{"file_name": "2024_10_1748_1756_EN.pdf", "text": "[2024] 10 S.C.R. 1748 : 2024 INSC 805\n\nCentral Warehousing Corporation & Anr. \nv. \nM/s Sidhartha Tiles & Sanitary Pvt. Ltd.\n\n(Civil Appeal No. 11723 of 2024)\n\n21 October 2024\n\n[Pamidighantam Sri Narasimha* and Sandeep Mehta, JJ.]\n\nIssue for Consideration\n\nAppellant,  which  is  a  statutory  body  under  the  Warehousing \nCorporations Act, 1962 and Respondent, a company, entered into \na lease agreement for leasing storage space for a period of three \nyears.  Clause  16  of  the  agreement  incorporated  the  arbitration \nclause. Dispute arose between the parties on the issue of revised \nstorage  charges  and  renewal  of  agreement. Appellant  invoked \nthe  provisions  of  the  Public  Premises  (Eviction  of  Unauthorised \nOccupants) Act, 1971 for eviction of Respondent from its premises. \nRespondent  invoked  arbitration  by  filing  an  application  under \nSection  11(6)  of  the  Act  for  the  appointment  of  an  arbitrator. \nHigh  Court  after  hearing  the  matter  came  to  the  conclusion  that \nthe  claims  made  in  the  notice  followed  by  the  application  under \nSection 11 are clearly covered by the arbitration clause. Aggrieved, \nAppellant challenged the legality of the High Court order by filing \nthe present SLP.\n\nWhether the Public Premises Act, 1971 overrides the Arbitration and \nConciliation Act, 1996, and if the answer is in negative, whether the \nHigh Court committed any error in appointing the arbitrator while \nexercising the jurisdiction under Section 11 of the Arbitration and \nConciliation Act, 1996.\n\nHeadnotes†\n\nWhether  the  Public  Premises  Act,  1971  overrides  the \nArbitration and Conciliation Act, 1996:\n\nHeld:  The  dispute  that  is  raised  in  the  Section  11  application \nrelate  to  promises  and  reciprocal  promises  arising  out  of  the \nagreement  dated  26.09.2012  –  The  right  of  renewal  as  well  as \nthe legality and propriety of the enhanced demand arose during \nthe subsistence of the agreement – On the other hand, the Public \n\n* Author\n\n\f[2024] 10 S.C.R.  \n\n1749\n\nPremises Act authorises the ejectment of a tenant in unauthorised \noccupation of public premises and for consequential directions – \nThe Public Premises Act would not even cast a shadow on this \nperiod – In so far as the dispute relating to this right of renewal \nis  concerned,  it  depends  on  the  terms  of  the  agreement  –  The \nPublic Premises Act neither bars nor overlaps with the scope and \nambit of proceedings that were initiated under the Arbitration and \nConciliation Act. [Para 13]\n\nWhether the High Court committed any error in appointing the \narbitrator while exercising the jurisdiction under Section 11:\n\nHeld:  The  revision  of  storage  charges  occurred  during  the \nsubsistence of the contract – Its legality and propriety will depend \non the terms of the agreement dated 26.09.2012 – Similarly, the \nright of renewal will also be based on and a construct of the said \nagreement – These two disputes will undoubtedly arise out of the \nagreement between the parties and the resolution of such disputes \nis  clearly  covered  by  the  arbitration  clause  –  After  the  recent \ndecision of this court in SBI General Insurance Co. the remit of \nthe referral court to consider an application under Section 11(6) \nis  clear  and  unambiguous  –  For  the  reasons  stated  above,  the \npetition is rejected and the appellant must bear the costs for this \nunnecessary litigation quantified at Rs. 50,000/- – Arbitral tribunal \nshall resume the proceedings and endeavour to deliver the award \nas expeditiously as possible. [Para 14,15 and 16]\n\nCase Law Cited\n\nSBI  General  Insurance  Co.  Ltd.  v.  Krish  Spinning  [2024]  7 \nSCR 840 : 2024 SCC OnLine SC 1754 – referred to.