Kerala High Court
Raju.J. Vayalattu vs Veeteejay Motors Pvt Limited on 2 April, 2025
AR NO.18/2025 1
2025:KER:28292
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
WEDNESDAY, THE 2ND DAY OF APRIL 2025 / 12TH CHAITHRA, 1947
AR NO. 18 OF 2025
PETITIONER:
RAJU.J. VAYALATTU
AGED 46 YEARS
S/O.LATE V.T.JOSEPH, 1/262, VAYALAT HOUSE,
FORT KOCHI, ERNAKULAM DISTRICT, REPRESENTED BY
HIS POWER OF ATTORNEY SINI RAJU, W/O RAJU. J.
VAYALATTU, VAYALATTU HOUSE, 1/262, FORT KOCHI.,
PIN - 682001
BY ADVS.
S.K.PREMJITH MENON
BINU V V VEETTIL VALAPPIL
P.J.STEPHEN
MANEKSHA D.
RESPONDENTS:
1 VEETEEJAY MOTORS PVT LIMITED
1/575 G, NH47 BYE PASS ROAD, KANNADIKADU,
MARADU P.O, ERNAKULAM. REPRESENTED BY ITS
MANAGING DIRECTOR THOMAS.J.VAYALAT, PIN - 682304
2 THOMAS.J.VAYALAT
MANAGING DIRECTOR, VEETEEJAY MOTORS PVT LIMITED
RESIDING AT 6/419 B, VAYALAT HOUSE, VAYALAT
AVENUE, MARADU, KOCHI, PIN - 682001
BY ADVS.
FIROZ K.M.
DIPU JAMES(K/1315/2003)
THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON
02.04.2025, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
AR NO.18/2025 2
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ORDER
Dated this the 02nd day of April, 2024
This Arbitration Request has been filed by the petitioner,
invoking Section 11 of the Arbitration and Conciliation Act, 1996
(hereinafter referred to as 'the Act of 1996'), to appoint an Arbitrator
to adjudicate the differences and disputes that have arisen between
the petitioner and the 1st respondent under Annexure A2 lease
agreement.
2. Petitioner was the owner of a property situated in Re.Sy.
No.135/1 of Maradu Village in Ernakulam District. He leased out the
said property to the 1st respondent vide Annexure A2 agreement
dated 01.12.2012. The said agreement in Clause 28 stipulated
arbitration as the chosen dispute resolution mechanism. Though
originally envisaged for a period of 11 months, the agreement was
extended from time to time. Later disputes arose between the
parties regarding payment of rent. Efforts to resolve the dispute
amicably met with failure. Petitioner hence issued Annexure A3
notice of invocation of arbitration clause nominating an Arbitrator to
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which the respondent did not reply. Hence this Arbitration Request
has been filed seeking to appoint an Arbitrator.
3. Respondents have filed a detailed counter affidavit. The 2 nd
respondent is the brother of the petitioner and the Managing Director
of the 1st respondent. Annexure A2 though has been signed by the
2nd respondent as the Managing Director of the 1 st respondent, it
does not bear the signature of the Petitioner. Hence Annexure A2
does not meet the mandates of Section 7 (4) (a) of the Act of 1996.
Thus there is no agreement to arbitrate which can lead to the
invocation of Section 11 of the Act of 1996. There is no meeting of
minds or a bilateral agreement. Alleged arbitration agreement is
non-existent, invalid and the dispute is non-arbitrable. It is further
contended that Annexure A2 dated 01.12.2012 mentions a lease
for a period of 11 months ending on 31.10.2013. There is no renewal
clause or written extension. Consequently, the alleged agreement
had expired long time back. There can be no arbitration now based
on Annexure A2. The subject property had been granted on lease to
the respondents much prior to 01.12.2012. The lease arrangement
was thus not based on Annexure 2. The 1st respondent is now
continuing in possession of the premises and its status is that of a
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statutory tenant as envisaged in Section 2 (6) (ii) of the Kerala
Building Lease and Rent Control Act, 1965 (hereinafter referred to
as 'the Act of 1965'). Hence the 1 st respondent is entitled to the
statutory rights under the said Act. The dispute between the parties
thus relates to tenancy and alleged arrears of rent, which are
matters governed by the Act of 1965. The dispute is thus governed
by a special statute which stipulates special rights and protections.
