Shrey Chouksay vs Raghuwar Dayal Singhal
2022 Latest Caselaw 5925 Chatt

                                     1
                                                                        AFR
          HIGH COURT OF CHHATTISGARH, BILASPUR

                              ARBR No. 19 of 2018

  1. Shrey Chouksay Mukesh Chouksay, Aged About 26 Years R/o Near
     Jalaram Mandir Tikrapara, Bilaspur, Chhattisgarh., District : Bilaspur,
     Chhattisgarh                                            ----Applicant

                                  Versus

  1. Raghuwar Dayal Singhal Late Shiv Dayal Singhal, Aged About 68 Years R/o
     Singhal Sadan Link Raod, Bilaspur Chhattisgarh. (One Of The Panchwati
     Inn Bilaspur Chhattisgarh.),

  2. Gopal Krishan Singhal, Raghuwar Dayal Singhal, Aged About 50 Years R/o
     Singhal Sadan Link Raod, Bilaspur, Chhattisgarh. (One Of The Partners Of
     M/s Panchwati Inn Bilaspur, Chhattisgarh.)               --Respondents

For Applicant                 : Mr. Bidya Nand Mishra, Advocate.
For Respondent.               : Mr. Anurag Dayal Shrivastava, Advocate




                  Hon'ble Shri Justice P. Sam Koshy
                            Order On Board
22.09.2022

1. Present is an application under Section 11(6) of the Arbitration and

Conciliation Act 1996 filed by the applicant. The prayer made by the

applicant in the instant application is for appointment of a sole

Arbitrator for adjudication of dispute arising out of a tenancy

agreement entered into between a tenant and landlord.

2. The facts in briefs is that at Link Road Bilaspur near Tarbahar Chowk,

there is a building owned by the respondents which was earlier

named as Hotel PANCHWATI INN. The respondents entered into an

agreement with the applicant herein for letting out the said premises

on rent. The original rent agreement was entered into between the

parties on 19.08.2014. The initial period of agreement was 7 years

from 01.11.2014 till 31.10.2021. The initial agreement entered into

between parties dated 19.08.2014 is marked as (Annexure A-1) with

the application. As per the said agreement, the premises was handed

over to the applicant by the respondents and upon obtaining the

possession of the said premises, the applicant started operating the

said premises in a different name and it was thereafter being operated

as "RASOI INN".

3. In terms of the said agreement dated 19.08.2014, it was agreed by

the applicant to pay a rent of Rs. 4 lac a month with increase of 15%

every 3 years, in addition a security amount of Rs. 28 lacs by way of

cheque to be deposited with the land-lord.

4. In the said agreement, there was a clause inserted as clause 14

dealing with arbitration. For ready reference the said Clause-14 is

reproduced here-in-under.

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5. After the applicant had taken possession of the said premises, there

appears to have been some dispute that arose between the applicant

and the respondents in respect of the rent agreement. In terms of the

Cause-14 of the agreement dated 19.08.2014, the dispute as agreed

went before the sole Arbitrator Shri Upendra Bharat, Advocate at

Bilaspur, The said sole Arbitrator conducted the arbitration

proceedings between the parties and passed an award on 27.10.2014

whereby in addition to extending of the rental agreement between the

two parties from 7 years which was initially agreed, to 12 years i.e.

up-till 31.12.2026 and had also awarded the periodical rent that would

be payable by the applicant to the respondent-landlord. Based upon

the said arbitration award dated 27.10.2014, an amended rent

agreement was executed between the parties on 27.10.2014 itself

extending the rental agreement and the periodical rent payable by the

applicant to the respondent-landlord. Subsequently, there appears to

have been again certain dispute that arose between the parties in

respect of, the premises which was let by the respondents to the

applicant. The applicant again moved an application for appointment

of an Arbitrator for resolving of the dispute between the parties. The

said dispute now seems to be in respect of non-granting of the entire

premises which was initially agreed upon by the respondents to the

applicant and also in-respect-of the other fringe benefits and for

providing of other infrastructural facilities like fire fighting facility etc.

This request by the applicant was not exceeded to by the

respondents which led to filing of the instant application under Section

11(6) of the Act of 1996 for appointment of a sole Arbitrator.

