PNP 1 ARBAP100-12.10 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. ARBITRATION APPLICATION NO.100 OF 2010 M/s. Super Religare Laboratories Ltd. ..Applicant. Vs. M/s. Atul Kumar & Co. ..Respondent. .... Mr. Gautam Ankhad i/b Hemant Sethi & Co. for the Applicant. Mr. J.R. Trivedi for the Respondent. ..... CORAM : DR.D.Y.CHANDRACHUD, J. 12 October 2010. P.C. : 1. This is an application under Section 11(6) of the Arbitration and Conciliation Act, 1996. 2. A leave and licence agreement was entered into between the parties on 21 October 2009. The leave and licence agreement contains an arbitration clause. Under Clause 21 any dispute or difference between the licensor and the licensee arising out of or relating to anything contained in the agreement has to be referred to arbitration. The Applicant who is the licensee has invoked arbitration on 8 April 2010 for the refund of the PNP 2 ARBAP100-12.10 security deposit of Rs.2.46 Crores. The licensor has instituted a suit for possession on 28 April 2010 before the Court of Small Causes at Mumbai. The suit (L. E &C. Suit No.32/46 of 2010) is pending. 3. The question as to whether an arbitration clause contained in a leave and licence agreement would have the effect of ousting the exclusive jurisdiction of the Small Causes Court under the Presidency Small Causes Courts Act 1882 by virtue of the provisions of Section 5 of the Arbitration and Conciliation Act 1996 came up for consideration before a Full Bench of this Court. In Central Warehousing Corporation v. Fortpoint Automotive Pvt. Ltd.1 the Full Bench answered the question thus : In summation, we would hold that section 41(1) of the Act of “ 1882 is a special law which in turn has constituted special courts for adjudication of disputes specified therein between the licensor and licensee or a landlord and tenant. The effect of section 41(2) of the Act of 1882 is only the suits or proceedings for recovery of possession of immovable property or of licence fee thereof, to which, the provisions of specified Acts or any other law for the time being in force apply, have been excepted from the application of non obstante clause contained in section 41(1) of the Act. The expression or any other law for the time “ being in force appearing in section 41(2) will have to be ” construed to mean that such law should provide for resolution of disputes between licensor and licensee or a landlord and tenant in relation to immovable property or licence fee thereof, to which immovable property, the provisions of that Act are 1 2010(1) Bom.C.R. 560 PNP 3 ARBAP100-12.10 applicable. The Act of 1996 is not covered within the ambit of section 41(2) in particular the expression or any other law for “ the time being in force contained therein. The question ” whether the exclusive jurisdiction of the Small Causes Court vested in terms of section 41 of the Act of 1882 is ousted, if an agreement between the licensor and licensee contains a clause for arbitration, the same will have to be answered in the negative. For section 5 of the Act of 1996 in that sense is not an absolute non obstante clause. Section 5 of the Act of 1996 cannot affect the laws for the time being in force by virtue of which certain disputes may not be submitted to arbitration, as stipulated in section 2(3) of the Act of 1996. We hold that section 41 of the Act of 1882 falls within the ambit of section 2(3) of the Act of 1996. As a result of which, even if the Licence Agreement contains Arbitration Agreement, the exclusive jurisdiction of the courts of Small Causes under section 41 of the Act of 1882 is not affected in any manner. Whereas, Arbitration Agreement in such cases would be invalid and inoperative on the principle that it would be against public policy to allow the parties to contract out of the exclusive jurisdiction of the Small Causes Courts by virtue of section 41 of the Act of 1882.” 4. Counsel appearing on behalf of the Applicant, however, submitted that in the present case, the Applicant does not seek a decree for possession or the recovery of license fee, charges or rent and therefore, the arbitration clause would not cease to operate. Reliance was sought to be placed on a judgment of a learned Single Judge of this Court in RMC Readymix I) P. Ltd. v. Kanayo Khubchand Motwani2. 2 2006(4) Bom.C.R.437. PNP 4 ARBAP100-12.10 5. Section 41(1) of the Presidency Small Cause Courts Act 1882 provides that notwithstanding anything contained elsewhere in the Act, but subject to the provisions of sub section (2), the Court of Small Causes shall have 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 Grater Mumbai, or relating to the recovery of the license fee or charges or rent therefor, irrespective of the value of the subject matter of the suit or proceedings. Now the provisions of the leave and licence agreement in this case would show that the licensee under Clause 3 agreed that the security deposit of Rs.2.46 Crores held by the licensor under the previous agreement shall be returned to the licensee on or before the expiry of the leave and license agreement or at the time of vacating of the licensed premises. Similarly, under Clause 10(g) the licensee was to surrender the physical occupation of the licensed premises on the expiry or earlier termination of the agreement against a refund of the interest free deposit of Rs.2.46 Crores. The return of the interest free security deposit is therefore clearly linked to the return of the possession of the premises. One cannot be disassociated from the other. The Full Bench has now clearly laid down PNP 5 ARBAP100-12.10 the position that the exclusive jurisdiction of the Small Causes Court vested by Section 41 is not ousted if the agreement between the licensor and the licensee contains a clause for arbitration. 6. In these circumstances, and particularly having regard to the law laid down by the Full Bench in Central Warehousing Corporation (supra), the existence of the arbitration clause in the leave and licence agreement will not operate to oust the exclusive jurisdiction of the Small Causes Court under Section 41(1). The Arbitration Application under Section 11(6) therefore cannot be entertained and is accordingly dismissed. (Dr. D.Y.Chandrachud, J.)