JUSTICE SHIV NARAYAN DHINGRA

1. The petitioner is aggrieved by an order dated 31st May, 2007 whereby an application made by the petitioner for referring the subject matter of suit to the arbitration was declined by the learned Trial Court.

2. The respondent filed a suit for recovery of possession of the premises in dispute along with mesne profits. The premises were let out to the petitioner in May, 1975 and again by an agreement on 16th August, 1978. This agreement was for a period of 2 years. Thereafter, the premises remained under tenancy of the petitioner without any written agreement. The terms of oral tenancy also kept on changing and a new oral month-to-month tenancy came into existence on 1st January, 2005. There was an arbitration clause in the lease agreement dated 16th August, 1978. The respondent/landlord filed this suit for possession on the basis of termination of tenancy by a notice

dated 30th August, 2006. The petitioner filed an application that the matter should be referred to arbitration. This application was dismissed by the Trial Court holding that the terms of tenancy got changed between the parties by oral agreement and the defendant cannot rely upon agreement dated 16th August, 1978 to claim existence of arbitration clause.

3. It is submitted by counsel for the petitioner that the agreement dated 16th August, 1978 was a business agreement executed between the parties and the respondent/plaintiff in terms of this agreement was entitled to a guaranteed sale commission and it was agreed that the petitioner shall pay a consolidated sum of Rs.15,000/- per month towards sale commission and rental. Since this agreement of 1978 contained an arbitration clause, the Court was bound to refer the matter to the Arbitrator for adjudication.

4. A perusal of the agreement dated 16th August, 1978 filed by the petitioner would show that the relationship between petitioner and the respondent was that of a lesser and lessee and lease was granted to the petitioner in 1978 for a period of 3 years starting from 3rd March, 1977. An option was given in the agreement to renew the terms and conditions of the lease upon mutually agreed terms. There was also a clause for terminating the agreement in case of failure on the part of either of the parties in fulfilling the terms. After this agreement, which expired in 1980, no new agreement was executed.

5. It is settled law that in case of lease of immovable properties, if the lease is for a period of one year or more lease deed is required to be compulsorily registered. The agreement relied upon by the petitioner is an unregistered. Even otherwise, this agreement exhausted itself in 1980 and after 1980 there was no written agreement between the parties. After 1980 premises remained in occupation of petition on the basis of a lease which was orally created from time to time and renewed from time to time as a month-to-month tenancy. The Court cannot look into or rely upon an unregistered document which purports to create lease of one year or more than one year. If a document is inadmissible because of its non-registration or because of its not having proper stamp duty, all its terms are inadmissible including the one which provides for an arbitration between the parties. An arbitration agreement can be enforced only along with the contract between the parties and such a contract must be a valid contract, admissible under law. If a contract is not admissible in law, every clause of it is inadmissible in law including arbitration clause.

6. Even if this lease agreement had been a registered lease agreement, on expiry of the lease period fixed in the original lease deed, the lease would have come to an end. Since no written lease deed was executed between the parties a new contract of tenancy had come into existence between the parties created orally. The parties cannot resort to the terms and conditions of the exhausted contract when a new contract had come into existence. If