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2025 Supreme(Online)(Mad) 27143
IN THE HIGH COURT OF JUDICATURE AT MADRAS
CHANDIRA, J
N.Nachiappan – Appellant
Versus
M/s.GTL Infrastructure Limited – Respondent
C.R.P.No.558 of 2024
For the Appellants/Petitioners: Mr.A.Babu
For the Respondents: Mr.C.Sakthimanikandan
Arbitration clauses cannot be enforced to frustrate eviction claims or possession disputes after lease expiry and waiver of monetary claims, especially where arbitration venue is inconvenient and the litigation is prolonged.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 8 - Arbitration clause in unregistered licence agreement - Referral of disputes to arbitration - Suit for eviction and arrears of rent - Court's jurisdiction and applicability of arbitration clause - Territorial jurisdiction and fairness in arbitration venue (Paras 7, 17, 18).
(B) Arbitration - Scope and limitation - Arbitration may not be appropriate after expiry of the contract period with long delay and waiver of monetary claims - Arbitration not to be used to protract litigation unnecessarily (Paras 12, 17).
Facts of the case:
The petitioner, landlord, filed suit for eviction and recovery of arrears of rent against the defendant tenant based on a licence agreement for mobile tower installation. The defendant invoked arbitration clause under the agreement to refer disputes to arbitration in Pune. The Trial Court allowed the defendant's application holding the suit not maintainable. The petitioner challenged this referral.
Findings of Court:
The court held that despite existence of arbitration clause, given the elapsed long period (more than 10 years), waiver of arrears claims by petitioner, and the unfairness of enforcing arbitration in a distant place (Pune), the dispute over possession is inappropriate for arbitration. The respondent was directed to vacate the premises within one month with no further claims by either party.
Issues: Whether the arbitration clause in an unregistered licence agreement is enforceable to refer eviction and rent recovery disputes to arbitration outside territorial jurisdiction after expiry of the lease and waiver of arrears claims.
Ratio Decidendi: Where parties have agreed disputes be referred to arbitration, such reference is generally binding. However, arbitration clauses cannot be used mechanically to prolong or frustrate just claims, especially where the dispute concerns possession after contract expiry and monetary claims are waived. Territorial jurisdiction and fairness also impact enforceability of arbitration clauses.
Result: Civil revision petition allowed. The suit was held maintainable in court for eviction and possession, and arbitration clause held inapplicable under these circumstances. Respondent ordered to vacate premises within one month.
| Table of Content |
|---|
| 1. facts establishing agreement terms and arrears default (Para 2 , 6 , 14 , 15) |
| 2. parties' contentions on arbitration applicability and jurisdiction (Para 3 , 4) |
| 3. court’s analysis on arbitration clause enforceability and exceptions (Para 7 , 8 , 12 , 17) |
| 4. historical litigation context and waivers affecting enforcement (Para 9 , 10 , 11 , 13 , 16) |
ORDER
The civil revision petition has been filed against the Fair and Decreetal order dated 21.9.2023 made in I.A.No.1 of 2021 in O.S.No.7622 of 2019 on the file of the XVIII Assistant Judge, City Civil Court, Chennai, whereby, the Trial Court has referred the parties to arbitration.
2. Brief facts of the case:-
i) The petitioner herein is the plaintiff and the respondent herein is the defendant. The petitioner herein had filed a suit in O.S.No.7622 of 2019 as against the defendant/respondent viz., GTL Infrastructure Limited (GTL) alleging as under:-
The defendant had entered into an agreement dated 13.02.2010 with the petitioner/plaintiff for a period of 10 years agreeing to pay a rent at Rs.10,000/- per month for the first 3 years and thereafter with the added escalation of 15% for every 3 years and at the time of inception of tenancy, the defendant had paid a sum of Rs.1,00,000/- towards security deposit. The rent was periodically enhanced in terms of the said lease agreement to Rs.11,500/- and further enhanced to Rs.13,225/-. The defendant has failed and neglected to pay the monthly rent at Rs.15,209/- from February 2019 to till date, in terms of the lease agreement. The defendant also failed to pay the contractual rent but chosen to pay Rs.6,613/- only from March 2018. However, instead of paying the said sum of Rs.15,209/-, the defendant is paying Rs.6,613/- every month till date. As such, the defendant is in arrears of rent of Rs.1,39,516/-. The plaintiff has issued a notice dated 26.06.2019, terminating the tenancy. The defendant is liable to pay damages for such illegal and wrongful occupation of the suit property at Rs.50,000/- per month from 01.08.2019 to the plaintiff. The defendant is liable to pay a sum of Rs.1,39,516/-.
ii) Contending that the suit is not maintainable in view of clause 17 of the Licence Agreement dated 13.2.2010 entered between the plaintiff and the defendant, which contemplates referral of any dispute arising out of such agreement to a sole arbitrator in accordance with the provisions of the Arbitration and Conciliation Act, 1996 and the arbitration shall be held at Pune, the defendant had sought for referring the suit for arbitration by filing an Application in I.A.No.1 of 2021.
iii) The court below, finding that the parties are bound by the arbitration clause found in the Licence Agreement dated 13.2.2010, allowed the Application filed by the defendant holding that the suit is not maintainable before the court. Challenging the same, the present civil revision petition has been filed.
3. The crux of the submissions of the learned counsel for the petitioner is as under:-
i) The suit itself has been filed for eviction of the respondent, of course for the ancillary relief of recovery for arrears of rent and for past and future damages for unlawful use and occupation and thus, the court below had erred in allowing the application filed by the defendant holding that the suit is not maintainable.
ii) Merely because the the petitioner had signed the agreement prepared by the licensee, it may not be appropriate to drive an innocent landlord, who let the property situate at Chennai, for arbitration at Pune even for seeking eviction.
iii) While the territorial jurisdiction lies within Chennai, on mere mentioning of a particular place outside the territorial jurisdiction in the agreement at the choice of the licensee for arbitration to resolve any dispute, without there being any consensus ad idem, it cannot be held that the licensor should approach the said place and thereby, the order passed by the court below warrants interference.
4. The submissions of
