Arbitration of Tenancy Disputes
The Apex Court decision in Vidya Drolia clarified the issue of arbitration of landlord disputes under the 1882 Act of Transfer of Ownership (“Act of TP”). In assessing the issue at hand, the tribunal considered a series of conflicting decisions and clarified the position of arbitration in tenancy disputes.
In the previous case of Natraj Studio (P) Ltd. v. Navrang Studios & Ors, The High Court held that rental disputes under the 1947 Bombay Rent Control Act, hotels and motels must be decided exclusively by a small court and cannot be submitted to arbitration. Subsequently, the Apex Court in the Booz Allen case pointed out specific circumstances which made the rental disputes insoluble. It also observes that the TP law does not exclude the possibility of arbitration. Consequently, disputes between owners will only be arbitrated in the following cases:
(i) the eviction or rental is governed by special statutes;
(ii) tenants benefit from legal protection against eviction; and
(iii) only specific courts are competent to expel or settle disputes.
Also in 2017, in Himangni Enterprises v. Kamaljeet Singh Ahluwalia ("Himangni Enterprises"), the High Court reaffirmed the impossibility of disputes regarding the rental and eviction. The Court found that although the Delhi Tenancy Act, 1995 did not apply to rented premises, disputes between landlords and tenants could not be brought to arbitration. Such a dispute would fall under the jurisdiction of city law and would therefore have to be decided by the civil courts.
In the end, due to the conflicting interpretation of admissibility in the lease dispute, the matter was definitively decided by a larger Supreme Court bench in the Vidya Drolia case. The court overturned the decision of Himangni Enterprises saying that the findings were not based on good reason and simply because the government could withdraw the exemption from rental premises under the Delhi Tenancy Act. 1995, it will not render the lease dispute null and void. In addition, the court explained that rental disputes under the City Law are admissible because they involve subordinate rights in the individual that derive from actual rights and these rights can therefore be decided by a referee. For example, rights under a patent license may be arbitrable; however, the validity of a patent cannot be assessed by 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 Foundation shall not be responsible for any errors caused due to human error or otherwise.)