Transfer of Property Act, 1882 ("TOPA"), a central legislation, contains the general law governing the transfer of property by the acts of parties including the lease of immovable properties. It specifies the rights and liabilities of landlord and tenant, in absence of contract to the contrary.

However, several States have enacted rent or tenancy laws which regulate the rights and obligations of landlord and tenant. These laws provide certain provisions for effectively handling the situations in terms of contract between landlord and tenant and issues revolving around them. These special laws often exclude ordinary jurisdiction of civil courts. Instead, they confer exclusive jurisdiction to special courts to adjudicate specified disputes between landlord and tenant.

The Maharashtra Rent Control Act, 1999 ("Act") provides that, in Mumbai, the Court of Small Causes Mumbai, and in any area for which a Small Causes Court is established under the Presidency Small Causes Courts Act, 1882, shall have exclusive jurisdiction to entertain any proceeding or application or to deal with such claim or question.

Many landlord and tenant disputes wind up in court. This often results in a lengthy, frustrating and costly process for landlords. Tenants may also feel the brunt of this process and may face consequences, more particularly the costs that they may not afford. However, arbitration to resolve such disputes between them offers an alternative to this process.

While deciding an application seeking appointment of an arbitrator under Section 11(6A) of the Indian Arbitration and Conciliation Act, 1996 ("Arbitration Act"), the power of the court is confined only to the examination of the existence of an arbitration agreement, leaving it to the court to decide on the existence of a valid arbitration agreement, no more and no less.

The dispute

Tenancy-related disputes have seen a huge increase in India, specifically in Maharashtra, considering the practice of Pagadi system. The substantial increase in such disputes are also on account of the upcoming redevelopment of old dilapidated structures. Adjudication of these disputes by the special court take several years.

Given the commercial nature of leasing transactions and the huge financial implications involved, parties alternatively concurred to resolution by arbitration. But as the Act enshrines the Small Causes Court to have exclusive jurisdiction to entertain and try any suit or proceeding between a landlord or tenant relating to the recovery of rent or possession of any premises thereby excluding arbitration for resolving these issues/ disputes. The Supreme Court and various High Courts have had contradicting views on the same and the Supreme Court verdict in Himangni Enterprises v. Kamaljeet Singh Ahluwalia1 is mentioned here:

A suit was filed by the shop owner to seek tenant's eviction from his shop and for recovery of unpaid arrears of rent and grant of permanent injunction. The tenant, on being served with the notice of the civil suit, filed an application under Section 8 of the Arbitration Act urging the Court to refer the parties to arbitration. The Trial Court upheld the objections of the owner and dismissed tenant's application. The aggrieved tenant filed an appeal before the High Court. The High Court dismissed the appeal and upheld the order of the Trial Court giving rise to filing of the special leave to appeal by the tenant before Supreme Court.

The Supreme Court dismissed the appeal of the tenant and held that the Delhi Rent Act, which deals with the cases relating to rent and eviction of the premises, is a special Act. Though it contains a provision by virtue of which the provisions of the Delhi Rent Act did not apply to certain premises but that did not mean that the Arbitration Act, ipso facto, would be applicable to such premises conferring jurisdiction on the arbitrator to decide the eviction/rent disputes.


1 (2017) 10 SCC 706

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