Bombay High Court
Baldota Bhavan vs A Private Limited Company on 16 December, 2009
Bench: A.M. Khanwilkar, R.P. Sondurbaldota
: 1 :
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.4614 OF 2009
Central Warehousing Corporation
(A Govt. of India Undertaking)
having their Regional Office at
Baldota Bhavan, IInd Floor,
M.K.Marg, Churchgate,
Mumbai - 400 020. ..Petitioners
Versus
M/s. Fortpoint Automotive Pvt.Ltd.
A Private Limited Company,
incorporated under Companies Act, 1956,
having its Office at TW-I,
"B" Block, Bay No.1,
Off. P.D'Mello Road,
Cottongreen (East),
Mumbai-400 033. ..Respondents
......
Shri S.U.Kamdar, Sr.Counsel with Ms. Pooja Patil and Ms. Suvindhe Shah
i/b. S.I.Shah & Co. for Petitioners.
Mr. Umesh Shetty with Ms.Sharila D'Souza, Mr.Roshan D'Souza and
Mitesh Naik i/b M/s. Umesh Shetty & Co. for Respondents.
......
CORAM : SWATANTER KUMAR, C.J. WITH
A.M.KHANWILKAR, AND
R.P.SONDURBALDOTA, JJ.
JUDGMENT RESERVED ON : 7th DECEMBER, 2009.
JUDGMENT PRONOUNCED ON : 16th DECEMBER, 2009.
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: 2 :
JUDGMENT (PER KHANWILKAR, J.) :
1. The question as referred by the Learned Single Judge of this Court
for consideration of the larger Bench, is as follows:-
"Whether in view of the provision of Section 5 of the
Arbitration and Conciliation Act, 1996, if any Agreement between
Licensor and Licensee contains a clause for arbitration, the
jurisdiction of the Small Causes Court under the Presidency Small
Cause Courts Act, 1882 would be ousted?"
2.
The background in which the matter has been placed before us to
examine the above question can be briefly mentioned as follows:-
The Petitioners are lessees in respect of godown premises
admeasuring 18,850 sq. meters being Shed TW-1 at Cotton Green Depot.
The Mumbai Port Trust is the owner thereof who vide letter dated 26th
February, 1975 gave the said premises on lease to the Petitioners.
Sometime on or around 19th September 2002, the Respondents approached
the Petitioners for storage facilities. By a Memorandum of Agreement
dated 19th September 2002, the storage facility space was provided to the
Respondents in an area of 2,411 sq.meters which was subsequently
increased to 2,627 sq.meters on terms and conditions stated in the
Agreement dated 19th September 2002. It is common ground that Clause
14 of the said Agreement dated 19th September 2002 is an arbitration
agreement. There is no dispute before us on this fact.
3. Be that as it may, it is the case of the Petitioners that as per the
Agreement dated 19th September 2002, a mere warehousing facility was
extended by the Petitioners to the Respondents in the normal course of
business. The Agreement clearly provides that the possession of the
premises were to always remain with the Petitioners and the Respondents
were given only access thereof. Clause 7 of the Agreement records that the
Respondents were aware about the arrangement by and between the
Petitioners and Mumbai Port Trust and that they (Respondents) will be
bound by the said terms and conditions. The Agreement also provides that
the Petitioners are entitled to enhance the charges, as and when the Mumbai
Port Trust claims repossession of the said premises and further the
Respondents will vacate and hand over the possession thereof to the
Petitioners for the purpose of handing over it to the Mumbai Port Trust. It
is the case of the Petitioners that the Respondents in breach of the terms and
conditions of the said Agreement, unauthorisedly encroached upon an area
outside the godown premises and started using the same for washing their
vehicles. Resultantly, the owners-Mumbai Port Trust-issued show-cause
notice to the Petitioners on 24th December 2005 calling upon the Petitioners
as to why the Lease Deed should not be terminated for various breaches
including unlawful encroachment caused by the Respondents. The owner-
Mumbai Port Trust threatened the Petitioners to initiate proceedings under
the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 and
later on enhanced the rent and made a demand for increase in the rate with
retrospective effect from the Petitioners in the sum of Rs. 70,94,21,581.51
and also claimed damages and interest on the basis of unauthorised
encroachment of the premises. On receipt of the said communication dated
30th April 2007 from the owners, the Petitioners called upon the
Respondents to pay the entire arrears of storage charges including revision
of rent by Mumbai Port Trust as well as make payment of damages for
unauthorised occupation and encroachment on the part of the storage
facilities. Besides, the Petitioners terminated the storage warehousing
facilities of the Respondents and called upon them to remove themselves
from the said storage facilities by removing their cars therefrom. In
response to the said notice, the Respondents issued a letter dated 1st
September 2008, inter alia invoking the Arbitration Clause as contained in
Clause 14 of the said Agreement and called upon the Petitioners to refer the
disputes and differences between them to arbitration under the terms of the
said Agreement. At the same time, the Respondents proceeded to file a suit
before the Small Causes Court at Mumbai by invoking Section 41 of the
Presidency Small Cause Courts Act, 1882 (hereinafter referred to as `the
Act of 1882') for declaration that the Agreement dated 19th September 2002
executed between the Petitioners and Respondents was valid and subsisting
and also for further declaration that the notices issued by the Petitioners
dated 20th August 2008 and 26th August 2008 terminating the Agreement
dated 19th September 2002 were illegal, bad in law, null and void.
According to the Petitioners, however, they had already appointed sole
Arbitrator to adjudicate the dispute between the Petitioners and the
Respondents, but the Respondents failed to appear before the Arbitrator for
hearing of the matter. In the abovesaid suit, the Respondents took out
notice dated 15th September, 2008 praying for interim-relief restraining the
Petitioners from taking any action in pursuance of the termination notices.
The Petitioners filed reply affidavit on 20th September, 2008 and raised
preliminary objection regarding jurisdiction of the Small Causes Court to
try the said under Section 41 of the Act of 1882 on the ground that the same
was barred in view of the provisions of Section 8 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as `the Act of 1996') and the
Court is obliged to refer the parties to arbitration for resolution of their
disputes and differences. Consequent to the preliminary objection raised
by the Petitioners, the Small Causes Court framed preliminary issue
regarding jurisdiction of the Court under Section 9A of the Code of Civil
Procedure, 1908. Besides, the Small Causes Court granted ad-interim
relief to the Respondents. It is unnecessary to advert to the other
proceedings arising out of the interim order passed by the Small Causes
Court. Suffice it to mention that the preliminary issue was eventually
answered by the Small Causes Court on 25th February 2009 against the
Petitioners. In the said Judgment, the Small Causes Court found that it had
exclusive jurisdiction to try disputes between the Licensor and Licensee by
virtue of Section 41 (1) of the Act of 1882 and the suit so instituted by the
Respondents was not barred by the provisions of Act of 1996. According
to the Petitioners, against this decision, the Petitioners could have resorted
to remedy of appeal before the Appellate Bench of the Small Causes Court,
however, having regard to the fact that the question answered by the Trial
Court was purely question of law and there were direct decisions of this
Court on the point, no fruitful purpose would be served by invoking remedy
of appeal. In other words, the remedy of appeal was not an efficacious
remedy in the fact situation of the present case. For that reason, the
Petitioners approached this Court by way of present Writ Petition under
Article 227 of the Constitution of India.
4. While hearing the said Writ Petition on 9th July 2009, the learned
Single Judge noticed the argument canvassed on behalf of the Petitioners
and was persuaded to refer the matter to a larger Bench. The principal
argument of the Petitioners as noticed by the learned Single Judge is that,
neither the earlier decision of this Court in Siemens Ltd. vs. Captech
Online Pvt. Ltd. in Arbitration Petition No. 99/2004 dated 28th August
2005 and another decision of the Single Judge in the case of ING Vyasa
Bank Ltd. vs. Modern Indian reported in 2008 (2) MLJ 635 as well as
the decision of the Division Bench in the case of Carona Limited. vs.
Sumangal Holdings reported in 2007 (4) BCR 265, which have taken
the view that the provisions of Section 41 of the Act of 1882 would prevail
over the Arbitration and Conciliation Act, had occasion to consider the
efficacy of Section 5 of the Act of 1996. According to the Petitioners,
Section 5 of the Act of 1996 begins with a non-obstante clause indicating
that no Judicial Authority shall intervene except where so provided in Part-
I of the Act of 1996 - which presupposes that the Act of 1996 would prevail
over the Act of 1882. The learned Single Judge has also noted the argument
that Section 2(3) of the Act of 1996 which is also contained in Part-I
stipulates that that part does not affect any other law for the time being in
force by virtue of which certain disputes may not be submitted to
arbitration. Having noticed the arguments and above referred Judgments
of this Court which essentially are founded on the exposition of the Apex
Court in Natraj Studio Pvt. Ltd. vs. Navrang Studio & Anr. reported in
1981 (1) SCC 523 - which decision was based on the provisions of the
Arbitration Act, 1940 which did not contain the provision similar to Section
5 of the Act of 1996, thought it appropriate to refer the matter to Larger
Bench for an authoritative pronouncement on the question. Accordingly,
the matter has been placed before us to examine the question formulated by
the Learned Single Judge reproduced in Paragraph 1 above.
5. We have had the benefit of erudite submissions made by Mr. Kamdar,
learned Senior Counsel for the Petitioners and Mr. Umesh Shetty, learned
Advocate for the Respondents. According to the Petitioners, Section 41(1)
of the Act of 1882, as is applicable at present, does not contain non-
obstante clause with respect to any other law for the time being in force.
The non-obstante clause is limited to anything contained elsewhere in the
Act of 1882 alone. Further, Section 41 is a provision intended only to
consolidate suits irrespective of its valuation before the Small Causes
Court as is observed in the case of P.A. Narayanan vs. Dr. S. Shankar &
Anr. reported in AIR 1981 Bom. 339. It is argued that when Section 41
of Act of 1882 was introduced in 1976 and amended in 1984, at the
relevant time, the Act of 1996 had not come into force but the law was
governed by the provisions of Arbitration Act, 1940. Insofar as Arbitration
Act, 1940 is concerned, it does not contain provision similar to Section 5 of
the Act of 1996. Instead, the regime which was followed pre 1996 was that
the suits were permitted to be filed in the Civil Court even if there was an
Arbitration Agreement. In such suits, the party could file application for
stay by invoking Section 34 of the Act of 1940 and only if such stay was to
be granted, the Arbitrator could proceed with the Arbitration proceedings
and get jurisdiction to decide the dispute referred to him. Under the Act of
1940, there was limited bar specified in Section 32 of the Act which
provided that the validity of the Arbitration Agreement or validity of an
award cannot be challenged by a suit nor can any Arbitration Agreement
or award be enforced, set aside, amended, modified or in any way affected,
except as provided under that Act. However, the regime under the Act of
1996 has brought about a sea change. The new enactment introduces
non-obstante clause to exclude the jurisdiction of Courts by virtue of
Section 5 of Act of 1996, which provides that notwithstanding anything
contained in any other law for the time being in force, for any matter
governed by Part-I of the said Act, no Judicial Authority shall intervene
except as provided in the said Part of the said Act. It is argued that this
provision is a conscious departure by the Legislature from the bar
contained in the old Act. The bar stipulated in the Act of 1996 is very
wide and even filing of the suit, if the subject matter is governed by Part-I
of the Act of 1996, is ousted.
ig To buttress the argument regarding sweep
of Section 5, reliance is placed on the decision of the Apex Court in the case
of Union of India vs. Popular Construction-2001 (8) SCC 470; Empire
Jute Company Ltd. & Ors. vs. Jute Corporation of India Ltd. &
Anr.-2007 (14) SCC page-680; CDC Financial Services (Mauritius)
Limited vs. BPL Communication Limited-2003 (12) SCC 140;
Hindustan Corporation Ltd. vs. Pinkcity Midway Petroleums-2003 (6)
SCC 503 and decision of Learned Single Judge of this Court in Girish
Manubhai Parekh vs. Continental Steel Corporation & Ors.- 2009 (2)
BCR 846. It is next contended by the Petitioners that the decisions which
have considered the question, were in the context of provisions of Act of
1940, would be of no avail. For, the provisions introduced in the
enactment of 1996 is of wide import and it has been consistently held that
the jurisdiction of Courts is ousted once there is an Arbitration Agreement
between the parties and such Arbitration Agreement by virtue of Section 7
of the Act of 1996 is governed by Part-I of that Act. Moreover, the
decisions would be of no avail as the same have had no occasion to
consider the efficacy of Section 5 of the Act of 1996. The decision such as
Natraj Studio vs. Navrang Studio-(1981) 1 SCC 523, Mansukhlal
Dhanraj Jain vs. Eknath Vithal Ogale-(1995) 2 SCC 665 which were the
basis for answering the controversy by the learned Single Judge as well as
Division Bench, therefore, would be of no avail. Besides, the non-
obstante clause in Section 41(1) as it appears at present, is very limited and
does not cover all laws unlike the non-obstante clause in Section-5 of the
Act of 1996. It is further argued that the non-obstante clause of 1996 being
a later Statute, the same would prevail. Reliance is placed on the decision
of the Apex Court in Maruti Udyog Ltd. vs. Ram Lal & Others reported
in 2005 (2) SCC 638 to buttress this proposition. It is also argued that the
Act of 1996 is a special statute which has come into force subsequently.
