Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 3334 OF 2014

(Arising out of SLP (C) No. 15165 of 2010)

Ranjit Kumar Bose & Anr. … Appellants

Versus

Anannya Chowdhury & Anr. … Respondents

J U D G M E N T

A. K. PATNAIK, J.

Leave granted.

Facts of the Case

2.The appellants have inducted the respondents as

tenants in respect of a shop room measuring 600 sq.

feet at HA-3, Sector-3, Salt Lake City, Kolkata, and

paying a monthly rent to the appellants. In respect

of the tenancy, the appellants and the respondents

have executed an unregistered tenancy agreement

which has been notarized on 10.11.2003. On

06.03.2008, the appellants, through their Advocates,

Page 2 served a notice on the respondents terminating the

tenancy and asking them to vacate the shop

premises and the notice stated that after April, 2008

the relationship of landlord and tenant between the

appellants and the respondents shall cease to exist

and the respondents will be deemed to be

trespassers liable to pay damages at the rate of

Rs.500/- per day for wrongful occupation of the shop.

The respondents, however, did not vacate the shop

premises and the appellants filed Title Suit No.89 of

2008 against the respondents for eviction, arrears of

rent, arrears of municipal tax, mesne profit and for

permanent injunction in the Court of the Civil Judge

(Senior Division), 2

nd

Court at Barasat, District North

24-Parganas in the State of West Bengal. In the suit,

the respondents filed a petition under Section 8 of

the Arbitration and Conciliation Act, 1996 (for short

‘the 1996 Act’) stating therein that the tenancy

agreement contains an arbitration agreement in

clause 15 and praying that all the disputes in the suit

be referred to the arbitrator. By order dated

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Page 3 10.06.2009, the learned Civil Judge dismissed the

petition under Section 8 of the 1996 Act and posted

the matter to 10.07.2009 for filing of written

statement by the defendants (respondents herein).

3.Aggrieved, the respondents filed an application (C.O.

No.2440 of 2009) under Article 227 of the

Constitution of India before the Calcutta High Court

and contended that the tenancy agreement contains

an arbitration agreement in Clause 15, which

provides that any dispute regarding the contents or

construction of the agreement or dispute arising out

of the agreement shall be settled by Joint Arbitration

of two arbitrators, one to be appointed by the

landlords and the other to be appointed by the

tenants and the decision of the arbitrators or umpires

appointed by them shall be final and that the

arbitration will be in accordance with the 1996 Act

and, therefore, the learned Civil Judge rejected the

petition of the respondents to refer the disputes to

arbitration contrary to the mandate in Section 8 of

the 1996 Act. The appellants opposed the

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Page 4 application under Article 227 of the Constitution of

India contending inter alia that the dispute between

the appellants and the respondents, who are

landlords and tenants respectively, can only be

decided by a Civil Judge in accordance with the

provisions of the West Bengal Premises Tenancy Act,

1997 (for short ‘the Tenancy Act’). By the

impugned judgment dated 16.04.2010, the High

Court has held that in view of the decisions of this

Court in Hindustan Petroleum Corporation Ltd. v.

Pinkcity Midway Petroleums [(2003) 6 SCC 503], Agri

Gold Exims Ltd. v. Sri Lakshmi Knits & Wovens & Ors.

[(2007) 3 SCC 686] and Branch Manager, Magma

Leasing & Finance Limited & Anr. v. Potluri

Madhavilata & Anr. [(2009) 10 SCC 103], the Court

has no other alternative but to refer the disputes to

the arbitrators to be appointed by the parties as per

the arbitration agreement. The High Court, however,

has observed in the impugned judgment that if any

dispute is raised regarding arbitrability of such

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Page 5 dispute before the arbitral tribunal, such dispute will

be decided by the arbitral tribunal.

Contentions of the learned counsel for the parties

4.Learned counsel for the appellants submitted that in

Hindustan Petroleum Corporation Ltd. v. Pinkcity

Midway Petroleums, Agri Gold Exims Ltd. v. Sri

Lakshmi Knits & Wovens & Ors. and Branch Manager,

Magma Leasing & Finance Limited & Anr. v. Potluri

Madhavilata & Anr. (supra), this Court has not

decided as to whether the dispute between the

landlord and the tenant could be decided by the

arbitrator in accordance with the arbitration

agreement between the landlord and the tenant and

the provisions of the 1996 Act or by the appropriate

forum in accordance with the law relating to tenancy.

