Radius Global Solutions India BPO Private Limited vs Blue Eagle Constructions Private Limited

The applicant has filed the present application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a three-member arbitral tribunal. The applicant wants the disputes and differences which have arisen between the applicant and the respondent, in connection with the Sub-License Agreement dated 17th December 2020, to be decided through arbitration.

The dispute in the present Petition is about the Respondent continuing to occupy the licensed premises even after the fixed period of the Sub-License Agreement came to an end on 30 April 2026. According to the Applicant, after expiry of the Sub-License Agreement, the Respondent has no, statutory or equitable right to remain in possession of the premises. The Respondent cannot insist that the Sub-License Agreement should be renewed. The Applicant relies, in particular, upon the fresh Leave and License Agreement dated 24 February 2026 executed with the Owner, which does not permit the premises to be sublet to persons or entities who are not affiliates of the Applicant.

The facts and circumstances which, according to the Applicant, have resulted in filing of the present Petition are as follows. On 16 May 2017, Supreme Housing & Hospitality Pvt. Ltd. (Owner) entered into a Leave and License Agreement with the Applicant in respect of Unit Nos. 501 and 601, A-Wing, Supreme Business Park, Powai, Mumbai. The said Agreement was for a period of 48 months, commencing from 1 May 2017 and ending on 30 April 2021. Thereafter, on 4 October 2018, with the consent of the Owner, the Applicant entered into a registered Sub-License Agreement with the Respondent. The said Sub-License was for the period commencing from 1 August 2018 and ending on 30 April 2021. Thereafter, on 18 November 2020, Supreme Housing and the Applicant entered into a fresh Leave and License Agreement for a period of 60 months, commencing from 1 May 2021 and ending on 30 April 2026. On 4 December 2020, Supreme Housing gave its consent for renewal and continuation of the Sub-License arrangement in favour of the Respondent., on 17 December 2020, the Applicant and the Respondent entered into a fresh Sub-License Agreement for a period of 60 months, commencing from 1 May 2021 and ending on 30 April 2026. The said Agreement contained an arbitration clause, being Clause 11. On 29 April 2024, the Applicant and the Respondent entered into an Addendum to the Sub-License Agreement. Under the Addendum, the Respondent gave up a substantial part of the licensed area. The Respondent thereafter retained only 1,316 sq. ft. of chargeable office area on the 5th Floor and 555 sq. ft. of usable area on the 4th Floor, Core-

Thereafter, on 29 August 2025, the Applicant issued a written notice to the Respondent informing it that the Primary Leave and License Agreement was going to expire on 30 April 2026. The Respondent was called upon to hand over vacant possession of the premises upon expiry of the Sub-License Agreement. According to the Applicant, this notice was given more than 8 months in advance, as contemplated under Clause 15 of the MIPA. The Respondent thereafter filed L.D. Suit No.104 of 2025 before the Small Causes Court, Mumbai. By the said Suit, the Respondent challenged the notice dated 29 August 2025 and sought declarations concerning continuation and renewal of the Sub-License Agreement. During the years 2025-2026, the Applicant filed its Written Statement and filed applications under Section 8 of the Arbitration and Conciliation Act, 1996 and Order VII Rule 11 of the Code of Civil Procedure. By these applications, the Applicant raised objections concerning arbitrability of the dispute and the jurisdiction of the Court. On 24 February 2026, the Applicant and Supreme Housing entered into another fresh Leave and License Agreement for the period from 1 May 2026 to 30 April 2031. The said Agreement specifically restricted assignment and subletting of the premises, except where such assignment or subletting was in favour of the Applicant's affiliates and wholly-owned subsidiaries. Thereafter, on 20 April 2026, the Respondent, through its affiliate or entity known as “Sembridge”, approached Supreme Housing and sought direct rights in respect of the licensed premises. Supreme Housing did not accept this request.

On 27 April 2026, Supreme Housing again rejected the Respondent's request. However, it offered the Respondent alternative vacant premises in the same building for taking on direct license. On 30 April 2026, the Sub-License Agreement dated 17 December 2020, as amended by the Addendum dated 29 April 2024, came to an end by efflux of time. After expiry of the Agreement, on 14 May 2026, the Applicant issued a final demand notice to the Respondent. By the said notice, the Respondent was called upon to vacate the licensed premises and hand over peaceful possession to the Applicant. Thereafter, on 22 May 2026, the Applicant nominated its arbitrator and, by its letter, called upon the Respondent to nominate its arbitrator.