\n\nList of Acts\n\nArbitration and Conciliation Act, 1996, Public Premises (Eviction of \nUnauthorised Occupants) Act, 1971, The Warehousing Corporations \nAct, 1962.\n\nList of Keywords\n\nArbitration;  Lease  agreement;  Arbitration  clause;  Central \nWarehousing  Corporation;  Application  under  section  11; \nAppointment  of  arbitrator;  Public  Premises Act,  1971;  Dispute \nresolution; Interpretation of agreement.\n\nCentral Warehousing Corporation & Anr. v. M/s Sidhartha Tiles & Sanitary Pvt. Ltd.\f1750 \n\n[2024] 10 S.C.R.\n\nCase Arising From\n\nCIVIL APPELLATE JURISDICTION : Civil Appeal No. 11723 of 2024\n\n[From the Judgment and Order dated 11.02.2022 of the High Court \nfor the State of Telangana at Hyderabad in ARBA No. 140 of 2015]\n\nAppearances for Parties\n\nAshish  Kumar  Tiwari, Anurag  Tiwari,  Sahib  Patel, Advs.  for  the \nAppellants.\n\nB.K.Choudhary,  S.  Balachander,  Rameshwar  Prasad  Goyal,   \nAdvs. for the Respondent.\n\nJudgment / Order of the Supreme Court\n\nJudgment\n\nPamidighantam Sri Narasimha, J.\n\n1. \n\nLeave granted.\n\n2.  The questions of law formulated in this appeal is, whether the Public \nPremises Act,  1971  overrides  the Arbitration  and  Conciliation Act, \n1996. If the said question is answered in negative, the only question \nthat  survives  is,  whether  the  High  Court  committed  any  error  in \nappointing  the  arbitrator  while  exercising  the  jurisdiction  under \nSection 11 of the Arbitration and Conciliation Act, 1996 (‘hereinafter \nreferred as the Act’). Having examined the matter in detail, it is clear \nthat the said question does not arise in the facts and circumstances \nof the case. We are guided by the existence of the Arbitration Clause \nand  the  decision  of  this  Court  in  SBI  General  Insurance  Co.  Ltd. \nvs.  Krish  Spinning1  which  discussed  the  scope  of  referral  court’s \ninterference when a valid arbitration clause exists.\n\n3.  A  brief  conspectus  of  the  facts  is  as  follows.  The  appellant  is  a \nstatutory body under the Warehousing Corporations Act, 1962, and is \nunder the administrative control of the Ministry of Consumer Affairs, \nGovernment of India. As it was providing warehousing facilities, the \n\n1 \n\n[2024] 7 SCR 840 : 2024 SCC OnLine SC 1754\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1751\n\nrespondent, a company engaged in the business of trading ceramic \ntiles  and  sanitary  ware,  had  approached  the  appellant  for  storage \nof  its  goods.  The  appellant  agreed  and  provided  a  storage  space \nof 1295 sq. mtrs. and possession of this space was handed over to \nthe respondent on 12.09.2012, even before an agreement could be \nentered between the parties.\n\n4. \n\nLease  agreement  on  26.09.2012  governing  the  contractual \nrelationship  provided  under  Clause  1  that  the  space  will  remain \nwith the respondent for a period of 3 years from 12.09.2012. Thus, \nthe contract was due to expire by efflux of time by 11.09.2015. This \nlease  was  made  subject  to  a  ‘renewal  by  mutual  consent’  as  per \nClause 2. The rate of storage was fixed at Rs. 131 per square meter \nper month. What is relevant for us is Clause 16 of the agreement, \nincorporating the arbitration clause.\n\n5.  Even before the expiry of the lease, the storage charges were said \nto  have  been  revised  on  a  pan  India  basis  w.e.f.  01.11.2012. The \nrevision of the storage charges was communicated to the respondent \nand by a letter dated 04.10.2012, a demand for enhanced payment \nw.e.f. 01.11.2012 was raised. The appellant renewed the said demand \non 10.05.2013 and 31.12.2014 and intimated that if the amount is \nnot  paid,  it  will  be  inferred  that  the  respondent  is  not  interested  in \nretaining  the  facility.  