, The bombay high Court i Writ Petition No. 4614 of 2009 has thereby confirmed its earlier
judgments which held that arbitration clauses in Leave and License Agreements pertaining to
properties situated in Greater Mumbai are void and the jurisdiction to try all disputes in such
arrangements vests with the Small Causes Court in Mumbai as per the provisions of the
Presidency Small Causes Court Act, 1882 (“Presidency Act”).
the full Bench rof bombay high court relied on the decision of the Supreme Court in Natraj Studio Pvt. Ltd.
vs. Navrang Studio5 (1981) 1 SCC 523
, wherein in context of the section 28 of the Bombay Rent Act, 1947, it was
held that the provision was a law by virtue of which disputes contemplated therein could not be
submitted to arbitration. The Larger Bench also relied on the decision of the Supreme Court in
Mansukhlal Dhanraj Jain v. Eknath Vithal Ogale case6 (1995) 2 SCC 665 wherein it was held that the provisions ofSection 28 of the Bombay Rent Act are pari materia (relating to the same subject matter) to
section 41 (1) of the Presidency Act.
The Court observed that Section 41 (2) of the Presidency Act is a special law which in turn has
constituted special courts for adjudication of disputes specified therein between the licensor and
licensee or a landlord and tenant. Thus the Court held that Section 5 of the Arbitration Act in a
sense was not an absolute non-obstante clause and cannot affect the laws that have been in
force and thus Section 41 of the Presidency Act falls within the ambit of Section 2 (3) of the
Arbitration Act. As a result, even if the License Agreement contains an Arbitration clause, the
exclusive jurisdiction of the Courts of Small Causes under Section 41 of the Presidency Act, is not
affected in any manner.
Accordingly, the Larger Bench held that an arbitration agreement in such cases would be invalid
and inoperative on th