A.B. Mallikarjuna Son of A.M. Basavegowda Vs. Jubliant Biosys Limited (Noida) a Company Incorporated Under the Companies Act, 1956 Rep. by Its Director, - Court Judgment

Excerpt:
- karnataka small causes courts act, 1964 [k.a. no. 11/1964]. sections 8 & 9: [k. ramanna, j] suit for ejection - jurisdiction of small causes court - suit for possession in respect of non-residential premises - held, small causes court has jurisdiction to pass a decree. however, a suit for possession of with mesne profits or damages would be outside the jurisdiction of small causes court. ordermohan shantanagoudar, j.1. this petition is filed under section 11(6) of the arbitration and conciliation act, 1996, (hereinafter referred to as 'arbitration act of 1996' in short) praying for appointment of sole arbitrator to decide over the dispute which has arisen between the petitioner and respondents.2. brief facts of the case are as under : petitioner is the absolute owner of the immovable property bearing no. 94, industrial suburb, 2nd stage, industrial area, yeshwanthpur, bangalore-560 022, with construction thereon. respondents 1 and 3 are the companies incorporated under the provisions of companies act, 1956. the petitioner and respondent no. 1 entered into a lease agreement as per annexure-'b' dated 8lh september 2008. likewise, another agreement of lease was entered into between petitioner and respondent no. 3 as per annexure-'c' on the very day i.e., on 8th september 2008. prior thereto, a memorandum of understanding was entered into between the petitioner and the 1st respondent as per annexure-'a' on 6th august 2008. consequently, the aforementioned property was leased in favour of respondents 1 and 3 as per the lease deeds vide annexures-'b' and 'c' it is the case of the petitioner that respondents 1 and 3 are affiliated companies and part of jubiliant organosys group of companies and the companies are under the same management. the memorandum of understanding as well as the lease deeds set out the terms and conditions agreed between the parties. in accordance with the memorandum of understanding, the petitioner was to provide additional facilities demanded by respondent no. 1 in the schedule property. according to the petitioner, he has agreed to all the demands made by respondent no. 1 and provided all the additional facilities even to the extent of making substantial changes and improvements to the schedule properly to suit to the convenience of respondent no. 1 and its requirements, consequently has incurred additional expenditure of rs. 1 crore for alterations carried out based on the representation/demand made by respondents no. 1. the parties have agreed that respondent no. 1 will continue in possession of the property as a lessee for a block period of fifteen years. however, the lease deeds reveal that the 'lock-in-period' of lease would be for 36 months i.e., three years. ultimately, the letters of termination of lease dated 8.12.2008 as per annexures-'d' and 'e' sent by respondent no. 1 and 3 are received by the petitioner. in view of the termination of lease agreements coupled with clause-5 of the lease deeds, the petitioner called upon the respondents to make the payment of the rents for a period of 42 months (i.e., the period of lock in and notice period) totaling to a sum of rs. 6,59,40,000/-, vide letter dated 17.12.2008 as per annexure-'t' to the writ petition. the respondents have sent reply on 12.2.2009 as per annexures-'g' and 'h', denying the prayer of the petitioner.3. from the above, it is clear that the dispute has arisen between the parties and the same needs to be resolved. clause-19 of both the lease deeds reveals that any dispute arising out of the lease deeds or any matters relating thereto, shall be referred to arbitration, which shall be decided in accordance with the arbitration and conciliation act, 1996. such arbitration shall be held in bangalore and the courts in bangalore alone will have jurisdiction. by invoking the said clause, this petition is filed praying for appointment of sole arbitrator to resolve the dispute.4. sri basava prabhu patil, learned senior counsel appearing on behalf of petitioner submits that there is no dispute that the lease agreements were entered into between the petitioner and respondent 1 as per annexure-'b' and petitioner and respondent no. 3 as per annexure-'c'. since the disputes have arisen between the parties regarding the lease deeds and the matters relating thereto, the arbitrator is to be appointed for resolving the dispute.5. per contra, sri shekar shetty, learned counsel appearing on behalf of respondents contended that since the lease agreements between the parties are evidenced by unregistered lease deeds, the same cannot be acted upon for enforcing clause no. 19 relating to arbitration agreement, and that single petition is not maintainable under section 11(6) of the arbitration act of 1996 as two lease deeds are involved in the matter. in other words, the respondents contend that the petitioner ought to have filed two separate petitions.6. in the matter on hand, the lease deeds in question containing the arbitration clause are in writing and are signed by both the parties. they are unregistered. in order to appreciate the rival contentions, it is relevant to note the provisions of section 7 of the arbitration act of 1996, section 107 of transfer of property act, 1882 and section 49 of the registration act, 1908.section 7 : arbitration agreement - (1) in this part, 'arbitration agreement' means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.(2) an arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.(3) an arbitration agreement shall be in writing.(4)an arbitration agreement is in writing if it is contained in-(a) a document signed by the parties;(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.(5) the reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.section 107 of transfer of property act : leases how made : a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument.all other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one. each such instrument shall be executed by both the lessor and the lessee:provided that the state government may, from time to time, by notification in the official gazette, direct that leases of immovable property. other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.section 49 of registration act :- effect of non-registration of documents required to be registered - no document required by section 107 or by any provisions of the transfer of property act, 1882 (4 of 1882) to be registered shall -(a) affect any immovable property comprised therein, or.