Therefore, the legislature is deemed to be aware of the earlier non-obstante
clause for which reason also the later non-obstante clause ought to prevail.
Reliance is placed on Maharashtra Tubes Ltd. vs. State Industrial &
Investment Corporation of Maharashtra Limited reported in 1993 (2)
SCC 144; A.P. State Finance & Corporation vs. Official Liquidator
reported in AIR 2000 SC 2642. It is argued that the provisions of
Section 41 of the Act of 1882 is the State (Maharashtra) amendment;
whereas enactment of Act of 1996 being a Central Statute, even if there was
any conflict between the two Statutes, the Central enactment must prevail
over the State enactment. Reliance is placed on the exposition in the case
of G. Shreedharmurthy vs. Hindustan Petroleum Corporation Ltd.
reported in 1995 (6) SCC 605. Reliance is also placed on the exposition
in the case of Indore Municipality vs. Ratnaprabha reported in AIR
1977 SC 308; Indian Oil Corporation vs. Municipal Corporation of
Madhya Pradesh reported in AIR 1995 SC 1480. According to the
Petitioners Section 5 of the Act of 1996 must prevail over the provisions of
Section 41 of the Act of 1882. Learned Counsel for the Petitioners has also
distinguished the decisions of our High Court in Siemens Ltd. vs. ING
Vyasa Bank Ltd. (supra) as well as Carona Ltd. (supra) on the above
argument. Instead, reliance is placed on the exposition of another Division
Bench of this Court in the case of Vijaya Bank vs. Maker Services
Private Limited reported in 2001 (3) BCR 652, which has held that the
dispute covered between the Licensor and Licensee for recovery of
possession after expiry of licence will not fall within the provisions of
Section 41 of the Act of 1882. It is also argued that Section 2(3) of the Act
of 1996 which is now been relied upon by the Respondents, is an
argument which is advanced for the first time before this Court. Moreover,
Section 2(3) requires that the Law must provide that the specified dispute
cannot be referred to arbitration. According to the Petitioners, the
provisions of Act of 1882 nowhere provides for such restriction or bar of
jurisdiction of arbitrator, unless it was to be so understood by virtue of
interpretation of non-obstante clause under Section 41 of that Act.
Moreover, Section 2(3) does not control the provisions of Section 5 of the
Act of 1996 which stands on its own force and would override the
provisions of Section 41 of the Act of 1882. It was submitted that where
the decision of the arbitration in dispute between the private parties were to
be in personem and if there is existing Arbitration Agreement then as per
the mandate of Act of 1996, the dispute between the parties is required to
be referred to the Arbitrator. It would be a different matter if the decision
on the dispute to be given by the Arbitrator would have the effect of
decision in rem. It is conceded by the Petitioners that only such disputes
in which the decision is in rem have been excluded from the regime of
arbitration. To wit, only if the criminal offence is required to be prosecuted
in Court of law, that matter cannot be taken before the Arbitrator as held in
S.N. Palanitkar vs. State of Bihar- AIR 2001 SC 2960. Similarly, a
probate proceedings under Succession Act cannot be subject matter of
arbitration as held in Chiranjilal Shrilal vs. Goenka vs. Jagjit Singh &
Ors.-1993 (2) SCC 507. Similarly, a winding up proceedings cannot be
subject matter of arbitration because, winding up proceedings are in rem as
held in Haryana Industries Ltd. vs. Sterlite Industries (India)
Limited-1999 (5) SCC-688. Even the matrimonial disputes cannot be
subject matter of arbitration as held in the case of V.V. Pushpakaran vs.
P.K. Sarojini-1992 (Kerala) 9. It was argued that such analogy cannot be
applied in a case of dispute between a Licensor and Licensee, which is
governed by the contractual Agreement between the parties. The decision
of Arbitrator would bind only the parties to the arbitration action. It is
submitted that the effect of Section 5 of the Act of 1996 would, therefore,
clearly override the provisions of Section 41 of the Act of 1882. It is
argued that the theory of public policy is relevant only in relation to
disputes between landlord and tenant. Insofar as the disputes between the
Licensor and Licensee are concerned, there is no statutory protection to the
Licensee as in the case of tenants. Moreover, principle of public policy
cannot be invoked to construe the provision such as Section 41 of the Act of
1882 or Section 5 of the Act of 1996. The enactment must provide that the
jurisdiction of the Arbitrator is barred by law which is in force at the
relevant time. It was also argued that the legislative change may also be
taken into account while construing the rigours of the provisions in
question. In that, the Maharashtra Rent Control Act, 1999, which has
been introduced in 1999, takes out the exclusive jurisdiction of the Small
Causes Court in relation to Licensor-Licensee, inasmuch as, Section 24
gives option to the Licensor to invoke the said provision for recovery of
possession and compensation. This indicates that the public policy has also
undergone change with regard to the exclusivity of jurisdiction of the Small
Causes Court to adjudicate disputes between Licensor and Licensee. It is
contended that by virtue of Article 254 of the Constitution of India, all
laws which are existing and inconsistent with the Act of 1996, the same
would stand superseded. There is direct conflict between Section 41 of the
Act of 1882 and Section 5 of the Act of 1996. Therefore, Section 5 of the
Act of 1996 would prevail. The fact that the amendment to Section 41 of
Act of 1882 has been brought into force after receiving assent of the
President of India, that would make no difference. Firstly, because the Act
of 1996 had not come into being at the relevant time. Moreover, for the
State enactment to prevail, it was imperative to invite the attention of the
President to the inconsistency before obtaining his assent. Only in that
case, the State legislation which has received assent of the President would
be of some consequence.
6. Per contra, the learned Counsel for the Respondents submits that the
plain language of Section 41 leaves no manner of doubt that exclusive
jurisdiction is conferred upon the Small Causes Court in the matter of suits
and proceedings between Licensors and Licensees relating to recovery of
possession of any immovable property situated in Greater Mumbai or
relating to recovery of licence fees or charges thereof, irrespective of the
value of the subject matter of the said suit or proceedings. It is a special law
conferring exclusive jurisdiction to entertain and decide the specified suits
and proceedings between Licensors and licensees. The learned Counsel has
invited our attention to the legislative history of Section 41 of the Act of
1882. The said provision has been introduced in Part VII of the said Act
and later on amended to further the cause of general public. According to
him, public policy also requires that the parties cannot be permitted to
contract out of the legislative mandate, which requires specified kind of
disputes to be settled by the Special Courts constituted under the said Act of
1882. The learned Counsel has placed strong reliance on the decision of the
Apex Court in the case of Natraj Studio Pvt.Ltd. (supra) as well as
Mansukhlal Dhanraj Jain's case (supra) and contends that neither the
amendment of 1984 in the Act of 1882 nor the enactment of Act of 1996
would affect the interpretation expounded by the Apex Court in respect of
Section 41 of the Act of 1882. Going by the plain language of Section 41 of
the Act of 1882, it is noticed that the same confers exclusive jurisdiction on
the Small Causes Court. With reference to the dictum of the Apex Court in
Natraj Studio Pvt.Ltd. (supra), which is in the context of Section 28 of
the Bombay Rent Act, it is contended that the said provision is pari materia
with the provisions of Section 41(1) of the Act of 1882. For that reason, on
parity of reasoning, even the disputes between the Licensors and Licensees,
the exclusive jurisdiction would be of the Small Causes Court by virtue of
Section 41 of the Act of 1882. That jurisdiction is, in no way, impacted by
the existence of Arbitration Agreement. Section 5 of the Act of 1996 cannot
control the exclusive jurisdiction of the Small Causes Court to entertain and
decide specified disputes between Licensors and Licensees. In his
submission, the interpretation of Section 41 has found favour even with the
Apex Court which is, in no way, diluted by the enactment of Section 5 of
the Act of 1996. Learned Counsel has placed reliance on the decisions of
our High Court in the cases of Carona Limited (supra), Siemens Ltd.
(supra) and ING Vyasa Bank Ltd. (supra) to buttress his submission that
the Small Causes Court will have exclusive jurisdiction by virtue of Section
41 of the Act. The principle expounded in the above said decisions is that
the Legislature has created special forum for adjudication of disputes
between the Licensors and Licensees in relation to recovery of possession
and licence fees. Further, the amendment of Section 41 of the Act does not
obliterate the exclusive jurisdiction of the Small Causes Court. Even in case
of existence of Arbitration Agreement, the Arbitration would be barred by
virtue of exclusive jurisdiction conferred upon the Court of Small Causes
by Section 41 of the Act of 1882. The scheme of Section 41 is that only the
Small Causes Court can entertain and decide suits or proceedings for
recovery or possession of any immovable property or of licence fee or
charges or rent thereof, unless the same was covered by the provisions of
enactments referred to in sub-section (2) of Section 41. Besides mentioning
the specific Acts, sub-section (2) also refers to "or any other law for the
time being in force", which exception would not encompass the Act of
1996, being a general law on arbitration and not specific to disputes
between Licensors and Licensees for recovery of possession of immovable
property or licence fees or charges or rent thereof. According to the
Respondents, even by virtue of Section 2(3) under Part-I Chapter I of the
Act of 1996, the exclusive jurisdiction of the Small Causes Court by virtue
of Section 41 of the Act of 1882 would prevail, notwithstanding the
existence of an Arbitration Agreement between the Licensor and Licensee.
Such Agreement would not, in any manner, affect the jurisdiction of the
Small Causes Court nor the provisions of Section 5 under Chapter I of the
Act of 1996 would take the matter any further. According to the learned
Counsel for the Respondents, on conjoint reading of Section 2(3) and
Section 5 of the Act of 1996, it is clear that any other law for the time being
in force by virtue of which certain disputes may not be submitted to
arbitration, such law is saved and not affected by the non-obstante clause in
Section 5 of the Act of 1996. Whereas, in the suits and proceedings between
Licensors and Licensees covered by Section 41(1) of the Act of 1882, in
law, the Small Causes Court alone has exclusive jurisdiction. Therefore,
Part-I of the Act of 1996 including Section 5 thereof does not and cannot
affect or take away the exclusive jurisdiction of the Small Causes Court in
respect of specified suits and proceedings between Licensors and Licensees,
notwithstanding the existence of any Arbitration Agreement between them.
It is thus argued that the jurisdiction of the Small Causes Court under
Section 41 of the Act of 1882 cannot be ousted inspite of an Arbitration
Agreement between the Licensor and the Licensee and even by virtue of
Section 5 of the Act of 1996. It is submitted that Section 5 of the Act of
1996 cannot control Section 41 of the Act of 1882. More over, Section 5 of
the Act of 1996 does not in any way change the effect of Section 41 of the
Act of 1882. On the other hand, the fact that Section 41 of the Act of 1882
envisages that all issues between the Licensors and Licensees should go to
the Special Court namely, the Small Causes Court, by necessary
implication, the arbitration mechanism is excluded. Our attention is invited
to Entry No.7 and Entry No.13 of List III of Schedule VII of the
Constitution of India. The enactment such as Arbitration Act would be
ascribable to Entry No.7, whereas, the suits and proceedings between the
Licensors and Licensees are referable to Entry No.13 of the said List III. It
is submitted that Section 41 operates in different field. It is a special
enactment conferring exclusive jurisdiction in the Special Court to
entertain, try and decide specified disputes between Licensors and
Licensees. Such provision cannot be affected by the special provisions of
Arbitration Act which is general in nature concerning resolution of disputes.
