In a recent decision passed by the Hon'ble Supreme Court of India in the matter titled as "Himangni Enterprises v Kamaljeet Singh Ahulwalia",14 the Hon'ble Supreme Court bench comprising of Hon'ble Justices R K Agarwal and Justice Abhay Manohar Sapre has reinforced the catena of decisions that bar the arbitrability of landlord- tenant disputes on the grounds of involvement of rights in rem and public policy.
In the present matter, the Appellant filed an appeal before the Hon'ble Supreme Court against the final judgment and order of the Hon'ble High Court of Delhi in F.A.O. No.344 of 2016 wherein the High Court upheld the decision of the District Court in rejecting the Appellants' application under Section 8 of the Arbitration and Conciliation Act, 1996 (herein after refereed as "Act"). The said application under Section 8 of the Act was filed by the appellant in the suit for eviction and permanent injunction filed by the Respondents against the Appellant.
Brief Facts :
In the instat case, the Respondents had entered and executed a lease deed dated 31st August, 2010 (herein after referred as "the said deed") with the Appellant. The said deed was for a period of 3 years with effect from 7th October, 2010. After the expiry of the said deed, no fresh deed was executed between the Respondents and the Appellant.
Subsequently, the Respondent filed a suit being C.S. No. 132/2016 against the appellant on 17.08.2015 in the Saket District Court inter- alia seeking the Appellant's eviction from the premises in question and claiming some unpaid arrears of rent and a grant of permanent injunction against the Appellant.
"The appellant, on being served with the notice of the civil suit, filed an application under Section 8 of the Act. According to the appellant, since the cause of action was based on the said deed, which contained an arbitration clause, the parties were bound by the same and the suit had to be referred to arbitration. The Appellant further argued that the Delhi Rent Act, 1995 was not applicable to the premises in question by virtue of Section 3(1)(c) of the same, and hence, the dispute was not solely within the purview of the civil court. The Respondents (being the Plaintiff in the C.S. No. 132/2016) vehemently opposed the said application on the ground that the said deed has come to an end by efflux of time and moreover the subject matter of the civil suit was incapable of being referred to arbitration. The District Court upheld the argument of the Respondents and dismissed the application of the Appellant.
Being aggrieved of the decision passed by the District Court, the Appellant filed an appeal before the Hon'ble Delhi High Court. The Hon'ble High Court upheld the decision District Court, giving rise to the present appeal before the Supreme Court.
Decision of the Supreme Court :
After hearing the arguments of the Appellant and the Respondent, the Court was of the view that question arising from the present appeal filed by the Appellant had been extensively discussed in various decisions passed by the Hon'ble Supreme Court in favour of the Respondents and against the Appellant.
The Court also placed reliance on Natraj Studios (P) Limited v Navrang Studios15 and Booz Allen & Hamilton Inc v SBI Home Finance Limited16. In both the cases, the Supreme Court has held eviction and tenancy matters are 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 court also rejected the argument of the Appellant with respect to that the Delhi Rent Act, 1995, was not applicable to the present dispute by virtue of Section 3(1)(c) of the said Act and dispute between the parties should have been referred to arbitration. The Supreme Court held that the mere preclusion of the Delhi Rent Act, 1995 from application did not mean that the Arbitration & Conciliation Act, 1996 would automatically apply to the present dispute. The court further held that in such a situation, the rights of the parties would be governed by the Transfer of Property Act, 1882. Therefore, the Supreme Court has again reinstated the bar on the arbitrability of landlord- tenant disputes on the grounds of involvement of rights in rem and public policy.
14. (2017) 10 SCC 706
15. 1981 AIR 537
16. [(2011) 5 SCC 532]
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