(b) confer any power to adopt, or(c) be received as evidence of any transaction affecting such property or conferring such power,unless it has been registered:provided that an unregistered document affecting immovable property and required by this act or the transfer of property act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under chapter ii of the specific relief act, 1877 (1 of 1877) or as evidence of any collateral transaction not required to be effected by registered instrument.it is also relevant to note clause 1(a) and clause 3(a) and (i) of the respective lease deeds which read thus:clause 1(a) :- in consideration of the rent herein reserved and the covenants herein contained, the lessor does hereby agree to demise unto the lessee, by way of lease, the schedule property to hold the same unto the lessee, for a period of 180 (one hundred eighty) months, paying there for an aggregate monthly rent of rs. 11,77,500/- (rupees elevan lakhs seventy seven thousand and five hundred only) on or before the 10th day of the month in advance. in the event of any delay in payments of rent, the lessee shall be liable to pay interest @ 2% per month for the period of delay.clause 3(a) : to pay the monthly rent in respect of the schedule property, in advance, on or before the 10th day of the concerned month, without the necessity of any notice or demand from the lessor, subject, however, to any deductions required to be made by law. in the event that the lessor produces a tax exemption certificate, the lessee shall not deduct any tax at source.clause 3(i) :- both lessor and lessee agree to an escalation of the rent at 15% of the monthly rent last payable once in every three (3) years.the lease of immovable property is defined in section 105 of the transfer of property act. a transfer of right to enjoy a property in consideration of a price paid or promised to be rendered periodically or on specified occasions is the basic fabric for a valid lease. the provision says that such a transfer can be made expressly or by implication. once there is such a transfer of right to enjoy a property, a lease stands created. the second paragraph of section 107 of the transfer of property act clarifies that a lease by oral agreement accompanied by delivery of possession is sufficient, if the lease does not fall in first paragraph of section 107. therefore, even if the document is not registered, but the lessee was inducted in possession, it is enough for the purpose of creation of jural relationship between the parties. in the case of anthony v. k.c. ittoop and sons : 2000 (6) scc 394 it is held that, when a lease is transfer of a right to enjoy the property and such transfer can be made expressly or by implication, the mere fact that an unregistered instrument came into existence would not stand in the way of the court to determine whether there was in fact a lease otherwise than through such deed. when it is admitted by both parties that the respondents were inducted into possession of the building by the owner thereof pursuant to the lease deeds and that the respondents were paying rent or had agreed to pay rent in respect of the building, the legal character of the respondent's possession has to be attributed to a jural relationship between the parties. such jural relationship cannot be placed anything different from that of lessor and lessee falling within the purview of the second para of section 107 of the transfer of property act.7. in the case of burmah shell oil distributing v. khaja midhat noor : air 1988 sc 1470 at para-5, it is observed thus:in view of the paragraphs of section 107 of the act, since the lease was for a period exceeding one year, it could only have been extended by a registered instrument executed by both the lessor and the lessee. in the absence of the registered instrument, the lease shall be deemed to be 'lease from month to month'. it is clear from the very language of section 107 of the act which postulates that a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made on a registered instrument. in the absence of registered instrument, it must be a monthlu lease. the lessee and the sub-lessee in facts of this case continued to remain in possession of the proyertu on vaument of rent as a tenant from month to month. the high court so found. we are of the opinion that the high court was right.(emphasis supplied)in the matter on hand, clause 1(a) and clause 3(a) and (1)(mentioned supra) of the lease deeds prima facie reveal that the lessees have not only agreed to pay monthly rent on or before 10th of concerned month, but also to pay higher rents periodically. hence, i find that the lessees continued to remain in possession for about three months as the tenants from month to month.8. moreover, the last paragraph of section 49 of the registration act specifically mentions that an unregistered document may be received as evidence of any collateral transaction not required to be effected by registered document. a document required by law to be registered, if unregistered, is inadmissible as evidence of a transaction affecting immovable property, but it may be admitted as evidence of collateral facts, or for any collateral purpose, that is for any purpose other than that of creating, declaring, assigning, limiting or extinguishing a right to immovable property. the proviso clearly empowers the courts to admit any unregistered document as evidence of collateral transaction not required to be registered. see the judgments in the cases of (1) satish chand makhan and ors. v. govardhan das byas and ors. : air 1984 sc 143 and (2) rai chand jain v. miss. chandra kanta khosla : air 1991 sc 744.in the case of national agricultural co-operative marketing federation india ltd. v. gains trading ltd. : 2007 (5) scc 692, the apex court held that an arbitration clause is a collateral term in the contract, which relates to resolution of disputes, and not performance. even if the performance of the contract comes to an end on account of repudiation, frustration or breach of contract, the arbitration agreement would survive for the purpose of resolution of disputes arising under or in connection with the contract. this position is statutorily recognised under section 16(1) of the act, which, inter alia, provides that an