6. The counsel for the applicant submits that admittedly the applicant is

the tenant of the respondents in terms of the rent agreement entered

into between the parties. However certain facilities were demanded

by the applicant like having clear access to the area where the

transformers are installed and also in-respect-of parking area of the

said Hotel and for making arrangement like necessary fire safety

equipments and other mandatory requirements. According to the

counsel for the applicant, all these demands that the applicant had

raised from the respondents, were strictly flowing from the rental

agreement entered into between the parties. Therefore, for resolving

of the same, an Arbitrator was sought to be appointed which has been

refused, and therefore the present request has been made to the

High Court to appoint an Arbitrator to Arbitrate between the parties.

7. The contentions which the counsel for applicant at this juncture raises

is that firstly there is a clear categorical arbitration clause available in

the rent agreement between the parties i.e. clause 14 which stands

reproduced in the preceding paragraph. Secondly, in terms of the said

arbitration clause-14, an earlier dispute between the parties was in-

fact made to the sole Arbitrator and whose name is reflected in the

said agreement and the said Arbitrator thereafter has also passed an

award on 27.10.2014, which was acceptable to both the parties.

8. According to the counsel for the applicant, since both the parties on

an earlier occasion from the same rental agreement, had availed the

arbitration clause and had resolved the dispute, any subsequent

dispute also need to be decided in the same manner.

9. Meanwhile, another development that took place is that the sole

Arbitrator agreed upon between the parties, subsequently had

expressed his reluctance to act as an Arbitrator, as he has meanwhile

said to have provided certain professional services to the respondents,

and thereby expressing his dissent to act as an Arbitrator any further.

The applicant meanwhile had also suggested three names as per

notice (Annexure A/5) dated 19.04.2018.

10. Learned counsel for the applicant in support of his contentions has

relied upon, the judgment of the recent full Bench of the Bombay High

Court in the case of Gautam Landscapes Private vs Shailesh S

Shah in Arbitration Petition No. 466 of 2017 along with other connected

applications which stood decided on 04.04.2019. The order passed by

the Division Bench of this High Court in the case of CLOUD RETAIL

SOLUTIONS PVT LIMITED Vs. THRIVING KITCHEN PRIVATE LIMITED, in

Arbitration Appeal No. 73 of 2021 decided on 17.03.2021 and the

recent decision of the Hon'ble Supreme Court in the case of Vidya

Drolia and Ors vs. Durga Trading Corporation and others reported

in 2021 (2) SCC 1.

11.Learned counsel appearing for the respondents, however, on the

other hand opposing the appeal, submits that it is a case which arises

out of a pure rental dispute between the applicant and the

respondents. The relationship between the applicant and the

respondents is that of a tenant and landlord. The relationship stands

governed between the parties from a tenancy agreement which was

initially entered into on 19.08.2014 and which was subsequently

amended on 27.10.2014.

12.According to the learned counsel for the respondents, since the

dispute flows from a tenancy agreement, the matter is one which

would not come within the purview of the Arbitration and that the

remedy in fact is available under the Rent Control Law prevailing in

the State of Chhattisgarh. It was also contended by the counsel for

respondents that the respondents had already approached the Rent

Controlling Authority in respect of the dispute between the parties

seeking eviction as also for arrears of rent.

13.In the garb of the instant application filed under the Arbitration Act, the

applicant has stopped payment of monthly rent for a considerable

period of time running into years and as such there is a clear default

of payment of rent on the part of the applicant. Therefore, for these

reasons, the Arbitration application at this juncture should not be

entertained and would not otherwise be maintainable.

14.It was the further contention of the counsel for the respondents that

the documents on the basis of which the applicant seeks to invoke the

Arbitration Clause is not sufficiently stamped or is deficit of the

requisite stamp duty. That on this ground also, it would not be proper

to entertain the Arbitration Application without further complying with

the Section 33 and 35 of the Indian Stamp Act at 1899.