Mr. Siroya, learned Advocate for the Applicant, submitted that the Applicant had raised an objection regarding the jurisdiction of the Small Causes Court under Section 8 of the Arbitration and Conciliation Act, 1996. He pointed out that this objection was specifically taken in the Written Statement filed on 3 December 2025. He submitted that even during the hearing of the application filed by the Defendant under Order VII Rule 11 of the Code of Civil Procedure, the Defendant had raised the objection under Section 8 of the Arbitration and Conciliation Act. According to him, although sub-section (1) of Section 8 uses the words “if a party so applies”, such an objection can be taken in the Written Statement. He submitted that sub-sections (2) and (3) of Section 8 refer to an “application under Sub-section (1)”, but this does not mean that a separate application, apart from the Written Statement, is compulsory for invoking the arbitration agreement between the parties. He relied upon the decision in Arti Jethani (supra), where it was held that a reference under Section 8 can be made when the Written Statement contains a request for referring the dispute to arbitration. However, according to Mr. Siroya, to the extent Arti Jethani holds that there must be a specific prayer seeking reference to arbitration, the said view, with respect, is not consistent with the language of Section 8. He submitted that Section 8 only requires a party to inform the judicial authority that the dispute brought before it is covered by an arbitration agreement. Therefore, if the existence of the arbitration agreement and the objection to the Court entertaining the dispute are brought to the Court's notice in the Written Statement, the mere absence of a separate prayer or the particular words seeking reference to arbitration cannot prevent the judicial authority from referring the parties to arbitration.

Mr. Siroya submitted that the Delhi High Court, in Madhu Sudan Sharma & Ors. v. Omaxe Ltd., has taken the same view. According to the said decision, when a party, in its Written Statement, objects to the jurisdiction of the Court to entertain the suit because the parties have an arbitration clause, such objection is sufficient compliance with Section 8 of the Arbitration and Conciliation Act, 1996. He submitted that once the party has referred to the arbitration clause in its written submissions and has relied upon it to object to the jurisdiction of the Court, there is no requirement to file a separate application under Section 8 of the Act.

Mr. Siroya submitted that sub-section (3) of Section 8 makes it clear that merely because an application under Section 8 is pending before a Court, arbitration proceedings are not required to be stopped. According to him, such pendency does not prevent the arbitration from being commenced or continued, nor does it prevent an arbitral award from being made. He submitted that the purpose of this provision is clear. The filing of a suit by one party to an arbitration agreement, or the filing of an application under Section 8 by the other party before the Court, should not prevent the other party from taking steps for appointment of an arbitrator or from continuing with the arbitration before the Arbitral Tribunal.

Mr. Siroya denied the allegation that the pre-negotiation requirement contained in the arbitration clause had not been followed. He submitted that the Applicant had followed the procedure provided in the Agreement, including the requirement of first having discussions and negotiations before invoking arbitration. He pointed out that, by letter dated 29 August 2025, the Applicant had called upon the Respondent to hand over possession of the licensed premises. At that stage, the Primary Leave and License Agreement was not proposed to be renewed, as the Owner, Supreme Housing, had made its position clear in that regard. He submitted that even after filing of the present suit, the Applicant had again called upon the Plaintiff to hand over possession of the licensed premises. According to him, the clause does not prescribe any strict or impossible pre-condition. It only provides an opportunity to the parties to resolve their dispute amicably before formal proceedings are initiated. The steps taken by the Applicant were sufficient compliance with the requirement. He submitted that the allegation of non-compliance is contrary to the record and cannot be accepted. Consequently, according to him, the invocation of arbitration is valid and maintainable.

Mr. Siroya submitted that the letter dated 29 August 2025 was not a termination letter. It was only an intimation to the Respondent that it would have to vacate the licensed premises because the renewed Primary Leave and License Agreement between the Applicant and Supreme Business Park was to come to an end on 30 April 2026. He pointed out that the Sub-License Agreement dated 17 December 2020 was for a fixed period of 60 months, commencing from 1 May 2021 and ending on 30 April 2026. He submitted that it is settled law that when a contract comes to an end naturally on expiry of its agreed period, non-renewal of the contract is different from termination of the contract.

Mr. Siroya then submitted that disputes relating to rights in personam are capable of being decided by arbitration, whereas disputes relating to rights in rem are required to be decided by Courts or public tribunals. However, according to him, this is not an absolute or inflexible rule. Even where a right in rem exists, disputes concerning subordinate or connected rights in personam arising from such right in rem have traditionally been regarded as capable of being referred to arbitration.

Mr. Siroya submitted that there is a distinction between a dispute concerning a right in rem and a dispute concerning a right in personam. A dispute concerning a right in personam can be decided by a private forum such as an arbitral tribunal. On the other hand, a dispute concerning a right in rem is required to be decided by a public Court. However, he submitted that merely because a particular Court has been given jurisdiction, or a special forum has been created in place of the ordinary Civil Court, it cannot be concluded that the dispute is not arbitrable. The creation of a specific Court or public forum is an important consideration, but it is not by the final test for deciding whether arbitration is excluded. He submitted that the relevant principle is that the mere conferment of jurisdiction upon a particular Court does not, by, establish an implied bar against arbitration. What has to be examined is the nature of the right and the nature of the dispute which the parties have placed before the Court.

