CENTRAL WAREHOUSING CORPORATION & ANR.versusM/S SIDHARTHA TILES & SANITARY PVT. LTD.

                [2024] 10 S.C.R. 1748 : 2024 INSC 805

              Central Warehousing Corporation & Anr.
                                 v.
              M/s Sidhartha Tiles & Sanitary Pvt. Ltd.
                      (Civil Appeal No. 11723 of 2024)
                               21 October 2024
 [Pamidighantam Sri Narasimha* and Sandeep Mehta, JJ.]


                            Issue for Consideration
       Appellant, which is a statutory body under the Warehousing
       Corporations Act, 1962 and Respondent, a company, entered into
       a lease agreement for leasing storage space for a period of three
       years. Clause 16 of the agreement incorporated the arbitration
       clause. Dispute arose between the parties on the issue of revised
       storage charges and renewal of agreement. Appellant invoked
       the provisions of the Public Premises (Eviction of Unauthorised
       Occupants) Act, 1971 for eviction of Respondent from its premises.
       Respondent invoked arbitration by filing an application under
       Section 11(6) of the Act for the appointment of an arbitrator.
       High Court after hearing the matter came to the conclusion that
       the claims made in the notice followed by the application under
       Section 11 are clearly covered by the arbitration clause. Aggrieved,
       Appellant challenged the legality of the High Court order by filing
       the present SLP.
       Whether the Public Premises Act, 1971 overrides the Arbitration and
       Conciliation Act, 1996, and if the answer is in negative, whether the
       High Court committed any error in appointing the arbitrator while
       exercising the jurisdiction under Section 11 of the Arbitration and
       Conciliation Act, 1996.

                                  Headnotes†
       Whether the Public Premises Act, 1971 overrides the
       Arbitration and Conciliation Act, 1996:
       Held: The dispute that is raised in the Section 11 application
       relate to promises and reciprocal promises arising out of the
       agreement dated 26.09.2012 – The right of renewal as well as
       the legality and propriety of the enhanced demand arose during
       the subsistence of the agreement – On the other hand, the Public

* Author
[2024] 10 S.C.R.                                                            1749

               Central Warehousing Corporation & Anr. v.
                M/s Sidhartha Tiles & Sanitary Pvt. Ltd.

     Premises Act authorises the ejectment of a tenant in unauthorised
     occupation of public premises and for consequential directions –
     The Public Premises Act would not even cast a shadow on this
     period – In so far as the dispute relating to this right of renewal
     is concerned, it depends on the terms of the agreement – The
     Public Premises Act neither bars nor overlaps with the scope and
     ambit of proceedings that were initiated under the Arbitration and
     Conciliation Act. [Para 13]
     Whether the High Court committed any error in appointing the
     arbitrator while exercising the jurisdiction under Section 11:
     Held: The revision of storage charges occurred during the
     subsistence of the contract – Its legality and propriety will depend
     on the terms of the agreement dated 26.09.2012 – Similarly, the
     right of renewal will also be based on and a construct of the said
     agreement – These two disputes will undoubtedly arise out of the
     agreement between the parties and the resolution of such disputes
     is clearly covered by the arbitration clause – After the recent
     decision of this court in SBI General Insurance Co. the remit of
     the referral court to consider an application under Section 11(6)
     is clear and unambiguous – For the reasons stated above, the
     petition is rejected and the appellant must bear the costs for this
     unnecessary litigation quantified at Rs. 50,000/- – Arbitral tribunal
     shall resume the proceedings and endeavour to deliver the award
     as expeditiously as possible. [Para 14,15 and 16]

                              Case Law Cited
     SBI General Insurance Co. Ltd. v. Krish Spinning [2024] 7
     SCR 840 : 2024 SCC OnLine SC 1754 – referred to.

                                List of Acts
     Arbitration and Conciliation Act, 1996, Public Premises (Eviction of
     Unauthorised Occupants) Act, 1971, The Warehousing Corporations
     Act, 1962.

                             List of Keywords
     Arbitration; Lease agreement; Arbitration clause; Central
     Warehousing Corporation; Application under section 11;
     Appointment of arbitrator; Public Premises Act, 1971; Dispute
     resolution; Interpretation of agreement.
1750                                                       [2024] 10 S.C.R.

