Section 41 of the PSCC Act applies to incidental reliefs claimed by a party in a recovery suit; jurisdiction would also lie with Small Causes Court: Bombay High Court

Section 41 of the PSCC Act applies to incidental reliefs claimed by a party in a recovery suit; jurisdiction would also lie with Small Causes Court: Bombay High Court

The Bombay High Court in its recent judgement held that reliefs that are incidental to the possession of licensed premises cannot be sought in an application for interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act) and this is in view of the exclusive jurisdiction conferred on the Court of Small Causes under Section 41 of the Presidency Small Cause Courts Act, 1882 (PSCC Act).

It was reiterated by the Court that the bar contained in Section 41 of the PSCC Act applies not only to a suit for recovery of possession of immovable property but also to all other incidental reliefs which can be claimed by a party in a suit for recovery of possession and hence, the jurisdiction to grant such incidental reliefs would also lie with the Small Causes Court.

The facts of the case are that a Leave and License Agreement was entered between the parties. Upon the expiry of the Agreement by efflux of time, the petitioner/licensor BXIN Office Parks India Pvt. Ltd. issued a notice to the respondent/licensee Kailasa Urja Pvt. Ltd. to handover the possession of the licensed property.

However, the respondent refused to vacate and handover the licensed premises to the petitioner. Consequently, an application was filed under Section 9 of the A&C Act by the petitioner, pursuant to the arbitration clause under the Agreement, before the Bombay High Court for interim relief and sough an injunction against the respondent from utilizing the licensed premises.

Whilst disputing the maintainability of the petition under Section 9 of the A&C Act, the respondent submitted before the High Court that it was the intention of the petitioner to dispossess the respondent from the licensed premises and thus, the dispute between the parties was not arbitrable in view of the bar contained in Section 41 of the Presidency Small Cause Courts Act, 1882 (PSCC Act).

The respondent added that under Section 41 of the PSCC Act, the Small Causes Court is conferred with exclusive jurisdiction to try and entertain all suits and proceedings between a licensor and licensee relating to recovery of possession of any immovable property situated in Greater Bombay. Thus, the respondent averred that the proceedings under Section 9 of the A&C Act seeking any ancillary or interim reliefs are not maintainable, since the main relief sought by the petitioner of recovery of possession of the licensed premises is not arbitrable.

Section 41 of the PSCC Act provides that the Court of Small Causes shall have the jurisdiction to entertain and try all suits and proceedings between a licensor and licensee, or a landlord and tenant, relating to the recovery of possession of any immovable property situated in Greater Bombay, or relating to the recovery of the license fees or charges or rent therefore, irrespective of the value of the subject matter of such suits or proceedings.

The Court relied on two cases:

1. Central Warehousing Corporation versus Fortpoint Automotive Pvt. Ltd. (2009) had ruled that even if an arbitration agreement exists between the parties and despite the non-obstante clause contained in Section 5 of the A&C Act, the exclusive jurisdiction of the Small Causes Court to try and decide the dispute specified in Section 41 of the PSCC Act would not be ousted.

2. Nagin Mansukhlal Dogli versus Haribhai Manibhai Patel (1979), the bar contained in Section 41 of the PSCC Act applies not only to a suit for recovery of possession of immovable property but also extends to all other reliefs which the plaintiff can claim in a suit for recovery of possession of immovable property on the termination of a license or a tenancy.

The Court held that if the dispute under the leave and license agreement gave rise to a claim which was purely a monetary claim and was not in relation to the possession of the licensed premises or any reliefs incidental thereto, the arbitral proceedings would be maintainable and hence, the jurisdiction of the Court under Section 9 of the A&C Act for interim measures could be invoked. However, the Bench ruled that since the real dispute between the parties was in relation to the possession of the licensed premises, therefore, the Court of Small Causes alone would have the exclusive jurisdiction to adjudicate the disputes and not an arbitral tribunal.

"In these circumstances, there can be no other conclusion that the Court of Small Causes alone has the exclusive jurisdiction and not an arbitral tribunal to adjudicate the dispute between the parties, being a special forum created by the legislature for adjudication of disputes between the licensor and licensee inter alia in relation to the recovery of possession as Section 41(1) of the PSCC Act would provide. The reason being that the exclusive jurisdiction of the Court of Small Causes under Section 41 of the PSCC Act would remain sacrosanct and stand unaffected even if the parties agree to an arbitration agreement in the leave and licence agreement. As held by the Full Bench in Central Warehousing Corporation, Mumbai (supra) in the arbitration agreement in such cases is held to be invalid and inoperative on the principle that it would be against public policy to allow the parties, by a contract to oust the exclusive jurisdiction of the Small Causes Court by virtue of Section 41 of the PSCC Act."

Holding that the reliefs sought by the petitioner under Section 9 of the A&C Act were incidental to the possession of the licensed premises, the Court ruled that the jurisdiction to grant such incidental reliefs would also lie with the Small Causes Court under Section 41 of the PSCC Act.

The Court thus dismissed the petition.