Mr. Siroya submitted that a dispute would be non-arbitrable only where the subject matter concerns an action in rem and does not concern any subordinate right in personam arising out of such right in rem. According to him, where the dispute is essentially between the parties concerning their individual rights and obligations, the dispute can be referred to arbitration unless there is a specific legal bar against doing so.

Mr. Siroya submitted that it is settled law that the mere pendency of an application under Section 8 of the Arbitration and Conciliation Act before a Civil Court does not prevent arbitration from being commenced or continued. It does not prevent the Arbitral Tribunal from making an arbitral award. He again relied upon sub-section (3) of Section 8 and submitted that the provision expressly makes it clear that the pendency of an application under Section 8 before a Court does not prevent the commencement or continuation of arbitration or the making of an arbitral award. According to him, the object of this provision is to ensure that neither the filing of a suit by a party to an arbitration agreement nor the filing of an application under Section 8 by the other party can obstruct or prevent the commencement of arbitration. Therefore, even while the issue is pending before the Court, a party can take steps for appointment of an arbitrator and can proceed with the arbitration before the Arbitral Tribunal. On these grounds, Mr. Siroya submitted that the present Application deserves to be allowed in terms of the prayers made therein.

Mr. Nargolkar, learned Advocate for the Respondent, submitted that the Applicant did not take the necessary steps under Section 8 of the Arbitration and Conciliation Act, 1996 within the time permitted by law. According to him, by not doing so, the Applicant has waived its right to rely upon the arbitration agreement. He submitted that, after the amendment made in 2015, Section 8(1) requires a party seeking reference to arbitration to make such application “not later than the date of submitting his first statement on the substance of the dispute”. In the present case, the Applicant filed its Written Statement before the Court of Small Causes on 3 December 2025. However, it did not file any application under Section 8 at that time and did not produce the arbitration agreement as required by Section 8(2). The Applicant filed its Section 8 Application only on 7 May 2026, that is, five months and four days after filing its Written Statement. It thereafter invoked arbitration only on 22 May 2026. Mr. Nargolkar relied upon the judgment of this Court in State Bank of India v. Surya Pharmaceuticals Limited, 2025 SCC OnLine Bom 1133, which followed the judgment in SSIPL Lifestyle Private Limited v. Vama Apparels (India) Private Limited, 2020 SCC OnLine Del 1667. He submitted that once the statutory period has expired, the arbitration clause is deemed to have been waived. Once waived, such clause cannot be treated as operative and cannot be made the basis for seeking appointment of an arbitrator under Section 11. He submitted that the conduct of the Applicant in the suit shows that it had chosen to proceed before the Court of Small Causes and had thereby waived its right to arbitration.

Mr. Nargolkar next submitted that the dispute cannot be referred to arbitration. According to him, the relationship between the parties is admittedly that of sub-licensor and sub-licensee. The dispute concerns possession of immovable property situated in Greater Mumbai. Section 41(1) of the Presidency Small Cause Courts Act, 1882 confers exclusive jurisdiction in respect of such disputes upon the Court of Small Causes. He submitted that this position has been settled by a Full Bench of this Court and by a three-Judge Bench of the Supreme Court. According to him, in such circumstances, an arbitration agreement is invalid and cannot be acted upon because permitting the parties to take away the exclusive jurisdiction given by statute to the Court of Small Causes would be contrary to public policy. The parties cannot, merely by entering into a contract, remove the dispute from the jurisdiction of the Court of Small Causes.

Mr. Nargolkar submitted that the Applicant had failed to comply with the pre-arbitration negotiation requirement contained in Clause 11 of the Sub-License Agreement. According to him, Clause 11 makes the commencement of arbitration subject to an earlier attempt by the parties to resolve the dispute through negotiation between their designated executives. It requires thirty days to pass after their meeting before arbitration can be initiated. In the present case, no executive was designated, no meeting was held and no written notice of an unresolved dispute was given. Therefore, the condition which had to be fulfilled before the right to commence arbitration could arise was never fulfilled. The Applicant could not validly invoke arbitration.

Mr. Nargolkar submitted that the admitted dates show that the Applicant's application under Section 8 was filed beyond the period prescribed by law. According to him, the position is as follows. First, the Applicant filed its Written Statement dealing with the substance of the dispute before the Court of Small Causes on 3 December 2025. This is the relevant date for the purpose of Section 8(1). Even if it were argued that the period had started earlier, the Applicant had admittedly not filed a Section 8 application by 3 December 2025. Second, no Section 8 application was filed on or before that date. The Written Statement was not accompanied by such an application or by the original arbitration agreement or a duly certified copy as required under Section 8(2). Third, the Applicant filed its Section 8 Application only on 7 May 2026. This was five months and four days after filing its Written Statement and one month after its Affidavit-in-Reply dated 8 April 2026. By that time, the Applicant had contested the suit on its merits. It thereafter issued the notice invoking arbitration on 22 May 2026. Mr. Nargolkar submitted that this delay is substantial and cannot be treated as a minor delay. He pointed out that it is much longer than the period of 120 days prescribed under the Commercial Courts Act, 2015 for filing a Written Statement. According to him, both requirements identified in paragraph 32 of SSIPL Lifestyle are satisfied independently. The Applicant had filed its statement of defence and had submitted to the jurisdiction of the Court of Small Causes. It had delayed filing the Section 8 application beyond the time within which its statement of defence could have been filed. Therefore, in view of the judgment in Surya Pharmaceuticals, the arbitration clause must be treated as having been deemed waived.