                           Digital Supreme Court Reports


                                   Case Arising From
      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 11723 of 2024
      [From the Judgment and Order dated 11.02.2022 of the High Court
      for the State of Telangana at Hyderabad in ARBA No. 140 of 2015]

                               Appearances for Parties
      Ashish Kumar Tiwari, Anurag Tiwari, Sahib Patel, Advs. for the
      Appellants.
      B.K.Choudhary, S. Balachander, Rameshwar Prasad Goyal,
      Advs. for the Respondent.

                    Judgment / Order of the Supreme Court

                                        Judgment

      Pamidighantam Sri Narasimha, J.

1.    Leave granted.
2.    The questions of law formulated in this appeal is, whether the Public
      Premises Act, 1971 overrides the Arbitration and Conciliation Act,
      1996. If the said question is answered in negative, the only question
      that survives is, whether the High Court committed any error in
      appointing the arbitrator while exercising the jurisdiction under
      Section 11 of the Arbitration and Conciliation Act, 1996 (‘hereinafter
      referred as the Act’). Having examined the matter in detail, it is clear
      that the said question does not arise in the facts and circumstances
      of the case. We are guided by the existence of the Arbitration Clause
      and the decision of this Court in SBI General Insurance Co. Ltd.
      vs. Krish Spinning1 which discussed the scope of referral court’s
      interference when a valid arbitration clause exists.
3.    A brief conspectus of the facts is as follows. The appellant is a
      statutory body under the Warehousing Corporations Act, 1962, and is
      under the administrative control of the Ministry of Consumer Affairs,
      Government of India. As it was providing warehousing facilities, the



1    [2024] 7 SCR 840 : 2024 SCC OnLine SC 1754
[2024] 10 S.C.R.                                                     1751

               Central Warehousing Corporation & Anr. v.
                M/s Sidhartha Tiles & Sanitary Pvt. Ltd.

     respondent, a company engaged in the business of trading ceramic
     tiles and sanitary ware, had approached the appellant for storage
     of its goods. The appellant agreed and provided a storage space
     of 1295 sq. mtrs. and possession of this space was handed over to
     the respondent on 12.09.2012, even before an agreement could be
     entered between the parties.
4.   Lease agreement on 26.09.2012 governing the contractual
     relationship provided under Clause 1 that the space will remain
     with the respondent for a period of 3 years from 12.09.2012. Thus,
     the contract was due to expire by efflux of time by 11.09.2015. This
     lease was made subject to a ‘renewal by mutual consent’ as per
     Clause 2. The rate of storage was fixed at Rs. 131 per square meter
     per month. What is relevant for us is Clause 16 of the agreement,
     incorporating the arbitration clause.
5.   Even before the expiry of the lease, the storage charges were said
     to have been revised on a pan India basis w.e.f. 01.11.2012. The
     revision of the storage charges was communicated to the respondent
     and by a letter dated 04.10.2012, a demand for enhanced payment
     w.e.f. 01.11.2012 was raised. The appellant renewed the said demand
     on 10.05.2013 and 31.12.2014 and intimated that if the amount is
     not paid, it will be inferred that the respondent is not interested in
     retaining the facility. While the matter was pending, the storage
     charges were further revised w.e.f. 01.04.2015 by a letter dated
     05.03.2015 when the respondent was informed that the tariff will be
     at the rate of Rs.177/- per sq. mtr. per month.
6.   In turn, the respondent is said to have intimated the appellant that
     it is interested in continuing the facility but sought renewal of the
     agreement dated 26.09.2012 by also committing that any arrears
     due as per the original agreement would be cleared.
7.   On 16.09.2015, the appellant is supposed to have rejected the
     request for renewal of the agreement and has in turn raised a demand
     of Rs. 16,10,004/. In view of the fact that the respondent had not
     vacated the premises despite the lease’s expiry on 11.09.2015, the
     appellant invoked the provisions of the Public Premises (Eviction of
     Unauthorised Occupants) Act, 1971 (hereinafter the Public Premises
     Act).
1752                                                       [2024] 10 S.C.R.

                     Digital Supreme Court Reports


8.   It is an admitted fact that even before the order of the Estate Officer
     under the Public Premises Act could be passed, the respondent
     is said to have vacated the premises on 13.11.2015. The Estate
     Officer any way passed his order on 31.12.2015 holding that the
     respondent was in unauthorised possession only from 11.09.2015
     (i.e. when the lease expired) to 13.11.2015 (when premises were
     vacated) and also directed payment of certain dues as indicated in
     the demand notice.
9.   It is in the above referred background that the respondent invoked
     arbitration by filing an application under Section 11(6) of the Act for
     the appointment of an arbitrator in view of a subsisting arbitration
     clause in the agreement. The said clause is as under:
          “16. All disputes and differences arising out of or in any way
          touching upon or concerning this agreement whatsoever
          shall be referred to the sole Arbitration of any person
          appointed by the Managing Director, Central Warehousing
          Corporation New Delhi. The Award of such Arbitrator shall
          be final and binding on the Parties to this agreement. It is
          a term of this agreement that in the event of such arbitrator
          to whom the matter is originally referred / being transferred
          or vacating his office or being unable to act for any reason
          the Central Warehousing Corporation at that time shall
          appoint any other person to act as Arbitrator in accordance
          with the terms of this agreement. Such person shall be
          entitled to proceed with the reference from the stage at
          which it was left by his predecessors. The Arbitrator shall
          give a speaking award.
          The venue of Arbitration shall be at such place as may be
          fixed by the Arbitrator at his sole discretion.
          The cost of arbitration shall be borne by the parties as
          per the decision of the Arbitrator.
          The Arbitrator shall give separate award respect of each
          dispute or difference referred him,
          In to Subject as aforesaid, the Arbitration & Conciliation
          Act, 1996 shall apply to the Arbitration proceedings under
          this clause.”
[2024] 10 S.C.R.                                                         1753

               Central Warehousing Corporation & Anr. v.
                M/s Sidhartha Tiles & Sanitary Pvt. Ltd.

10. The application under Section 11 specifically speaks about the dispute
    that has arisen under the agreement dated 26.09.2012. Broadly, they
    relate to the right of renewal of the contract and also the legality
    and propriety of the revision of rates during the subsistence of the
    agreement.
11. The High Court considered the matter in detail and came to the
    conclusion that the claims made in the notice followed by the
    application under Section 11 are clearly covered by the arbitration
    clause. The relevant portions of the High Court Judgment is as under:
          “12. On going through the same, it is seen that as per the
          said clause all disputes and differences arising out of or
          in any way touching upon or concerning the agreement
          have to be referred to the sole arbitration of any person
          appointed by the Managing Director of the Corporation.
          Award of such arbitrator shall be final and binding on
          the parties to the agreement. The arbitrator shall also
          decide the venue of arbitration and the cost of arbitration
          shall be borne by the parties as per the decision of the
          arbitrator. The arbitrator is required to give separate award
          in respect of each dispute or difference referred to him.
          Thus, the crucial words in Clause 16 are “all disputes and
          differences arising out of or in any way touching upon or
          concerning the agreement. According to the petitioner,
          the agreement for dedicated warehousing entered into
          between the parties on 26.09.2012 clearly mentioned the
          rate of storage charge i.e. Rs. 131-00 per square meter
          per month. But the Corporation unilaterally enhanced the
          storage charge rate with effect from 01.11.2012 at the gross
          area rate of Rs.157-00 per Square meter per month and
          net area rate of Rs.216-00 per square meter per month.
          13. The second area of dispute is with regard to extension
          of the agreement for dedicated warehousing. As per
          Clause No 1 the period of dedicated warehousing was
          for three years with effect from 12.09.2012, but both the
          parties had the option of renewing the agreement for a
          further period as mutually agreed upon on expiry of the
          term of the agreement. It is on these two issues that notice
1754                                                     [2024] 10 S.C.R.