It is submitted that the fact that the Arbitration Law is a general law, is
evidenced from the statement of objects and reasons while introducing the
Arbitration and Conciliation Bill, 1995. The power of judicial intervention
is limited to arbitration proceedings commenced on the basis of Arbitration
Agreement. That cannot affect the special and exclusive jurisdiction of the
Small Causes Courts under Section 41 of the Act of 1882. According to the
learned Counsel, the observation of another Division Bench of this Court in
Vijaya Bank (supra), in particular, in Para 36, is very wide and in fact,
per incuriam. According to the learned Counsel, there is no conflict
between Section 41 and Section 5. Section 41 was introduced in 1976 after
the President had given assent to the State amendment. However, even if
there was any conflict, it would be conflict between the State enactment
which had received assent of the President and the Central enactment, in
which case, the State enactment would prevail. Reliance is placed on the
decision in the case of Vijay Kumar Sharma & Ors. vs. State of
Karnataka & Ors. reported in (1990) 2 SCC 562 as also Sanwarmal
Kejriwal vs. Vishwa Coopertive Housing Society Ltd. & Ors. reported
in (1990) 2 SCC 288. Learned Counsel has distinguished the decisions
pressed into service by the Petitioners. According to him, the observation of
the Division Bench in the case of P.A.Narayanan (supra) is no more a
good law, considering the dictum of the Apex court in the case of
Sanwarmal Kejriwal (supra) (Paras 21 and 22 thereof). He submits that
the Division Bench was persuaded to take the view without inviting the
statement of objects and reasons for the amendment to Section 41 of the
Act. According to the learned Counsel, the view taken by the two learned
Single Judges of this Court and also of the Division Bench, needs to be
upheld. As it has been rightly noticed that deletion of the non-obstante
clause by way of amendment would make no difference as the same was
done only with a view to remove certain inconsistency in Section 41 of the
Act. In substance, it is submitted that the object of Arbitration law is to
govern the procedure before the Arbitrator. It cannot affect the exclusive
jurisdiction of the Small Causes Court which has been conferred by Section
41 of the Act of 1882. There is no conflict between the two provisions and
each operate in separate field. Therefore, the question under reference
should be answered against the Petitioners.
7. The principal question which we have to answer is: whether Section
5 of the Act of 1996 would oust the jurisdiction of the Small Causes Court-
which is bestowed on it by virtue of Section 41 of the Act of 1882 to try all
suits and proceedings between a Licensor and Licensee, or a landlord and
tenant, relating to recovery of possession of any immovable property
situated in Greater Bombay, or relating to the recovery of the licence fee or
charges or rent. We would, therefore, straightaway refer to Section 5 of the
Act of 1996. The same reads thus:
"5.Extent of judicial intervention.- Notwithstanding anything contained
in any other law for the time being in force, in matters governed by this
Part, no judicial authority shall intervene except where so provided in
this Part." (emphasis supplied)
8. Going by the plain language of this provision, it is obvious that "all
matters" governed by Part-I of this Act (which deals with domestic
arbitrations) will have to proceed as per the regime provided in Part-I of
the Act. Further, no Judicial Authority can intervene in those matters except
where so provided by Part-I of the Act of 1996. The provision has very
wide import, as it opens with non-obstante clause. The sweep of non-
obstante clause operates notwithstanding anything contained in any other
law for the time being in force. In the case of Union of India (supra), the
Apex Court has restated the position that one of the main objects of the Act
of 1996 was the need "to minimise the supervisory role of Courts in the
arbitral process". The Apex Court had occasion to examine even the
purport of Section 5 of this Act in series of Judgments which have been
pressed into service before us. (See Empire Jute Company Ltd. (supra);
CDC Financial Services (Mauritius) Ltd. (supra); Hindustan
Corporation Ltd. (supra). It has been consistently held that Section 5
takes away the jurisdiction of the Court when there exists an arbitration
agreement and that provision must be given effect to. Further, the Courts
are restrained from interfering with arbitration except in the manner
provided in the Act of 1996. The Judicial Authority before which an
action is brought in a matter which is the subject of an Arbitration
Agreement is obliged to refer such parties to arbitration. The Arbitral
Tribunal has been empowered by virtue of Section 16 of the Act of 1996 to
rule on its own jurisdiction including on any objection with respect to the
existence or validity of arbitration agreement.
9.
The crucial aspect that needs to be examined is: whether Section 5
of the Act of 1996 can be read in isolation? In our opinion, on the plain
language of Section 5, it will have to be juxtaposed with Section 2(3) of
the Act of 1996 which provision also falls in Part-I of that Act. The latter
amplifies the scope of the Act of 1996. Section 2(3) of the Act reads thus:
"2.(3) This Part shall not affect any other law for the time being in force by
virtue of which certain disputes may not be submitted to arbitration."
(emphasis supplied)
This provision plainly means that Part-I of the Act shall not affect
any other law for the time being in force by virtue of which certain disputes
may not be submitted to Arbitration. To put it differently, if any law which
is for the time being in force were to provide-either expressly or by
necessary implication-that the specified disputes may not be submitted to
arbitration, in that case, inspite of the non-obstante provision in Section 5 of
the Act, that law has been saved by virtue of Section 2(3) of the Act of
1996. To that extent, the bar against the Judicial Authority in terms of
Section 5 of the Act of 1996, to try matters specified by such law would
stand lifted. To examine the question under reference, the crucial question
is: whether the provisions of Section 41 of the Act of 1882, is a law for the
time being in force by virtue of which the disputes specified therein may
not be submitted to arbitration.
10. Before we advert to Section 41 of the Act of 1882, it would be
apposite to analyse the broad contours of the said Act. It is a Central Act to
consolidate and amend the law relating to the Courts of Small Causes
established in the Presidency towns. The preamble of the Act mentions that
it is expedient to consolidate and amend the law relating to Courts of Small
Causes established in the towns of Calcutta, Madras and Bombay. Chapter
I of the Act deals with preliminary matters. Section 1 gives short title and
commencement of the Act. Section 4 stipulates that the Small Causes
Courts means the Court of Small Causes constituted under this Act in the
towns of Calcutta, Madras or Bombay as the case may be and the
expression Registrar includes a Deputy Registrar. Chapter II makes
elaborate provision regarding the constitution and Officers of the Court.
Chapter III deals with the law administered by the Courts so constituted.
Section 16 which is part of Chapter III provides that all questions, other
than questions relating to procedural practice, which arise in suits or other
proceedings under this Act in the Small Causes Courts shall be dealt with
and determined according to the law for the time being administered by the
High Court in the exercise of its ordinary original civil jurisdiction. Chapter
IV is somewhat relevant to consider the controversy on hand. It deals with
jurisdiction in respect of suits. Section 17 deals with local limits of
jurisdiction of court. Section 18 stipulates that subject to the exceptions in
Section 19, the Small Cause Court shall have jurisdiction to try all types of
suits of a civil nature where the amount or value of the subject matter does
not exceed 25,000/- rupees and the three other conditions specified in
clauses (a), (b) and (c) thereof. Thus, this provision vests jurisdiction in the
Small Cause Court to try all suits of a civil nature which do not exceed the
pecuniary claim of Rs.25,000/- and fulfill the three other conditions
specified therein. Section 18 has been made subject to Section 19. Section
19 provides for types of cases in respect of which the Small Cause Court
shall have no jurisdiction. Since Section 18 and Section 19 deal with the
jurisdiction of the Small Cause Court, the said Sections as presently apply,
read thus:
"18. Suits in which Court has jurisdiction.--Subject to the
exceptions in Section 19, the Small Cause Court shall have jurisdiction to try
all suits of a civil nature--
when the amount or value of the subject-matter does not exceed two thousand
rupees: and
(a) the cause of action has arisen, either wholly or in part, within
the local limits of the jurisdiction of the Small Cause Court, and the leave of
the Court has, for reasons to be recorded by it in writing, been given before
the institution of the suit; or
(b) all the defendants, at the time of the institution of the suit,
actually and voluntarily reside, or carry on business of personally work for
gain, within such local limits; or
(c) any of the defendants at the time of the institution of the suit,
actually and voluntarily resides, or carries on business or personally works for
gain, within such local limits, and either the leave of the Court has been given
before the institution of the suit, or the defendants who do not reside, or carry
on business, or personally work for gain, as aforesaid, acquiesce in such
institution:
1[Provided that where the cause of action has arisen wholly within the local
limits aforesaid, and the Court refuses to give leave for the institution of the
suit, it shall record in writing its reasons for such refusal.]
Explanation I.--When in any suit the sum claimed is, by a set-off admitted by
both parties, reduced to a balance not exceeding two thousand rupees, the
Small Cause Court shall have jurisdiction to try such suit.
Explanation II.--Where a person has a permanent dwelling at one place and
also a lodging at another place for a temporary purpose only, he shall be
deemed to reside at both places in respect of any cause of action arising at the
place where he has such temporary lodging.
Explanation III.--A Corporation or Company shall be deemed to carry on
business at its sole or principal office in 2[India], or, in respect of any cause of
action arising at any place where it has also a subordinate office, at such
place.
____________________________________________________________
Prior to amendment by 2 A.L.O., 1956, Section 18 read as:
18. Suits in which Court has jurisdiction.--Subject to the exceptions in
Section 19, the Small Cause Court shall have jurisdiction to try all suits of a
civil nature--
when the amount or value of the subject-matter does not exceed two thousand
rupees: and
(a) the cause of action has arisen, either wholly or in part, within
the local limits of the jurisdiction of the Small Cause Court, and the leave of
the Court has, for reasons to be recorded by it in writing, been given before
the institution of the suit; or
(b) all the defendants, at the time of the institution of the suit,
actually and voluntarily reside, or carry on business of personally work for
gain, within such local limits; or
(c) any of the defendants at the time of the institution of the suit,
actually and voluntarily resides, or carries on business or personally works for
gain, within such local limits, and either the leave of the Court has been given
before the institution of the suit, or the defendants who do not reside, or carry
on business, or personally work for gain, as aforesaid, acquiesce in such
institution:
[Provided that where the cause of action has arisen wholly within the local
limits aforesaid, and the Court refuses to give leave for the institution of the
suit, it shall record in writing its reasons for such refusal.]
Explanation I.--When in any suit the sum claimed is, by a set-off admitted by
both parties, reduced to a balance not exceeding two thousand rupees, the
Small Cause Court shall have jurisdiction to try such suit.
Explanation II.--Where a person has a permanent dwelling at one place and
also a lodging at another place for a temporary purpose only, he shall be
deemed to reside at both places in respect of any cause of action arising at the
place where he has such temporary lodging.
Explanation III.--A Corporation or Company shall be deemed to carry on
business at its sole or principal office in 4[a Part A State or a Part C State], or,
in respect of any cause of action arising at any place where it has also a
subordinate office, at such place.
[18-A. Plaintiff may abandon suit against defendant resident out of
jurisdiction.--The Small Cause Court may allow a plaintiff at or before the
first hearing of a suit in which a joint and several liability is alleged on a
cause of action arising either wholly or in part within the local limits of the
jurisdiction of the Court to abandon the suit as against any defendant who
does not reside or carry on business or personally work for gain within such
local limits, to sue for a decree against such defendants only as do so reside,
carry on business or personally work for gain.]"
"19. Suits in which Court has no jurisdiction.--The Small Cause Court
shall have no jurisdiction in--
(a) suits concerning the assessment or collection of the revenue;
(b) suits concerning any act done by or by order of the Central
Government, 2[* * *] or the State Government;
(c) suits concerning any act ordered or done by any Judge or
judicial officer in the execution of his office, or by any person
in pursuance of any judgment or order of any Court or any
such Judge or judicial officer;
(d) suits for the recovery of immovable property;
(e)
(f)
suits for the partition of immovable property;
suits for the foreclosure or redemption of a mortgage or
immovable property;
(g) suits for the determination of any other right to or interest in
immovable property;
(h) suits for the specific performance or rescission of contracts;
(i) suits to obtain an injunction;
(j) suits for the cancellation or rectification of instruments;
(k) suits to enforce a trust;
(l) suits for a general average loss and suits on policies of
insurance on sea-going vessels;
(m) suits for compensation in respect of collisions on the high seas;
(n) suits for compensation for the infringement of a patent,
copyright or trade-mark;
(o) suits for a dissolution of partnership or for an account of
partnership-transactions;
(p) suits for an account of property and its due administration
under the decree of the Court;
(q) suits for compensation for libel, slander, malicious prosecution,
adultery or breach of promise of marriage;
(r) suits for the restitution of conjugal rights, 3[* * *] or for a
divorce;
(s) suits for declaratory decrees;
(t) suits for possession of a hereditary office;
(u) suits against Sovereign Princes or Ruling Chiefs, or against
Ambassadors or Envoys of Foreign States;
(v) suits on any judgment of a High Court;
(w) suits the cognizance whereof by the Small Cause Court is
barred by any law for the time being in force."
