The Calcutta High Court in the case Tarit Mitra and Anr. vs Sharad Goenka observed and has adjudicated on the matter which involves a civil suit for possession of premises from the tenants and an application made under Section 8 of the Arbitration and Conciliation Act, 1996 by the tenants seeking to refer the dispute to arbitration based on the tenancy agreement which had expired a few years ago and was not novated or renewed.
The High Court in the case observed and has emphasized that while the tenancy may be established by conduct, arbitration cannot be inferred from the parties’ conduct alone.
The bench headed by Justice Sugato Majumdar in the case stated that the existed no arbitration agreement within the meaning of section 7 of the Act.
Facts of the Case;
The Defendant, Mr Sharad Goenka entered into a monthly tenancy agreement in 2006 with the original landlady for the premises in question. Thus, the said agreement was valid for 5 years and the two incidental agreements regarding the tenancy were also signed along with the main agreement. All these agreements contained an arbitration clause to refer any dispute to arbitration. The original lady passed away in 2012 and left behind her legal heir Joy Mitra who also passed away 6 years later.
Therefore, the Plaintiff, Mr Tarit Mitra took the ownership of the premises as the subsequent legal heir. He terminated the tenancy agreement of the Defendant by sending a notice under Section 106 of the Transfer of Property Act, 1882.
Further, the Defendant refused to vacate the premises. Therefore, the Plaintiff filed a suit for the recovery of possession in the Calcutta High Court.
In response to it, the Defendant filed an application under Section 8 of the Arbitration and Conciliation Act wherein it prayed for referring the dispute to arbitration.
It has also been contended by him before the court that the tenancy and its incidental agreements had a valid arbitration clause, and the subject matter was arbitrable.
On the other hand, the defendant contended that the existence of an arbitration agreement/clause and subjected himself to the jurisdiction of the Civil Court, thereby, negating the applicability of the Act of 1996.
Observations Made By High Court:
The High Court in the case observed that the tenancy was created based on an agreement dated January 27, 2006, by the predecessor-in-interest of the Plaintiff and the original tenancy agreement, along with two other incidental agreements, contained an arbitration clause.
Therefore, all the agreements expired after five years and despite the expiration, the tenancy continued under different successors, including the present Plaintiffs, with rent increases, but without any renewed agreements.
Further, the High Court noted that there was no explicit agreement showing that disputes related to tenancies should be resolved through arbitration. Thus, the other two incidental agreements were not renewed, and there was no written indication that disputes between the parties should be referred to arbitration, as required by Section 7 of the Arbitration and Conciliation Act, 1996.
The court in the case emphasized that while a tenancy may be established by conduct, arbitration cannot be inferred from the parties’ conduct alone.
The court while considering the facts and circumstances of the case stated that there existed no arbitration agreement within the meaning of Section 7 of the Act and the application filed by the Defendant under Section 8 of the Act was dismissed. A next date of hearing was assigned to proceed with the suit for the recovery of possession.
Accordingly, the Court dismissed the application under section 8 of the Act.