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2025 Supreme(Online)(Mad) 64528
2025:MHC:1980 IN THE HIGH COURT OF JUDICATURE AT MADRAS Reserved on : 11.08.2025 Pronounced on : 18.08.2025 CORAM:
THE HON'BLE MR. JUSTICE ABDUL QUDDHOSE Arb.O.P. (Com.Div.) No.421 of 2023 and A. No.4638 of 2023 Aparna Philip ... Petitioner Vs.
Dr. Jayalakshmi Shreedhar ... Respondent Prayer: Petition filed under Section 34 of the Arbitration and Conciliation Act to set aside the award dated 07.03.2023 and order dated 10.06.2022 in M.A. No.20 of 2022 filed under Section 16 of the Arbitration and Conciliation Act, 1996 passed by the Arbitral Tribunal.
For Petitioner : N.L. Rajah Senior Counsel for Thomas T. Jacob For Respondent : Nalini Chidambaram Senior Counsel for N. R. R. Arun Natarajan
Arbitration agreements remain enforceable under statutory tenant conditions even after the lease's expiration; the court limits judicial review to cases of patent irregularities or public policy violations.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Arbitral award challenge - Tenant challenged an award directing payment of rent arrears, asserting no arbitration agreement existed post-expiration of lease - The court confirmed that the statutory tenancy supports legality of arbitration terms even post-expiration. (Paras 5-6, 11-13, 32-34)
(B) Lease agreements - Binding arbitration clauses - The arbitrator validated the arbitration clause in the expired lease as continuing, due to statutory tenancy established on tenant's occupation past lease term expiration. (Paras 12, 18-30)
(C) Judicial Role - Standards for judicial review of arbitral awards - Court's intervention is limited to issues of patency and public policy, with the burden on the petitioner to demonstrate grounds for setting aside. (Paras 33-34)
Facts of the case:
The petitioner challenged an arbitration award for unpaid rent, contending that once the lease expired, there was no valid arbitration agreement, invoking statutory tenancy as basis for her claims.
Findings of Court:
The court affirmed that statutory tenancy precluded the dissolution of arbitration obligations arising from lease agreements, requiring adherence regardless of lease duration.
Issues: The principal issue revolved around the existence and enforceability of arbitration clauses following lease expiration, and the implications of statutory tenancy on arbitration agreements.
Ratio Decidendi: The court established that arbitration agreements retain enforceability under statutory tenancy conditions, negating the petitioner's claims of inapplicability post-lease expiration and validating arbitration jurisdiction based on statutory terms reflected in ongoing tenancy.
Result: Petition dismissed.
ORDER
This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 , challenging the impugned arbitral award dated 07.03.2023 passed in favour of the respondent against the petitioner.
2. Under the impugned arbitral award, the arbitrator has issued the following directions:
a) The petitioner was directed to pay a sum of Rs.25,66,762/- towards rental arrears to the respondent and interest along with 18% GST, after adjustment of advance and the petitioner was also made liable to pay interest at 9% on Rs.25,66,762/- from the date of the award till the date of payment;
b) The petitioner was also liable to pay damages at Rs.29,95,660/- together with interest at 9% to the respondent from the date of award till the date of payment;
c) The petitioner was also entitled to proportionate cost for the amounts awarded.
3. The petitioner, who is the tenant, was the respondent and the respondent, who is the landlord, was the claimant in the arbitration.
4. The petitioner has challenged the impugned arbitral award on the following grounds:
a) The written lease agreement dated 20.02.2012 has been succeeded / replaced by the oral tenancy agreement not containing provisions for arbitration;
b) There is an error apparent in the order passed by the arbitrator in the application filed by the petitioner under Section 16 of the Arbitration and Conciliation Act, 1996 as the arbitrator has erroneously given a finding in the said order while dismissing the petitioner's application that "beyond the lease period originally stipulated, the lease must be deemed to continue under statutory tenancy that began through contractual tenancy governed by an arbitral agreement".
c) The objections, as to the unregistered lease agreement and insufficiently stamped lease agreement, are purely legal pleas, which can be raised at any stage.
5. As seen from the grounds raised by the petitioner, who was a tenant under the respondent, the primary ground for challenge in this petition is that once the lease period under the lease agreement dated 20.02.2012 having got expired, the terms and conditions, which includes the arbitration clause, cannot be made applicable for the period after the expiry of the lease. In other words, the contention of the petitioner is that since the arbitral claim of the respondent arises out of the period after the expiry of the lease, the claim made by the respondent before the arbitrator is not an arbitrable dispute, as there is no arbitration agreement existing between the parties after the expiry of the lease under the lease agreement dated 20.02.2012.
6. According to the petitioner, the arbitrator has passed the arbitral award despite there being no arbitration agreement between the parties and also passed an erroneous order, dismissing the petitioner's application filed under Section 16 of the Arbitration and Conciliation Act, 1996 . The petitioner contends that since the lease agreement dated 20.02.2012 got expired on 04.04.2018, after which date, the tenancy of the petitioner was governed by statutory monthly oral tenancy, none of the subsequent statutory monthly oral tenancy agreements had a valid provision for arbitration.
7. In support of the petitioner's contention, the learned senior counsel for the petitioner drew the attention of this Court to the following authorities:
a) SMS Tea Estates Vs. Chandmari Tea Company reported in 2011 (14) SCC 66; This decision was relied upon in support of the proposition that if the parties had entered into two agreements and arbitration clause is found only in the first agreement and not in the second agreement, an arbitrator can be appointed only in respect of the disputes relating to the first agreement and not in respect of disputes relating to the second agreement;
b) Young Achievers Vs. IMS Learning Resources reported in 2013 (10) SCC 535. This decision was relied upon by the learned senior counsel for the petitioner in support of his contention that "arbitration clause
