Landlord-Tenant Disputes Under Transfer Of Property Act Arbitrable Except When Covered By Rent Control Court Laws

THE SUPREME COURT RECENTLY OVERRULED ITS JUDGMENT IN HIMANGNI ENTERPRISE CASE TO HOLD THAT LANDLORD-TENANT DISPUTES ARE ARBITRABLE EXCEPT WHEN THEY ARE COVERED BY SPECIFIC FORUMS CREATED BY RENT CONTROL LAWS.

WHAT WAS THE OVERRULED HIMANGNI ENTERPRISE CASE?

• (Himangni Enterprises v. Kamaljeet Singh Ahluwalia) (2017)

• In this, it was held by the Supreme Court that if the Landlord and Tenant are subject to the Transfer of Property Act, 1882, their matter would not come under the purview of arbitration.

• It held that such matters would only be decidable by a Court

• It means that the Arbitration Act would not apply in such a case

WHAT IS THE PRESENT JUDGMENT?

• In the present case, the Supreme Court overruled its judgment in the Himangni Enterprise Case.

• It held that landlord-tenant disputes are arbitrable as the Transfer of Property Act does not forbid or foreclose arbitration

• It laid a fourfold test to determine if a case cannot be taken for arbitration -

The subject matter of the case should not concern the society in general
The case would affect an unrelated third party; and to prevent this, a central adjudication is required
When the case relates to inalienable sovereign and public interest functions of State, &
When the case is expressly non-arbitrable

• The Court held that as per this formula, landlord-tenant disputes involve rights in-personam, and do not involve the society. So there is no reason to forbid them from arbitration.

WHAT DISPUTES CANNOT BE REFERRED TO ARBITRATION AS PER FORMULA?

• Cases relating to Trademark,
• Criminal Cases,
• Matrimonial Disputes,
• Cases relating to probate testamentary matter,
• Disputes under DRT,
• Etc..

LAW GOVERNING ARBITRATION IN INDIA

• Arbitration is an alternate dispute resolution (ADR) mechanism wherein disputes are adjudicated outside the courts by appointed arbitrators.

• It is codified by the Arbitration and Conciliation Act, 1996

• Section 8 of the Act provides that the court may refer the parties for arbitration, on an application moved by one of the parties to the dispute, if it is brought that the dispute is subject to a valid arbitration agreement.

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