Such a dispute is not by its very nature arbitrable. Additionally, the
Annexure A2 agreement has not been sufficiently stamped under
the Kerala Stamp Act and the same is not valid and enforceable.
The alleged oral extension of the agreement is denied. The same
militates against the stipulations in clause 25 of Annexure A2. The
Arbitrator nominated by the petitioner in Annexure A3 is not
acceptable to the respondents. The amount of Rs.60,63,650/-
claimed by the petitioner is denied and disputed. There are no
arrears as alleged and no amount is payable by the respondents to
the petitioner. No reply was issued to Annexure A3 notice since in
the mutual settlement talks held, it had been agreed that no further
action would be initiated. Petitioner breached the said solemn
undertaking. Arbitration Request is not maintainable in law and is
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only to be dismissed with costs.
4. Heard Sri. Premjith Menon S.K., Advocate for the petitioner
and Sri.K.M. Firoz, Advocate for the respondent.
5. The learned counsel for the petitioner reiterates the
contentions made in the Arbitration Request and submits that all the
essential mandates for invoking Section 11 of the Act of 1996 have
been duly satisfied. As regards the contention that Annexure A2 did
not bear the signature of the petitioner and hence cannot be treated
as meeting the mandates of Section 7 of the Act of 1996, it is
submitted that the same does not invalidate the lease agreement
nor render ineffective the arbitration clause, therein. Since
admittedly the 1st respondent is continuing to occupy the relevant
premises mentioned in Annexure A2 pursuant to the lease
arrangement between the parties the said agreement in its entirety
which is still in subsistence. Further, the respondents do not have a
case that they have not signed Annexure A2. Non-signature of the
document by the petitioner does not exonerate the respondent from
the terms and conditions therein as long as the meeting of minds on
the question of arbitration is evident and clear. As regards non-
arbitrability, the learned counsel submits that the right, if any,
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under the Act of 1965 does not oust the arbitration clause. Petitioner
vide in Annexure A3 had not sought to eviction of the respondent.
None of the statutory rights of the respondent are impacted by the
invocation of the arbitration clause. The limited purpose of the
proposed arbitration is to decide on the dispute regarding
outstanding payments. A simple monetary claim between a landlord
and tenant is always open settlement through arbitration. Kerala
Building Lease and Rent Control Act, 1965 does not stipulate nor
envisage any restriction on the rights of a tenant and landlord to
arbitrate their inter se monetary disputes. Bar, if any by virtue of
special statute can only be regarding the rights, immunities and
privileges conferred by such statute and not for resorting to
arbitration to resolve simple money claims. As regards the alleged
insufficiency in stamping in Annexure A2 agreement, it had been
held by the Hon'ble Supreme Court in In Re Interplay between
Arbitration Agreements under the Arbitration and Conciliation
Act, 1996 and the Indian Stamp Act 1899 [2023 KHC 1028] that
the referral court at Section 11 stage should not examine or
impound an unstamped or insufficiently stamped instrument and
should rather leave it for the determination by the Arbitral Tribunal.
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The learned counsel thus vehemently contended that the Arbitration
Request is fit to be allowed and the objections of the respondents
are legally unsustainable.
6. Per contra, the learned counsel for the respondents
reiterated the contentions in the counter affidavit. Towards
substantiating the contention regarding non-arbitrability and for
buttressing the argument that only Rent Control Courts can have
jurisdiction in the matter thereby excluding the possibility of invoking
Section 11 of the Act of 1996, reliance is placed on the judgment of
the Hon'ble Supreme Court in Booz Allen and Hamilton Inc. v. SBI
Home Finance Ltd. and others [2011 KHC 4388], wherein it has
been held as follows.