arbitration clause which forms part of the contract, has to be treated as an agreement independent of the other terms of the contract and a decision that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.9. from the definition of the 'arbitration agreement' under section 7 of the arbitration act of 1996, it is clear that the arbitration agreement does not require registration. no particular form is also prescribed. all that is required is that the arbitration agreement has to be in writing. the unregistered lease deed, can be looked into for collateral purpose. the unregistered lease agreements containing arbitration clause can be segregated and treated as independent agreement in writing duly signed by both the parties which is binding on the parties. an arbitration agreement which is in writing is recognised by the act. it is necessary that the terms should be reduced in writing and the agreement between the parties on such written terms is to be established. as aforementioned, the arbitration agreement is not required to be in any particular form. if the intention of the parties is to refer the dispute to an arbitrator, and if it can be clearly ascertained from the terms of the agreement, or from the facts and circumstances of the case, it is immaterial whether or not the agreement is registered. see the case of nandan biomatrjx limited v. d.i. oils limited : (2009) 4 scc 495.10. the arbitration clause is quite distinct from other clauses of the contract. other clauses of the agreement impose obligation, which the parties undertake towards each other. but the arbitration clause does not impose, on any of the parties, any obligation in favour of the other party. the arbitration agreement embodies an agreement between the parties that, in case of dispute, the same shall be settled by an arbitrator or umpire as the case may be. it is pertinent to note that there is material difference in an arbitration agreement, inasmuch as, in ordinary contract, the obligation of the parties to each other cannot, in general, be specifically enforced and breach of such terms of contract results only in damages. the arbitration clause however can be specifically enforced by the machinery of the arbitration act. in the case of ashok traders and anr. v. gurvmukh das saluja and ors. : air 2004 sc 1433, it has been categorically held that in the scheme of arbitration act, 1996, the arbitration clause is separable from other clauses of a deed and it constitutes an agreement by itself. the apex court in its recent judgment in the case of p. manohar reddy and bros. v. maharashtra krishna valley development corporation and ors. : air 2009 sc 1776, has observed that, an arbitration clause, as is well known, is part of the contract. it being a collateral term need not, in all situations, perish with coming to an end of the contract. it may survive. this concept of separability of the arbitration clause is now widely accepted. thus, the arbitration clause which forms part of the contract shall be treated as an agreement independent of other terms of the contract. the decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.11. from the above, it is clear that the arbitration clause in the agreement shall have to be treated as an independent agreement between the parties and will have to be enforced as such. the said clause/agreement does not depend upon the validity or invalidity of the agreement between the parties.12. there is no requirement that the arbitration agreement should be registered. where the statute (section 7 of the arbitration act of 1996) has gone to great lengths to define exactly what is meant by the term 'in writing', i am precluded from adding another term to the definition. in deed, it is contrary to all rules of construction to read words into an act unless it is absolutely necessary to do so. since the statute is abundantly clear and unambiguous, this court does not find any reason to read certain words into the act. one of the main objectives of the arbitration act of 1996, is to minimise the role of the court; adding additional requirements to the act is antithetical to such a goal. if this court adds a number of extra requirements such as stamps, seals, registration and originals, i would be enhancing my role, not minimising it. what is even more worrisome is that the parties' intention to arbitrate would be foiled by formality. section 7 of the arbitration act of 1996 does not require that the parties stamp the agreement. it would be incorrect to disturb the parliament's intention when it is so clearly stated and when it in no way conflicts with the constitution.13. the next contention of the respondents that the petitioner ought to have filed two petitions instead of one is too technical in nature. may be, the petitioner could have filed two petitions. however, the petitioner has chosen to file single petition. mere filing of single petition cannot be a ground to throw away the case of the petitioner. at the most, the petitioner may be directed to pay additional set of court fee. such a procedure may cure the technical defect, if any.14. since the disputes have arisen relating to the lease agreements, and as the lease agreements in question clearly reveal that the parties have agreed to refer the matter to arbitration for resolution of dispute, it is a fit case to exercise jurisdiction under section 11(6) of the arbitration and conciliation act, 1996. accordingly, the following order is made:sri justice k. shivashankar bhat, retired judge of this court. no. 401/29, 12th main, r.m.v. extension, sadashivanagar, bangalore-80, is appointed as sole arbitrator to resolve the dispute between the parties. learned arbitrator on receipt of copy of this order will enter upon the reference, issue notice to the parties and then proceed to resolve the dispute in accordance with arbitration and conciliation act, 1996.office is directed to send the copy of this order to the learned arbitrator forthwith. it is further directed to return the original papers if any, filed along with the petition, to the petitioner to produce the same before the arbitrator.petitioner is directed to pay additional set of court fee in the registry of this office within four weeks from today.it is made clear that the learned arbitrator shall not be bound by any of the observations which have been made in this judgment. the observations have been made only to decide this arbitration petition.the petition is allowed accordingly.