Amongst others, Clause (d) of Section 19 refers to suits for recovery
of immovable property. Clause (g) of the same provision stipulates that suit
for the determination of any other right to or interest in immovable
property. By virtue of these clauses, it is expressly made clear that the Small
Causes Court can have no jurisdiction to consider the relief of recovery of
immovable property or for determination of any other right to or interest in
immovable property. Clause (h) of Section 19 provides that the Small
Causes Court shall have no jurisdiction in respect of suits for the specific
performance or recession of contracts. Clause (f) deals with suits to obtain
an injunction in relation to which Small Causes Court cannot exercise
jurisdiction. Another relevant clause in Section 19 relevant for our purpose
is clause (w), which provides that the Small Cause Court shall have no
jurisdiction in relation to suits, the cognizance whereof by the Small Cause
Court is barred by any law for the time being in force. Obviously, if this
were the only provision in the Act of 1882, the question under reference
could have been straightaway answered, keeping in mind the non-obstante
clause in Section 5 of the Act of 1996. The other provisions in Chapter IV
pertain to return of plaint and investing power in the Court to try suits
beyond pecuniary limits of jurisdiction by consent of the parties to the suit.
Section 21 deals with suits by and against Officers of Court and Section 22
deals with costs when Plaintiff sues in High Court or Bombay City Civil
Court in other cases cognizable by Small Causes Court. Chapter V deals
with procedure of trial of suits. It may not be necessary to elaborate the
provisions under Chapter V of the Act. Chapter VI deals with new trials and
appeals. Chapter VII of the Act provides for recovery of possession of
immovable property and certain licence fees and rent. Section 41 in this
Chapter departs from the scheme of Section 18 read with Section 19 of the
Act and invests exclusive jurisdiction in the Small Cause Court to entertain
and try all suits and proceedings between a licensor and licensee or a
landlord and tenant relating to recovery of possession of any immovable
property situated in Greater Bombay, or relating to the recovery of licence
fee or charges or rent therefor, irrespective of the value of the subject matter
of such suits or proceedings. The other provisions covered by Chapter VIII
to XIII may not be of much relevance to answer the controversy.
11. We shall now examine the sweep of Section 41 of the Act, which is a
provision regarding suits or proceedings between licensors and licensee or
landlords and tenants for recovery of possession of immovable property or
licence fees or rent, except to those to which other Acts apply, to lie in
Small Causes Court. Before we advert to Section 41 as is presently
applicable, we would refer to the legislative history in relation to the said
provision. Section 41 of the Act of 1882 as originally enacted found place
in Chapter VII of the Act, read thus:
"CHAPTER VII
RECOVERY OF POSSESSION OF IMMOVABLE PROPERTY
S.41. Summons against person occupying property without leave.- When
any person has had possession of any immovable property situate within the
local limits of the Small Cause Court's jurisdiction and of which the annual
value at a rack-rent does not exceed two thousand rupees, as the tenant, or
by permission, or another person, or of some person through whom such
other person claims,
and such tenancy or permission has determined or been withdrawn,
and such tenant or occupier or any person holding under or by assignment
from him (hereinafter called the occupant) refuses to deliver up such
property in compliance with a request made to him in this behalf by such
other person,
such other person (hereinafter called the applicant) may apply to the Small
Cause Court for a summons against the occupant, calling upon him to show
cause, on a day therein appointed, why he should not be compelled to
deliver up the property."
12. The State Legislature in view of the experience about the multiplicity
of proceedings required to be resorted to by the licensor for recovery of
possession of premises and licence fees, decided to amend the said
provision. The intent behind the Maharashtra Amendment to Section 41 can
be discerned from the statement of objects and reasons while introducing
the amendment which culminated with the Maharashtra Amending Act
XIX of 1976. The same reads thus:
"STATEMENT OF OBJECTS AND REASONS
At present, in Greater Bombay, all suits and proceedings between a
landlord and tenant relating to recovery of possession of premises or rent,
irrespective of the value of the subject-matter, lie in the Court of Small
Causes, Bombay, under section 28 of the Bombay Rents, Hotel and Lodging
House Rates Control Act, 1947. Under that section, suits and proceedings for
the recovery of the licence fee between a licensor and licensee as defined in
that Act also lie in the Court of Small Causes, irrespective of the value of the
subject-matter. Under Chapter VII of the Presidency Small Cause Courts Act,
1882, an application can be made by a licensor for recovery of possession of
premises, of which the annual value at a rack rent doe4s not exceed three
thousand rupees. If the rack rent exceeds three thousand rupees, the licensor
has to take proceedings in the City Civil Court where the rack rent does not
exceed twenty-five thousand rupees and for higher rents in the High court.
Similarly, for recovery of licence fees to which the provisions of the Bombay
Rent Control Act do not apply, the licensor has to seek his remedy in the
Small Cause Court, the City Civil Court or the High court, as the case may be,
according to the value of the subject-matter. Under the existing law, the
licensor has to go to different Courts for recovery of possession of premises
and licence fees and if the plea of tenancy is raised by the defendant and
succeeds, the matter has again to go to the Small Cause Court. Similarly,
where proceedings on the basis of tenancy are started in the Small Cause
Court and subsequently the plea of licence is taken and succeeds, the plaint is
returned and has to be re-presented to the City Civil Court or the High Court,
as the case may be, depending on the valuation. Thus there is unnecessary
delay, expense and hardship caused to the suitors by going from one Court to
another to have the issue of jurisdiction decided. Moreover, Chapter VII of
the Presidency Small Cause Courts Act envisages applications which
culminate in orders and are always susceptible of being challenged by
separate suits on title where the relationship is admittedly not between a
landlord and tenant.
2. In order to avoid multiplicity of proceedings in different Courts and
consequent waste of public time and money and unnecessary delay, hardship
and expense to the suitors, and to have uniformity of procedure, it is
considered expedient to make the required supplementary provisions in the
Presidency Small Cause Courts Act, so that all suits and proceedings between
a landlord and tenant or a licensor and licensee for recovery of possession of
premises or for recovery of rent or licence fee, irrespective of the value of the
subject-matter, should go to and be disposed of by the Small Cause Court,
either under that Act or the Rent Control Act.
3. The Bill is intended to achieve these objects.
A.R.ANTULAY,
Nagpur, dated the 24th November 1975. Minister for Law and Judiciary.
D.M.ANEY,
Secretary,
Nagpur, dated the 24th November 1975. Maharashtra Legislative Council."
(emphasis supplied)
13. The amended Section 41 was introduced by Maharashtra Act XIX of
1976 which came into effect after the same was assented to by the President
of India on 29th April 1976. The said amended Section 41, reads thus:
"S. 41. Suits or proceedings between licensors and licensees or landlords
and tenants for recovery of possession of immovable property and licence
fees or rent, except to those to which other Acts apply to lie in Small
cause Court.- (1) Notwithstanding anything contained elsewhere in this Act
or in any other law for the time being in force, but subject to the provisions
of sub-section (2), the Court of Small Cause shall have jurisdiction to
entertain and try all suits and proceedings between a licensor and licensee, or
a landlord and tenant, relating to the recovery of possession of any
immovable property situated in Greater Bombay, or relating to the recovery
of any licence fee or charges or rent therefor, irrespective of the value of the
subject-matter of such suits or proceedings.
(2) Nothing contained in sub-section (1) shall apply to suits or
proceedings for the recovery of possession of any immovable property, or of
licence fee or charges or rent thereof, to which the provisions of the Bombay
Rents, Hotel and Lodging House Rates Control Act, 1947, the Bombay
Government Premises (Eviction) Act, 1955, the Bombay Municipal
Corporation Act, the Bombay Housing Board Act, 1948 or any other law for
the time being in force applies."
14.
The State Legislature after having gained satisfactory result on
account of consolidation of all suits and proceedings between a landlord
and tenant or a licensor and licensee for recovery of possession of the
premises or recovery of the rent of licence fee, irrespective of the value of
the subject matter, to be tried and entertained by the Court of Small Causes,
decided to apply similar regime outside the area of Greater Bombay by
amending Provincial Small Cause Court Act, 1887. Accordingly,
amendment was moved on 1st March 1984 by the Ministry of Law and
Judiciary of the State of Maharashtra in that behalf. Besides proposing to
amend the Provincial Small Cause Courts Act, 1887, an amendment was
suggested in respect of Section 41 of the Act of 1882 on the ground that
there was a minor inconsistency in sub-sections (1) and (2) of Section 41 of
the Act of 1882 and it was, therefore, proposed to amend Section 41 of the
Act to remove the inconsistency. The said proposal was accepted by the
State Legislature as a result of which, amendment was effected not only in
sub-section (1) but also sub-section (2) of Section 41 of the Act of 1882 by
Maharashtra Act XXIV of 1984. After that amendment, Section 41, as is
presently applicable, would read thus:
"S.41. (1) Notwithstanding anything contained elsewhere in this Act
but subject to the provisions of sub-section (2), the Court of Small Causes
shall have jurisdiction to entertain and try all suits and proceedings between a
licensor and licensee, or a landlord and tenant, relating to the recovery of
possession of any immovable property situated in Greater Bombay, or
relating to the recovery of the licence fee or charges or rent therefor,
irrespective of the value of the subject matter of such suits or proceedings.
(2) Nothing contained in sub-section (1) shall apply to suits or
proceedings for the recovery of possession of any immovable property, or of
licence fee or charges or rent thereof, to which the provisions of the Bombay
Rents, Hotel and Lodging House Rates Control Act, 1947, the Bombay
Government Premises (Eviction) Act, 1955, the Bombay Municipal
Corporation Act, the Maharashtra Housing and Area Development Act, 1976
or any other law for the time being in force, apply."
As aforesaid, by virtue of Section 18 read with Section 19 of the Act
of 1882, the Small Causes Court could not have entertained any suit for the
recovery of immovable property or a suit for the determination of any other
right to or interest in immovable property. However, Section 41 is a
departure from that rule. It invests exclusive jurisdiction in the Court of
Small Causes to entertain and try all suits and proceedings between a
licensor and licensee or a landlord and tenant, relating to the recovery of
possession of any immovable property situated in Greater Bombay, or
relating to the recovery of the licence fee or charges or rent therefor,
irrespective of the value of the subject matter of such suits or proceedings.
15. Section 41(1) of the Act as it stood prior to amendment of 1984, fell
for consideration of the Apex Court in the case of Mansukhlal Dhanraj
Jain's case (supra). The Apex Court observed that a mere look at the said
provision made it clear that because of the non-obstante clause contained in
the section, even if a suit may otherwise lie before any other court, if such a
suit falls within the sweep of Section 41(1) it can be entertained only by the
Court of Small Causes. It further observed that for applicability of Section
41(1) of the Small Cause Courts Act, the following conditions must be
satisfied before taking the view that jurisdiction of regular competent civil
court like City Civil Court is ousted:
(i) It must be a suit or proceeding between the licensee and
licensor; or
(ii) between a landlord and a tenant;
(iii) such suit or proceeding must relate to the recovery of
possession of any property situated in Greater Bombay; or
(iv) relating to the recovery of the licence fee or charges or rent
thereof.
The fact that Section 41(1) as it stood prior to 1984 was a non-
obstante clause is no more res integra in view of this decision.
16. The question is: whether the position has undergone any change after
the amendment of 1984, insofar as sub-section (1) of Section 41 is
concerned? By Maharashtra Act 24 of 1984, the words " or in any other
law for the time being in force" occurring in sub-section (1) of Section 41
came to be deleted. We have already re-produced the provision which is
applicable after the amendment of 1984 and is presently in force. At the
first look, it may appear that the non-obstante clause has now been limited
only to the provisions contained elsewhere in the same Act. Former
provision, which was a non-obstante clause, covered matters in relation to
any other law for the time being in force. In other words, it would appear
that after the amendment of 1984, Section 41 does not contain a non-
obstante clause to override the provisions of any other law for the time
being in force. However, this is not an accurate statement. For, sub-
section opens with notwithstanding anything contained elsewhere in this
Act. That would take within its fold all the provisions of the Act of 1882
including Section 18 and Section 19 thereof and in particular, Section
19(w), which deal with the jurisdiction of the Small Causes Court to
entertain and try suits of a civil nature. In other words, even the
stipulation provided in Section 19(w) in relation to suits, the cognizance
whereof by the Small Causes Court is barred by law for the time being in
force, is covered by the non-obstante clause in Section 41(1) of the Act.
That would mean that even if there was to be any other law for the time
being in force which created
ig bar on the Small Causes Court to take
cognizance of the specified suits, the same will be governed by operation
of Section 41(1) of the Act of 1882 as it presently applies. The
concomitant of this interpretation is that, even if the jurisdiction of the
Small Causes Court is barred by any other law for the time being in force
in relation to the matters specified in sub-section (1) of Section 41, the
Court of Small Causes would still have the exclusive jurisdiction to
entertain and try the suits and proceedings between the licensor and
licensee, or a landlord and tenant, relating to recovery of possession of any
immovable property situated in Greater Bombay, or relating to the recovery
of licence fee or charges or rent therefor, irrespective of the value of the
subject matter of such suits or proceedings.