"22. Arbitral tribunals are private fora chosen
voluntarily by the parties to the dispute, to adjudicate their
disputes in place of courts and tribunals which are public
fora constituted under the laws of the country. Every civil
or commercial dispute, either contractual or non-
contractual, which can be decided by a court, is in
principle capable of being adjudicated and resolved by
arbitration unless the jurisdiction of arbitral tribunals is
excluded either expressly or by necessary implication.
Adjudication of certain categories of proceedings are
reserved by the Legislature exclusively for public fora as a
matter of public policy. Certain other categories of cases,
though not expressly reserved for adjudication by a public
fora (courts and Tribunals), may by necessary implication
stand excluded from the purview of private fora.
Consequently, where the cause/dispute is inarbitrable, the
court where a suit is pending, will refuse to refer the
parties to arbitration, under section 8 of the Act, even if
the parties might have agreed upon arbitration as the
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forum for settlement of such disputes. The well-
recognized examples of non-arbitrable disputes are : (i)
disputes relating to rights and liabilities which give rise to
or arise out of criminal offences; (ii) matrimonial disputes
relating to divorce, judicial separation, restitution of
conjugal rights, child custody; (iii) guardianship matters;
(iv) insolvency and winding up matters; (v) testamentary
matters (grant of probate, letters of administration and
succession certificate); and (vi) eviction or tenancy
matters governed by special statutes where the tenant
enjoys statutory protection against eviction and only the
specified courts are conferred jurisdiction to grant eviction
or decide the disputes". (emphasis supplied)
7. Reliance is also placed on the observations of the Hon'ble
Supreme Court touching on the same aspect in Vidya Drolia and
others v. Durga Trading Corporation [2020 KHC 6711], which
reads as follows:
"48. Landlord-tenant disputes governed by the Transfer of
Property Act are 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.
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
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enforced by the specified court/forum, and not through
arbitration." (emphasis supplied)
8. Attention is invited to the dictum laid down by the Hon'ble
Supreme Court in Hemalatha Devi M. v. B. Udayasri [2023
KHC6928] wherein after a detailed survey of the precedents on the
point, it was held as follows:
"21. This Court ultimately held that the main purpose of
bringing an amendment inter alia in Sections 8 and 11 of
the Arbitration Act, 1996 was to minimise the scope of
judicial authority, which was to refuse reference to
arbitration only on the ground when it prima facie finds
that there was no valid arbitration agreement. The
legislative intent for the amendment was confined to
limiting judicial intervention, and once the Court finds that
there is a valid arbitration agreement, it has no option but
to refer the matter for arbitration. But this would not mean
that where the matter itself is non-arbitrable, or is covered
by a special legislation such as the Consumer Protection
Act, it still has to be referred for arbitration. In Para 59 of
Emaar III (supra), it was stated as under: "59. The
amendment in Section 8 cannot be given such expansive
meaning and intent so as to inundate entire regime of
special legislations where such disputes were held to be
not arbitrable. Something which legislation never intended
cannot be accepted as side wind to override the settled
law. The submission of the petitioner that after the
amendment the law as laid down by this Court in National
Seeds Corpn. Ltd. [National Seeds Corpn. Ltd. v. M.
Madhusudhan Reddy, (2012) 2 SCC 506 : (2012) 1 SCC
(Civ) 908] is no more a good law cannot be accepted. The
words "notwithstanding any judgment, decree or order of
the Supreme Court or any court" were meant only to
those precedents where it was laid down that the judicial
authority while making reference under Section 8 shall be
entitled to look into various facets of the arbitration
agreement, subject-matter of the arbitration whether the
claim is alive or dead, whether the arbitration agreement
is null and void. The words added in Section 8 cannot be
meant for any other meaning." Emaar III (supra) though
ends with a caveat, where it leaves the option with the
party who may have an option to choose between a
public or private forum, may consciously choose to go for
private fora. This is what it says:
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"63. We may, however, hasten to add that in the event a
person entitled to seek an additional special remedy
provided under the statues does not opt for the
additional/special remedy and he is a party to an
arbitration agreement, there is no inhibition in disputes
being proceeded in arbitration. It is only the case where
specific/special remedies are provided for and which are
opted by an aggrieved person that judicial authority can
refuse to relegate the parties to the arbitration."