15.According to the counsel for the respondents, unless the documents

are duly stamped, the documents would not become enforceable and

an application under Section 11(6) in respect of an unenforceable

document should not be entertained. Moreover, the said tenancy deal

entered into between the parties, also is not a registered document

because of which, it would also amount to violation of the provision of

Section 107 of the Transfer of Property Act, as any lease deed

entered into between the parties on year to year basis has to be a

registered document.

16.Learned counsel for the respondents relies upon the decisions

rendered by the Hon'ble Supreme Court in the case of Garware Wall

Ropers Ltd. vs Coastal Marine Constructions & Engineering Ltd.

reported in 2019 (9) SCC 209 (AIR 2019 SC 2053), in the case of N.

N. Global Mercantile Private Ltd. Vs. Indo Unique Flame Ltd., and

Ors., reported in 2021 (4) SCC 379 and in the case of Vidya Drolia

(supra).

17. Learned counsel for the respondents further submits that initially the

Rent Control Authority before whom the respondents had approached

seeking for an order of eviction and arrears of rent, was dismissed on

the ground that there is an arbitration clause in the tenancy agreement

between the parties. The said order of the Rent Control Authority was

subjected to challenge before the Rent Control Appellate Tribunal. The

Rent Control Appellate Tribunal had allowed the appeal of the

respondents setting aside the order of the Rent Control Authority

dismissing the application on 18.03.2019 and remitted the matter back

to the Rent Control Authority for deciding the case on merits afresh

holding the proceedings before the Rent Control Authority to be

maintainable between the parties.

18.The said order passed by the Rent Control Appellate Authority was

challenged by the applicant herein before the High Court in a writ

petition i.e. WP227 No. 545 of 2022. The Division Bench of this High

Court vide its order dated 02.09.2022 has dismissed the said writ

petition filed by the applicant holding that the landlord-tenant disputes

covered and governed by the Rent Control Legislation, would not be

Arbitrable and the Arbitration and Conciliation Act 1996 would not

have a domino effect on tenancy. According to the Division Bench, the

mere insertion of clause 14 in the tenancy agreement at the first

instance on 19.08.2014 by itself would not amount to waiver on the

jurisdiction part so far as the forum to adjudicate upon the dispute

arising between the parties.

19.For all these reasons, the respondents prayed for the rejection of the

application under Section 11(6) by the applicant.

20.Taking the objections of maintainability of the application under

Section 11(6) of the Act of 1996 in-respect-of the dispute not being

arbitrable as the dispute between the parties is being governed under

the Rent Control Legislation framed by the State of Chhattishgarh, this

Court tends to decide the said issue first, before going into the other

grounds on merits.

21.It would be relevant also at this juncture to take note of certain

provisions of the Chhattishgarh Rent Control Act 2011. The definition

of accommodation under the said Act is defined in Section 2(i) which

for ready reference is being reproduced herein under:-

(1)"Accommodation" means any building or part of a building, whether residential or non-residential, leased out by the landlord to the tenant and includes open space, staircase, grounds, garden, garage and all facilities and amenities forming part of the agreement between them of any land which is not being used for agricultural purposes;

22.The term "Agreement" is defined in Sub-Section 2 of Section 2.

Likewise, The "Landlord and Tenant" are defined in Sub-Section 5 and

Sub-Section 14 of Section 2. Section 4 deals with the "Tenancy

Agreement" between the parties which again for ready reference,

these definitions are being reproduced here in under:-

2(2)."Agreement" means the written agreement executed by the landlord and the tenant as required under this Act; 2(5) "Landlord" means a person who for the time being is receiving or is entitled to receive, the rent of any accommodation, whether on his own account or on account of or on behalf of or for the benefit of any other person or as a trustee, guardian or receiver for any other person or who would so receive the rent or to be entitled to receive the rent, if the accommodations were let to a tenant;

2(14) "Tenant"means- (i) the person by whom or on whose account or behalf rent is, or but for, a contract express or implied, would be payable for any accommodation to his landlord including the person who is continuing its possession after the termination of his tenancy otherwise than by an order or decree for eviction passed under the provisions of this Act; and

(ii) in the event of death of the person referred to in sub-clause (i)-

(a) in case of accommodation let out for residential purposes, his surviving spouse, son, daughter, mother and father who had been ordinarily residing with him in such accommodation as member of his family up to his death;

(b) in case of accommodation let out for commercial or business purposes, his surviving spouse, son, daughter, mother and father who had been ordinarily carrying on business with him in such accommodation as member of his family up to his death.

