LI Network
Published on: February 15, 2024 at 15:26 IST
The Calcutta High Court, led by Justice Sugato Majumdar, addressed a case involving a civil suit for possession of premises and a Section 8 application under the Arbitration and Conciliation Act, 1996.
The tenants sought arbitration based on an expired tenancy agreement that had not been renewed or novated.
The High Court clarified that while tenancy may be established through conduct, the inference of arbitration cannot be drawn solely from the parties’ behavior. Consequently, it was determined that there was no arbitration agreement within the purview of Section 7 of the Act.
The Defendant, Mr. Sharad Goenka, entered into a monthly tenancy agreement in 2006 with the original landlady, valid for five years, for the premises in question.
The agreement, along with two incidental agreements, included an arbitration clause. After the landlady’s demise in 2012, her legal heir, Joy Mitra, continued the tenancy until Mr. Tarit Mitra, the present Plaintiff, assumed ownership. Upon terminating the tenancy, the Plaintiff filed a possession suit in the Calcutta High Court.
In response, the Defendant filed a Section 8 application under the Arbitration and Conciliation Act, asserting the validity of the arbitration clause in the original tenancy agreement. However, the Defendant also contested the existence of such a clause, submitting to the Civil Court’s jurisdiction, thus challenging the applicability of the 1996 Act.
The High Court acknowledged the creation of a tenancy in 2006, supported by the original agreement and two incidental agreements with arbitration clauses.
However, all agreements expired after five years, and subsequent tenancy continued without formal renewal or novation.
The Court emphasized the absence of explicit provisions indicating arbitration for tenancy disputes, as required by Section 7 of the Act.
Despite the establishment of tenancy through conduct, the court asserted that arbitration could not be inferred solely from the parties’ behavior.
The original arbitration clause’s applicability was questioned due to the lack of agreement on renewal and novation terms.
Consequently, the High Court dismissed the Defendant’s Section 8 application, finding no valid arbitration agreement under Section 7 of the Act. The court scheduled the next hearing to proceed with the possession suit.
Case Title: Tarit Mitra and Anr. vs. Sharad Goenka