22. Thus, in our considered opinion in the case at hand,
the Telangana High Court had adopted the right approach
in its two impugned orders, where it declined to interfere
in the matter and appoint an arbitrator.
True in Emaar III (supra) this Court had examined the
scope of sub-section (1) to Section 8 and not of sub-
section 6A to Section 11 of the Arbitration Act, 1996. All
the same, the reasoning given in the above judgment
would be equally applicable to Section 11 application
before the High Court. Both the provisions incorporated in
Section 8 and Section 11 of the Arbitration Act, 1996 [i.e.,
subsection (1) and sub-section 6A respectively],
seemingly restrict the scope of the examination by the
concerned courts, in their reference to arbitration, or
appointment of arbitrator, as the case might be, and the
language being common, "notwithstanding any judgment,
decree or order" places a similar question before the two
courts. More importantly, when the Principal Civil Court or
a judicial authority such as consumer redressal forum can
have powers to dismiss a Section 8 application on the
ground of arbitrability of a dispute, will such powers not be
available with the High Courts? In SBP & Co. v. Patel
Engg. Ltd. , it was decided by this Court that both Section
8 and Section 11 of Arbitration Act, 1996 are
complementary provisions. This position has been
reiterated, in the post-amendment context, in Vidya
Drolia v. Durga Trading Corpn."
9. Relying on the dictum laid down by the Hon'ble Supreme
Court in In Re. Interplay (supra), the learned counsel for the
respondents submits that a court while exercising jurisdiction under
Section 8 or 11 of the Act of 1996 must examine whether the
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arbitration agreement prima facie exists. When parties append their
signature to a contract containing an arbitration agreement, they are
regarded in effect as independently appending their signatures to
the same for the reason that the parties intend to treat an arbitration
agreement contained in an underlying contract as distinct from the
other terms of the contract. Placing reliance on a Division Bench
judgment of this Court in Girindra Global Hospitality and another
v. Manappuram Hotels (P) Ltd. and others [2022 (5) KHC 684] it
is contended that landlord-tenant disputes covered and governed by
Rent Control Legislation will not be arbitrable when a specific court
or forum has been given exclusive jurisdiction to apply and decide
special rights and obligations.
10. The learned counsel for the respondents in fairness also
brought to my notice a decision of the High Court of Punjab and
Haryana in Rohit Sawhney v. M/s.DLF Power and Services Ltd.
[2023 KHC2449] and attempted to distinguish the same. In the said
judgment, it had been held that where the petitioner has not claimed
the eviction of the respondent on any of the grounds available to a
landlord under the provisions of the relevant rent statute and had
only sought recovery of the lease amount in terms of the lease
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agreement, such dispute is not a dispute which falls within the
exclusive jurisdiction of the Rent Controller under the rent statute.
Therefore, the exercise of powers under Section 11(6) of the Act of
1996, to appoint an independent Arbitrator to resolve the dispute is
not barred.
11. Based on the above-mentioned precedents the learned
counsel for the respondent, contended that since Annexure A2
relates to a lease arrangement and the claim of the petitioner is for
arrears of rent, the subject matter squarely falls under Section 11 of
the Act of 1965. The petitioner as the landlord has the right to
invoke the relevant provisions of the said Act with respect to fair rent
fixation or arrears of rent. Since non-payment of rent is the bone of
contention between the parties, the remedy is to invoke rights under
the special statute viz., the Kerala Building Lease and Rent Control
Act, 1965. Of the two parties to the agreement, the petitioner
landlord alone can invoke the said rights. Without invoking the
same, he cannot choose to invoke the arbitration clause as the
subject matter does not admit arbitration. Relying on the above, the
counsel for the respondents sought dismissal of the Arbitration
Request.
