Central Warehousing Corporation (A Govt. of India Undertaking) vs Fortpoint Automotive

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2009 Supreme(Bom) 1742

High Court of Judicature at Bombay
THE HONOURABLE CHIEF JUSTICE MR. SWATANTER KUMAR, THE HONOURABLE MR. JUSTICE A.M. KHANWILKAR & THE HONOURABLE MRS. JUSTICE R.P. SONDURBALDOTA
Central Warehousing Corporation (A Govt. of India Undertaking)
Versus
M/s. Fortpoint Automotive Pvt.Ltd.
WRIT PETITION NO.4614 OF 2009
Decided on : 16-12-2009

Advocates appeared:
For the Petitioner:S.U. Kamdar, Sr.Counsel with Ms. Pooja Patil and Ms. Suvindhe Shah i/b. S.I. Shah & Co., Advocates. For the Respondents:Umesh Shetty with Ms. Sharila D’Souza, Roshan D’Souza and Mitesh Naik i/b M/s. Umesh Shetty & Co., Advocates.

Headnote:Presidency Small Cause Courts Act, 1882 - Section 41 - Arbitration and Conciliation Act, 1996, Section 2(3) and 5 - Jurisdiction of Small Causes Courts - Reference to Full Bench - Held - Small Causes Court has exclusive jurisdiction to try and decide dispute specified in Section 41 of Act 1882 inspite of arbitration agreement between parties and non obstante clause in Section 5 of Act, 1996 - Jurisdiction not ousted. - In summation 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 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 any 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 abstante 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. 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.
Accordingly, answer the question referred to Court in the negative. 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.

Judgment :

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 unauthorized 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

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2009 Supreme(Bom) 1742

Cases Referred (22)