(1.) (Sic) for the recovery of Rs. 8000 as compensation for the damages (Sic) building during the subsistence of tenancy brought by the (Sic) Union of India, an application was made by the (Sic) section 34 of the Jammu and Kashmir Arbitration Act for stay of the proceedings. The defendants averred that as the claim of the plaintiff in respect of the subject matter of suit was covered by the arbitration clause in the agreement, therefore the plaintiff be asked to seek arbitration in terms of the relevant clause of the agreement. This application was resisted by the plaintiff on the ground that Sec. 34 did not apply to the facts of the case. The plaintiff admitted that there was an agreement between the parties when the premises were leased out by him to the defendants, but, he submitted that as the tenancy had stood determined by afflux of time and even a decree for ejectment of the suit premises was passed against the defendants and the possession of the property was delivered to the plaintiff, therefore the agreement between the parties had come to an end and the arbitration agreement had become non -existent. This objection of the plaintiff prevailed with the learned trial Judge who dismissed the application and refused to stay the suit. He directed the defendants to file their written statement. Aggrieved by this order the Union of India has come up in appeal before this court.
(2.) SHRI R.P. Bakshi appearing for the appellants has submitted that the court below had erred in holding that Sect. 34 of the Arbitration Act did not strictly apply to the facts of the case. The court had committed a legal error in not staying the suit in terms of the aforesaid section. The plaintiff seeks to enforce his claim for compensation for the damage caused to his building during the subsistence of the tenancy as is evident from the plaintiff. Therefore such questions are to be referred to the sole arbitration of the officer designated in the agreement under clause 18 of the lease agreement. Learned counsel has submitted that clause 18 as also clause 10 of the lease agreement operate. There was, therefore, no other option left to the trial court but to stay the suit and refer the plaintiff to seek arbitration. The discretion exercised by the trial court was not judicial. The authority of this court reported in A. I. R. 1961 J & K 39 relied upon was given in different context and did not apply to the facts of the present case.
(3.) THERE are two aspects of the questions posed before us: (i) whether the matter in dispute i.e. the claim of the plaintiff is referable to arbitration (ii) whether the discretion vested in the court under Section 34 is to be exercised in favour of grant of stay. On consideration of the facts of the case I am of the view that the matter in dispute is covered by clause 18 read with clause 10 of the lease agreement. Clause 10 provides that the lessee shall hand over the said premises in the same condition as they were in at the commencement of these presents fair wear and tear and damage by fire or other causes beyond the control o the lessee excepted, or at its option pay compensation in lieu thereof provided further that such compensation shall not exceed the value of the said premises at the date of the expiry or determination of these presents. Under clause 18 all questions and matters in dispute and differences between the parties hereto touching arising under or out of or in connection with the subject matter of these presents or any covenant, clause or thing therein contained or otherwise arising out of this lease shall be referred to the sole arbitration of a person designated in the clause. The plaintiff has vide para 4 of the plaint unequivocally stated that the defendants have been guilty of breach of malfeasance, misfeasance and non -feasance brought to the building which was damaged heavily during the terms of tenancy when the officers and authorities were in possession and control of the premises. It is quite evident from this averment that the alleged damage has, according to the plaintiff, been caused during the terms of tenancy. Under the agreement the tenants had to deliver the property in the original condition and if according to the plaintiff the damage to the building was caused during the subsistence of tenancy then surely such a question or dispute is referable to arbitration under clause 18 of the agreement, I, therefore, do not agree with the learned trial court that the question raised in the suit is not covered by the arbitration agreement. The test for determining whether a dispute is one arising out of the lease agreement or in connection with the lease agreement has been laid down in case decided by the Supreme Court and reported in A. I. R. 1969 SC 488. Their Lordships have propounded the view that if it is necessary to take recourse to the terms of contract by which both the parties are bound, it must be held that the matter is within the scope of the arbitration clause and that the arbitrator had jurisdiction to decide the dispute. The observations made in A.I. R. 1961 J&K 39 relied upon by the learned trial court were made in a different context where the dispute related to the right of the landlord to claim damages for wrongful use and occupation of the premises after the lease had expired by afflux of time. Such a question was not countenanced by the lease agreement and therefore undoubtedly did not fall within the purview of the arbitration clause. But here in the instant case the question or the dispute is covered by clause 10 of the lease agreement and is referable under clause 18 of arbitration. Had the case of the plaintiff been that the damage to the building was caused after the expiry of the lease then of course it was a different matter. I n that event it could have been argued that as lease had determined by afflux of time and possession of the property had been restored to the plaintiff landlord in consequence of decree in suit for ejectment and also that damage to the building was done after the expiry of lease, therefore the claim for compensation could not fall under the arbitration clause and the said clause No. 10 could not be attracted to the case, but that is not the case before us. I n my opinion, therefore the claim of the plaintiff is covered by the arbitration clause.