Mr. Nargolkar submitted that even apart from the expiry of the statutory period, the conduct of the Applicant in the suit shows a clear decision to proceed before the Court of Small Causes and to abandon the arbitral forum. First, the Applicant filed a detailed Written Statement dealing with the substance of the dispute on 3 December 2025 without reserving any right to invoke arbitration. Second, the Applicant filed an application under Order VII Rule 11 of the Code of Civil Procedure, 1908 seeking rejection of the Plaint. It argued that application on its merits and thereby asked the Court of Small Causes to decide the suit at the initial stage. According to Mr. Nargolkar, a party which asks a Court to reject and dispose of a suit cannot at the same time contend that the same Court has no jurisdiction to hear the dispute. These two positions cannot stand together. Third, the Applicant contested the interim applications on their merits for about six months, until those applications became part-heard. Fourth, on 10 March 2026, the Applicant filed a Sur-Rejoinder in which it denied the very renewal which, according to the Respondent, had been executed by the Applicant on 24 February 2026. Fifth, on 8 April 2026, the Applicant filed an Affidavit-in-Reply to the Respondent's Interim Application and again contested the matter on merits. On the previous day, it had issued a vacation letter calling upon the Respondent to hand over possession by 30 April 2026, without disclosing the renewal. Sixth, the Applicant filed its Section 8 Application only on 7 May 2026 and invoked arbitration only on 22 May 2026. According to Mr. Nargolkar, both these steps were taken only after the Court of Small Causes directed production of documents on 25 April 2026 and after the Owner confirmed its position on 30 April 2026 and 14 May 2026. The subsequent conduct of the Applicant shows that the arbitration plea was raised belatedly and only after the position of the parties had become clear before the Court.

Mr. Nargolkar submitted that the Applicant's argument that its right under Section 8 was “preserved” merely because the arbitration clause was mentioned in the Written Statement and was orally referred to during the proceedings under Order VII Rule 11 cannot be accepted. According to him, there are three reasons for rejecting this argument. First, the right under Section 8 cannot simply be kept aside or “reserved” for use at a later stage. Section 8(1) requires the party to "so apply" and requires such application to be made not later than the date of submitting the first statement on the substance of the dispute. Section 8(2) requires the application to be accompanied by the original arbitration agreement or a duly certified copy. According to Mr. Nargolkar, both these requirements are mandatory. A reference to arbitration in a Written Statement is not an application under Section 8. Similarly, an oral submission made during arguments on a separate application cannot be treated as a Section 8 application. Neither of these is accompanied by the arbitration agreement as required by Section 8(2). He submitted that the Applicant's own conduct supports this position because it considered it necessary to file a formal Section 8 Application on 7 May 2026. If the Written Statement was sufficient, there was no reason for the Applicant to file a separate application later.

Second, Mr. Nargolkar submitted that the Applicant's argument is contrary to the binding decision of this Court in Surya Pharmaceuticals. He submitted that, in that case, an argument was made that an objection contained in the pleadings was sufficient. This Court did not accept that argument and held that, after expiry of the period for filing the Written Statement, the arbitration clause stood "deemed waived". According to him, decisions rendered before the 2015 amendment, which introduced the words "not later than the date of submitting", cannot be relied upon to interpret the amended provision in the same manner.

Third, Mr. Nargolkar submitted that the Applicant's argument creates a difficulty for the present proceedings. If the objection contained in the Written Statement is treated as a Section 8 application, then the issue of reference to arbitration has been pending before the Court of Small Causes since 3 December 2025 and has not yet been decided. On the other hand, if the Written Statement is not treated as a Section 8 application, then the first actual Section 8 application was filed only on 7 May 2026 and is beyond the prescribed time. Therefore, according to him, on either view, the Applicant cannot succeed in the present Application.