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12. I have heard both sides in detail. The primary question
that comes up for consideration is whether Annexure A2 agreement,
which contains the arbitration clause, can be termed an agreement
that meets the mandates of Section 7 of the Act of 1996 to constitute
a valid arbitration agreement. The reason for so doubting its status
is the fact that Annexure A2 does not bear the signature of one of
the parties to the agreement viz., the petitioner who had filed this
Section 11 application. It is relevant to note that Section 7 of the Act
while explaining the essential ingredients for an arbitration
agreement inter alia mandates that it shall be in writing and that it
should bear the signature of the parties. Annexure A2 bears only the
signature of the 2nd respondent as the Managing Director of the 1 st
respondent. It does not however bear the signature of the other
party to the agreement viz., the petitioner. This lacuna is termed as
thoroughly inconsequential by the counsel for the petitioner since
the signature that binds the respondents, against whom the clause
is sought to be invoked, is very much present in Annexure A2 and
the genuineness or veracity thereof has not been challenged by the
respondents. That the signature of the petitioner is absent is of no
consequence also since the petitioner admits Annexure A2
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document and had moved the Arbitration Request only after invoking
the arbitration clause therein by issuance of a notice envisaged
under Section 21 of the Act of 1996. This argument, though
attractive at the first blush, conceals the specific mandate in Section
7 of the Act of 1996 whereby to be termed as a written agreement,
the same needs to be signed by all the parties thereto and not by
one or any of the parties. Though it may be true that the parties had
for years together by their conduct adhered to the lease agreement
and by their conduct exhibited adherence to the terms of the lease,
in this AR the question to be considered is whether there is
concurrence between the parties to arbitrate the matter. Such
concurrence and consensus ad idem regarding arbitration cannot be
presumed from conduct. It needs to be revealed by the express
compliance with the terms mandated in Section 7 of the Act of
1996 . Since such compliance is factually lacking, I hold that the
existence of a binding arbitration agreement between the parties has
not been proved by the petitioner in order to satisfy this court to hold
that the parties are to be referred to arbitration in an invocation
under Section 11 of the Act of 1996. In In Re. Interplay (supra), it
has been held that the scope of reference under Section 11 (6) is
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limited to an examination of the existence of an arbitration
agreement and the use of the term 'examination' should be
understood as regarding the formal validity of the arbitration
agreement such as the requirement that it should be in writing. The
issue of substantive existence and validity of the arbitration
agreement is to be left to the arbitral Tribunal to decide. An
examination of the formal validity of the arbitration agreement in
Annexure A2 reveals that the same does not meet the mandate of
Section 7 of the Act of 1996. Hence it has to be concluded that the
invocation of Section 11 of the Act by the petitioner fails at the very
threshold. Nevertheless, I deem it relevant to consider the other
contentions put forth by the petitioner in substantiation of the
prayers sought in the Arbitration Request.
