1981 (1) TMI 279 - SC - Indian Laws

Summary

Issues Involved:
1. Jurisdiction of the Court of Small Causes vs. Arbitrator
2. Applicability of the Bombay Rent, Hotel and Lodging House Rates Control Act, 1947
3. Interpretation of the 'leave and licence' agreement
4. Public policy considerations in tenancy disputes
5. Validity of the arbitration clause in the 'leave and licence' agreement

Issue-wise Detailed Analysis:

1. Jurisdiction of the Court of Small Causes vs. Arbitrator:
The core issue was whether the Court of Small Causes or an arbitrator had jurisdiction to resolve the dispute concerning the possession of the studios. The Court held that the Bombay Rent Act confers exclusive jurisdiction on the Court of Small Causes to entertain and try any suit or proceeding between a landlord and tenant relating to recovery of rent or possession of any premises. The Act also excludes the jurisdiction of any other Court, including an arbitrator, from entertaining such disputes. The Court emphasized that public policy requires disputes under the Rent Act to be resolved by the specialized courts constituted under the Act.

2. Applicability of the Bombay Rent, Hotel and Lodging House Rates Control Act, 1947:
The appellant argued that after the 1973 Amendment, the status of the appellant was that of a 'deemed tenant' under Section 15A of the Act. The Court agreed, stating that the amendment deemed licensees in occupation of premises on February 1, 1973, to be tenants. The Court also clarified that the definition of 'premises' under the Act includes buildings given on licence for business purposes, thus bringing the 'leave and licence' agreement within the ambit of the Act.

3. Interpretation of the 'leave and licence' agreement:
The agreement provided 'leave and licence' for the use of studios and other premises, as well as machinery and equipment. The Court found that the agreement was a composite one, granting licence to use both the premises and the equipment for producing films. The Court rejected the respondent's argument that the licence was primarily for the business of shooting films, with the use of the premises being merely incidental. The Court held that the studios given on licence were 'premises' under the Act, thus attracting its protective provisions.

4. Public policy considerations in tenancy disputes:
The Court underscored that the Bombay Rent Act is a welfare legislation aimed at protecting tenants from harassment by landlords. It is a matter of public policy that disputes under the Act be resolved by specialized courts. The Court noted that allowing arbitration agreements to override the jurisdiction of the Court of Small Causes would nullify the rights conferred on tenants by the Act, which is against public policy.

5. Validity of the arbitration clause in the 'leave and licence' agreement:
The Court declared the arbitration clause in the 'leave and licence' agreement to be inoperative. It reasoned that the dispute concerning the possession of the studios fell squarely within the jurisdiction of the Court of Small Causes under the Bombay Rent Act. The Court also noted that the respondent had filed a written statement in the suit before the Court of Small Causes without seeking a stay under Section 34 of the Arbitration Act, thereby precluding them from seeking arbitration.

Conclusion:
The appeals were allowed with costs, and the arbitration clause in the agreement dated March 28, 1970, was declared inoperative. The application for reference to arbitration was dismissed, affirming that the Court of Small Causes had exclusive jurisdiction to adjudicate the dispute.