Disputes Between Landlord & Tenant Governed by Transfer of Property Act, 1882 Arbitrable: HC
FCS DEEPAK P. SINGH | Jun 19, 2022 |
Disputes Between Landlord & Tenant Governed by Transfer of Property Act, 1882 Arbitrable: HC
GOKALDAS IMAGES PRIVATE LIMITED VERSUS ARIES AGRO-VET ASSOCIATES (PVT) LIMITED & ANR.
DATED: 13.04.2022
WRIT PETITION NO.1305 OF 2022 (GM-CPC)
KARNATAKA HIGH COURT
HELD THAT: THE DISPUTES BETWEEN LANDLORD & TENANT GOVERNED BY TRANSFER OF PROPERTY ACT, 1882 ARE ARBITRABLE IN NATURE.
BRIEF FACTS:
SUBMISSION AND OBSERVATIONS:
However, learned senior counsel invited the attention of the Court to the judgment of the Hon’ble Apex Court in the case of VIDYA DROLIA v. DURGA TRADING CORPORATION reported in (2019)20 SCC 406 and contended that the Hon’ble Supreme Court, held that judgment in HIMANGI ENTERPRISES (supra) requires re-look by a Bench of three Hon’ble Judges of Hon’ble Supreme Court and therefore contended that the impugned order passed following the judgment in HIMANGI (supra) is incorrect and requires interference in this Writ Petition.
In the light of the conclusion arrived at the by the trial Court, based on the judgment of the Apex Court in HIMANGI ENTEPRISES (supra) , the have considered the later judgment of the Apex Court in the case of VIDYA DROLIA (supra) wherein at paragraph 12 of the judgment it is observed thus:
“12. While appreciating that a lease is a transfer of an interest in property, and therefore, a conveyance, in law, there is nothing in the Transfer of Property Act to show that a dispute as to determination of a lease arising under Section 111 cannot be decided by arbitration. However, what was argued was that Sections 114 and 114A and, which provide for statutory reliefs against forfeiture for non- payment of rent and for breach of an express condition, would indicate that the statute itself is based on a public policy in favour of tenants as a class, which can be decided by the courts only.”
“26. Equally, merely because a discretion had to be exercised by the court on whether or not to grant specific performance, would not militate against specific performance being granted [see paragraph 44, in particular, of Booz Allen (supra)]. It is clear, therefore, that the judgment in Himangni Enterprises (supra) will require a relook by a Bench of three Hon’ble Judges of this Court. 27 to 33 xxx xxx xxx 34. In this view of the matter, this case is referred to a Bench of three Hon’ble Judges.”
Thereafter, the Three Judge Bench of the Hon’ble Apex Court in the case of VIDYA DROLIA v. DURGA TRADING CORPORTION reported (2021)2 SCC 1 at paragraphs 79 and 80 observed thus:
“79. Landlord-tenant disputes governed by the Transfer of Property Act are arbitrable as they are not action sin tem but pertain to subordinate rights in personam that arise from rights in tem. Such actions normally would not affect third-party rights or have ergaomnes effect or require centralised adjudication. An award passed deciding landlord-tenant disputes can be executed and to inalienable and sovereign functions of the State. The provisions of the Transfer of Property Act do not expressly or by necessary implication bar arbitration. The Transfer of Property Act, like all other Acts, has a public purpose, that is, to regulate landlord tenant relationships and the Arbitrator would be bound by the provisions, including provisions which enure and protect the tenants.
80. In view of the aforesaid, we overrule the ratio laid down in HIMANGI ENTERPRISES and old that the landlord-tenant disputes are arbitrable as the Transfer of Property Act does not forbid or foreclose arbitration. However, landlord-tenant disputes covered and government by rent control legislation would not be arbitrable when specific court or forum has been given exclusive jurisdiction to apply and decide special right and obligations. Such rights are obligations can only be adjudicated and enforced by the specified court/forum, and not through arbitration.”
CONCLUSION: as you are aware that Arbitration is one of the best Alternate Disputes Resolution process, which saves time, money and energy of the parties. The Transfer of Property Act, 1882 no where prohibits deciding of cases through arbitration. But landlord-tenant disputes covered and government by rent control legislation would not be arbitrable when specific court or forum has been given exclusive jurisdiction to apply and decide special right and obligations. Such rights are obligations can only be adjudicated and enforced by the specified court/forum, and not through arbitration.”
DISCLAIMER: the case law presented here is only for sharing information with the readers. The views are personal. In case of necessity do consult with professionals.
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