Judgment:
ORDER

Mohan Shantanagoudar, J.

1. This petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as 'Arbitration Act of 1996' in short) praying for appointment of Sole Arbitrator to decide over the dispute which has arisen between the petitioner and respondents.

2. Brief facts of the case are as under : Petitioner is the absolute owner of the immovable property bearing No. 94, Industrial Suburb, 2nd Stage, Industrial Area, Yeshwanthpur, Bangalore-560 022, with construction thereon. Respondents 1 and 3 are the companies incorporated under the provisions of Companies Act, 1956. The petitioner and respondent No. 1 entered into a Lease Agreement as per Annexure-'B' dated 8lh September 2008. Likewise, another agreement of lease was entered into between petitioner and respondent No. 3 as per Annexure-'C' on the very day i.e., on 8th September 2008. Prior thereto, a Memorandum of Understanding was entered into between the petitioner and the 1st respondent as per Annexure-'A' on 6th August 2008. Consequently, the aforementioned property was leased in favour of respondents 1 and 3 as per the Lease Deeds vide Annexures-'B' and 'C' It is the case of the petitioner that respondents 1 and 3 are affiliated companies and part of Jubiliant Organosys Group of Companies and the companies are under the same management. The Memorandum of Understanding as well as the Lease Deeds set out the terms and conditions agreed between the parties. In accordance with the Memorandum of Understanding, the petitioner was to provide additional facilities demanded by respondent No. 1 in the schedule property. According to the petitioner, he has agreed to all the demands made by respondent No. 1 and provided all the additional facilities even to the extent of making substantial changes and improvements to the schedule properly to suit to the convenience of respondent No. 1 and its requirements, consequently has incurred additional expenditure of Rs. 1 crore for alterations carried out based on the representation/demand made by respondents No. 1. The parties have agreed that respondent No. 1 will continue in possession of the property as a lessee for a block period of fifteen years. However, the Lease Deeds reveal that the 'lock-in-period' of lease would be for 36 months i.e., three years. Ultimately, the letters of termination of lease dated 8.12.2008 as per Annexures-'D' and 'E' sent by respondent No. 1 and 3 are received by the petitioner. In view of the termination of lease agreements coupled with Clause-5 of the Lease Deeds, the petitioner called upon the respondents to make the payment of the rents for a period of 42 months (i.e., the period of Lock In and Notice period) totaling to a sum of Rs. 6,59,40,000/-, vide letter dated 17.12.2008 as per Annexure-'T' to the writ petition. The respondents have sent reply on 12.2.2009 as per Annexures-'G' and 'H', denying the prayer of the petitioner.

3. From the above, it is clear that the dispute has arisen between the parties and the same needs to be resolved. Clause-19 of both the Lease Deeds reveals that any dispute arising out of the Lease Deeds or any matters relating thereto, shall be referred to arbitration, which shall be decided in accordance with the Arbitration and Conciliation Act, 1996. Such arbitration shall be held in Bangalore and the Courts in Bangalore alone will have jurisdiction. By invoking the said clause, this petition is filed praying for appointment of sole Arbitrator to resolve the dispute.

4. Sri Basava Prabhu Patil, learned Senior Counsel appearing on behalf of petitioner submits that there is no dispute that the lease agreements were entered into between the petitioner and respondent 1 as per Annexure-'B' and petitioner and respondent No. 3 as per Annexure-'C'. Since the disputes have arisen between the parties regarding the Lease Deeds and the matters relating thereto, the Arbitrator is to be appointed for resolving the dispute.

5. Per contra, Sri Shekar Shetty, learned Counsel appearing on behalf of respondents contended that since the lease agreements between the parties are evidenced by unregistered Lease Deeds, the same cannot be acted upon for enforcing Clause No. 19 relating to arbitration agreement, and that single petition is not maintainable under Section 11(6) of the Arbitration Act of 1996 as two lease deeds are involved in the matter. In other words, the respondents contend that the petitioner ought to have filed two separate petitions.

6. In the matter on hand, the lease deeds in question containing the arbitration clause are in writing and are signed by both the parties. They are unregistered. In order to appreciate the rival contentions, it is relevant to note the provisions of Section 7 of the Arbitration Act of 1996, Section 107 of Transfer of Property Act, 1882 and Section 49 of the Registration Act, 1908.

Section 7 : Arbitration agreement - (1) In this Part, 'arbitration agreement' means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing.

(4)An arbitration agreement is in writing if it is contained in-

(a) A document signed by the parties;

(b) An exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or

(c) An exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.

Section 107 of Transfer of Property Act : Leases how made : A lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument.

All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.

Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one. each such instrument shall be executed by both the lessor and the lessee:

Provided that the State Government may, from time to time, by notification in the Official Gazette, direct that leases of immovable property. other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered Instrument or by oral agreement without delivery of possession.Section 49 of Registration Act :- Effect of non-registration of documents required to be registered - No document required by Section 107 or by any provisions of the Transfer of Property Act, 1882 (4 of 1882) to be registered shall -

(a) affect any immovable property comprised therein, or.

(b) confer any power to adopt, or

(c) be received as evidence of any transaction affecting such property or conferring such power,

unless it has been registered:Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (1 of 1877) or as evidence of any collateral transaction not required to be effected by registered instrument.

It is also relevant to note Clause 1(a) and Clause 3(a) and (i) of the respective Lease Deeds which read thus:

Clause 1(a) :- In consideration of the rent herein reserved and the covenants herein contained, the Lessor does hereby agree to demise unto the Lessee, by way of lease, the Schedule Property TO HOLD the same unto the Lessee, for a period of 180 (One Hundred Eighty) months, Paying There for an aggregate monthly rent of Rs. 11,77,500/- (Rupees Elevan Lakhs seventy seven Thousand and Five hundred only) on or before the 10th day of the month in advance. In the event of any delay in payments of rent, the Lessee shall be liable to pay interest @ 2% per month for the period of delay.

Clause 3(a) : To pay the monthly rent in respect of the Schedule Property, in advance, on or before the 10th day of the concerned month, without the necessity of any notice or demand from the Lessor, subject, however, to any deductions required to be made by law. In the event that the Lessor produces a tax exemption certificate, the Lessee shall not deduct any tax at source.

Clause 3(i) :- Both Lessor and Lessee agree to an escalation of the rent at 15% of the monthly rent last payable once in every three (3) years.

The lease of immovable property is defined in Section 105 of the Transfer of Property Act. A transfer of right to enjoy a property in consideration of a price paid or promised to be rendered periodically or on specified occasions is the basic fabric for a valid lease. The provision says that such a transfer can be made expressly or by implication. Once there is such a transfer of right to enjoy a property, a lease stands created. The second paragraph of Section 107 of the Transfer of Property Act clarifies that a lease by oral agreement accompanied by delivery of possession is sufficient, if the lease does not fall in first paragraph of Section 107. Therefore, even if the document is not registered, but the lessee was inducted in possession, it is enough for the purpose of creation of jural relationship between the parties. In the case of Anthony v. K.C. Ittoop and Sons : 2000 (6) SCC 394 it is held that, when a lease is transfer of a right to enjoy the property and such transfer can be made expressly or by implication, the mere fact that an unregistered instrument came into existence would not stand in the way of the Court to determine whether there was in fact a lease otherwise than through such deed. When it is admitted by both parties that the respondents were inducted into possession of the building by the owner thereof pursuant to the lease deeds and that the respondents were paying rent or had agreed to pay rent in respect of the building, the legal character of the respondent's possession has to be attributed to a jural relationship between the parties. Such jural relationship cannot be placed anything different from that of lessor and lessee falling within the purview of the second para of Section 107 of the Transfer of Property Act.

7. In the case of Burmah Shell Oil Distributing v. Khaja Midhat Noor : AIR 1988 SC 1470 at para-5, it is observed thus:

In view of the paragraphs of Section 107 of the Act, since the lease was for a period exceeding one year, it could only have been extended by a registered instrument executed by both the lessor and the lessee. In the absence of the registered instrument, the lease shall be deemed to be 'lease from month to month'. It is clear from the very language of Section 107 of the Act which postulates that a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made on a registered instrument. In the absence of registered instrument, it must be a monthlu lease. The lessee and the sub-lessee in facts of this case continued to remain in possession of the proyertu on vaument of rent as a tenant from month to month. The High Court so found. We are of the opinion that the High Court was right.

(Emphasis supplied)

In the matter on hand, Clause 1(a) and Clause 3(a) and (1)(mentioned supra) of the Lease Deeds prima facie reveal that the lessees have not only agreed to pay monthly rent on or before 10th of concerned month, but also to pay higher rents periodically. Hence, I find that the lessees continued to remain in possession for about three months as the tenants from month to month.

8. Moreover, the last paragraph of Section 49 of the Registration Act specifically mentions that an unregistered document may be received as evidence of any collateral transaction not required to be effected by registered document. A document required by law to be registered, if unregistered, is inadmissible as evidence of a transaction affecting immovable property, but it may be admitted as evidence of collateral facts, or for any collateral purpose, that is for any purpose other than that of creating, declaring, assigning, limiting or extinguishing a right to immovable property. The proviso clearly empowers the Courts to admit any unregistered document as evidence of collateral transaction not required to be registered. See the judgments in the cases of (1) Satish Chand Makhan and Ors. v. Govardhan Das Byas and Ors. : AIR 1984 SC 143 and (2) Rai Chand Jain v. Miss. Chandra Kanta Khosla : AIR 1991 SC 744.

In the case of National Agricultural Co-operative Marketing Federation India Ltd. v. Gains Trading Ltd. : 2007 (5) SCC 692, the Apex Court held that an arbitration clause is a collateral term in the contract, which relates to resolution of disputes, and not performance. Even if the performance of the contract comes to an end on account of repudiation, frustration or breach of contract, the arbitration agreement would survive for the purpose of resolution of disputes arising under or in connection with the contract. This position is statutorily recognised under Section 16(1) of the Act, which, inter alia, provides that an arbitration clause which forms part of the contract, has to be treated as an agreement independent of the other terms of the contract and a decision that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

9. From the definition of the 'arbitration agreement' under Section 7 of the Arbitration Act of 1996, it is clear that the arbitration agreement does not require registration. No particular form is also prescribed. All that is required is that the arbitration agreement has to be in writing. The unregistered Lease Deed, can be looked into for collateral purpose. The unregistered lease agreements containing arbitration clause can be segregated and treated as independent agreement in writing duly signed by both the parties which is binding on the parties. An arbitration agreement which is in writing is recognised by the Act. It is necessary that the terms should be reduced in writing and the agreement between the parties on such written terms is to be established. As aforementioned, the arbitration agreement is not required to be in any particular form. If the intention of the parties is to refer the dispute to an Arbitrator, and If it can be clearly ascertained from the terms of the agreement, or from the facts and circumstances of the case, it is immaterial whether or not the agreement is registered. see the case of Nandan Biomatrjx Limited v. D.I. Oils Limited : (2009) 4 SCC 495.

