Bar Under Section 41(1) Of The Presidency Small Causes Courts Act Is Not Attracted When The Tenant-Landlord Relationship Is Non-Existing: Bombay High Court

The Bombay High Court has held that bar under Section 41(1) of the Presidency Small Causes Courts Act, 1882[i] is not attracted to a dispute regarding declaration of tenancy rights under a partnership deed when the licensor-licensee or landlord/tenant relationship is non-existent

The Bench of Justice B.P. Colabawall held that bar under Section 41 of the Presidency Small Causes Courts Act only applies where the parties have a landlord-tenant or licensor-licensee relationship between themselves.

Facts

The applicant/respondent, the claimant, and a third party entered into a partnership deed dated 26.03.1993 to carry on business in the name of M/s Paradise Traders. The claimant was the tenant in the subject premises/Shop.

Clause 13 of the Partnership deed provided that the said Shop stands in the name of the Claimant and it shall always belong to him and the other partners of the Partnership Firm shall have no right, title or interest or any claim in the said Shop.

A dispute arose between the parties related to the tenancy rights in the subject premises. Therefore, the claimant invoked the arbitration under the partnership deed. The arbitrator passed an award and held that in terms of Clause 13 of the Partnership Deed, the claimant has the exclusive tenancy rights in the subject premises and it does not form a part of the assets of the partnership firm.

The applicant did not challenge the arbitral award. Accordingly, it attained finality. The claimant filed for its execution, subsequently, the applicant filed an application thereunder to restrain the claimant from taking out any legal proceedings qua the subject premises.

The Contention Of The Parties

The applicant sought to restrain the applicant from enforcing the arbitral award on the following grounds:

• The arbitral tribunal had no jurisdiction to decide the dispute between the parties as it was clearly non-arbitrable in view of Section 41(1) of the Presidency Small Causes Courts Act, 1882 and Maharashtra Rent Control Act, 1999 as it touches upon the rights of the Applicant as a tenant of the said premises.
• The award is a nullity in the eyes of law, therefore, the same can be challenged at the enforcement stage as well.
• Even if there is no relationship of landlord and tenant (between the Claimant and the Applicant), there is certainly a relationship of a licensor and a gratuitous licensee.

The claimant rebutted the contentions of the applicant on the following grounds:

• For Section 41(1) of the Presidency Small Causes Courts Act to apply, the existence of landlord-tenant relationship is sine-qua-non.
• There is no landlord-tenant relationship between the parties. In fact, the claimant is the tenant and the landlord is some third party and the dispute between the parties purely arises out of a partnership deed.
• Clause 13 of the Partnership expressly provided that the claimant is the exclusive tenant in the subject premises and the firm or other partners have no interest at all.
• The arbitrator was not adjudicating a dispute between the tenant-landlord but merely the tenancy rights of the claimant vis-à-vis the partnership deed.
• The applicant has failed to challenge the award under Section 34 of the A&C Act, therefore, it has become final.

Analysis By The Court

The Court observed that the issue before the Arbitral Tribunal was whether the said Shop [and which was tenanted] belonged to the Claimant and whether the Applicant could (in his capacity as a partner), claim any right title or interest in the said Shop.

The Court held that the objection raised by the applicant is without any merit as for Section 41(1) of the Presidency Small Causes Courts Act to apply there must be a landlord-tenant or licensor-licensee relationship existing.

The Court held that it is not even the case of the applicant that there was any landlord-tenant relationship between the parties and the arbitrator adjudicated the same. Therefore, the objection regarding non-arbitrability is wholly misplaced.

The Court stated that the arbitrator granted the relief to the claimant on the basis of Clause 13 of the Partnership Deed which expressly recorded the exclusive right of the claimant qua the subject premises.

It observed that there was no dispute before the Arbitral Tribunal between a landlord and a tenant which would divest it of its jurisdiction.

The Court further rejected the objection of the applicant regarding there being a licensor and gratuitous licensee relationship between the parties. The Court held that the said objection was raised out of sheer desperation and it was not supported by any pleadings. It observed that it was never the case of the applicant that it was a gratuitous licensee of the claimant, the only objection it raised before the arbitral tribunal was regarding Section 41(1) of the Presidency Small Causes Act.

The Court held that applicant being the gratuitous licensee of the claimant is a question of fact which is required to be pleaded and thereafter established and any relief would not be granted in absence of the same.

Accordingly, it dismissed the interim application as without any merit.

Case Title: Rahim Manji Kaba v. Moosabhai Gagji Khetani, Interim Application (L) No. 29900 of 2021 in Execution Application No. 356 of 2021

Date: 13.07.2022

Citation: 2022 LiveLaw (Bom) 256 

Counsel for the Applicant/Respondent: Nisha Kaba and Hare Krishna Mishra, Advocates

Counsel for the Claimant: Vishal Kanade and A.M. Rajabally, Advocates.

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