Sandhya Sharma vs Smt. Shalini Aligh And Another
2021 Latest Caselaw 2223 UK

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL


                      Appeal from Order No.121 of 2021

Sandhya Sharma                                          .........Appellant

                                         Vs.

Smt. Shalini Aligh and another                       ...........Respondents

Present:-
Mr. Sarvesh Agarwal, Advocate for the appellant.



                                   JUDGMENT

Hon'ble Ravindra Maithani, J. (Oral)

Instant appeal is preferred against the Judgment and Order dated 23.06.2021, passed in Civil Suit No.30 of 2021, Sandya Sharma vs. Smt. Shalini Aligh and another, by the court of Civil Judge (Sr. Div.), Nainital ("the suit"). By the impugned order, an application filed under Section 8 of the Arbitration and Conciliation Act, 1996 (for short, "the Act"), filed by the respondents have been allowed and the parties have been referred to arbitration.

2. Heard learned counsel for the parties through video conferencing.

3. Facts necessary for disposal of the appeal briefly stated are that the appellant took a hotel on lease ("the hotel") from the respondents on 29.01.2021 and a lease-deed was executed (for short, "the lease-deed"). It is the case of the appellant that she was complying with all the terms and conditions of the lease-deed, but the respondents wanted to evict her from the hotel. Hence, suit for permanent injunction has been filed so that the respondents be restrained to interfere in the peaceful possession of the appellant on the hotel taken on lease.

4. During the pendency of the suit, an application under Section 8 of the Act was filed by the respondents with the averments therein that there

is an arbitration clause in the lease-deed, therefore, the court lacks jurisdiction and the parties should be referred to the arbitration. After hearing the parties, by the impugned order, it was held that the parties should be referred to arbitration in view of the arbitration clause in the lease-deed and accordingly, the application filed under Section 8 of the Act of the respondents has been allowed.

5. Learned counsel for the appellant would submit that the suit has been filed for permanent injunction, a relief which could be obtained from the civil court only, therefore, the parties ought not to have referred to arbitration and the suit should have been decided by the civil court. It is argued that by allowing the application under Section 8 of the Act, an error has been committed, therefore, the appeal deserves to be allowed.

6. Undoubtedly, a suit for injunction, if cognizance thereof is not impliedly or expressively barred, is maintainable in a civil court. But, then the provision of the Act provides for the mechanism by which parties may agree to get any future dispute resolved through arbitrator. There are various provisions of law on the subject which need not detain this Court for a long. The question is whether the Court at the first instance while considering a matter for referring the parties for arbitration should consider each and every aspect about the legality of arbitration and the second question is whether in a suit like the instant one the claim is arbitrable?

7. It is admitted case of the appellant that she took the hotel on lease and a lease-deed was executed. Admittedly, the lease-deed makes provision for arbitration. There is an arbitration clause in it, which is as hereunder:-

"17. Any dispute, differences or claim, that is not settled within "7" (Seven) days of the date on which such dispute, differences or claim is raised, arising out of or in connection of this Deed, the "Dispute" shall referred to final and binding arbitration under the Indian Arbitration and Conciliation Act, 1996. The sole Arbitrator shall be appointing with the mutual consent to the Parties."

8. Section 8 of the Act, authorizes the judicial authority to refer parties to arbitration. In the case of Vidya Drolia and others vs. Durga

Trading Corporation, (2021) 2 SCC 1, the Hon'ble Supreme Court interpreted various aspects of referring parties to arbitration including the arbitrable claims as well as who decides arbitrability. In para 79 of it, the Court held, "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. ............. The provisions of the Transfer of Property Act do not expressly or by necessary implication bar arbitration."

9. In Vidya Drolia case (supra), the ratio laid down in the case of Himangni Enterprises vs. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706, has been overruled and it was held that, "the landlord tenant disputes are arbitrable as the Transfer of Property Act does not forbid or foreclose the arbitration".

10. Learned counsel for the appellant very fairly concedes that in this case, no rent Act is applicable, which may provide any specific forum to decide the landlord-tenant dispute.

11. The claim is arbitrable. Another question is who decides arbitrability? In the case of Vidya Drolia (supra), the Hon'ble Supreme Court observed on this aspect as hereunder:-

"154.3 The general rule and principle, in view of the legislative mandate clear from Act 3 of 2016 and Act 33 of 2019, and the principle of severability and competence-competence, is that the Arbitral Tribunal is the preferred first authority to determine and decide all questions of non-arbitrability. The court has been conferred power of "second look" on aspects of non-arbitrability post the award in terms of sub-clauses (i), (ii) or (iv) of Section 34(2)(a) or sub-clause (i) of Section 34(2)(b) of the Arbitration Act.

154.4 Rarely as a demurrer the court may interfere at Section 8 or 11 stage when it is manifestly and ex facie certain that the arbitration agreement is non-existent, invalid or the disputes are non-arbitrable, though the nature and facet of non-arbitrability would, to some extent, determine the level and nature of judicial scrutiny. The restricted and limited review is to check and protect parties from being forced to arbitrate when the matter is demonstrably "non-arbitrable" and to cut off the deadwood....."

12. In the instant case, admittedly there is an arbitration clause in the lease-deed. Parties had agreed that in case of any dispute arising out of or any connection of the deed, the dispute shall be referred to the arbitration, therefore, in the eventuality of existence of arbitration clause, the judicial authority before which action was brought has rightly observed that the parties should be referred to arbitration. Deeper scrutiny was not required at this stage. The learned court below discussed the arbitrability of the claim; took note of the other relevant factors and passed the impugned order in accordance with law. The impugned order does not warrant any interference and the instant appeal deserves to be dismissed at the stage of admission itself.

13. The appeal is dismissed in limine.

(Ravindra Maithani, J.) 05.07.2021 Sanjay