While  the  matter  was  pending,  the  storage \ncharges  were  further  revised  w.e.f.  01.04.2015  by  a  letter  dated \n05.03.2015 when the respondent was informed that the tariff will be \nat the rate of Rs.177/- per sq. mtr. per month.\n\n6. \n\nIn turn, the respondent is said to have intimated the appellant that \nit  is  interested  in  continuing  the  facility  but  sought  renewal  of  the \nagreement  dated  26.09.2012  by  also  committing  that  any  arrears \ndue as per the original agreement would be cleared. \n\n7.  On  16.09.2015,  the  appellant  is  supposed  to  have  rejected  the \nrequest for renewal of the agreement and has in turn raised a demand \nof  Rs.  16,10,004/.  In  view  of  the  fact  that  the  respondent  had  not \nvacated the premises despite the lease’s expiry on 11.09.2015, the \nappellant invoked the provisions of the Public Premises (Eviction of \nUnauthorised Occupants) Act, 1971 (hereinafter the Public Premises \nAct). \n\nCentral Warehousing Corporation & Anr. v. M/s Sidhartha Tiles & Sanitary Pvt. Ltd.\f1752 \n\n[2024] 10 S.C.R.\n\n8. \n\nIt is an admitted fact that even before the order of the Estate Officer \nunder  the  Public  Premises Act  could  be  passed,  the  respondent \nis  said  to  have  vacated  the  premises  on  13.11.2015.  The  Estate \nOfficer  any  way  passed  his  order  on  31.12.2015  holding  that  the \nrespondent was in unauthorised possession only from 11.09.2015 \n(i.e.  when  the  lease  expired)  to  13.11.2015  (when  premises  were \nvacated) and also directed payment of certain dues as indicated in \nthe demand notice.\n\n9. \n\nIt is in the above referred background that the respondent invoked \narbitration by filing an application under Section 11(6) of the Act for \nthe  appointment  of  an  arbitrator  in  view  of  a  subsisting  arbitration \nclause in the agreement. The said clause is as under:\n\n“16. All disputes and differences arising out of or in any way \ntouching upon or concerning this agreement whatsoever \nshall  be  referred  to  the  sole Arbitration  of  any  person \nappointed by the Managing Director, Central Warehousing \nCorporation New Delhi. The Award of such Arbitrator shall \nbe final and binding on the Parties to this agreement. It is \na term of this agreement that in the event of such arbitrator \nto whom the matter is originally referred / being transferred \nor vacating his office or being unable to act for any reason \nthe  Central  Warehousing  Corporation  at  that  time  shall \nappoint any other person to act as Arbitrator in accordance \nwith  the  terms  of  this  agreement.  Such  person  shall  be \nentitled  to  proceed  with  the  reference  from  the  stage  at \nwhich it was left by his predecessors. The Arbitrator shall \ngive a speaking award.\n\nThe venue of Arbitration shall be at such place as may be \nfixed by the Arbitrator at his sole discretion.\n\nThe  cost  of  arbitration  shall  be  borne  by  the  parties  as \nper the decision of the Arbitrator.\n\nThe Arbitrator shall give separate award respect of each \ndispute or difference referred him,\n\nIn  to  Subject  as  aforesaid,  the Arbitration  &  Conciliation \nAct, 1996 shall apply to the Arbitration proceedings under \nthis clause.”\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1753\n\n10.  The application under Section 11 specifically speaks about the dispute \nthat has arisen under the agreement dated 26.09.2012. Broadly, they \nrelate  to  the  right  of  renewal  of  the  contract  and  also  the  legality \nand propriety of the revision of rates during the subsistence of the \nagreement.\n\n11.  