The main legal point established in the judgment is the significance of arbitration clauses and the legislative command to refer parties to arbitration when an arbitration agreement exists, as per Section 8 of the Arbitration and Conciliation Act, 1996.

Shri A. P. BHANGALE, J. :

1. Since common questions of law and facts arise in both these petitions, they were heard together and are being disposed of by this common Judgment.

2. Rule. Learned counsel appearing for the respondents waives service. By consent, rule is made returnable forthwith in both the petitions.

3. By these writ petitions, the petitioners seek issuance of a mandamus or such direction against the respondents to adhere to clause 20.1 of the terms of the lease agreement between the petitioners and the Central Railway and for a direction/mandamus to the respondents to enter in to fresh lease agreement for a further period of two years by accepting 25% extra lease freight, as provided under clause 20.1 of the lease agreement.

4. Briefly stated the facts in Writ petition No.1951 of 2009 are thus :

The petitioners are a private limited company having their registered office at Vile Parle (E), Mumbai. They had entered into an agreement for leasing of parcel space in train No.5645DN, operating between LTT (Kurla) to Guwahati (Assam) for a period of three years with effect from 2792006 to 2692009 with the respondent Central Railway. The petitioners were awarded the contract pursuant to the tender floated by the Central Railway for a consideration of Rs.1,43,110/ for making use of the parcel van for a single trip between Kurla Mumbai to Guwahati (Assam).

5. So far as the facts in Writ Petition No.2566 of 2009 are concerned, in brief, they read thus:

The petitioners are a company having its registered office at 3, Kewal Industrial Estate, S.B. Marg, Lower Parel (W), Mumbai 400 013, and are engaged in the business of logistics, transporters and exporters. According to the petitioners, they had participated in a tender process of the respondents for taking on lease a parcel /space in break van/parcel van in train No.8029/30 from LTT to Shalimar. Accordingly an agreement dated 16th January 2007 came to be executed between the petitioners and the respondents for giving on lease the said parcel van of 25 tonnes for transportation on weekly basis by the said train with effect from 16th January 2007 on round trip basis for a period of three years.

6. Clause 20.1 of the lease agreement, which is relevant for decision in these petitions, reads thus:

"20.1 Extension of lease is permissible only in case of long term lease of 3 years wherein the same can be extended only once, by 2 more years at a lease rate of 25% more than the lumpsum leased freight rate subject to satisfactory performance by the lease holder without any penalty for overloading or violation of any provision of the contract".

7. Clause 28.0 of the lease agreement which provides for an arbitration in the event of any difference of opinion or dispute between the parties to the lease agreement and which is also relevant for decision in these petitions, reads thus:

"28.0 In the event of any difference of opinion or dispute between the Railway Administration and the Leaseholder as to the respective rights and obligations of the parties hereunder of as the true intent and meaning of these presents or any articles of condition thereof. Such difference of opinion shall be referred to the sole arbitrator or any officer appointed by the General Manager, Central Railway CSTM (name of head Quarter) for the time being whose decision shall be final, conclusive and binding on the parties, the intention of the parties being that every matter in respect of this agreement must be decided by him as sole arbitrator and not taken to a Civil Court. All disputes are subject to the territorial jurisdiction of Courts located in the Mumbai only."

8. According to the petitioners, they rendered extremely satisfactory services and there was no complaint against them of any nature. The petitioners by their respective letters, written prior to the expiry of their respective agreements, had requested the respondentCentral Railway to extend the lease agreement for a further period of two years and e