The Supreme Court overruling its own judgment in Himangni Enterprises v. Kamaljeet Singh Ahluwalia ruled that landlord-tenant disputes governed by the Transfer of Property Act (TP Act) are arbitrable as they are not actions in rem.
The Court also stated that such actions under TP Act normally would not affect third-party rights and such disputes do not relate to inalienable and sovereign functions of the State.
The Court also noted that the provisions of the Transfer of Property Act do not expressly or by necessary implication bar arbitration.
“In view of the aforesaid, we overrule the ratio laid down in Himangni Enterprises and hold that landlord-tenant disputes are arbitrable as the Transfer of Property Act does not forbid or foreclose arbitration,”
Landlord-tenant disputes covered by rent control legislation would not be arbitrable when specific court or forum has been given exclusive jurisdiction to apply and decide special rights and obligations.
The Court analysed in the matter of tenant disputes various rulings and provisions in this regard to conclude that the arbitral tribunal is the preferred first authority to determine and decide all questions of non-arbitrability. The court has been conferred the power of “second look” post the award, the judgment held.
“The general rule and principle, in view of the legislative mandate clear from Act 3 of 2016 and Act 33 of 2019, and the principle of severability and competence-competence, is that the arbitral tribunal is the preferred first authority to determine and decide all questions of non-arbitrability. The court has been conferred power of “second look” on aspects of nonarbitrability post the award in terms of sub-clauses (i) (ii) or (iv) of Section 34(2)(a) or sub-clause (i) of Section 34(2)(b) of the Arbitration Act,” the Court said.
The court can interfere when it is ex facie certain that the arbitration agreement is non-existent, invalid or the disputes are non-arbitrable at the Section 8 or 11 stage, the top court said.
“The restricted and limited review is to check and protect parties from being forced to arbitrate when the matter is demonstrably ‘non-arbitrable’ and to cut off the deadwood,” the judgment said.
However, the nature and facet of non-arbitrability would determine the level and nature of judicial scrutiny.
Read the Judgment here: