In a Civil Appeal before the Supreme Court division bench comprising Justice Pamidighantam Sri Narasimha and Justice Sandeep Mehta, the court held that Public Premises Act does not override the Arbitration & Conciliation Act in a case of dispute arising from contracts involving public premises.

The case concerns a dispute between the appellant, a statutory body operating under the Warehousing Corporations Act, 1962, and the respondent, a company engaged in trading ceramic tiles and sanitary ware, regarding the use of a warehousing facility. On September 12, 2012, the appellant granted possession of a 1295 sq. meter storage space to the respondent, and a formal lease agreement was signed on September 26, 2012. The lease was for a period of three years, expiring on September 11, 2015, and included a clause allowing for renewal by mutual consent. Additionally, the agreement incorporated an arbitration clause to address potential disputes.

During the lease, the appellant revised the storage charges and demanded increased payments from the respondent. The appellant indicated that failure to comply with the revised charges would be interpreted as a lack of interest in renewing the lease. In response, the respondent expressed a desire to continue using the storage facility and requested renewal of the lease, while also committing to clearing any outstanding arrears. However, the appellant rejected the renewal request and raised a demand for Rs. 16,10,004/- in unpaid dues.

Despite the lease expiring, the respondent did not vacate the premises, leading the appellant to invoke the provisions of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971. 

The key legal issues in the case involve the interpretation of the renewal clause in the lease, the respondent's refusal to vacate the premises, and the application of the Public Premises Act for eviction proceedings. Questioning the judgement and order passed by the High Court and referring the dispute to arbitration, the appellant filed the present appeal. The questions for consideration before the court were:

• 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 (the Act)?
• Whether the Public Premises Act, 1971, overrides the Act? 

After due consideration, the Supreme Court concluded that the said question does not arise in the facts and circumstances of the case, calling to reference the Arbitration Clause and the decision of the Supreme Court in SBI General Insurance Co. v. Krish Spinning, 2024 INSC 532, which discussed the scope of the referral court’s interference when a valid arbitration clause exists.  

The key point is whether the High Court made an error in appointing the arbitrator under Section 11. The disputes, such as revised storage charges and the right of renewal, are clearly covered by the arbitration clause in the agreement. The court's recent decision in SBI General Insurance Co. v. Krish Spinning, 2024 INSC 532 clarified that the referral court’s role is simply to check the existence of an arbitration agreement. The court found that these disputes undeniably fall under the scope of the arbitration clause.

The High Court confirmed that the disputes mentioned in the notice are indeed covered by the arbitration clause in the agreement. This includes issues around increased storage charges and the extension of the warehousing agreement. According to Clause 16, any dispute relating to the agreement must be resolved through arbitration, and the arbitrator's decisions are final and binding. So, despite the respondent's arguments, these disputes fall within the scope of arbitration.

The court observed, “The Public Premises Act neither bars nor overlaps with the scope and ambit of proceedings that were initiated under the Arbitration and Conciliation Act”.

Finally, the Supreme Court rejected the petition and held that the appellant must bear a cost of Rs 50,000 for this unnecessary litigation.

As the arbitration proceedings were stayed due to the pendency of this appeal, while dismissing this appeal, the court also directed that the arbitral tribunal shall resume the proceedings and endeavour to deliver the award as expeditiously as possible.  

Advocate for the Petitioner: Ashish Kumar Tiwari 

Advocate for the Respondent: Rameshwar Prasad Goyal 

Case Details: Central Warehousing Corporation & Anr. v. M/s Sidhartha Tiles & Sanitary Pvt. Ltd., C.A./011723/2024