17. Section 41 of the Act of 1882, however, provides for exceptions as
specified in sub-section (2) thereof. It is noticed that although sub-section
(1) opens with non-obstante clause, it makes it clear that the same is subject
to the provisions of sub-section (2). Therefore, it carves out exception to
the rule contained in sub-section (1). Sub-section (2), as is presently
applicable, provides that nothing contained in sub-section (1) shall apply to
suits or proceedings for the recovery of possession of any immovable
property or licence fee or charges or rent thereof, to which the provisions of
Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, the
Bombay Government Premises (Eviction) Act, 1955, the Bombay
Municipal Corporation Act, the Maharashtra Housing and Area
Development Act, 1976 or any other law for the time being in force, apply.
The sweep of sub-section (2) would apply to suits or proceedings for the
recovery of immovable property or of licence fee or charges or rent thereof,
but the quintessence to attract sub-section (2) is that the immovable
property should be governed by the provisions of the Specified Acts. The
difficulty, however, arises on account of the generic expression used in
sub-section (2) to the effect " or any other law for the time being in force".
We shall deal with this aspect a little later.
18. Notably, there is marked difference between the expression
used in sub-section (1) of Section 41 and sub-section (2) thereof. In sub-
section (1) while describing the suits and proceedings between the licensor
and licensee or the landlord and tenant, it is provided that it should
be "relating to the recovery of possession of any immovable property" or
"relating to the recovery of licence fee thereof" etc. On the other hand, in
sub-section (2) the category of cases which are carved out are "for the
recovery of possession of any immovable property or licence fee" etc.
The distinction between expression "relating to recovery of possession"
and "for recovery of possession" has been noticed in Manshukhlal
Dhanraj Jain's case (supra) by the Apex Court. The Apex Court in
Paragraph-14 has observed thus:
"However, on the clear language of Section, in our view, it cannot
be said that these suits are not relating to the possession of the immovable
property. It is pertinent to note that Section 41(1) does not employ the
words "suits and proceedings for recovery of possession of immovable
property. There is a good deal of difference between the words
"relating to the recovery of possession" on the one hand and the terminology
"for recovery of possession of any immovable property". The words
"relating to" are of wide import and can take in their sweep any suit in
which grievance is made that the defendant is threatening to illegally
recover the possession from plaintiff-licensee. Suits for protecting such
possession of immovable property against the alleged illegal attempts on
the part of the defendants to forcibly recover possession from the plaintiff,
can clearly get covered by the wide sweep of the words "relating to recovery
of possession" as employed by Section 41(1)."
19. Suffice it to observe that a suit or proceeding for recovery of
possession or for licence fee referred to in sub-section (2) of Section 41
would obviously be filed by a licensor or a landlord in respect of
immovable property governed by the specified enactments; whereas the
suit covered by sub-section (1) of Section 41 can be filed by any licensor
or a landlord in respect of immovable property governed by laws other
than the ones referred to in sub-section(2) and also by the tenant or
licensee of such premises who has been threatened of alleged illegal dis-
possession from the premises by the landlord or licensor. Thus, the latter
suits referable to sub-section (1) fall within the exclusive jurisdiction of
the Small Causes Court. For, sub-section (2) would be attracted only if
immovable property is governed by the provisions of the specified Acts
such as the Bombay Rent Act, the Bombay Government Premises Eviction
Act, the Bombay Municipal Corporation Act, the Maharashtra Housing
and Area Development Act.
20. Reverting to sub-section (2) of Section 41, it also refers to "any
other law for the time being in force". That is a very wide expression. To
give proper meaning to this expression in the context of excepted category
of cases covered therein, it will have to be construed to mean that that
law must provide mechanism for recovery of possession of specified
immovable property or licence fee thereof which the landlord or licensor
can invoke. For, in the case of the Bombay Rent Act of 1947, Section 28
which is pari materia with Section 41, as has been held by the Apex Court.
It deals with the suits or proceedings between a landlord and a tenant
relating to the recovery of rent or possession of any premises to which any
of the provisions of Part II of that Act apply or between a licensor and a
licensee relating to the recovery of licence fee or charge and decide any
application made under that Act and to deal with any claim or question
arising out of that Act or any of its provision. It provides that no other
Court shall have jurisdiction to try and entertain any such proceedings or
application to deal with such claim or question. What is significant to
notice is that all the laws specified in sub-section (2) of Section 41, are
essentially laws made by the State Legislature. Indubitably, the Act of
1882 is a Central enactment. Section 41 is a State amendment which has
been brought into force after receiving the assent of the President of India.
Since the contemporary State Legislations such as Bombay Rent Act of
1947 was in force and dealt with the similar matters, it became necessary
to exempt the matters covered by that Act from the application of Section
41(1) of the Act of 1882. Similarly, the provisions of Bombay
Government Premises Eviction Act can be invoked in respect of premises
covered by the said enactment against the occupant in his capacity as
licensee, tenant or otherwise as the case may be, for recovery of
possession of immovable property in his possession or of licence fee
thereof. The said enactment provides mechanism therefor. Even in
respect of Bombay Municipal Corporation Act and the Maharashtra
Housing and Area Development Act, the claim of possession of any
immovable property or of licence fee thereof would be by the special
landlord/licensor against the occupant who may be in possession of such
premises as tenant or licensee or even as trespasser. It is for that reason,
the summary action provided for recovery of possession of immovable
property governed by the stated Acts have been exempted from the sweep
of Section 41(1) of the Act. The expression used by the State Legislature
"or any other law for the time being in force" is, therefore, intended to
cover all such enactments - be it State or Central Legislations - where the
landlord or licensor under the concerned enactment is competent to
proceed against the occupant of the premises governed by the respective
Acts for recovery of possession and licence fee thereof. Obviously, the
Legislative intent behind using expression "or any other law for the time
being in force" is to encompass all such enactments which provide for
remedy for the recovery of possession of specified immovable property
governed by that Act or licence fee thereof and not to cover the general
enactments such as the Act of 1996.
21. Further, the term 'law for the time being in force' would apply not
only to the prevailing laws, but also to laws on stated matter to be made in
future. The State legislature, instead of naming different legislations in
sub-section (2) - which
ig may be State enactments or also Central
enactments, has thought it appropriate to name only few Acts and then
used the expression 'or any other law for the time being in force' so as to
make it comprehensive enough to include any other prevailing laws or
laws to be made in future, which may provide for mechanism for recovery
of possession of specified immovable property governed by that Act or
licence fee thereof. To wit, the recent legislation introduced by the State
legislature, the Maharashtra Rent Control Act, 1999 is one such example.
Even though this legislation (Rent Act of 1999) has not been specifically
mentioned in sub-section (2), on account of the expansive expression "or
any other law for the time being in force", it would take within its ambit
even the subsequent legislation enacted on the subject. Section 33 of the
Maharashtra Rent Control Act, 1999 is similar provision to one provided in
Section 28 of the Rent Act of 1947. There is, however, slight departure in
the scheme of the two provisions. In Section 28 of the Act of 1947,
reference is not only made to a suit or proceedings between "landlord and
tenant" but also between the "licensor and licensee", whereas in Section
33 of the Rent Act of 1999, reference is made only to suit or proceedings
between a "landlord and a tenant" in relation to which the Rent Court will
have exclusive jurisdiction. This departure will have to be presumed to
be a conscious one. ig For, insofar as the right of a licensor to recover
possession of immovable property or of licence fee thereof, the same is
now governed by the regime of Section 24 of the Rent Act of 1999.
Section 24 opens with a non-obstante clause. It provides that
notwithstanding anything contained in this Act (Act of 1999), a licensee
in possession or occupation of premises given to him on licence for
residence shall deliver possession of such premises to the landlord on
expiry of the period of licence and on the failure of the licensee to so
deliver the possession of licensed premises, the landlord shall be entitled to
recover possession of such premises from the licensee, on the expiry of the
period of licence, by making an application to the Competent Authority.
Indeed, this provision applies only to premises given on licence "for
residence" and where the licence term has expired. Therefore, on proper
construction of Section 41 of the Act of 1882, it would follow that the
exclusive jurisdiction invested in the Rent Court or for that matter the
Competent Authority by virtue of Section 33 and 24 respectively in
relation to suits and proceedings governed by those provisions have been
exempted from the application of Section 41(1) of the Act of 1882. To put
it differently, this generic expression "or any other law for the time being
in force" will have to be understood to mean that all such laws which are
for the time being in force, which provide for the mechanism for recovery
of possession of specified immovable property (governed by such
legislation) or licence fee thereof, the same have been exempted from the
application of Section 41(1) of the Act and to that extent the Small Causes
Court will have no jurisdiction. Indubitably, the Act of 1996, although a
special law governing arbitration proceedings, in that sense, is a general
one and not specific to matters provided in Section 41 of the Act of 1882.
The said Act of 1996 does not deal with any immovable property or
provide mechanism for recovery of possession thereof from the
tenant/licensee. A priori, it necessarily follows that the Act of 1996 is not
covered within the ambit of expression "any other law for the time being in
force" as appearing in Section 41(2) of the Act of 1882.
22. Although several decisions have been cited across the bar, no
direct judgment has been pressed into service which would assist us in
relation to the above exposition. Be that as it may, the Supreme Court in
Mansukhlal Dhanraj Jain (supra) has observed that when Section 41(1)
of the Act of 1882 is juxtaposed with Section 28 of the Bombay Rent Act
of 1947, it becomes clear that pari materia words are used about nature of
suits in both these provisions for conferring exclusive jurisdiction on Small
Causes Courts, namely, they alone can entertain such suits or proceedings
relating to recovery of possession of premises. The Apex Court also
noticed that Section 41 of the Small Causes Court deal with suits between
the licensee and licensor while Section 28 of the Bombay Rent Act of
1947 deal with suits between landlord and tenant. It went on to observe
that even so the nature of such suits as contemplated by both these sections
is the same namely it should be relating to the recovery of possession of
premises. The Court has placed reliance on its earlier decision in Natraj
Studio Pvt. Ltd. (supra) which had occasion to examine the question
regarding validity of Arbitration Agreement contained in the Leave and
Licence Agreement. In that case a Leave and Licence Agreement was
executed between the parties which was extended from time to time. By
an Agreement dated November 5, 1972, the original Agreement was
extended for a period of eleven months from January 1, 1973. The Leave
and Licence Agreement was thus in force on February 1, 1973, with effect
from which date Section 15 A of the Bombay Rent Act, 1947 was inserted
by an amendment. The effect of Section 15 A was that any person who
was in occupation of any premises on February 1, 1973 as a licensee was
deemed to have become, on that date, for the purpose of the Act, a tenant
of the landlord, in respect of premises or part thereof in his occupation.
Relying on this legislative change, the Appellant before the Supreme Court
filed a declaratory suit praying for a declaration that plaintiff was a
monthly tenant of the premises in question and for fixation of the standard
rent and other reliefs. Pending the said suit, the Appellant filed
application under Section 33 of the Arbitration Act of 1940 in the Bombay
High Court for a declaration that the arbitration clause in the Leave and
Licence Agreement was invalid and inoperative. That application was
dismissed on the ground that the Court had no jurisdiction to determine the
alleged rights, if any of the Appellant is a tenant. The Respondent, on the
other hand, filed application under Section 8 of the Arbitration Act of
1940, praying that the 2nd Respondent be appointed as the sole Arbitrator
to decide the dispute and differences between the parties under the Leave
and Licence Agreement dated March 28, 1970. That application was
allowed and the 2nd Respondent was appointed as the sole Arbitrator. At
the same time, against the decision of the learned Single Judge on
application under Section 33 of the Arbitration Act, 1940, the Appellant
had carried the matter in appeal which also was dismissed. The order
passed by the Learned Single Judge came to be confirmed. The Appeal
was dismissed on the ground that it was not maintainable under Section 39
of the Arbitration Act of 1940. Accordingly, the order of the learned
Single Judge passed on application under Section 33 of the Arbitration
Act, 1940 as also on the appeal against that decision, both were carried in
appeal before the Apex Court. Looking at Section 28 of the Bombay Rent
Act, 1947, the Court examined as to whether the Court of Small Causes
alone has or has not exclusive jurisdiction to resolve the dispute between
the parties. In Paragraph 16 of the said decision the Court observed thus:
"16. We may now proceed to consider the submission that the Court of
Small Causes alone has exclusive jurisdiction to resolve the dispute between
the parties. Section 28(1) of the Bombay Rent Act, positively, confers
jurisdiction on the Court of Small Causes to entertain and try any suit or
proceeding between a landlord and tenant relating to the recovery of rent or
possession of any premises or between a licensor and a licensee relating to
the recovery of licence fee or charge and to decide any application made
under the Act and to deal with any claim or question arising out of the Act or
any of its provisions, and negatively it excludes the jurisdiction of any other
court from entertaining any such suit, proceeding or application or dealing
with such claim or question."