Mr. Nargolkar submitted that the question whether an arbitration agreement between a licensor and licensee can take away the exclusive jurisdiction of the Court of Small Causes under Section 41 of the PSCC Act has been authoritatively decided by the Full Bench of this Court in Central Warehousing Corporation, Mumbai v. Fortpoint Automotive Pvt. Ltd., Mumbai (2010) 1 Mah LJ 658. He relied upon the following observations of the Full Bench:

Mr. Nargolkar submitted that the Full Bench considered the earlier authorities, including ING Vysya Bank Ltd. v. Modern India Ltd. MANU/MH/0066/2008, Nagin Mansukhlal Dagli and Vidya Drolia v. Durga Trading Corporation AIR 1980 Bom 123. After considering those decisions, the Full Bench held as follows:

Mr. Nargolkar relied upon Clause 11 of the Sub-License Agreement. According to him, this clause is a multi-stage dispute resolution provision. Its second paragraph specifically requires the parties to first try to settle a material dispute through negotiations between designated executives. Only after that process fails, and thirty days have passed after the meeting of the executives, can either party initiate arbitration. The relevant portion of Clause 11 reads:

Mr. Nargolkar submitted that the Applicant did not comply with this requirement at any stage. No executive was designated by the Applicant for the purpose of negotiation. No meeting between the designated executives was called or held. No written notice of an unresolved dispute was served in the manner contemplated by Clause 11. Consequently, the period of thirty days contemplated under the clause could never have commenced because there was no meeting from which such period could run. According to him, instead of following this agreed procedure, the Applicant issued a unilateral Termination Notice on 29 August 2025. It thereafter disputed the renewal obligation during the discussions held on 3 September 2025. The Applicant then continued to contest the proceedings before the Court of Small Causes on merits for more than seven months. It was only thereafter, on 22 May 2026, that the Applicant purported to invoke arbitration. Mr. Nargolkar submitted that the pre-condition for commencement of arbitration was never fulfilled and the subsequent invocation of arbitration cannot be sustained.

I have considered the submissions made by the learned Advocates appearing for both sides and the judgments cited before me. I have considered the objection raised by the Respondent that the dispute cannot be referred to arbitration since Section 41 of the Presidency Small Cause Courts Act, 1882 gives jurisdiction to the Small Causes Court.

At the beginning, it is necessary to see what is the relationship between the parties. The document relied upon by the Applicant is described as a “SUB-LICENSE AGREEMENT”. From the Agreement, it appears that the Sub-Licensor was holding the larger premises under a Leave and License Agreement and, after obtaining approval from the Owner, a portion of the said premises was given to the Applicant under a sub-license. Thus, the Agreement is not only concerning payment of licence fees or other money. It gives the Applicant a right to use and occupy a particular portion of the premises. The Agreement identifies the Sub-Premises and provides the terms on which they can be used and occupied. Clause 1 provides for the sub-license to use and occupy the Sub-Premises. The Agreement contains provisions relating to termination, surrender of the premises and the rights and obligations of the parties after expiry or earlier determination of the Agreement.

The Applicant has submitted that the dispute between the parties has arisen from the rights created under the Sub-License Agreement and, therefore, the same is required to be considered under the arbitration clause contained in the Agreement. It is submitted that the objection under Section 8 was taken in the Written Statement and during the proceedings relating to the application under Order VII Rule 11 of the Code of Civil Procedure. According to the Applicant, there was no necessity to file a separate application under Section 8 at the very first stage, particularly when the arbitration agreement was before the Court and its existence was known. This submission cannot be rejected only by treating it as a technical issue. Therefore, it is necessary to see whether there is a valid arbitration agreement, whether the request for arbitration was made at the proper stage and, more importantly in the present case, whether the dispute is such which can be decided by an arbitral tribunal.

The Respondent has submitted that the Applicant did not take steps for invoking arbitration at the proper stage. It is pointed out that the Written Statement was filed on 3 December 2025 without filing an application under Section 8 and without producing the original arbitration agreement. The formal application under Section 8 was filed only on 7 May 2026 and thereafter arbitration was invoked on 22 May 2026. The Respondent has relied upon State Bank of India and SSIPL Lifestyle , and submitted that the right to seek reference to arbitration cannot be kept open indefinitely and that the conduct of a party in the Court proceedings can have legal consequences.

There is some substance in the submission that the conduct of a party before the Court cannot be ignored. However, merely because a separate application was not filed with a particular title at an earlier stage, the entire matter cannot be decided only on that ground. The pleadings as a whole, the conduct of the parties and the stage at which the objection was raised are required to be seen. The Applicant has stated that the arbitration clause was relied upon during the earlier proceedings. Therefore, I do not consider it proper to make the delay in filing the Section 8 application alone the basis for the final decision. The objection of the Respondent on this issue is considered. However, the more basic question is whether the dispute can be referred to arbitration. That question has to be decided.

The Applicant has submitted that Clause 11 contains a wide arbitration clause covering disputes, differences, controversies and questions arising from the Agreement. It is submitted that since the dispute arises from the contract, the same should be referred to arbitration. It is submitted that the requirement of negotiation before starting arbitration has been complied with, or at least sufficiently invoked, through the correspondence exchanged between the parties. It is correct that the Agreement contains an arbitration mechanism and provides for discussions between the parties before arbitration proceedings are commenced. The Agreement provides that during the pendency of the disputes, the parties are required to continue performing their obligations. Thus, it can be accepted that the parties intended that disputes, to the extent permitted by law, should be referred to arbitration. But the arbitration clause, even if widely worded, has to remain within the limits of law. The consent of the parties cannot give an arbitral tribunal jurisdiction over a dispute which the law requires to be decided by a particular Court or forum.

