Summary
The Supreme Court upheld the High Court's appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. Disputes over the renewal of a warehousing lease and the revision of storage charges during its term arose out of the agreement and fell within its arbitration clause, and the Public Premises Act, 1971 neither barred nor overlapped with them. The appeal was dismissed with costs of Rs. 50,000.
Issues
- Whether the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 overrides the Arbitration and Conciliation Act, 1996 so as to exclude arbitration of the parties' disputes.
- Whether the High Court erred in appointing an arbitrator under Section 11(6) of the 1996 Act for disputes over renewal of the lease and enhancement of storage charges.
Provisions considered
- Eviction of unauthorised occupants (scheme of the Act), Public Premises (Eviction of Unauthorised Occupants) Act, 1971The Court held that the Act deals with ejectment of persons in unauthorised occupation of public premises and consequential directions; it does not touch disputes about rights and obligations during the subsistence of the lease (12.09.2012 to 11.09.2015) or about the contractual right of renewal, and so does not bar arbitration of those disputes. (¶ 13)
- Section 11(6) and 11(6A), Arbitration and Conciliation Act, 1996Following SBI General Insurance Co. Ltd. v Krish Spinning, the Court held that a referral court under Section 11(6) only examines the prima facie existence of an arbitration agreement; since Clause 16 covered all disputes arising out of or touching the agreement, the High Court rightly appointed an arbitrator. (¶¶ 2, 14)
Held
- The disputes raised in the Section 11 application concerned reciprocal promises under the lease agreement: the right of renewal and the legality of rate revisions made while the lease subsisted. These depend on the construction of the agreement, whereas the Public Premises Act only provides for ejectment of unauthorised occupants of public premises. That Act neither bars nor overlaps with the arbitration proceedings, and does not override the Arbitration Act in this situation. (¶ 13)
- Both the revision of storage charges and the claimed right of renewal arise out of the agreement and are covered by its arbitration clause, which extends to all disputes arising out of or touching upon the agreement. (¶ 14)
- At the Section 11(6) stage the referral court is confined to a prima facie examination of the existence of an arbitration agreement; contested questions are left to the arbitral tribunal under Section 16. The High Court committed no error in appointing the arbitrator. (¶ 14)
- Because the appellant had pursued unnecessary litigation, it was ordered to pay costs, and the arbitral tribunal, whose proceedings had been stayed pending the appeal, was directed to resume and decide expeditiously. (¶¶ 15, 16)
Result
Appeal dismissed with costs of Rs. 50,000 payable by the appellant; arbitral tribunal directed to resume the proceedings stayed by the order of 01.04.2022 and to deliver the award expeditiously.