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2022 Supreme(Online)(Ker) 75595
IN THE HIGH COURT OF KERALA AT ERNAKULAM
V. G. Arun, J
KRISHNAN – Appellant
Versus
HINDUSTAN PETROLEUM CORPORATION LIMITED – Respondent
OP(C) NO. 1500 OF 2015 | O.S.No.293/2013
For the Appellants/Petitioners: M.P. SAMPATH KUMAR, ALEX M. SCARIA, G.BAIJURAJ, SARITHA THOMAS
For the Respondents: P.BENNY THOMAS, M.GOPIKRISHNAN NAMBIAR, S.SREEKUMAR (SR.), C.DEVIKA RANI KAIMAL, K.JOHN MATHAI, JOSON MANAVALAN, V.R.KESAVA KAIMAL, KURYAN THOMAS, CHETHAN KRISHNA R., M.S. P.MARTIN JOSE, P.PRIJITH THOMAS, P.KURUVILLA, AJAY BEN JOSE, MANJUNATH MENON, SACHIN JACOB AMBAT, R.GITHESH, HANI P.NAIR, ANNA LINDA V.J, HARIKRISHNAN S.
The court confirmed arbitration validity post-agreement termination, asserting disputes under the arbitration clause are separable and subjected to arbitration despite wider legal provisions.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 8 - Arbitration clause - Dispute resolution - The court found the arbitration clause valid even after the lease expiration; the dispute was found to be arbitrable according to precedents - Emphasizing the doctrine of separability and competence-competence, it was held that the arbitral tribunal could determine its jurisdiction independently. (Paras 11-12)
(B) Arbitration Agreement - The court delineated that an arbitration agreement holds its validity post-termination of a contract and can govern disputes arising “in respect of” the contract despite its cessation. (Paras 8-9)
Facts of the case:
The dispute arose from a landlord-tenant relationship where the original lease agreement lapsed, and the tenant sought arbitration concerning possession and other reliefs post-notice from the petitioner/grantor, who sought recovery of the property.
Findings of Court:
The arbitration clause survives despite the expiration of the main contract, and disputes related to tenancy issues can be adjudicated through arbitration.
Issues: The core issue was whether the arbitration clause was enforceable despite the lease agreement's termination and whether disputes regarding possession are solely within the civil court's jurisdiction.
Ratio Decidendi: Arbitration remains valid post-termination of the substantive contract, and disputes over rights arising from such relations can be arbitrated based on the principles of separability and competence-competence.
Result: The original petition is dismissed.
| Table of Content |
|---|
| 1. tenant's status in relation to expired lease. (Para 1 , 2) |
| 2. arguments on privity and jurisdiction of arbitration. (Para 3 , 4 , 5) |
| 3. court's observations on arbitration agreement validity. (Para 6 , 7 , 8 , 9 , 10) |
| 4. court's conclusion on dispute arbitrability. (Para 11) |
| 5. final ruling on original petition dismiss. (Para 12) |
JUDGMENT
The petitioner had filed O.S.No.293 of 2013 before the Principal Sub Court, Ernakulam based on the following averments;
Petitioner is the absolute owner of the plaint schedule property having an extent of 39.620 cents of land comprised in Sy.No.931/1 of Nadama Village in Ernakulam District. The property originally belonged to the petitioner's mother, Lakshmi Marar, who expired on 29.9.2010. During her life time, Lakshmi Marar had executed registered Document No.599 of 1969 of Sub Registrar's Office, Tripunithura leasing out the plaint schedule property to respondents 1 and 2 for conducting a petroleum retail outlet. The 3rd respondent is conducting the outlet, on the strength of a licence granted by respondents 1 and 2. The lease agreement was renewed from time to time and thus, Exhibit P4 lease deed was executed on 23.12.1994, renewing the lease by 20 years from 1.4.1992. The period covered by Exhibit P4 expired on 31.3.2012. Thereupon, the petitioner, who by that time had become the owner of the property, caused a lawyer's notice to be issued to respondents 1 and 2, demanding vacant possession of the property after removing all structures and movables therein. The respondents sent a reply referring to Clause 2(c) of Exhibit P4 agreement to point out that the lease is renewable for a further term of 20 years and requesting the petitioner to renew the lease agreement. As petitioner was not amenable for such course of action the suit was filed, seeking the following reliefs;
“i. grant a decree of recovery of possession of the plaint schedule property.
ii. grant a decree of mandatory injunction directing the defendants to remove the structures and other equipments installed in the plaint schedule property. (Item No.2).
Iii. grant a decree of relief of arrears of rent amounting to 29,500/- together with interest at the rate of12% from 31.3.2012 till realisation.”
2. On being served with notice in the suit, respondents 1 and 2 entered appearance and filed Exhibit P1 application (I.A.No.4670 of 2013), referring to the arbitration clause in Exhibit P4 agreement and seeking to refer the dispute to arbitration, as mandated under Section 8 of the Arbitration Act, 1996. Petitioner opposed the prayer in the application, contending that there is no privity of contract between the petitioner and the 3rd defendant, who is conducting the petroleum outlet as per the licence agreement entered with the defendants. That apart, the 3rd defendant not being a party to the lease deed, the suit cannot be referred to arbitration. By Exhibit P3 order, the learned Sub Judge allowed the interlocutory application, relying on the decision of the Honourable Supreme Court in Hindustan Petroleum Corpn Ltd. v. Pinkcity Midway Petroleums [ 2003 6 SCC 503 ]. After referring the dispute to arbitration, the original suit was dismissed.
3. Advocate Alex M. Scaria, learned Counsel for the petitioner, assailed Exhibit P3 order on the following grounds;
The agreement period having expired on 31.3.2012, the lease stood determined with effect from that date. The court below could not have referred the parties to arbitration based on the arbitration clause in a non-existent agreement. Further, since the lease stood determined, the status of the respondents are that of tenants at sufferance and as such, they figure as mere trespassers. The reliefs in the suit are founded on the provisions in the Specific Relief Act and Transfer of Property Act which can be adjudicated only in a civil court. Even if it is accepted that the arbitration clause is in subsistence, the relief of recovery of possession cannot be decided or decreed by the