The Applicant has relied upon the difference between “termination” and “non-renewal”. According to the Applicant, the communication dated 29 August 2025 was not a termination of the Sub-License Agreement but only an intimation regarding non-renewal. It is submitted that the rights of the Applicant under the Agreement continued and the dispute regarding those rights has to be decided by an arbitrator. The distinction pointed out by the Applicant is not without relevance. In a dispute, the actual meaning and effect of the communication has to be seen. A communication cannot be treated as termination only because one party describes it as termination. Similarly, it cannot be treated as only an intimation of non-renewal merely because the party issuing it gives such description. Its real effect has to be seen from the Agreement, the contents of the communication and the circumstances in which it was issued. The Agreement provides for a fixed period of sub-license commencing from 1 May 2021 for sixty months, stated to be up to 30 April 2026. It connects continuation of the sub-license with continuation of the principal Leave and License Agreement. Therefore, the period for which the Applicant was entitled to remain in occupation and whether such occupation could continue are important questions arising from the dispute.

For considering the Applicant's case, I accept that whether the communication dated 29 August 2025 amounts to termination, non-renewal or something else can give rise to a genuine dispute. However, this finding by does not decide whether the ultimate relief arising from that dispute can be granted by an arbitral tribunal. The Applicant has submitted that the dispute concerns rights in personam and such disputes are capable of being arbitrated. It is submitted that merely because a special forum is provided, every dispute relating to immovable property does not become non-arbitrable.

This submission is correct to a limited extent. Every dispute concerning immovable property cannot be treated as non-arbitrable merely because immovable property is involved. The Court has to see the real nature of the dispute and the relief which is actually required. The Respondent is not submitting that every monetary claim arising from the Sub-License Agreement must go before the Small Causes Court. The submission of the Respondent is more specific. According to the Respondent, the main dispute concerns the right of the Applicant to continue in possession and occupation of the licensed premises and the corresponding right of the Sub-Licensor to obtain possession. It is submitted that such relief comes within Section 41 of the Presidency Small Cause Courts Act. Therefore, the distinction between a dispute which is only for money and a dispute which concerns possession becomes important in the present matter.

The Agreement shows that use and occupation of the Sub-Premises are not merely incidental matters. Clause 1 gives the right “to use and occupy” the Sub-Premises. The Agreement provides that after expiry or earlier determination, the Sub-Licensee is required to stop using the premises and surrender and deliver the same to the Sub-Licensor. Therefore, if the dispute was only about payment of some amount, calculation of charges or payment of damages for breach, the position could have been different. But where the decision requires determination as to who is entitled to remain in possession or who is required to surrender the premises, the nature of the dispute becomes different. For this reason, I am unable to accept the submission of the Applicant that the dispute can be treated only as a dispute between the parties.

The Respondent has relied upon BXIN Office Parks India Pvt. Ltd. v. Kailasa Urja Pvt. Ltd., 2022 SCC OnLine Bom 1689. The reasoning in that judgment is relevant to the present case because it considers the relationship between an arbitration clause and Section 41 of the Presidency Small Cause Courts Act where the dispute concerns possession between parties claiming under a licence arrangement. The said judgment explains that the words “relating to” used in Section 41 are of wide meaning and can include matters connected with the main dispute. At the same time, the judgment makes a distinction between a dispute which is really regarding possession and a dispute which remains after possession has been handed over and only a monetary claim survives.

This distinction is consistent with the later discussion referred to by the Applicant from Motilal Oswal Financial Services Ltd. v. Santosh Cordeiro, (2026) 2 SCC 801. The Applicant has rightly pointed out that Central Warehousing Corporation has to be understood with its facts, where possession was still in dispute, whereas in Motilal Oswal possession had been handed over and the dispute which remained was monetary. This difference is important. The facts of the present matter have to be seen in comparison with those decisions. The issue cannot be decided only because the Agreement contains an arbitration clause.

The judgment in Vidya Drolia v. Durga Trading Corporation requires consideration. The principle which emerges from that judgment is that merely because a statute provides a particular forum, it does not mean that every dispute connected with that statute becomes non-arbitrable. It has to be seen whether the statute creates a special right or liability and provides an exclusive remedy before a particular Court or tribunal. Therefore, the Applicant is right to the extent that only because the Small Causes Court exists, the dispute does not become non-arbitrable. The real question is whether the dispute in the present case falls within the special jurisdiction created under Section 41. At the same time, the Respondent is right to the extent that a arbitration clause cannot be used for avoiding a statutory forum where the legislature has given exclusive jurisdiction to such forum. Thus, the submissions of both sides have to be considered together. One proposition does not exclude the other.

