2017 (10) TMI 566 - SC - Indian Laws

Arbitration and Conciliation proceedings - whether the two Courts below were justified in rejecting the application filed under Section 8 of the Arbitration and Conciliation Act, 1996 in a pending civil suit filed by the respondent seeking appellant's eviction from the premises in question and for claiming some ancillary reliefs therein - Held that - Both the Courts below were right in dismissing the appellant's application filed under Section 8 of the Act and thereby were justified in holding that the civil suit filed by the respondent was maintainable for grant of reliefs claimed in the plaint despite parties agreeing to get the disputes arising therefrom to be decided by the arbitrator.

Summary

Issues:
1. Application of Section 8 of the Arbitration and Conciliation Act, 1996 in a civil suit.
2. Justification of rejecting the application under Section 8.
3. Maintaining the civil suit for eviction and ancillary reliefs.

Issue 1: Application of Section 8 of the Arbitration and Conciliation Act, 1996 in a civil suit

The appeal involved a question of whether the two lower courts were correct in rejecting the defendant's application under Section 8 of the Arbitration and Conciliation Act, 1996. The defendant argued that since the civil suit was based on a lease deed containing an arbitration clause, the disputes should be resolved through arbitration as per the terms of the lease deed. The plaintiff, on the other hand, contended that the lease period had ended and the disputes were not arbitrable. The defendant cited various legal precedents to support their argument that the disputes should be resolved through arbitration.

Issue 2: Justification of rejecting the application under Section 8

The Trial Court and the High Court upheld the objections of the plaintiff and dismissed the defendant's application under Section 8 of the Act. The High Court's judgment was based on the reasoning that the disputes were not arbitrable and should be tried by the Civil Court. The Supreme Court, after considering the arguments of both parties and examining legal precedents, found no merit in the appeal. It referenced previous judgments like Natraj Studios (P) Ltd. vs. Navrang Studios & Another and Booz Allen & Hamilton Inc. vs. SBI Home Finance Ltd. & Ors. to support the decision that the civil suit was maintainable despite the arbitration clause in the lease deed.

Issue 3: Maintaining the civil suit for eviction and ancillary reliefs

The Supreme Court held that the civil suit filed by the plaintiff seeking the defendant's eviction and other reliefs was maintainable in the Civil Court. It emphasized that certain disputes, including eviction or tenancy matters governed by special statutes, are non-arbitrable. The Court rejected the appellant's argument that the Delhi Rent Act's inapplicability to the premises would make the Arbitration Act applicable, stating that the rights of the parties and the demised premises would be governed by the Transfer of Property Act. The Court dismissed the appeal and directed the concerned Civil Court to proceed with the trial of the suit expeditiously.