                    Digital Supreme Court Reports



          of arbitration was given to the Managing Director of the
          Corporation by the petitioner on 23.09.2015. As per the
          postal tracking (page 32 of the paper book), the same was
          delivered on 26.09.2015. In any case respondent has not
          disputed receipt of the notice. According to the respondent,
          it is not an arbitral dispute being beyond the agreement.”
12. Questioning the judgment and order passed by the High Court,
    referring the dispute to arbitration, the appellant filed the present
    appeal. Though the question relating to whether the Public Premises
    Act will override the Arbitration Act has been raised and argued
    before the High Court. This court issued notice in the special leave
    petition on the basis of the question so formulated. We could have
    dismissed the special leave petition on this very ground but as
    notice was issued on this point and the appeal has been pending
    for some time, we considered it appropriate to hear the appellant
    on this question and decide the case. We will first answer the issue
    relating to the applicability of the Public Premises Act.
13. Re: Whether the Public Premises Act, 1971 overrides the Arbitration
    and Conciliation Act, 1996: This submission has to fail. The reasons
    are simple and straight forward. The dispute that is raised in the
    Section 11 application relate to promises and reciprocal promises
    arising out of the agreement dated 26.09.2012. The right of renewal
    as well as the legality and propriety of the enhanced demand
    arose during the subsistence of the agreement. It will be on the
    interpretation, construction and the obligations arising out of the
    agreement that the respondent’s claim rests. On the other hand,
    The Public Premises Act authorises the ejectment of a tenant in
    unauthorised occupation of public premises and for consequential
    directions. The original lease as it were, validly subsisted till
    11.09.2015 and the dispute between the parties related to the
    period commencing from 12.09.2012 to 11.09.2015, when the lease
    expired. The Public Premises Act would not even cast a shadow
    on this period. In so far as the dispute relating to this right of
    renewal is concerned, it depends on the terms of the agreement.
    The Public Premises Act neither bars nor overlaps with the scope
    and ambit of proceedings that were initiated under the Arbitration
    and Conciliation Act.
[2024] 10 S.C.R.                                                            1755

                Central Warehousing Corporation & Anr. v.
                 M/s Sidhartha Tiles & Sanitary Pvt. Ltd.

14. Whether the High Court committed any error in appointing the
    arbitrator while exercising the jurisdiction under Section 11: We
    have already extracted the relevant portion of the order passed by
    the High Court. The revision of storage charges occurred during the
    subsistence of the contract. Its legality and propriety will depend
    on the terms of the agreement dated 26.09.2012. Similarly, the
    right of renewal will also be based on and a construct of the said
    agreement. These two disputes will undoubtedly arise out of the
    agreement between the parties and the resolution of such disputes
    is clearly covered by the arbitration clause (Cl. 16 of the agreement).
    After the recent decision of this court in SBI General Insurance Co.
    (supra) the remit of the referral court to consider an application
    under Section 11(6) is clear and unambiguous. We need to just
    examine the existence of an arbitration agreement. The context is
    clearly delineated in paras 110-111 and 114 of the judgment which
    are extracted below for ready reference.
          “110. The scope of examination under Section 11(6-A) is
          confined to the existence of an arbitration agreement on
          the basis of Section 7. The examination of validity of the
          arbitration agreement is also limited to the requirement of
          formal validity such as the requirement that the agreement
          should be in writing.
          111. The use of the term ‘examination’ under Section
          11(6-A) as distinguished from the use of the term ‘rule’
          under Section 16 implies that the scope of enquiry under
          section 11(6-A) is limited to a prima facie scrutiny of the
          existence of the arbitration agreement, and does not
          include a contested or laborious enquiry, which is left for
          the arbitral tribunal to ‘rule’ under Section 16. The prima
          facie view on existence of the arbitration agreement taken
          by the referral court does not bind either the arbitral tribunal
          or the court enforcing the arbitral award.
          […]
          114. In view of the observations made by this Court
          in In Re : Interplay (supra), it is clear that the scope of
          enquiry at the stage of appointment of arbitrator is limited
1756                                                             [2024] 10 S.C.R.

                         Digital Supreme Court Reports


              to the scrutiny of prima facie existence of the arbitration
              agreement, and nothing else.[…]”
                                                       (emphasis supplied)
15. For the reasons stated above, we have no hesitation in rejecting the
    petition and we further hold that the appellant must bear the costs
    for this unnecessary litigation which we quantify at Rs. 50,000/-.
16. As the arbitration proceedings were stayed due to the pendency
    of this appeal by the order dated 01.04.2022, while dismissing this
    appeal we direct that the arbitral tribunal shall resume the proceedings
    and endeavour to deliver the award as expeditiously as possible.
17. The appeal is dismissed in terms of the above order.


     Result of the case: Appeal dismissed.



     †
         Headnotes prepared by: Adeeba Mujahid, Hony. Associate Editor
                                 (Verified by: Abhinav Mukerji, Sr. Adv.)