4. Tenancy Agreement.- (1) Notwithstanding anything contained in Section 107 of the Transfer of Property Act, 1882 (Central Act 4 of 1882), no person shall, after the commencement of this Act, let or take on rent any accommodation except by an agreement in writing. (2) Where, in relation to a tenancy created before the commencement of this Act,-

(a) an agreement in writing was already entered into shall be filed before the Rent Controller.

(b) no agreement in writing was entered into, the landlord and the tenant shall enter into an agreement in writing with regard to that tenancy and file the same before the Rent Controller;

Provided that where the landlord and the tenant fail to present jointly a copy of tenancy agreement under clause (a) or fail to reach an agreement under clause (b) such landlord and the tenant shall separately file the particulars about such tenancy.

(3) Every agreement referred to in sub-section (1) or required to be executed under sub-section (2) shall be in such format and in such manner and within such period as may be prescribed.

23.Section 7 of the said Act of 2011 deals with establishment of the Rent

Controller. Section 9 prescribes the powers and functions of the Rent

Controller. For ready reference both Section 7 and Section 9 are

reproduced herein under:-

7. Establishment of Rent Controller. - (1) For every district, the State Government shall appoint one or more officers not below the rank of a Deputy Collector, as Rent Controller with territorial jurisdiction as to be specified by the District Collector.

(2) Rent Controller shall be subordinate to the Rent Control Tribunal.

9. Powers and functions of Rent Controller. - (1) The Rent Controller shall exercise such powers, perform such functions and discharge such responsibilities within its territorial jurisdiction, as the Government may by notification vest in him, which shall include the following :-

(a) Reconciling dispute(s) between landlord and tenant.

(b) Securing the rights of landlords and tenants as available to them under this Act.

(c) Enforcing the obligations enjoyed upon landlords and tenants under this Act.

(2) All proceedings before the Rent Controller shall ordinarily conclude within six months from the date of first appearance of the respondent in response to the summons issued for his appearance in the case or from the date on which the respondent is set ex-parte.

24.Likewise, Section 6 deals with Constitution of a Rent Control Tribunal

and Section 8 deals with the Powers and Functions of the Rent

Control Tribunal. For ready reference Section 6 and Section 8 are also

being reproduced herein under:-

6. Constitution of the Rent Control Tribunal. - (1) The State Government shall by notification constitute, within thirty days of this Act, a Tribunal in terms of Article 323-B of the Constitution, to be called as Chhattisgarh Rent Control Tribunal, to give effect to the provisions of this Act, and for the adjudication or trial of any disputes, complaints, or offences with respect to rent, its regulation and control and tenancy issues including the rights, title and obligations of landlords and tenants.

Explanation. - Matters relating to transfer of property and/or disputes regarding title over any property shall continue to be considered under relevant laws by the courts of law.

[(2) The State Government shall appoint the Chairman of the Rent Control Tribunal, a retired Judge of the High Court or serving or retired District Judge not below the rank of Super Time Scale.

(3) The Tribunal shall have such members with such qualification, as the State Government may prescribe.

(4) The State Government shall appoint an officer as the Registrar of the Tribunal, who shall not be below the cadre of Civil Judge Class-I or the rank of Deputy Secretary to the State Government.]

(5) From the date, the Tribunal becomes functional, which date shall be published in the State Gazette, the jurisdiction of all courts, except the jurisdiction of the Supreme Court under Article 136 [and High

Courts under Articles 226 and 227] of the Constitution, shall stand excluded in respect of all matters falling within the jurisdiction of the Tribunal :

Provided, however, that all cases pending before any court or authority immediately before the establishment of the Tribunal, shall continue to be processed under the old Act, as amended from time to time.

[(6) The Tribunal shall have its headquarters at Raipur and the State Government may, by notification, fix such other places for hearing of matters by the Tribunal, as it deems fit.

(7) The terms and conditions of the service of the Chairman and members of the Tribunal shall be such as may be prescribed by the State Government.]