He cited the decision of this Court in Natraj Studios

(P) Ltd. v. Navrang Studios & Anr. [(1981) 1 SCC

523], wherein it has been held that Court of Small

Causes alone and not the arbitrator as a matter of

public policy has been empowered to decide disputes

between the landlord and the tenant under the

Bombay Rent Act. He also relied on the observations

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Page 6 of this Court in Booz Allen and Hamilton Inc. v. SBI

Home Finance Limited & Ors. [(2011) 5 SCC 532] in

para 36 at page 547 that eviction or tenancy matters

governed by a special statute where the tenant

enjoys statutory protection against eviction can be

decided by specified courts conferred with the

jurisdiction to grant eviction and such disputes are

non-arbitrable.

5.Learned counsel for the respondents, on the other

hand, relied on the decisions of this Court in

Hindustan Petroleum Corporation Ltd. v. Pinkcity

Midway Petroleums, Agri Gold Exims Ltd. v. Sri

Lakshmi Knits & Wovens & Ors. and Branch Manager,

Magma Leasing & Finance Limited & Anr. v. Potluri

Madhavilata & Anr. (supra) to support the impugned

judgment. He submitted that there can be no doubt

that the Tenancy Act will determine the rights of the

landlord and the tenant in this case, but when there

is an arbitration agreement between a landlord and a

tenant, instead of the Civil Judge, the arbitrator will

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Page 7 decide the disputes between the landlord and the

tenant by applying the provisions of the Tenancy Act.

Findings of the Court

6.The relevant portion of Section 6 of the Tenancy Act

1997 is quoted hereinbelow:

“6. Protection of tenant against

eviction.—(1) Notwithstanding anything to

the contrary contained in any other law for

the time being in force or in any contract,

no order or decree for the recovery of the

possession of any premises shall be made

by the Civil Judge having jurisdiction in

favour of the landlord against the tenant,

except on a suit being instituted by such

landlord on one or more of the following

grounds:—

……………………………………………………… ..”

It will be clear from the language of Section 6 of the

Tenancy Act 1997 quoted above that ‘notwithstanding

anything to the contrary contained in any contract’, no

order or decree for recovery of possession of any premises

shall be made by the Civil Judge having jurisdiction in

favour of the landlord against the tenant, ‘except on a suit

being instituted by such landlord’ on one or more grounds

mentioned therein. It is, thus, clear that Section 6 of the

Tenancy Act overrides a contract between the landlord

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Page 8 and the tenant and provides that only the Civil Judge

having jurisdiction can order or decree for recovery of

possession only in a suit to be filed by the landlord.

7.Part-I of the 1996 Act is titled ‘arbitration’. Section 8

of the 1996 Act is extracted hereinbelow:

“8. Power to refer parties to arbitration

where there is an arbitration agreement.--

(1) A judicial authority before which an

action is brought in a matter which is the

subject of an arbitration agreement shall, if

a party so applies not later than when

submitting his first statement on the

substance of the dispute, refer the parties

to arbitration.

(2) The application referred to in subsection

(1) shall not be entertained unless it is

accompanied by the original arbitration

agreement or a duly certified copy thereof.

(3) Notwithstanding that an application has

been made under sub- section (1) and that

the issue is pending before the judicial

authority, an arbitration may be

commenced or continued and an arbitral

award made.”

A reading of sub-section (1) of Section 8 of the 1996 Act

will make it clear that a judicial authority before which an

action is brought in a matter which is the subject of an

arbitration agreement shall refer the parties to arbitration.

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Page 9 Without ‘an arbitration agreement’, therefore, a judicial

authority cannot refer the parties to arbitration.

