The Supreme Court bench of Justice RF Nariman and Justice Vineet Saran presided upon an appeal filed against the order of the Calcutta High Court which appointed the arbitrator for presiding on a dispute between a landlord and tenant and which subsequently rejected a review petition filed against the said appointment in lieu of the judgment in Himangni Enterprises v. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706 which held that disputes between a landlord and tenant under the Transfer of Property Act, 1882 are not arbitrable.

The Appellant submitted to the Bench:

  1. That the Transfer of Property Act is an Act which created rights in rem insofar as the landlord and tenant are concerned.
  2. That public policy contained in the Transfer of Property Act, 1882 under Sections 111(g), 114, and 114A, clearly stipulates the exclusion of the Arbitration and Conciliation Act, 1996 in lieu of Section 2(3) read with Section 5 of the Arbitration Act.
  3. That the mesne profits claimed in the statement of claim can only be given by a Civil Court as per Order XX Rule 12 of the Code of Civil Procedure.
  4. That certain sub-clauses of Section 111 would be arbitrable, except for disputes relating to arrears of rent and forfeiture, being non-arbitrable.

The Respondent emphasized on the judgment of Himanshi Enterprises to counter the arguments of the Appellant.

The Bench referred to the judgment Booz Allen and Hamilton Inc. v. SBI Home Finance Limited and Others, (2011) 5 SCC 532 which elaborated on what category of disputes constitutes as non-arbitrable as follows:

“36. The well-recognised examples of non-arbitrable disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes.”

The Bench further relied on various other judgments such as Praduman Kumar v. Virendra Goyal (Dead) by LRs.(1969) 3 SCR 950, Namdeo Lokman Lodhi v. Narmadabai & Ors., [1953] SCR 1109, Natraj Studios (P) Ltd. vs. Navrang Studios, (1981) 1 SCC 523 to ascertain whether disputes between landlord and tenant and the nature of such disputes to be considered as arbitrable or not.

The Bench thus referred the matter to a larger bench and permitted the arbitration to continue only till the stage of formation of the award and directed that execution of the final award shall be done only with permission of the Supreme Court.

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Judgment: Vidya Drolia and Ors Versus Durga Trading Corporation