13. As regards the arbitrability, it is trite law as laid down in
Booz Allen (supra), Vidya Drolia (supra), Hemalatha Devi (supra)
and In Re. Interplay (supra) that, where the cause/dispute is in-
arbitrable or non-arbitrable, the court shall refuse to refer the parties
to arbitration, even if the parties might have agreed upon arbitration
as the forum for settlement of such disputes. Among the well-
recognized examples of 'non-arbitrable disputes' enumerated in
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Booz Allen (supra) are the 'eviction or tenancy matters governed by
special statutes where the tenant enjoys statutory protection against
eviction'. Only specified courts are conferred jurisdiction to grant
eviction or decide such disputes. This view has been followed by
this court in Girindra Global Hospitality (supra). Though there may
be a difference in parameters for judicial review under Section 8 and
Section 11 of the Act of 1996 and the said two provisions may not
lay down the same standard, it is now well settled that even in a
reference stage under Section 11 it is open to decline reference to
arbitration of matters that are 'non-arbitrable' ie., those which are
covered by special legislation. Coming to the facts of the case at
hand, the time period mentioned in Annexure A2 has expired, and
the 1st respondent is admittedly staying over and is in possession of
the premises. Thus the status of a statutory tenant has been claimed
by the 1st respondent. When contractual tenancy to which the rent
control legislation applies has expired by efflux of time and the
tenant continues in possession of the premises by virtue of statutory
protection, he becomes a statutory tenant. He can then be evicted
only under the provisions of the rent control legislation. A statutory
tenant, albeit with restrictions and limitations, has vested in him the
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rights and obligations of a tenant. It is this legal position in tenancy
law that the respondent relies on to contend that the 1st respondent
being entitled to statutory rights cannot be compelled to arbitrate the
matter since rights conferred by the statute can only be adjudicated
by the special court or forum constituted under the rent control
legislation.
14. I do not lose sight of the fact that Annexure A3 does not
seek eviction of the 1st respondent and confines the claim therein to
the arrear dues that are payable by the 1st respondent to the
petitioner. Since the petitioner has not sought eviction of the 1st
respondent invoking the grounds available to a landlord under
Section 11 of the 1965 Act and had only sought recovery of arrears,
would such a claim which does not prima facie attract the exclusive
jurisdiction of the Rent Controller debar the petitioner from invoking
the provisions of Section 11(6) to seek appointment of an
independent Arbitrator? Is not such a dispute or difference between
the parties regarding the settling of outstanding dues a simple
monetary claim that could be arbitrated as it does not call for the
invocation of the provisions of the special statute? The precedents
on the point answer these questions against the petitioner. Vidya
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Drolia (supra) holds that landlord-tenant disputes covered and
governed by rent control legislation would not be arbitrable when a
specific court or forum has been given exclusive jurisdiction to apply
and decide special rights and obligations. It has been held that such
rights and obligations can only be adjudicated and enforced by the
specified court/forum, and not through arbitration. This Court has in
Girindra Global Hospitality (supra) followed the same and held
that landlord-tenant disputes covered and governed by Rent Control
Legislation will not be arbitrable when a specific court or forum has
been given exclusive jurisdiction to apply and decide special rights
and obligations. In view of the above settled position of law,
arbitrability though is a matter to be left to the Arbitrator to decide, in
the facts and circumstances of this case merits it to be considered in
the Section 11 reference stage itself. As laid down in the precedents
discussed above, disputes and differences arising under Annexure
A2 being matters essentially concerning special rights and
obligations covered by the Kerala Building Lease and Rent Control
Act, 1965, cannot be arbitrated. Legal remedy, if any, available to
the petitioner landlord with respect to his claim for arrears of rent will
have to be invoked before the competent forum constituted under
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the relevant statute. The mere inclusion of an arbitration clause in
the lease agreement/ rent deed does not entitle the landlord to seek
arbitration regarding matters that are integrally governed by the
special statute governing the subject viz., the Kerala Building Lease
and Rent Control Act, 1965.
From the above, it follows that this Arbitration Request is not
maintainable in law. Hence, it is dismissed. No costs.
Sd/-
SYAM KUMAR V.M.
JUDGE
csl
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PETITIONER ANNEXURES
Annexure-A1 TRUE COPY OF THE POWER OF ATTORNEY
EXECUTED BY THE PETITIONER
Annexure-A2 TRUE COPY OF THE AGREEMENT DATED 01-12-
2012 ENTERED BETWEEN THE PETITIONER AND
RESPONDENT
Annexure-A3 TRUE COPY OF THE NOTICE DATED 24-07-
2024 ISSUED BY THE PETITIONER TO THE
RESPONDENT
Annexure-A4 TRUE COPY OF POSTAL TRACK RECORD OF
ANNEXURE A3 NOTICE
