17 June 2025 Arbitration Law >> Business & Commercial Law  

This case of Anuj Kabra & Another v/s CL Educate Ltd. (Formerly Known As Career Launcher India Ltd.) involves two applications filed under Section 11 of the Arbitration and Conciliation Act, 1996, concerning disputes arising from a License Agreement and a Hire Agreement, both dated August 25, 2016. While the Hire Agreement lacks an arbitration clause, the License Agreement includes one. Both parties consented to refer the disputes under both agreements to arbitration.

The central legal issue, previously framed by a Single Judge, is whether disputes related to a Leave and License Agreement are arbitrable, even with an arbitration clause, given the exclusive jurisdiction typically held by Small Causes Courts. The Full Bench decision in Central Warehousing Corporation held that such disputes fall exclusively under the jurisdiction of the Small Causes Court, thereby ousting the jurisdiction of arbitral tribunals.

The licensed premises are in Vashi, Navi Mumbai, falling under the Provincial Small Cause Court Act, 1887, which has provisions similar to those considered in Central Warehousing Corporation. A crucial finding is that the State Government confirmed, via an RTI response dated March 4, 2025, that no Small Causes Court has been established in Navi Mumbai. Furthermore, the High Court Registry, in a reply dated March 7, 2025, confirmed that no court has been specifically designated to perform the functions of a Small Causes Court under Section 28 of the Maharashtra Civil Courts Act, 1869. While some Civil Judges in Thane District have been conferred with limited Small Causes power, their pecuniary jurisdiction is capped at Rs. 12,000 for Senior Division Civil Judges and Rs. 6,000 for Junior Division Civil Judges as per a notification dated December 21, 2024.

The disputes in this case amount to approximately Rs. 16 Lakhs, with the claim under the Leave and License Agreement alone being nearly Rs. 7 Lakhs. Consequently, none of the designated Civil Judges with limited Small Causes power can adjudicate these disputes due to their restricted pecuniary jurisdiction.

The Court considered Section 26 of the Provincial Act, which grants Small Causes Courts jurisdiction over licensor-licensee disputes "irrespective of the value of the subject-matter." However, the Court, relying on the Radheshyam decision, held that this provision must be read harmoniously with Section 28 of the Civil Courts Act. The Radheshyam case explicitly ruled that a Civil Judge invested with Small Cause power under Section 28 of the Civil Courts Act cannot exercise jurisdiction beyond the specified pecuniary limits, even for suits falling under Section 26(1) of the Provincial Act.

Therefore, since no Small Cause Court with the necessary pecuniary jurisdiction exists to hear the disputes, the ouster of arbitration jurisdiction, as per Central Warehousing Corporation, does not apply. In the absence of a competent Small Causes Court and given the parties' conscious choice to arbitrate, the arbitration agreement should be given effect.

Accordingly, the Court, with the consent of the parties, referred all disputes and differences under both the Leave and License Agreement and the Hire Agreement to Mr. Yashodhan Divekar as the Sole Arbitrator. The order outlines the necessary steps for initiating the arbitration, including communication with the arbitrator, disclosure statements, and cost-sharing arrangements. The order explicitly states that it is not an expression of opinion on the merits of the case.

Section 11, Arbitration and Conciliation Act - 1996  

Arbitration and Conciliation Act, 1996