The debate about whether tenancy disputes can be solved using arbitration has been a part of the Indian legal system for more than a decade. It was only recently that the Apex court had settled this debate through the 2020 case of Vidya Drolia and others v Durga Trading Corporation.
What Are Arbitrable Disputes?
To understand why there has been ambiguity regarding the arbitrability of tenancy issues, it is necessary to understand the legal rationale behind what is deemed to be solved utilizing arbitration.
Under the law, when a legal issue exists at a larger scale, individuals reserve the right to exercise what is called a right in rem. When this issue exists personally, the individual reserves the right to exercise the right in personam. The general concept of applying arbitration as a means of dispute resolution is more suitable and acceptable in cases when an individual is trying to exercise the right in personam as it deals with disputes on a personal level, meaning that it would be easier to get the parties in question together and work towards reaching a standard, suitable solution. In contrast, the same cannot be achieved easily when the grievant party is trying to exercise their right in rem. These factors majorly influence the arbitrability of disputes. Hence the view of the judiciary regarding the arbitrability of tenancy disputes has been wavering for a while, until very recently.
Judicial Evolution on Tenancy Disputes & Their Arbitrability.
An explicit declaration and stance of the judiciary regarding issues that involved a landlord-tenant contract was seen in the judgment given by the Supreme Court in the case of Himangni Enterprises v Kamaljeet Singh Ahluwalia, wherein the judicial bench opined on the non-arbitrability of issues that were of this nature. However, in a very recent 2020 case of Vidya Drolia and others v Durga Trading Corporation, the debate of tenancy disputes was put to rest because the Apex Court recognized that right in rem gave rise to the existence of a right to personam in such cases and such existence of this right would make cases of this nature, fully arbitrable as long as the disputes were not governed or fell under statutory limitations of any special rent control legislations.
It is safe to say that through the previous recent judgment, the Supreme Court has made it clear that if a dispute arises out of a right in rem but finds the existence of a request in personam related with said right in rem, then the conflict becomes arbitrable, even if it deals with the tenancy.
The main takeaway is that in tenancy disputes and their possibility of resolution through arbitration, there need to be no restrictions laid down by rent control legislation, without which parties can freely opt to resolve their issues via arbitration.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre shall not be responsible for any errors caused due to human error or otherwise.