10. The arbitration clause is quite distinct from other clauses of the contract. Other clauses of the agreement impose obligation, which the parties undertake towards each other. But the arbitration clause does not impose, on any of the parties, any obligation in favour of the other party. The arbitration agreement embodies an agreement between the parties that, in case of dispute, the same shall be settled by an Arbitrator or Umpire as the case may be. It is pertinent to note that there is material difference in an arbitration agreement, inasmuch as, in ordinary contract, the obligation of the parties to each other cannot, in general, be specifically enforced and breach of such terms of contract results only in damages. The arbitration clause however can be specifically enforced by the machinery of the Arbitration Act. In the case of Ashok Traders and Anr. v. Gurvmukh Das Saluja and Ors. : AIR 2004 SC 1433, it has been categorically held that in the scheme of Arbitration Act, 1996, the arbitration clause is separable from other clauses of a Deed and it constitutes an agreement by itself. The Apex Court in its recent judgment in the case of P. Manohar Reddy and Bros. v. Maharashtra Krishna Valley Development Corporation and Ors. : AIR 2009 SC 1776, has observed that, an arbitration clause, as is well known, is part of the contract. It being a collateral term need not, in all situations, perish with coming to an end of the contract. It may survive. This concept of separability of the arbitration clause is now widely accepted. Thus, the arbitration clause which forms part of the contract shall be treated as an agreement independent of other terms of the contract. The decision by the Arbitral Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

11. From the above, it is clear that the arbitration clause in the agreement shall have to be treated as an independent agreement between the parties and will have to be enforced as such. The said clause/agreement does not depend upon the validity or invalidity of the agreement between the parties.

12. There is no requirement that the arbitration agreement should be registered. Where the statute (Section 7 of the Arbitration Act of 1996) has gone to great lengths to define exactly what is meant by the term 'in writing', I am precluded from adding another term to the definition. In deed, it is contrary to all rules of construction to read words into an Act unless it is absolutely necessary to do so. Since the statute is abundantly clear and unambiguous, this Court does not find any reason to read certain words into the Act. One of the main objectives of the Arbitration Act of 1996, is to minimise the role of the Court; adding additional requirements to the Act is antithetical to such a goal. If this Court adds a number of extra requirements such as stamps, seals, registration and originals, I would be enhancing my role, not minimising it. What is even more worrisome is that the parties' intention to arbitrate would be foiled by formality. Section 7 of the Arbitration Act of 1996 does not require that the parties stamp the agreement. It would be incorrect to disturb the Parliament's intention when it is so clearly stated and when it in no way conflicts with the Constitution.

13. The next contention of the respondents that the petitioner ought to have filed two petitions instead of one is too technical in nature. May be, the petitioner could have filed two petitions. However, the petitioner has chosen to file single petition. Mere filing of single petition cannot be a ground to throw away the case of the petitioner. At the most, the petitioner may be directed to pay additional set of court fee. Such a procedure may cure the technical defect, if any.

14. Since the disputes have arisen relating to the lease agreements, and as the lease agreements in question clearly reveal that the parties have agreed to refer the matter to arbitration for resolution of dispute, it is a fit case to exercise jurisdiction under Section 11(6) of the Arbitration and Conciliation Act, 1996. Accordingly, the following order is made:

Sri Justice K. Shivashankar Bhat, Retired Judge of this Court. No. 401/29, 12th Main, R.M.V. Extension, Sadashivanagar, Bangalore-80, is appointed as Sole Arbitrator to resolve the dispute between the parties. Learned Arbitrator on receipt of copy of this order will enter upon the reference, issue notice to the parties and then proceed to resolve the dispute in accordance with Arbitration and Conciliation Act, 1996.

Office is directed to send the copy of this order to the learned Arbitrator forthwith. It is further directed to return the original papers if any, filed along with the petition, to the petitioner to produce the same before the Arbitrator.

Petitioner is directed to pay additional set of court fee in the registry of this office within four weeks from today.

It is made clear that the learned Arbitrator shall not be bound by any of the observations which have been made in this judgment. The observations have been made only to decide this arbitration petition.

The Petition is allowed accordingly.