2014 (6) TMI 212 - HC - Indian Laws

Validity of arbitrator s award - Agreement for lease - Dispute over payment of conducting fees, outgoings and property tax - Arbitrator decided in favour of Respondents - Held that - Admittedly, the Judgment of the Full Bench was not referred, when the issue was raised and not adjudicated by the learned Arbitrator accordingly - The question is always in such matters to consider the facts and circumstances apart from the agreement between the parties. The jurisdiction of the Arbitral Tribunal, in view of above Judgment if excluded, in that case, merely because the Civil Suit was filed by the Petitioner, that itself in no way empowers and/or takes away the right of the Petitioner to raise the preliminary objection about the jurisdiction of the Arbitral Tribunal and get to be decided and/or dealt with the subject of leave and license and/or occupation charges , arising out of such exclusive occupation. The handing over of the possession pending the Arbitration, in no way takes away the specific pleadings so raised and as quoted above by the Petitioner with regard to the jurisdiction of the Arbitral Tribunal. The Arbitrator has no jurisdiction and/or authority to pass and to entertain such claim, as it is barred by specific provisions. The consequential orders/reliefs so passed, therefore, also unsustainable. This itself is not mean that the Respondent is not entitled to take appropriate steps in accordance with law. We are concerned with the eviction order and related orders passed by the Arbitrator. In the present facts and circumstances, therefore, keeping all points open as the remedy is elsewhere, I am inclined to set aside the award. The amount paid and received shall be subject to adjustment. The parties are at liberty to settle the matter - so far as the costs is concerned, the Claimant Petitioner is under obligation to make the payment as per bill dated 14 January 2010 as mentioned in para 70 of the Award. The amount to be paid to the Respondent as submission is made by the learned senior counsel appearing for the Respondent that they have already made the payment as per the bill. The Petitioner to make the payment therefore directly to the Respondent within four weeks - Following decision of M/s. Thakker Warehousing Agency Vs. Maharashtra Small Scale Industries Development Corporation Ltd. 2014 (6) TMI 208 - BOMBAY HIGH COURT - Order modified regarding costs - Decided in favour of appellants.

Summary

Issues Involved:
1. Jurisdiction of the Arbitrator.
2. Nature of the agreement (Leave and License vs. Business Conducting Agreement).
3. Award of costs and payment obligations.

Detailed Analysis:

1. Jurisdiction of the Arbitrator:
The primary issue was whether the Arbitrator had jurisdiction to entertain and decide the dispute, given the nature of the agreement and the relationship between the parties. The Petitioner argued that the nature of the possession was that of a license to use the Hyper Market Store Area and that such issues should be determined exclusively by the Civil Court, not through arbitration. The court referred to several precedents indicating that disputes involving "leave and license" agreements, possession, and occupation charges fall under the jurisdiction of specific statutes and not under arbitration. The court concluded that the Arbitrator lacked jurisdiction, stating, "The Arbitrator has no jurisdiction and/or authority to pass and to entertain such claim, as it is barred by specific provisions as referred above."

2. Nature of the Agreement:
Another significant issue was the interpretation of the agreement between the parties-whether it was a "Leave and License Agreement" or a "Business Conducting Agreement." The Petitioner contended that the agreement was a Leave and License Agreement, which would fall under the jurisdiction of the Civil Court. The court examined the agreement's clauses and the parties' conduct, concluding that the agreement created a relationship of "Licensor and Licensee." The court noted, "The nature of clauses and the agreement, in my view, create the relationship of 'Licensor and Licensee' and fall within the ambit of specific law."

3. Award of Costs and Payment Obligations:
The Arbitrator had awarded costs to the Respondent and directed the Petitioner to pay specific amounts. The court modified this aspect of the award, stating that since the award was quashed on jurisdictional grounds, the Petitioner should bear its own costs and not the costs of the Respondent. The court ordered, "The award is modified to that extent," and clarified that the Petitioner was still obligated to make payments as per the bill dated 14 January 2010 but not the costs awarded in paragraph 69 of the Award.

Conclusion:
The court quashed and set aside the Arbitrator's award on the grounds of lack of jurisdiction, emphasizing that disputes involving "leave and license" agreements should be adjudicated by the Civil Court. The court also modified the award concerning costs, directing the Petitioner to bear its own costs. The parties were encouraged to settle the matter, with all points kept open for further adjudication if necessary. The order concluded with, "Award dated 4 February 2010 is quashed and set aside, except the award of costs as modified in paragraph No. 21 of this Judgment."