8 Powers and functions of Rent Control Tribunal.- (1) The Rent Control Tribunal, shall have such powers as the Government may by notification vest in it, which shall include the following :-

(a) Enabling and ensuring the active existence of Rent Controller(s) at all times for due fulfillment of the purposes of this Act.

(b) Functioning as Appellate Authority, to consider applications of all person(s) aggrieved by any order of the Rent Controller.

Explanation. - The Rent Control Tribunal shall exercise such powers as was exercised by the High Court in adjudicating matters under the repealed Act.

(2) The Rent Control Tribunal shall have powers to punish for contempt of its authority, as if it were a High Court.

25.The plain reading of the aforesaid provisions would clearly reflect that

the State of Chhattisgarh by way of enactment of the said Act of 2011,

has enacted a provision with an intention and object of resolving the

dispute between a landlord and a tenant inclusive of the disputes

regarding to the payment of Rent etc.

26.It is pertinent also at this juncture to mention that the respondents

herein had already raised a dispute before the Rent Control Authority

for eviction of the premises as also for arrears of Rent. The applicant

herein moved an objection under Order 7 Rule 11 as regards the

maintainability of the proceedings under the Rent Control Act as there

was an arbitration clause in the agreement. The Rent Controlling

Authority upheld the said objection and dismissed the main application

filed by the land-lord vide order dated 18.03.2019. The land-lord

challenged the said order dated 18.03.2019 passed by the Rent

Controlling Authority before the Rent Control Tribunal.

27. The Rent Control Tribunal has set aside the order dated 18.03.2019

passed by the Rent Controlling Authority and remitted the matter back

to the Authority for afresh adjudication of the dispute. The view of the

Rent Control Tribunal was that the agreement between the parties

would not take away the jurisdiction of the Statutory Authority under

the aforementioned Act of 2011. The order of the Rent Control

Tribunal was further subjected to challenge by the applicant herein

before this High Court under Writ Jurisdiction. The Division Bench of

this High Court in WP227 No. 545 of 2022 vide its judgment dated

02.09.2022 dismissed the petition filed by the applicant affirming the

order passed by the Rent Control Tribunal and in paragraphs 10 to 13,

the Division Bench has held as under:-

"10 Section 2 (3) of the Arbitration and Conciliation Act, 1996, (for short Act of 1996) carves out and read that the 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. Therefore, the object of the Act of 2011 when are read with Section 2 (3 ) of the Act of 1996, it do not give an over riding effect rather is the operation has been made separate. Therefore, the Arbitration and Conciliation Act, 1996 would not have a domino effect on other law. The Hon'ble Supreme Court in the matter of Vidya Drolia (supra) while deciding the similar nature of lis has held that landlord-tenant disputes covered and governed by the rent control legislation would not be arbitrable when specific court or forum has been given exclusive jurisdiction to apply and decide special rights and obligations. Such rights and obligations can only be adjudicated and enforced by the specified court/ forum, and not through arbitration.

11. Para 49 of the Vidya Drolia (supra) is reproduced hereinbelow:-

49. In view of the aforesaid, we overrule the ratio laid down in Himangni Enterprises and hold that landlord-tenant

disputes are arbitrable as the Transfer of Property Act does not forbid or foreclose arbitration. However, landlord-tenant disputes covered and governed by rent control legislation would not be arbitrable when specific court or forum has been given exclusive jurisdiction to apply and decide special rights and obligations. Such rights and obligations can only be adjudicated and enforced by the specified court/forum, and not through arbitration.

12. The Act of 2011 would show that Section 7 speaks about establishment of Rent Controller that for every district, the State Government shall appoint Rent Controller and Section 6 is about constitution of Rent Control Tribunal. Therefore, special forum has been created to decide the rights and obligations of landlord and tenant which is enveloped under Section 12 of the Act of 2011, wherein Schedule 2 purports about landlord rights which includes the right to seek eviction of the tenant on various grounds likewise schedule 4 which is made of Section 12 (4) of the Act 2011 creates an obligation on the part of the tenant. The reliance placed by the learned counsel for the petitioner in case of Brij Raj Oberoi (supra) would not be of any help for the reason that obligation of the tenant under Schedule 4 under the Act of 2011 do not confer seeking an enhancement for the part of tenancy. Therefore, on facts of the case, when eviction is sought for by land-lord against tenant the ratio of the case supra would not be applicable.