8. In this case, there is an arbitration agreement in

clause 15 of the tenancy agreement, which provides

that any dispute regarding the contents or

construction of the tenancy agreement or dispute

arising out of the tenancy agreement shall be settled

by arbitration in accordance with the provisions of

the 1996 Act. But the words ‘notwithstanding

anything in any contract’ in Section 6 of the Tenancy

Act, will override the arbitration agreement in clause

15 of the tenancy agreement where a suit for

recovery of possession of any premises has been

filed by a landlord against the tenant. Such a suit

filed by the landlord against the tenant for recovery

of possession, therefore, cannot be referred under

Section 8 of the 1996 Act to arbitration. In fact, sub-

section (3) of Section 2 of the 1996 Act expressly

provides that Part-I which relates to ‘arbitration’

where the place of arbitration is in India shall not

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Page 10 affect any other law for the time being in force by

virtue of which certain disputes may not be

submitted to arbitration. Section 6 of the Tenancy

Act is one such law which clearly bars arbitration in a

dispute relating to recovery of possession of

premises by the landlord from the tenant. Since the

suit filed by the appellants was for eviction, it was a

suit for recovery of possession and could not be

referred to arbitration because of a statutory

provision in Section 6 of the Tenancy Act.

9.In Natraj Studios (P) Ltd. v. Navrang Studios & Anr.

(supra), there was a leave and licence agreement

between Natraj Studios (P) Ltd. and Navrang Studios.

On 28.04.1979, Navrang Studios purported to

terminate the leave and licence agreement and

called upon Natraj Studios (P) Ltd. to hand over the

possession of the studios to them. Natraj Studios (P)

Ltd. filed a suit on 08.05.1979 in the Court of Small

Causes, Bombay, for a declaration that Natraj Studios

(P) Ltd. was a monthly tenant of the studios and for

fixation of standard rent and other reliefs. Navrang

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Page 11 Studios filed a written statement contesting the suit.

Natraj Studios (P) Ltd. filed an application under

Section 33 of the Arbitration Act, 1940 in the Bombay

High Court for a declaration that the arbitration

clause in the leave and licence agreement was

invalid and inoperative. The High Court dismissed

the application. Thereafter, Navrang Studios filed an

application under Section 8 of the Arbitration Act,

1940 for appointment of a sole arbitrator to decide

the disputes and differences between the parties

under the leave and licence agreement. The High

Court allowed the application and appointed a sole

arbitrator. On appeal being carried to this Court by

Natraj Studios (P) Ltd., this Court held that Section

28(1) of the Bombay Rent Act vests an exclusive

jurisdiction in 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. This Court further held

that the Bombay Rent Act was a welfare legislation

aimed at the definite social objective of protection of

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Page 12 tenants against harassment by landlords in various

ways and public policy requires that contracts to the

contrary which nullify the rights conferred on tenants

by the Act cannot be permitted and it follows that

arbitration agreements between parties whose rights

are regulated by the Bombay Rent Act cannot be

recognized by a court of law. This decision in Natraj

Studios (P) Ltd. v. Navrang Studios & Anr . (supra)

supports our conclusion that the arbitration

agreement between the landlord and tenant has to

give way to Section 6 of the Tenancy Act which

confers exclusive jurisdiction on the Civil Judge, to

decide a dispute between the landlord and the tenant

with regard to recovery of possession of the tenanted

premises in a suit filed by the landlord.

10. The High Court, however, has relied on three

decisions of this Court to hold that it is for the arbitral

tribunal to decide under Section 16 of the 1996 Act

whether it has the jurisdiction to decide the dispute

between the appellants and the respondents. We

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Page 13 may distinguish those cases from the facts of the

present case.

11.In Hindustan Petroleum Corporation Ltd. v. Pinkcity

Midway Petroleums (supra), Hindustan Petroleum

Corporation Ltd. stopped supply of petroleum

products to the dealer and the dealer filed a civil suit

in the Court of Civil Judge, Rewari, for a declaration

that the order stopping supply of petroleum product

was illegal and arbitrary. Hindustan Petroleum

Corporation Ltd. filed a petition under Section 8 of

the 1996 Act praying for referring the dispute

pending before the Civil Court to the arbitrator as per

Clause 40 of the Dealership Agreement. The Civil

Judge dismissed the petition and Hindustan

Petroleum Corporation Ltd. filed a revision before the

High Court, but the High Court also dismissed the

revision. Hindustan Petroleum Corporation Ltd.

thereafter filed an appeal before this Court and this

Court held that Section 8 of the 1996 Act in its clear

terms mandates a judicial authority before whom an

application is brought in a matter, which is the

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Page 14 subject-matter of an arbitration agreement, to refer

such parties to the arbitration. In this case, the

arbitration agreement contained in Clause 40 of the

Dealership Agreement was not hit by a statutory

provision like the one in Section 6 of the Tenancy Act

providing that the dispute shall be decided only by a

Civil Judge in a suit notwithstanding a provision in the

contract to the contrary.