The  High  Court  considered  the  matter  in  detail  and  came  to  the \nconclusion  that  the  claims  made  in  the  notice  followed  by  the \napplication under Section 11 are clearly covered by the arbitration \nclause. The relevant portions of the High Court Judgment is as under:\n\n“12. On going through the same, it is seen that as per the \nsaid clause all disputes and differences arising out of or \nin  any  way  touching  upon  or  concerning  the  agreement \nhave to be referred to the sole arbitration of any person \nappointed  by  the  Managing  Director  of  the  Corporation. \nAward  of  such  arbitrator  shall  be  final  and  binding  on \nthe  parties  to  the  agreement.  The  arbitrator  shall  also \ndecide the venue of arbitration and the cost of arbitration \nshall  be  borne  by  the  parties  as  per  the  decision  of  the \narbitrator. The arbitrator is required to give separate award \nin  respect  of  each  dispute  or  difference  referred  to  him. \nThus, the crucial words in Clause 16 are “all disputes and \ndifferences arising out of or in any way touching upon or \nconcerning  the  agreement. According  to  the  petitioner, \nthe  agreement  for  dedicated  warehousing  entered  into \nbetween the parties on 26.09.2012 clearly mentioned the \nrate of storage charge i.e. Rs. 131-00 per square meter \nper month. But the Corporation unilaterally enhanced the \nstorage charge rate with effect from 01.11.2012 at the gross \narea rate of Rs.157-00 per Square meter per month and \nnet area rate of Rs.216-00 per square meter per month.\n\n13. The second area of dispute is with regard to extension \nof  the  agreement  for  dedicated  warehousing.  As  per \nClause  No  1  the  period  of  dedicated  warehousing  was \nfor three years with effect from 12.09.2012, but both the \nparties  had  the  option  of  renewing  the  agreement  for  a \nfurther  period  as  mutually  agreed  upon  on  expiry  of  the \nterm of the agreement. It is on these two issues that notice \n\nCentral Warehousing Corporation & Anr. v. M/s Sidhartha Tiles & Sanitary Pvt. Ltd.\f1754 \n\n[2024] 10 S.C.R.\n\nof  arbitration  was  given  to  the  Managing  Director  of  the \nCorporation  by  the  petitioner  on  23.09.2015. As  per  the \npostal tracking (page 32 of the paper book), the same was \ndelivered on 26.09.2015. In any case respondent has not \ndisputed receipt of the notice. According to the respondent, \nit is not an arbitral dispute being beyond the agreement.”\n\n12.  Questioning  the  judgment  and  order  passed  by  the  High  Court, \nreferring  the  dispute  to  arbitration,  the  appellant  filed  the  present \nappeal. Though the question relating to whether the Public Premises \nAct  will  override  the Arbitration Act  has  been  raised  and  argued \nbefore the High Court. This court issued notice in the special leave \npetition on the basis of the question so formulated. We could have \ndismissed  the  special  leave  petition  on  this  very  ground  but  as \nnotice  was  issued  on  this  point  and  the  appeal  has  been  pending \nfor  some  time,  we  considered  it  appropriate  to  hear  the  appellant \non this question and decide the case. We will first answer the issue \nrelating to the applicability of the Public Premises Act. \n\n13.  Re: Whether the Public Premises Act, 1971 overrides the Arbitration \nand Conciliation Act, 1996: This submission has to fail. The reasons \nare  simple  and  straight  forward.  The  dispute  that  is  raised  in  the \nSection 11 application relate to promises and reciprocal promises \narising out of the agreement dated 26.09.2012. The right of renewal \nas  well  as  the  legality  and  propriety  of  the  enhanced  demand \narose  during  the  subsistence  of  the  agreement.  It  will  be  on  the \ninterpretation,  construction  and  the  obligations  arising  out  of  the \nagreement  that  the  respondent’s  claim  rests.  On  the  other  hand, \nThe  Public  Premises Act  authorises  the  ejectment  of  a  tenant  in \nunauthorised occupation of public premises and for consequential \ndirections.  