It will be useful to refer to the dictum in Paragraph 17, wherein, the
Court observed thus:-
"17. The Bombay Rent Act is a welfare legislation aimed at the definite
social objective of protection of tenants against harassment by landlords in
various ways. It is a matter of public policy. The scheme of the Act shows
that the conferment of exclusive jurisdiction on certain courts is pursuant
to the social objective at which the legislation aims public policy requires
that contracts to the contrary which nullify the rights conferred on tenants
by the Act cannot be permitted. Therefore, public policy requires that
parties cannot also be permitted to contract out of the legislative mandate
which requires certain kind of disputes to be settled by Special Courts
constituted by the Act. It follows that arbitration agreements between
parties whose rights are regulated by the Bombay Rents Act cannot be
recognised by a court of law."
In Paragraph 18, the Court observed thus:-
"18. Thus exclusive jurisdiction is given to the Court of Small Causes and
jurisdiction is denied to other courts (1) to entertain and try any suit or
proceeding between a landlord and a tenant relating to recovery of rent or
possession of any premises, (2) to try any suit or proceeding between a
licensor and a licensee relating to the recovery of licence fee or charge, (3)
to decide any application made under the Act and, (4) to deal with any claim
or question arising out of the Act or any of its provisions. Exclusive
jurisdiction to entertain and try certain suits, to decide certain applications
or to deal with certain claims or questions does not necessarily mean
exclusive jurisdiction to decide jurisdictional facts also. Jurisdictional facts
have necessarily to be decided by the court where the jurisdictional question
falls to be decided, and the question may fall for decision before the court of
exclusive jurisdiction or before the court of ordinary jurisdiction. A person
claiming to be a landlord may sue his alleged tenant for possession of a
building on grounds specified in the Rent Act. Such a suit will have to be
brought in the Court of Small Causes, which has been made the Court of
exclusive jurisdiction. In such a suit, the defendant may deny the tenancy
but the denial by the defendant will not oust the jurisdiction of Court of
Small Causes. If ultimately the court finds that the defendant is not a tenant
the suit will fail for that reason. If the suit is instituted in the ordinary civil
court instead of the Court of Small Causes the plaint will have to be
returned irrespective of the plea of the defendant. Conversely a person
claiming to be the owner of a building and alleging the defendant to be a
trespasser will have to institute the suit, on the plaint allegations, in the
ordinary civil court only. In such a suit the defendant may raise the plea that
he is a tenant and not a trespasser. The defendant's plea will not straight
away oust the jurisdiction of the ordinary civil court but if ultimately the
plea of the defendant is accepted the suit must fail on that ground. So the
question whether there is relationship of landlord and tenant between the
parties or such other jurisdictional questions may have to be determined by
the court where it falls for determination -- be it the Court of Small Causes
or the ordinary civil court. If the jurisdictional question is decided in favour
of the court of exclusive jurisdiction the suit or proceeding before the
ordinary civil court must cease to the extent its jurisdiction is ousted."
The Court after considering its earlier decisions, in Paragraph 24
observed thus:-
"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 Jain6,
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."
The Court then examined the argument of the Respondent that
Section 40 of the Arbitration Act, 1940 prevented the Small Causes Court
from exercising any jurisdiction over arbitration proceedings and further
that the question in issue in the Court of Small Causes and before the
Arbitrator were not identical. In Paragraph 27 of the same decision, the
Court rejected the said argument with the following observations:-
"27. The suit was properly instituted in the Court of Small Causes and if the
respondent wanted to rely upon the arbitration clause an application under
Section 34 of the Arbitration Act should have been made to the Court of
Small Causes before the written statement was filed. That was not done. It
was said that the Court of Small Causes would have no jurisdiction to stay
the proceeding under Section 34 of the Act as it was precluded from
exercising any jurisdiction over arbitration proceedings under Section 40.
There is
no substance in this argument. Section 40 of the Arbitration
Act declares that a Small Cause Court shall have no jurisdiction over any
arbitration proceeding or over any application arising thereout. We do not
see how it can be said that the Court of Small Causes is exercising
jurisdiction over any arbitration proceedings merely because the agreement
between the parties contains an arbitration clause and the court is asked to
stay a proceeding before itself. The jurisdiction under Section 34 may be
exercised by the judicial authority before which the proceedings are pending
and not by the court which has jurisdiction over the arbitration proceedings.
This is clear from the language of Section 34 of the Arbitration Act. An
application under Section 34 is not an arbitration proceeding; nor is it an
application arising thereout. The bar under Section 40 does not come in the
way of the Court of Small Causes exercising jurisdiction under Section 34 of
the Arbitration Act to stay a proceeding pending before it. If authority is
necessary for this proposition it may be found in Chadha Motor Transport
Co. (P) Ltd., Delhi v. R.N. Chopra9 and Basanti Cotton Mills v. Dhingra
Brothers010. The submission that there is no identity of dispute is also
without substance. As already pointed out by us the dispute is between the
licensor-landlord and licensee tenant about the right to possess two Studios
and other premises. The identity of the dispute is clear from a perusal of the
pleadings in the suit in the Court of Small Causes and the petition for
reference to arbitration filed in the High Court."
23. The principle stated in this decision has been applied in Mansukhlal
Dhanraj Jain's case (supra). Besides the above case, the exposition in
other decisions referred to in the Judgment have been examined and the
Apex Court proceeded to conclude in Mansukhlal Jain's case (supra), in
Paragraph 24 on the following lines:-
"24. ........................... They are suits clearly based on the allegation that the
plaintiffs are licensees on monetary considerations and they apprehend to be
dispossessed, not in accordance with law, at the hands of the defendant-
licensors. Such suits as we have discussed earlier, clearly attract the
applicability of Section 41 of the Small Cause Courts Act as both the
conditions for its applicability, namely, that they are suits between licensees
and licensors and they relate to recovery of possession of immovable
properties situated in Greater Bombay are complied with. Consequently the
conclusion is inevitable that the aforesaid suits as filed by the appellants
were not cognizable by the City Civil Court, Bombay and they could be
entertained only by the Small Cause Court, Bombay, and fall within the
exclusive jurisdiction of the latter Court." (emphasis supplied)
24. The exposition in this Judgment would bind this Court to the extent
of interpretation of Section 41(1) of the Act as it obtained at the relevant
time prior to 1984. We have already noticed that after the amendment of
1984 the substance of the non-obstante clause in Section 41 has remained
the same. What has happened by the amendment of 1984 is only to
remove the inconsistency in Section 41 of the Act, as the State legislature
thought that it was unnecessary to retain the expression "or any other law
for the time being in force" in Section 41(1) of the Act of 1882. We,
however, find that the Division Bench of our Court in the case of Vijaya
Bank (supra) opined that the effect of the language used in Section 41 is
entirely different from the language used in Section 28 of the Rent Act.
The said Division Bench has further opined that insofar as the dispute
governed by the Act of 1882, it is essentially a commercial transaction
entered by the parties with open eyes and made their bargains. In such a
case, there is no situation similar to one of an oppressed tenant being
protected against the avarice of the rapacious landlord. With due respect to
the view expressed by the Division Bench in the above case, in the first
place, on the finding recorded in Paragraph 37 of the same Judgment it was
wholly unnecessary for the said Division Bench to examine the ground
raised by the Appellant. In Paragraph 37, the Court observed thus:-
"37. In any event, the real dispute between the parties, which the
arbitrator had to arbitrate upon, was not whether the respondent was entitled
to licence compensation. This is obvious from the fact that the stand of both
the parties before the arbitrator was that the licence had come to an end on
31-3-1998. Both the parties, however, differed on the consequence of what
should transpire after 31-3-1998 on account of the conduct of the parties. In
our judgment, therefore, this was not a dispute which would fall within the
province of section 41 of the Presidency Small Causes Act, 1882. This was
very much a dispute within the province of the Civil Court which the parties
were entitled to submit to Arbitration, which they did." (emphasis supplied)
25. On this finding, no further enquiry was necessary. In any case, we
are not in agreement with, if we may say so, obiter of the Division Bench in
paragraph 36 of the said decision. In Paragraph 38, the Division Bench
has went on to observe that the deletion of the expression or any other law
for the time being in force in sub-Section (1) by Maharashtra Act 24 of
1984 has brought about a sea change and makes a world of difference. We
are afraid, this is a very wide statement made without analysing the
legislative intent behind the said amendment. Suffice it to observe that this
Court would be bound by the opinion of the Apex Court in the case of
Mansukhlal Dhanraj Jain's case (supra) which in turn relies on the
exposition of its earlier decision in Natraj Studio's case (supra).
Applying the legal position expounded in these decisions, it would appear
that the purpose of amendment of Section 41 of the Act of 1882 was to
create a special Court and invest exclusive jurisdiction in the said Court in
relation to matters specified in sub-Section (1) thereof. The consequence
of such provision was to impliedly bar the jurisdiction of other Courts to
entertain and try suits involving specified disputes between licensor and
licensee or a landlord and tenant but also by necessary implication exclude
such matters to be submitted to arbitration.
26. We have no hesitation in taking the view that Section 41(1) is a non-
obstante clause, by virtue of which, exclusive jurisdiction is vested in the
Court of Small Causes to entertain and try all suits and proceedings referred
to therein. Sub-section (2) thereof provides for exception to the said Rule.
The Act of 1996 is not covered within the excepted enactments referred to
in Section 41(2) of the Act of 1882. The question is: whether Section 41 of
the Act of 1882 is a law for the time being in force by virtue of which
specified disputes may not be submitted to arbitration. Looking at the
provision in place, it is obvious that it does not expressly provide for
exclusion of arbitration. But since it is a non-obstante provision; and as the
disputes covered by Section 41(1) of the Act are required to be entertained
and tried exclusively by the Court of Small Causes and none else, by
necessary implication, it is a provision by virtue of which disputes referred
to therein cannot be submitted to arbitration. The Apex Court in the case of
Natraj Studio Pvt.Ltd. (supra) has directly answered this question.
Indeed, that decision is rendered in connection with the provisions of
Section 28 of the Bombay Rent Act of 1947. Nevertheless, in view of the
exposition of the Apex Court in Mansukhlal Dhanraj Jain's case (supra),
the provisions of Section 28 are pari materia to Section 41(1) of the Act. So
understood, the exposition in the case of Natraj Studio Pvt.Ltd. (supra)
would apply proprio vigore to the interpretation of Section 41(1) of the Act.
27. To get over this, the argument canvassed before us is that Section 41
is differently worded and in any case, the said enactment has no causal
connection with public policy. In that, the relationship of licensor and
licensee is not a situation of an oppressed tenant being protected against the
avarice of the rapacious landlord. This submission is on the lines of the
observations made by the Division Bench of our High Court in Vijaya
Bank's case (supra) in Para 36 thereof. We have already dealt with this
aspect and observed that the dictum found in the said decision of the
Division Bench - that the language used in Section 41 is entirely different
from the language used in Section 28 of the Rent Act, is inconsistent with
the exposition of the Apex Court in the case of Mansukhlal Dhanraj
Jain's case (supra), which is directly on the point. This decision of the
Apex Court was not brought to the notice of the Division Bench, as is
evident from the reported Judgment. Insofar as the consideration of public
policy, even if we may approve the observation of the Division Bench, that
insofar as tenants being protected by the Rent Act would stand on a
different footing than the licensee who will have no such protection; but
keeping in mind the exposition of the Apex Court in Mansukhlal Dhanraj
Jain's case (supra) about the intent of this provision to invest exclusive
jurisdiction in the Court of Small Causes by virtue of Section 41 of the Act
of 1882, such argument cannot be countenanced. Indeed, the Apex Court,
while considering Mansukhlal Dhanraj Jain's case (supra) has not
specifically dealt with the aspect of public policy. Nevertheless, since the
said decision follows the view taken in the earlier decision in Natraj
Studio Pvt.Ltd. (supra) in toto and then proceeds to hold that the Court of
Small Causes has exclusive jurisdiction to entertain and try suits
contemplated by Section 41(1), it is not open to this Court to assume that in
Mansukhlal Dhanraj Jain's case (supra), the Apex Court was oblivious
of the aspect of public policy behind such special law. Significantly, Section
41(1) not only deals with matters between licensor and licensee, but also
between landlord and tenant. Indeed, it does not take within its fold, matters
between landlord and tenant whose disputes would be governed by the
provisions of Bombay Rent Act, 1947 or Maharashtra Rent Control Act,
1999 as the case may be, in respect of immovable property to which the
said enactments apply. It is possible to take the view that the expression
"landlord and tenant" appearing in Section 41(1) of the Act, therefore,
would be one ascribable to such relationship on account of provisions of
Transfer of Property Act or any other law on that subject, which is,
however, not excepted by virtue of sub-section (2) of Section 41 of the Act.