Section 41 of the Presidency Small Cause Courts Act deals with suits and proceedings relating to recovery of possession of immovable property and certain other matters concerning premises. The jurisdiction created under this provision is not merely another forum which the parties can freely choose or avoid. It is a special jurisdiction created for the disputes covered by the provision. Therefore, the effect of Section 41 cannot be taken away only because the parties have agreed that disputes arising from their contract shall be referred to arbitration. The arbitration agreement comes from the consent of the parties, whereas the jurisdiction under Section 41 comes from the statute. Where the relief in substance requires a decision about the right to possession of premises covered by Section 41, such statutory jurisdiction cannot be taken away merely by an agreement between the parties.

The present case has to be examined keeping the above position in mind. The Sub-License Agreement does not create any ownership right in favour of the Applicant. It gives a licence to use and occupy the identified Sub-Premises for a particular period and subject to the conditions of the Agreement. After expiry or earlier determination, the Applicant was required to stop using and occupying the premises and surrender the same. The Agreement states that the Sub-Licensee shall not claim exclusive possession, tenancy or any higher right than what was granted under the Agreement. Therefore, the basic dispute is connected with the right of the Applicant to occupy the premises. Merely because the Applicant describes the dispute as one of non-renewal, termination or breach, the real nature of the dispute does not change. What has to be seen is what would ultimately be required to be decided for granting the effective relief claimed by the Applicant.

If an arbitrator accepts the case of the Applicant and holds that the Sub-License continued or that it was wrongly terminated, such decision would affect the Applicant's right to remain in occupation of the premises. Similarly, if the arbitrator rejects the Applicant's case and holds that the right of occupation had come to an end, the consequence would be surrender of the premises and the issue of possession would arise. Thus, the question of possession is not merely a later consequence. It is connected with the main dispute. This is different from a case where possession has been handed over and only a claim for money, adjustment of accounts or damages remains. In such a situation, the facts considered in Motilal Oswal may lead to a different conclusion. But on the material available before me, the present dispute cannot be treated as merely a monetary dispute.

The submission of the Applicant regarding damages does not change this position. The Applicant has submitted that it is ready to deposit or secure the amount of liquidated damages and that the monetary consequences can be decided by an arbitrator. I have considered this submission. A monetary claim can be arbitrable in a proper case. But merely because a monetary claim is made, a dispute which in substance concerns possession does not become a purely monetary dispute. The principal dispute has first to be identified. If possession remains to be decided, a claim for damages connected with such possession cannot be separated in such a manner that the arbitrator gets jurisdiction over the whole dispute, when the principal relief is outside the arbitral jurisdiction. Therefore, merely because the Agreement contains provisions regarding payment, default, termination and damages, the whole dispute does not become arbitrable.

The Applicant has relied upon the principle that the arbitration agreement continues even when disputes arise regarding the underlying contract. There is no difficulty in accepting this principle. The Agreement contains detailed provisions relating to payment of licence fees, defaults, termination and other obligations. However, existence of an arbitration clause and arbitrability of every dispute are two different things. An arbitration clause may continue to exist and still a particular dispute may be excluded from arbitration by operation of law. Therefore, the principle relied upon by the Applicant does not help the Applicant in the present matter.

The Respondent has relied upon SSIPL Lifestyle (P) Ltd., particularly regarding the effect of an original arbitration clause and whether a later agreement has replaced or novated the earlier arrangement. That principle does not decide the issue before this Court. The main question in the present case is not whether there is an arbitration clause or whether it has been novated. The existence of the arbitration clause is not in dispute. The real question is whether the said clause can be used for deciding a dispute regarding possession when such dispute comes within the special statutory jurisdiction of the Small Causes Court. Therefore, the submission of the Respondent regarding novation by cannot decide the Petition. The nature of the dispute and the statutory jurisdiction are the matters which are important for the final decision.

The Applicant has submitted that Clause 11 is subject to applicable law and it cannot be said that the parties intended to exclude the jurisdiction of a competent Court. In my view, this submission does not help the Applicant. The words “subject to the applicable laws” mean that the agreement to arbitrate has to operate within the law which applies to the parties and to the dispute. The parties can agree to arbitrate disputes which are capable of being arbitrated. They cannot, by agreement, give an arbitrator jurisdiction which the law does not permit. The Agreement provides that the Courts at Mumbai shall have jurisdiction for enforcement of rights, subject to the arbitration proceedings. This shows that the parties contemplated arbitration as well as Court proceedings, but both have to operate according to law. The clause cannot be understood as taking away a statutory jurisdiction which is given to the Small Causes Court.

The Respondent has relied upon the conduct of the Applicant in the Court proceedings. It is submitted that after filing the suit, participating in the proceedings and seeking relief before the Court, the Applicant had elected to follow the judicial remedy and thereafter could not insist upon arbitration. I have considered this objection. The Agreement contains a provision that knowledge or acquiescence in a breach shall not amount to waiver and that the parties can still require strict performance of the terms. Therefore, waiver cannot be inferred only from one act. The complete conduct of the parties and the circumstances have to be seen. At the same time, the conduct of the Applicant is relevant while considering whether arbitration was invoked at the proper stage and whether the arbitration clause was relied upon before substantial steps were taken in the Court proceedings. I have considered the conduct on record for that purpose. However, I do not find it necessary to make waiver alone the basis for deciding the Petition because the nature of the dispute and the statutory jurisdiction are sufficient for deciding the matter.