The  original  lease  as  it  were,  validly  subsisted  till \n11.09.2015  and  the  dispute  between  the  parties  related  to  the \nperiod commencing from 12.09.2012 to 11.09.2015, when the lease \nexpired.  The  Public  Premises Act  would  not  even  cast  a  shadow \non  this  period.  In  so  far  as  the  dispute  relating  to  this  right  of \nrenewal  is  concerned,  it  depends  on  the  terms  of  the  agreement. \nThe Public Premises Act neither bars nor overlaps with the scope \nand  ambit  of  proceedings  that  were  initiated  under  the Arbitration \nand Conciliation Act. \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1755\n\n14.  Whether  the  High  Court  committed  any  error  in  appointing  the \narbitrator  while  exercising  the  jurisdiction  under  Section  11:  We \nhave already extracted the relevant portion of the order passed by \nthe High Court. The revision of storage charges occurred during the \nsubsistence  of  the  contract.  Its  legality  and  propriety  will  depend \non  the  terms  of  the  agreement  dated  26.09.2012.  Similarly,  the \nright  of  renewal  will  also  be  based  on  and  a  construct  of  the  said \nagreement.  These  two  disputes  will  undoubtedly  arise  out  of  the \nagreement between the parties and the resolution of such disputes \nis clearly covered by the arbitration clause (Cl. 16 of the agreement). \nAfter the recent decision of this court in SBI General Insurance Co. \n(supra)  the  remit  of  the  referral  court  to  consider  an  application \nunder  Section  11(6)  is  clear  and  unambiguous.  We  need  to  just \nexamine the existence of an arbitration agreement. The context is \nclearly delineated in paras 110-111 and 114 of the judgment which \nare extracted below for ready reference.\n\n“110. The scope of examination under Section 11(6-A) is \nconfined to the existence of an arbitration agreement on \nthe basis of Section 7. The examination of validity of the \narbitration agreement is also limited to the requirement of \nformal validity such as the requirement that the agreement \nshould be in writing.\n\n111.  The  use  of  the  term  ‘examination’  under  Section \n11(6-A)  as  distinguished  from  the  use  of  the  term  ‘rule’ \nunder Section 16 implies that the scope of enquiry under \nsection 11(6-A) is limited to a prima facie scrutiny of the \nexistence  of  the  arbitration  agreement,  and  does  not \ninclude a contested or laborious enquiry, which is left for \nthe arbitral tribunal to ‘rule’ under Section 16. The prima \nfacie view on existence of the arbitration agreement taken \nby the referral court does not bind either the arbitral tribunal \nor the court enforcing the arbitral award.\n\n[…]\n\n114.  In  view  of  the  observations  made  by  this  Court \nin  In  Re  :  Interplay  (supra),  it  is  clear  that  the  scope  of \nenquiry at the stage of appointment of arbitrator is limited \n\nCentral Warehousing Corporation & Anr. v. M/s Sidhartha Tiles & Sanitary Pvt. Ltd.\f1756 \n\n[2024] 10 S.C.R.\n\nto the scrutiny of prima facie existence of the arbitration \nagreement, and nothing else.[…]” \n\n(emphasis supplied)\n\n15.  For the reasons stated above, we have no hesitation in rejecting the \npetition and we further hold that the appellant must bear the costs \nfor this unnecessary litigation which we quantify at Rs. 50,000/-. \n\n16.  As  the  arbitration  proceedings  were  stayed  due  to  the  pendency \nof this appeal by the order dated 01.04.2022, while dismissing this \nappeal we direct that the arbitral tribunal shall resume the proceedings \nand endeavour to deliver the award as expeditiously as possible. \n\n17.  The appeal is dismissed in terms of the above order.\n\nResult of the case: Appeal dismissed.\n\n†Headnotes prepared by:  Adeeba Mujahid, Hony. Associate Editor \n\n(Verified by: Abhinav Mukerji, Sr. Adv.)\n\nDigital Supreme Court Reports\f"}