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The decade-old uncertainty on the issue of arbitrability of
tenancy disputes stands settled with the pronouncement of the
judgment by the Hon ble Supreme Court in,
Vidya
Drolia and Others v. Durga Trading Corporation
1
(
Himangni Enterprises v. Kamaljeet Singh
Ahluwalia
2 (
Himangni
Enterprises ), provides much-needed
clarity on the nature of tenancy disputes that can be referred to
arbitration. The Dovetail Test laid down by the Court can be relied
upon in determining the non-arbitrability of disputes in general.
The Judgment also attempts to clear the conundrum surrounding the
Vidya Drolia v. Durga Trading
CA No. 2402 of 2019
Background facts
A Tenancy Agreement was entered into between the landlord s
predecessor-in-title (Shree Bajrang Land & Trading Company) and
the tenant (
Appellants) on February 02, 2006 in
respect of certain go- down and other structures.
The subsequent landlord, after the expiry of the tenancy
agreement, sent a notice asking the tenant to vacate the premises
and the tenant refused to vacate the premises, the
Respondent-Landlord filed an Application before the Calcutta High
Court (
HC) for appointment of an Arbitrator, as
per the Tenancy Agreement.
HC ruled in favor of the Respondent and appointed an Arbitrator
2 (“
Vidya Drolia II”), the Supreme Court has settled the dust on whether landlord-tenancy disputes under the Transfer of Property Act, 1882 (“
TP Act”) are arbitrable under the Arbitration & Conciliation Act, 1996 (“
Arbitration Act”).
Overruling many of its own as well as other High Courts’ judgments, the Court in Vidya Drolia II has set out the broad principles on which arbitrability of disputes may be decided. Applying the principles, the Court held that landlord-tenant disputes under TP Act, and not any special statute (such as state-specific rent legislations, etc.), would be arbitrable.
Additionally, the Vidya Drolia II judgment also demarcates the scope of inquiry by courts in determining questions of arbitrability at the pre-arbitration / reference stage under Section 8
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The Model Tenancy Law has been prepared by the Ministry of
Housing and Urban Affairs with an objective to balance the
interests and rights of the landlords and tenants. Chapter VI of
the Model Tenancy Law deals with the Rent Authorities, their power
and procedure for appeals and Chapter VII of the Model Tenancy Law
deals with Rent Court, Rent Tribunal, procedure to be followed in
rent court and rent tribunal, powers of the rent court and rent
tribunal, procedure for appeal to the rent tribunal.
(
Booz Allen ), wherein it was
held that in eviction or tenancy matters which are governed by
special statues and where tenant enjoys statutory protection as a class is a matter of public interest and only the
specified court has been conferred exclusive jurisdiction to
adjudicate the same.
Later, in 2017, the issue regarding arbitrability of lease
dispute was once again re-visited by the Supreme Court in the case
of
Himangi Enterprises and after relying on the said
ratios of
Booze Allen and
Natraj Studios the
court rejected the application filed by the tenant (defendant)
under section 8 of the Arbitration and Conciliation Act, 1996