28. A priori, Section 41(1) of the Act of 1882 is a law for the time being
in force by virtue of which the category of disputes referred to therein may
not be submitted to arbitration, by necessary implication. The Single Judge
of this Court following the exposition in the cases of Mansukhlal Dhanraj
Jain(supra) and Natraj Studio Pvt.Ltd.(supra), in the case of Siemens
Ltd. (supra) decided on 22nd August 2005, in Arbitration Petition No.99 of
2009, held that the Small Causes Court has exclusive jurisdiction to try and
decide cases covered by Section 41(1) of the Act of 1882. Further, such
cases cannot be referred to arbitration. That decision has been quoted with
approval by the Division Bench of our High Court in Carona Limited
(supra) and which in turn has been followed by the learned Single Judge in
the case of ING Vyasa Bank Ltd. (supra). Indeed, the argument now
raised is that in none of these decisions the efficacy of Section 5 of the Act
of 1996 has been examined at all. In our view, for the reasons mentioned
hitherto, the exclusive jurisdiction of the Small Causes Court under Section
41 of the Act of 1882 is in no way affected inspite of Section 5 of the Act
of 1996. For, the provisions of Section 41(1) are saved by virtue of Section
2(3) of the Act of 1996, inspite of the non-obstante clause in the form of
Section 5 of the Act of 1996.
29. According to the Counsel for the Petitioners, it would be a case of
two non-obstante clauses existing at the same time, in which case, the latter
non-obstante clause in the form of Section 5 of 1996 ought to prevail. To
buttress this submission, reliance is placed on the decision of the Apex
Court in Maruti Udyog Ltd. (supra). That was a case of two Central
enactments having non-obstante clauses. That is not the case on hand. In the
present case, the two legislations operate in different fields. Insofar as Act
of 1882 is concerned, it is a special law investing exclusive jurisdiction in
the Court of Small Causes to entertain and try specified disputes to the
exclusion of all other forums. It would have been a different matter if the
Act of 1996 did not contain Section 2(3) of the Act. Because of the said
provision, Section 41 of the Act of 1982 is saved, which by necessary
implication, provides that the specified disputes referred to therein, may not
be submitted to arbitration. It is, therefore, covered by Section 2(3) of the
Act of 1996 by virtue of which, the mandate of Section 5 of the Act of 1996
does not come into play qua Section 41 of the Act of 1982. The situation
arising out of existence of two non-obstante clauses in the Central
Legislation is, therefore, of no avail. Even in the case of Maharashtra
Tubes Ltd. vs. State Industrial & Investment Corporation of
Maharashtra Ltd. reported in (1993) 2 SCC 144 as well as A.P.State
Finance & Corporation vs. Official Liquidator reported in AIR 2000
SC 2642, the position is similar. In that, two non-obstante provisions of the
Central Statute were in existence at the same time resulting in collusion
interse. In the case of G.Shridharmurthy (supra), the controversy was
about conflict between State enactment and Central enactment. Both of
which contained non-obstante clause. The Apex Court invoking the
mandate of Article 254(2) of the Constitution, went on to hold that to the
extent of inconsistency, the State Act would become void. In the case of
Indore Municipality (supra), both the enactments were State Laws
which contained non-obstante clause. In that situation, the controversy
was answered on the interpretation of the two provisions.
30. Suffice it to observe that the principle canvassed by the Petitioners
about collusion of two non-obstante clauses proceeds on an erroneous
assumption. That argument would have been available only if Section 2(3)
of the Act of 1996 was not in place. The effect of that provision is to save
the laws which provide that certain disputes may not be submitted to
arbitration, inspite of non-obstante clause contained in Section 5.
31. To get over this position, it was argued on behalf of the Petitioners
that the disputes specified by Section 41 of the Act of 1882 are essentially
between parties who in turn would be inviting verdict of the Court which
would be in personem and not in rem. Relying on the exposition of the
decision in the cases of S.N.Palanitkar (supra), Chiranjilal Shrilal
Goenka (supra), Haryana Industries Ltd. vs. Sterlite Industries (India)
Ltd. reported in (1999) 5 SCC 688 and V.V.Pushpakaran (supra), it
was contended that if the effect of the decision was in rem, it would be a
different matter and only such cases cannot be referred to arbitration. In the
case of S.N.Palanitkar (supra), the Court was considering relief of
quashing of proceedings. As a passing remark, the Court while considering
the contention has observed that merely because there is an arbitration
clause in the Agreement, they cannot be extricated from the criminal action.
In the case of Chiranjilal Shrilal Goenka (supra), the parties by consent
appointed sole Arbitrator to settle the dispute as to who would be the legal
heirs of the estate of Late Chiranjilal Shrilal Goenka. The Court observed
that the Succession Act is a self-contained code insofar as the question of
making an application for probate, grant or refusal of probate or an appeal
carried against the decision of the probate Court. Further, the grant of
probate by a Court of competent jurisdiction is in the nature of proceedings
in rem and conclusive and binds not only the parties before the Court but
also all other persons in all proceedings arising out of will or claiming
under award or the will. The Apex Court concluded that the Probate Court
alone has jurisdiction and is competent to grant probate in the manner
prescribed under the Succession Act. That Court alone is competent to deal
with probate proceedings and to grant or refuse probate of the annexed Will
and the probate so granted is conclusive unless it is revoked. It is a
Judgment in rem. The Court, therefore, proceeded to hold that consent
given by the parties to appoint sole Arbitrator cannot confer jurisdiction nor
shall be estoppel against the Statute. The Court also noted that the other
legatees of the Will were not parties to the consent for appointing the sole
arbitrator, for which reason also, the Arbitrator could not have proceeded
for want of jurisdiction. In the case of Haryana Industries Ltd. (supra),
the Court opined that the Arbitrator, notwithstanding any agreement
between the parties, would have no jurisdiction of winding up of the
Company since that power is conferred on a Court by the Companies Act.
In the case of V.V.Pushpakaran (supra), it was a matrimonial dispute in
which an Arbitration Agreement was reached. The Court opined that the
Arbitrator would not get any authority to adjudicate such dispute. For, the
decision in matrimonial jurisdiction is of such nature that it could be
rendered only by competent Court having jurisdiction as that is a decision
in rem and not in personem. That is a matter which cannot be referred to
arbitration and decided by the Arbitrators. Even though we may agree with
the argument of the Petitioners that the disputes specified in Section 41 are
essentially between the parties to the cause and the decision on such dispute
would only be in personem and not in rem. That, however, does not mean
that the Arbitrator can proceed with the matters specified in Section 41 of
the Act of 1882 since that Act is a law which, by necessary implication,
excludes the reference of the specified disputes to the Arbitrator, as that law
invests exclusive jurisdiction in the Court of Small Causes to entertain and
try such disputes.
32. According to the Petitioners, Section 41 is essentially to provide
jurisdiction to the Courts of Small Causes in respect of matters specified
therein, irrespective of the value of the subject matter of the immovable
property. The Legislative intent was that suits which were filed in different
Courts depending upon the value of the subject matter should now be filed
in the Court of Small Causes. In other words, this provision was inserted
only to consolidate the jurisdiction of the Courts of Small Causes in relation
to the disputes between the landlord and tenant or licensor and licensee in
relation to recovery of possession or recovery of licence fee or rent. To
buttress this submission, reliance was placed on the decision of the Division
Bench of our High Court in the case of P.A.Narayanan (supra). In our
opinion, after the decision of the Apex Court in Mansukhlal Dhanraj
Jain's case (supra) which directly interpretes Section 41(1) of the Act of
1882, it is not necessary to dilate any further. The Apex Court has
authoritatively held that Section 41 is a special law to create special Courts
for adjudication of disputes specified therein between licensors and licensee
or landlord and tenant. It is essentially a non-obstante clause investing
exclusive jurisdiction in the Courts of Small Causes. Accordingly, the
dictum of this Court in P.A.Narayanan (supra) pressed into service is of
no avail.
33. It was then contended that the purport of Section 41 of the Act of
1982 collides with the non-obstante clause in Section 5 of the Act of 1996.
Further, the fact that before bringing into force this provision, assent of
President has been received, would be of no avail in view of the subsequent
Central Legislation in the form of Section 5 of the Act of 1996. In view of
the subsequent Central Legislation, Section 41 of the Act of 1882 will have
to give way and would be void because of its repugnancy. Reliance is
placed on the decisions in Kaiser-I-Hind (P) Ltd. & Anr. vs. National
Textile Corporation (Maharashtra North) Ltd. - (2002) 8 SCC 182 as
well as M/s.Shyama Charan Agarwala & Sons vs. Union of India -
(2002) 6 SCC 201 and M/s.Consolidated Engineering Enterprises vs.
The Principal Secretary (Irrigation Department) & Ors. - (2008) 7 SCC
169. These decisions would have been handy if we were to hold that the
non-obstante clause in Act of 1996 is absolute and it purports to override
provisions of any other law for the time being in force. In the earlier part,
we have already noticed that Section 5 cannot be read in isolation. The
purport of Section 5 of the Act of 1996 will have to be understood in the
context of saving provision contained in Section 2(3) of the Act. Since
Section 41 of the Act as held by us, is a law for the time being in force by
virtue of which disputes specified therein by necessary implication cannot
be submitted to arbitration, the same is saved inspite of the non-obstante
clause in Section 5 of the Act of 1996. In the case of Kaiser-I-Hind
(supra), the Apex Court held that while taking assent, the repugnancy
between the Maharashtra Rent Control Act with that of the provisions of
Central enactment-Public Premises Act was not placed for consideration of
President of India, for which reason, it cannot be assumed that the President
gave assent to the State Legislation so as to make the provisions of Public
Premises Act inapplicable to the premises governed by the provisions of the
Rent Act. The Court found that the assent was given by the President only
keeping in mind the repugnancy between the Bombay Rent Act and the
Transfer of Property Act as well as the Presidency Small Cause Court Act
and no other law. In the present case, the Central enactment in the form of
Act of 1996 is a subsequent legislation. Naturally, the question of reference
thereto in the Act of 1882 would not find place while giving assent by the
President to the enactment in the form of Section 41 of the Act of 1882. In
the case of Thirumuruga Kirupananda Variyar Thavathiru Sundara
Swamigal Medical Educational & Charitable Trust vs. State of Tamil
Nadu - (1996) 3 SCC 15, while considering the effect of Article 254 of the
Constitution, in Paragraph 32, the Court expounded as follows :
"32. The fact that the State Act has received the assent of the President
would be of no avail because the repugnancy is with the Central Act which
was enacted by Parliament after the enactment of the State Act. In view of
the proviso to sub-article (2) of Article 254 Parliament could add to, amend,
vary or repeal the State Act. In exercise of this power Parliament could
repeal the State Act either expressly or by implication. (See: Zaverbhai
Amaidas v. State of Bombay5, SCR at p. 809; Deep Chand v. State of
U.P. , SCR at p. 51.) Although the Central Act does not expressly
amend or repeal the State Act but the effect of the non obstante clause in
sub-section (1) of Section 10-A which gives overriding effect to the
provisions of Section 10-A over anything contained in the Indian Medical
Council Act, 1956 or any other law for the time being in force, is to render
inapplicable, and thereby repeal impliedly, the proviso inserted in sub-
section (5) of Section 5 of the Medical University Act in the matter of
establishment of a new medical college in the State of Tamil Nadu and its
affiliation by the Medical University. In other words, as a result of insertion
of Section 10-A in the Indian Medical Council Act, 1956 by the Central Act,
with effect from 27-8-1992, the proviso to Section 5(5) of the Medical
University Act has ceased to apply in the matter of establishment of a
medical college in the State of Tamil Nadu and its affiliation to the Medical
University and for the purpose of establishing a medical college permission
of the Central Government has to be obtained in accordance with the
provisions of Section 10-A. If such a permission is granted by the Central
Government a further permission of the State Government under the
proviso to Section 5(5) of the Medical University Act would not be required
for the purpose of obtaining affiliation of such a college to the Medical
University." (emphasis supplied)
34. As aforesaid, Section 41 of the Act of 1882 is a State amendment,
which has come into force after receiving assent of the President. That is
the law for the time being in force. By virtue of which, the disputes
specified therein by necessary implication cannot be submitted to
arbitration as the Courts of Small Causes have exclusive jurisdiction to try
and decide the same. Such law has been saved by Section 2(3) of the Act of
1996. Since it has been specifically saved by the Act of 1996, the question
of it being repugnant to Section 5 of the Act of 1996 or the effect of Section
5 of the Act of 1996 is to add to, amend, vary or repeal the State
amendment, does not arise.