13. Therefore, the forum having been created under the statue and it being a special legislature for particular purpose this statue provision cannot be diluted by the act of parties as has been held in the case of Supdt. of Taxes, Dhubri and Ors. Vs. M/s. Onkarmal Nathmal Trust reported in AIR 1975 SC 2065 and further in the case of Harshad Chiman Lal Modi Vs. D. L. F. Universal Ltd. And another reported in AIR 2005 SC 4446:: 2005 AIR SCW 5369 while deciding the jurisdiction of the court has held that jurisdiction can neither be waived nor created by consent.

28.It would also be relevant at this juncture to take note of the

observation of the Hon'ble Supreme Court in the case Vidya Drolia

(supra) dealing with the aforesaid subject matter, particularly dealing

with the issue of landlord and tenant. The Hon'ble Supreme Court

while deciding the said land mark decision in paragraph 79 and 80

touching the dispute of landlord and tenant has held as under:-

"79. Landlord-tenant disputes governed by the Transfer of Property Actare arbitrable as they are not actions in rem but pertain to subordinate rights in personam that arise from rights in rem. Such actions normally would not affect third-party rights or have erga omnes affect or require centralized adjudication. An award passed deciding landlord-tenant disputes can be executed and enforced like a decree of the civil court. Landlord-tenant disputes do not relate to inalienable and sovereign functions of the State. The provisions of the Transfer of Property Act do not expressly or by necessary implication bar arbitration. Transfer of Property Act, like all other Acts, has a public purpose, that is, to regulate landlord- tenant relationships and the

arbitrator would be bound by the provisions, including provisions which enure and protect the tenants.

80. In view of the aforesaid, we overrule the ratio laid down in Himangni Enterprises and hold that landlord-tenant disputes are arbitrable as theTransfer of Property Act does not forbid orforeclose arbitration. However, landlord-tenant disputes covered and governed by rent control legislation would not be arbitrable when specific court or forum has been given exclusive jurisdiction to apply and decide special rights and obligations. Such rights and obligations can only be adjudicated and enforced by the specified court/forum, and not through arbitration."

29.The plain reading of paragraphs reproduced here-in-above would

clearly indicate that the Hon'ble Supreme Court was very specific

while holding that under the normal circumstances, if there is no Rent

Control Legislation applicable in the concerned State, a dispute

between a landlord and tenant would be Arbitrable. At the same time

the Hon'ble Supreme Court has also emphatically in Paragraph 80

held that where a Rent Control Legislation exists, the landlord and

tenant dispute which are covered and governed under the Rent

Control Legislation enacted, then the landlord-tenant dispute would

not be Arbitrable. This view of the Hon'ble Supreme Court was on

account of the fact that there is a specific Court or forum with

exclusive jurisdiction and with appellate remedies available for

redressal of disputes. Therefore, it would be only these forums and

Courts which would have the jurisdiction to adjudicate upon the

dispute and not through arbitration.

30.In view of the specific order of the Hon'ble Supreme Court in the case

of Vidya Drolia (supra) on the landlord-tenant issue making it non-

Arbitrable, in the event of a Rent Control Legislation being in force,

this Court finds sufficient force in the objections raised by the

respondents as regard the maintainability of the present application.

31. As a consequence, the application under Section 11 (6) filed by the

applicant which admittedly is a dispute between the landlord and

tenant and the dispute flowing from a tenancy agreement and

because of the fact that in the State of Chhattisgarh, the Government

has specifically enacted a Rent Control Legislation known as

Chhattisgarh Rent Control Act of 2011, the dispute between the

parties becomes non-arbitrable.

32.The application also now would not be further maintainable on the

ground that the Division Bench of this High Court in WP227 No. 545 of

2022 vide its order dated 02.09.2022 has clearly held that the dispute

between the parties is one which is non-arbitrable. Hence, the

application of the applicant deserves to be and is accordingly rejected.

Sd/-

P. Sam Koshy) Judge Jyoti