12.In Agri Gold Exims Ltd. v. Sri Lakshmi Knits & Wovens

& Ors. (supra), the parties had entered into a

memorandum of understanding in relation to the

business of export and the memorandum of

understanding contained an arbitration clause that in

case of any dispute between the two parties, the

same shall be referred to arbitration, by two

arbitrators, nominated by each of the parties and the

award of the arbitrators shall be binding on both the

parties. Agri Gold Exims Ltd. filed a suit in the

District Court at Vijayawada for recovery of an

amount of Rs.36,14,887/- and for future interest on a

sum of Rs.53,79,149/-. Sri Lakshmi Knits & Wovens

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Page 15 filed an application under Section 8 of the 1996 Act

for referring the dispute to the arbitral tribunal in

terms of the arbitration agreement contained in the

memorandum of understanding. This application,

however, was dismissed by the District Court, but on

revision the High Court reversed the order of the

District Court and referred the parties to arbitration.

Agri Gold Exims Ltd. carried an appeal to this Court

and this Court reiterated that Section 8 of the 1996

Act is peremptory in nature and in a case where

there exists an arbitration agreement, the Court is

under obligation to refer the parties to arbitration in

terms of the arbitration agreement, relying on

Hindustan Petroleum Corporation Ltd. (supra). In this

case again, there was no statutory bar to arbitration

like the one in Section 6 of the Tenancy Act providing

that the dispute can only be decided by the Civil

Judge in a suit.

13. In Branch Manager, Magma Leasing & Finance

Limited & Anr. v. Potluri Madhavilata & Anr. (supra),

Magma Leasing Limited Public United Company (for

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Page 16 short ‘Magma’) and Smt. Potluri Madhavilata (for

short ‘hirer’) entered into an agreement of hire-

purchase for the purchase of a motor vehicle

whereunder the hirer was required to pay hire-

purchase price in 46 instalments. When the

instalments were not paid, Magma seized the vehicle

and sent a notice to the hirer saying that the hire-

purchase agreement has been terminated. The hirer

then filed a suit against Magma in the Court of the

Senior Civil Judge for recovery of possession of the

vehicle and for restraining Magma from transferring

the vehicle. Magma filed a petition before the Civil

Judge under Section 8 of the 1996 Act praying that

the dispute raised in the suit be referred to an

arbitrator in terms of Clause 22 of the Hire-Purchase

Agreement, which contained the arbitration

agreement. This Court reiterated that Section 8 is in

the form of legislative command to the court and

once the prerequisite conditions are satisfied, the

Court must refer the parties to arbitration. In this

case again, there was no statutory bar to arbitration

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Page 17 like Section 6 of the Tenancy Act providing that the

dispute can only be decided by a Civil Judge.

14.The High Court, therefore, was not correct in coming

to the conclusion that as per the decisions of this

Court in the aforesaid three cases, the Court has no

alternative but to refer the parties to arbitration in

view of the clear mandate in Section 8 of the 1996

Act. On the contrary, the relief claimed by the

appellants being mainly for eviction, it could only be

granted by the “Civil Judge having jurisdiction” in a

suit filed by the landlord as provided in Section 6 of

the Tenancy Act. The expression “Civil Judge having

jurisdiction” will obviously mean the Civil Judge who

has jurisdiction to grant the other reliefs: decree for

arrears of rent, decree for recovery of arrears of

proportionate and enhanced municipal taxes, a

decree for mesne profits and a decree for permanent

injunction claimed in the suit.

15. For the aforesaid reasons, we allow this appeal and

set aside the impugned judgments of the High Court

and the Civil Judge, Senior Division, and remand the

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Page 18 matter to the learned Civil Judge, Senior Division,

who will now give an opportunity to the respondents

to put in their written statements and thereafter

proceed with the suit in accordance with law.

Considering the peculiar facts of this case, there shall

be no order as to costs.

.....……………..…….J.

(A. K. Patnaik)

....…………..……….J.

(V. Gopala Gowda)

New Delhi,

March 07, 2014.

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