The Respondent has relied upon Central Warehousing Corporation, which has been considered in Motilal Oswal Financial Services Ltd. The Applicant is right to the extent that Central Warehousing Corporation cannot be understood as laying down an absolute rule that every dispute arising from a leave and licence arrangement is non-arbitrable. The facts in Motilal Oswal were different because possession had been handed over and the dispute which remained was regarding money. I do not accept the submission of the Respondent. However, even after accepting the distinction, the Applicant does not succeed. The distinction made in Motilal Oswal requires this Court to see whether possession is still a live issue in the present case. On the material placed before me, the question of possession remains connected with the dispute.

The decision in BXIN Office Parks is more relevant to the facts of the present matter. In that judgment, the Court considered the dispute by looking at the actual relief and not only at the words contained in the arbitration clause. The Court recognised that where the main dispute between the licensor and licensee is regarding possession of the premises, Section 41 can give exclusive jurisdiction to the Small Causes Court. This approach is consistent with the requirement that the real nature of the dispute has to be seen. Parties cannot make a dispute arbitrable merely by describing it as a declaration regarding rights, when the actual result of such declaration would be to decide who is entitled to remain in possession of the premises.

Applying the above principles to the present case, I find that the submission of the Applicant that the entire dispute is only regarding termination or non-renewal cannot be accepted. The communication dated 29 August 2025 may raise a question as to whether the Applicant's rights were terminated or whether the communication only stated an intention not to renew the Agreement. That is a genuine question. But whatever may be the answer to that question, its legal effect affects the Applicant's right to continue using the Sub-Premises. The Agreement connects continuation of occupation with the period and requires surrender upon expiry. Therefore, the dispute cannot be decided without considering whether the Applicant has a continuing right to occupy the premises. For this reason, the dispute cannot be divided into one question which is said to be arbitrable and another possession question which is said to be separate. On the facts of the present case, both questions are connected with each other.

I have considered the submission of the Applicant that merely because a statutory jurisdiction exists, every dispute does not become non-arbitrable. As a principle, I agree with this submission. But the present case is not decided only because another forum is available. Here, Section 41 is being relied upon because the dispute concerns the right to possession and occupation of premises covered by that provision. The relationship between the parties is that of licensor and licensee. The relief which would give effect to the decision affects possession of the premises. Therefore, the statutory jurisdiction is connected with the real nature of the dispute. Consequently, the arbitration clause cannot be used for giving an arbitral tribunal jurisdiction over a dispute which, under the statute, is required to be adjudicated by the Small Causes Court.

I am conscious that while considering a request for reference to arbitration, the Court should not conduct a full trial of all disputed questions. But where an objection is raised that the dispute is not arbitrable because of a statutory provision, the Court is required to consider whether the dispute falls within such statutory exclusion. In the present case, the material placed before the Court is sufficient to understand the nature of the dispute. The Sub-License Agreement gives the right of use and occupation. It regulates the continuation of such occupation. It provides for termination and requires surrender after expiry or earlier determination. These terms, when read with the reliefs claimed and the rival submissions, show that possession is not a separate or unimportant matter. The dispute falls within the category of matters for which the Respondent relies upon the exclusive jurisdiction of the Small Causes Court.

I do not find sufficient merit in the submission that because the Agreement contains a detailed procedure of negotiation and arbitration, the arbitration clause must be given effect in the present case. A multi-stage dispute resolution clause can provide the procedure for dealing with a dispute which is otherwise arbitrable. But it cannot make a dispute arbitrable where the law does not permit arbitration. Once it is found that the principal dispute is outside the jurisdiction of an arbitral tribunal, it is not necessary to decide whether the negotiation requirement under Clause 11 was complied with. For the same reason, it is not necessary to give a final finding as to whether the letter dated 29 August 2025 was sufficient compliance with the negotiation procedure. Even if that issue is considered in favour of the Applicant, the difficulty in referring the principal dispute to arbitration remains.

I hold that the principal dispute between the parties concerns the right to possession and occupation of the Sub-Premises. Such dispute cannot be referred to arbitration in the manner sought by the Applicant. The Petition is liable to be dismissed.

In view of the foregoing discussion and for the reasons recorded hereinabove, the following order is passed:

iii) The arbitration clause contained in the Sub-License Agreement dated 17th December 2020 does not confer jurisdiction upon an arbitral tribunal to adjudicate disputes which fall within the exclusive jurisdiction of the Small Causes Court under Section 41 of the Presidency Small Cause Courts Act, 1882;

iv) The applicant is at liberty to avail such other remedy as may be available to the applicant in law;

vi) There shall be no order as to costs;

vii) The Arbitration Application stands disposed of accordingly;