35. It was argued by the Counsel for the Respondents that Section 41 of
the Act of 1882 operates in different field. According to the learned
Counsel, the said law is enacted by virtue of power to legislate ascribable to
Entry No.13 of the Concurrent list (List III of the Constitution of India).
Whereas the pith and substance of the Act of 1996 is ascribable to Entry
No.7 of the Concurrent list (List No.III). This submission does not
commend to us. Assuming that the Arbitration Act of 1996 is ascribable to
Entry No.7, that does not mean that the power to legislate the same does not
flow from any other Entry. Entry No.13 in List III on the other hand not
only deals with civil procedure, including all matters including in the Code
of Civil Procedure at the commencement of this Constitution, but also to
limitation and arbitration. The Arbitration Act would therefore be referable
also to Entry No.13 of list III. In the case of G.C. Kanungo vs. State of
Orissa - (1995) 5 SCC 96, the Apex Court has noted that the Arbitration
Act of 1996 falls under Entry No.13 of List III. Besides the said Entry, the
provision such as Section 5 of the Act of 1996 or Section 41 of the Act of
1882, can be ascribed also to Entry No.46 of List III which deals with
"Jurisdiction and powers of all Courts, except the Supreme Court, with
respect to any of the matters in list III. Since the subject arbitration falls
under Concurrent list, both the State Legislature as well as the Parliament
would be competent to make law on that subject and to provide matters
relating to jurisdiction and powers of all Courts in connection thereto. In
our opinion, the State Legislation has enacted Section 41 of the Act of 1882,
which is a special law creating special Courts to try and decide disputes
specified therein and which by necessary implication excludes the reference
of such disputes to arbitration. The same is saved by Section 2(3) of the Act
of 1996 and is not impacted in any manner inspite of the non-obstante
clause in Section 5 of the Act of 1996.
36. Counsel for the Respondents placed reliance on the exposition of the
Apex Court in the case of Vijay Kumar Sharma (supra). In Paragraph
15 of the said decision the Court observed as follows:-
"15. A lot of light relevant to the aspect under consideration is available
from another decision of a Constitution Bench of this Court: (M.
Karunanidhi v. Union of India9). At p. 263 of the reports, it has been said:
(SCC pp. 436-37, para 8)
"It would be seen that so far as clause (1) of Article 254 is concerned it
clearly lays down that where there is a direct collision between a provision
of a law made by the State and that made by Parliament with respect
of one of the matters enumerated in the Concurrent List, then, subject to the
provisions of clause (2), the State law would be void to the extent of the
repugnancy. This naturally means that where both the State and Parliament
occupy the field contemplated by the Concurrent List then the Act passed by
Parliament being prior in point of time will prevail and consequently the
State Act will have to yield to the Central Act. In fact, the scheme of the
Constitution is a scientific and equitable distribution of legislative powers
between Parliament and the State legislatures. First, regarding the matters
contained in List I, i.e., the Union List to the Seventh Schedule, Parliament
alone is empowered to legislate and the State legislatures have no authority
to make any law in respect of the entries contained in List I. Secondly, so
far as the Concurrent List is concerned both Parliament and the State
legislatures are entitled to legislate in regard to any of the entries appearing
therein, but that is subject to the condition laid down by Article 254(1)
discussed above. Thirdly, so far as the matters in List II, i.e., the State List
are concerned, the State legislatures alone are competent to legislate on
them and only under certain conditions Parliament can do so. It is,
therefore, obvious that in such matters repugnancy may result from the
following circumstances:
1. Where the provisions of a Central Act and a State Act in the
Concurrent List are fully inconsistent (emphasis added) and are absolutely
irreconcilable, the Central Act will prevail and the State Act will become
void in view of the repugnancy.
2. Where however a law passed by the State comes into
collision with a law passed by Parliament on an entry in the Concurrent
List, the State Act shall prevail to the extent of the repugnancy and the
provisions of the Central Act would become void provided the State Act has
been passed in accordance with clause (2) of Article 254.
3. Where a law passed by the State legislature while being
substantially within the scope of the entries in the State List entrenches
upon any of the entries in the Central List the constitutionality of the law
may be upheld by invoking the doctrine of pith and substance if on an
analysis of the provisions of the Act it appears that by and large the law falls
within the four corners of the State List and entrenchment, if any, is purely
incidental or inconsequential.
Where, however, a law made by the State legislature on a
subject covered by the Concurrent List is inconsistent with and repugnant to
a previous law made by Parliament, then such a law can be protected by
obtaining the assent of the President under Article 254(2) of the
Constitution. The result of obtaining the assent of the President would be
that so far as the State Act is concerned, it will prevail in the State and
overrule the provisions of the Central Act in their applicability to the State
only. Such a state of affairs will exist only until Parliament may at any
time make a law adding to, or amending, varying or repealing the law made
by the State legislature under proviso to Article 254."
37. There is no difficulty in broadly accepting the statement of law in the
case of Vijay Kumar Sharma (supra). However, as is observed earlier,
the non-obstante clause in Section 5 of the Act of 1996, in that sense, is not
in absolute terms. Section 2(3) of the Act of 1996 carve out those laws,
which are for the time being in force, by virtue of which specified disputes
may not be submitted to arbitration. Such laws have been saved on their
own by virtue of this provision. Having been saved by Section 2(3), the
question of such law (Section 41 of the Act of 1882) being repugnant to
Section 5 of the Act of 1996 does not arise. To be repugnant to Section 5
of the Act of 1996, the law should be such that there is no restriction of
submitting of specified disputes to arbitration. But once we find that
Section 41 of the Act of 1882 is a law by virtue of which dispute specified
therein cannot be submitted to arbitration, the same would be saved inspite
of Section 5 of the Act of 1996. To such a situation, the question of
repugnancy and necessity of assent of the President of India because of the
subsequent Central Legislation would not arise.
38. In the case of Sanwarmal Kejriwal (supra), the Court has
expounded that if a law is a special law, the general provision would not
affect such a law. It may be useful to refer to Paragraphs 21 and 22 of the
said decision which have been pressed into service. The same read thus:-
"21. But what happens when competing provisions vesting jurisdiction
under different laws open with a non-obstante clause and invest jurisdiction
in different courts? The Societies Act under Section 91(1) confers
jurisdiction on the Co-operative Court while Section 28 of the Rent Act
confers jurisdiction on the Court of Small Causes, Bombay. This Court
observed in Deccan Merchants Co-operative Bank, Limited v. Dalichand
Jugraj Jain10 that 'the two Acts can be harmonised best by holding that in
matters covered by the Rent Act, its provisions, rather than the provisions of
the Act, should apply'. This view was approved in Bhatnagar case1 also. In
Co-operative Central Bank Ltd. v. Additional Industrial Tribunal, Andhra
Pradesh11 also this Court was required to harmonise the competing
provisions in Section 61 of the A.P. Co-operative Societies Act, which is
substantially the same as Section 91(1) of the Societies Act, and Section
10(1)(d) of the Industrial Disputes Act. This Court applying the test laid
down in Deccan Merchants Co-operative Bank case10 held that a dispute
relating to the service conditions of an employee of the society would
properly be governed by the Industrial Disputes Act."
"22. It was, however, submitted by the learned counsel for the society that
the earlier enactment i.e. the Rent Act must yield to the later Act, i.e. the
Societies Act, if the competing provisions of the two cannot be reconciled
--lex posterior derogat priori. But the Rent Act is a special law extending
protection to tenants, just as the Industrial Disputes Act which makes
provision for the benefit of the workmen. Ordinarily, therefore, a general
provision, a dispute touching the business of the society, would have to
give way to the special provision in the Rent Act on the maxim generalia
specialibus non derogant. That is why this Court harmonised the said
provisions by holding that in matter covered by Rent Act, its provisions,
rather than the provisions of the Societies Act, should apply. In the present
case the appellant seeks protection of the Rent Act since he is a deemed
tenant under Section 15-A read with Section 5(4-A) and 5(11)(bb) of the
Rent Act. The status of a tenant is conferred on him by law as the legislature
desired to extend the protection of the Rent Act to such licensees. Rights
which do not flow from contracts but are conferred by law such as the Rent
Act, must, we think, be determined by the machinery, if any, provided by
the law conferring the right."
39. According to the Petitioners, the decisions pressed into service by the
other side would be of no avail as the same is in relation to the scheme of
the provisions in the repealed Arbitration Act of 1940. Section 40 thereof,
contends learned Counsel, expressly barred the jurisdiction of the Courts of
Small Causes over any arbitration proceedings or any application arising
thereout save on application made under Section 21. Section 21 of the said
Act provided that where in any suit the parties interested agree that any
matter in difference between them in the suit shall be referred to arbitration,
they may at any time before judgment is pronounced apply in writing to
the Court for an order of reference. What is to be noticed is that Section 40
of the Arbitration Act 1940, referred to the bar of jurisdiction over the
arbitration proceedings or over any application arising therefrom. Section
21 enabled the parties to the suit to apply for order of reference. These
provisions, however, did not bar the exclusive jurisdiction of the Small
Causes Court under Section 41 of the Act of 1882. In the case of Natraj
Studio (supra), which exposition would apply even to a case governed by
Section 41 of the Act of 1882, the same being pari materia with Section 28
of the Rent Act of 1947, inspite of the Arbitration Agreement, the Court
opined that such an agreement would be inoperative, keeping in mind the
exclusivity of jurisdiction bestowed on the Small Causes Court to decide
the disputes specified in Section 28 of the Rent Act which by necessary
implication would mean that such disputes may not be referred to
arbitration. We do not see how this situation has changed after coming into
force of amended Section 41 of the Act of 1882 or the Act of 1996. The
provisions of Section 5 of the Act of 1996 cannot be interpreted to mean
that even the exclusive jurisdiction vested in Special Courts by virtue of
Special laws such as Section 41 of the Act of 1882, will stand ousted.
40. In summation, we would hold that Section 41(1) of the Act of 1882 is
a special law which in turn has constituted special Courts for adjudication
of disputes specified therein between the licensor and licensee or a landlord
and tenant. The effect of Section 41(2) of the Act of 1882 is only the suits
or proceedings for recovery of possession of immovable property or of
licence fee thereof, to which, the provisions of specified Acts or any other
law for the time being in force apply, have been excepted from the
application of non-obstante clause contained in Section 41(1) of the Act.
The expression "or any other law for the time being in force" appearing in
Section 41(2) will have to be construed to mean that such law should
provide for resolution of disputes between licensor and licensee or a
landlord and tenant in relation to immovable property or licence fee thereof,
to which immovable property,the provisions of that Act are applicable. The
Act of 1996 is not covered within the ambit of Section 41(2) in particular
the expression "or any other law for the time being in force" contained
therein. The question whether the exclusive jurisdiction of the Small
Causes Court vested in terms of Section 41 of the Act of 1882 is ousted, if
an agreement between the licensor and licensee contains a clause for
arbitration, the same will have to be answered in the negative. For, Section
5 of the Act of 1996 in that sense is not an absolute non-obstante clause.
Section 5 of the Act of 1996 cannot affect the laws for the time being in
force by virtue of which certain disputes may not be submitted to
arbitration, as stipulated in Section 2(3) of the Act of 1996. We hold that
Section 41 of the Act of 1882 falls within the ambit of Section 2(3) of the
Act of 1996. As a result of which, even if the Licence Agreement contains
Arbitration Agreement, the exclusive jurisdiction of the Courts of Small
Causes under Section 41 of the Act of 1882 is not affected in any manner.
Whereas, Arbitration Agreement in such cases would be invalid and
inoperative on the principle that it would be against public policy to allow
the parties to contract out of the exclusive jurisdiction of the Small Causes
Courts by virtue of Section 41 of the Act of 1882.
41. Accordingly, we answer the question referred to us in the negative.
We, therefore, hold that inspite of Arbitration Agreement between the
parties and non-obstante clause in Section 5 of the Act of 1996, the
exclusive jurisdiction of the Small Causes Court to try and decide the
dispute specified in Section 41 of the Act of 1882 is not ousted.
42. Since we have answered the question referred to us, the matter be
now placed before the appropriate Bench for further hearing in accordance
with law.
CHIEF JUSTICE
ig A.M.KHANWILKAR, J.
R.P.SONDURBALDOTA, J.
