacharya
Advocate for the Respondent: Mr. Mainak Bose, Mr. Naresh Balodia, Mr. Pallav Choudhury
Read Judgment @LatestLaws.com
Picture Source :