SURESH SHAH V. HIPAD TECHNOLOGY INDIA PRIVATE LTD.

PARTIES OF THE CASE

  • PETITIONER: Suresh Shah
  • RESPONDENT: Hipad Technology India Private Limited

CITATION: Arbitral Petition (Civil) No. 08/2020

BENCH: Justice A.S. Bopanna, Justice V. Ramasubramanian

FACTUAL BACKGROUND:

There was a dispute between the petitioner and respondent regarding the sub-lease of a premise. The sub-lease deed between the parties contained a clause that stated that in case of any dispute, the same should be resolved by the process of Arbitration. The petitioner approached the Court under Section 11(5) of the Arbitration and Conciliation Act, 1996 seeking the appointment of a Sole arbitrator for resolving the dispute which had arisen between the parties in relation to the Sub-lease.

ISSUE:

Whether the dispute arising under the Sub-lease deed being governed under the Transfer of Property Act, 1882 (TP Act) is arbitrable or not under the Arbitration and Conciliation Act, 1996?

DECISION:

The Hon’ble Supreme Court concluded that as the tenancy dispute was not subject to any special statutes, it is hence arbitrable under TP Act, 1882. Further, it held that considering that the respondent neither replied to the said notice nor did he object to the arbitrator proposed by the petitioner, the petition for appointment for Sole arbitrator was hence allowed.

REASONING AND ANALYSIS:

The Apex Court considered the provisions contained in Section 111, 114 and 114A of the TP Act, 1882. These provisions denote the manner in which the determination of lease would occur. It also determined the forfeiture, in case the lessee/tenant broke expressed conditions, agreed between the parties, or as provided in law. Thus, it is a provision enabling the exercise of equitable jurisdiction, in appropriate cases as a matter of discretion.

The Supreme Court also analysed a position settled in Namdeo Lokman Lodhi v. Narmadabai and others and clarified that when any disputes arise between the landlord and tenant regarding the determination of lease under the TP Act, 1882, the landlord can secure the possession of the leased property by instituting a suit in the Court having jurisdiction. However, if the parties agreed upon any dispute resolution through arbitration, the landlord would be entitled to invoke the arbitration clause and make a claim before the learned arbitrator. Even in such proceedings, if the circumstances as contained in Section 114 and 114A of TP Act, 1882 arise, it can be brought up before the learned Arbitrator who would take note of the same and act in accordance with the law and pass the award.

Another three-judge Bench of the Supreme Court referred to the law laid down in Vidya Drolia and clarified why arbitrability of tenancy disputes is contingent on whether the lease agreement is governed by the Transfer of Property Act, 1882 or by special statutes. It stated that the tribunal’s jurisdiction is limited to disputes, concerning and arising, from the term and conditions of a lease agreement.

Therefore, insofar as matters related to eviction or tenancy governed by any special statutes are concerned, where the tenant enjoys special protection against eviction, the Court/Forum specified and conferred jurisdiction under the statute alone can adjudicate such matters. Hence in such cases, the dispute is non-arbitrable.

Similarly, if the special statutes do not apply to the premises/property and the lease/tenancy created thereunder is where the cause of action arises to seek for eviction and in such transaction, if the parties are governed by an Arbitration Clause, the dispute between the parties is arbitrable.

The Court also observed that the said arbitration qualifies as an International Commercial Arbitration as the petitioner is a citizen of Kenya and the dispute is arbitrable as the rights of the tenant were not protected by any special statute where the tenant enjoys special statutory protection, therefore, there would be no impediment for resolving the dispute through arbitration.

CONCLUSION:

The judgement must be explicitly read in the context of landlord-tenancy disputes under specific provisions of the Transfer of Property Act, 1882. Caution must be exercised in considering the nature of the dispute under action. The judgment cannot be broadly applied to mean that all provisions under the TP Act, 1882 are arbitrable.

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