2020 (12) TMI 688 - SC - Indian Laws

Seeking appointment of a Sole Arbitrator for resolving the disputes that have arisen between the parties - Sub-lease deed - Section 11(5) of the Arbitration and Conciliation Act, 1996 - HELD THAT - A perusal of the provisions indicate the manner in which the determination of lease would occur, which also includes determination by forfeiture due to the acts of the lessee/tenant in breaking the express condition agreed between the parties or provided in law. The breach and the consequent forfeiture could also be with respect to non-payment of rent. In such circumstance where the lease is determined by forfeiture and the lessor sues to eject the lessee and, if, at the hearing of the suit, the lessee pays or tenders to the lessor the rent in arrear, Section 114 of TP Act provides that the Court instead of passing a decree for ejectment may pass an order relieving the lessee against the forfeiture due to which the lessee will be entitled to hold the property leased as if the forfeiture had not occurred. Under Section 114A of the TP Act a condition for issue of notice prior to filing suit of ejectment is provided so as to enable the lessee to remedy the breach. No doubt the said provisions provide certain protection to the lessee/tenant before being ejected from the leased property - the same cannot be construed as a statutory protection nor as a hard and fast rule in all cases to waive the forfeiture. It is a provision enabling exercise of equitable jurisdiction in appropriate cases as a matter of discretion. Such equitable protection does not mean that the disputes relating to those aspects between the landlord and the tenant is not arbitrable and that only a Court is empowered to waive the forfeiture or not in the circumstance stated in the provision. When the disputes arise between the landlord and tenant with regard to determination of lease under the TP Act, the landlord to secure possession of the leased property in a normal circumstance is required to institute a suit in the Court which has jurisdiction. However, if the parties in the contract of lease or in such other manner have agreed upon the alternate mode of dispute resolution through arbitration the landlord would be entitled to invoke the arbitration clause and make a claim before the learned Arbitrator - the Court having jurisdiction alone can advert into all these aspects as a statutory requirement and, therefore, such cases are not arbitrable. As indicated above, the same is not the position in matters relating to the lease/tenancy which are not governed under the special statutes but under the TP Act. Insofar as eviction or tenancy relating to matters governed by special statutes where the tenant enjoys statutory protection against eviction whereunder the Court/Forum is specified and conferred jurisdiction under the statute alone can adjudicate such matters. Hence in such cases the dispute is non-arbitrable - If the special statutes do not apply to the premises/property and the lease/tenancy created thereunder as on the date when the cause of action arises to seek for eviction or such other relief and in such transaction if the parties are governed by an Arbitration Clause; the dispute between the parties is arbitrable and there shall be no impediment whatsoever to invoke the Arbitration Clau The petitioner in the instant case while invoking the Arbitration Clause has proposed the name of Justice (Retired) Mukul Mudgal as the Sole Arbitrator. The respondent neither replied to the said notice nor objected to the Arbitrator proposed by the petitioner. In that backdrop since a dispute between the parties is to be resolved through Arbitration, the prayer made in this petition is liable to be accepted - Petition allowed - decided in favor of petitioner.

Summary

Issues Involved:
1. Appointment of a Sole Arbitrator under Section 11(5) of the Arbitration and Conciliation Act, 1996.
2. Arbitrability of disputes under the Transfer of Property Act, 1882.
3. Jurisdiction for appointing an Arbitrator in International Commercial Arbitration.

Issue-wise Detailed Analysis:

1. Appointment of a Sole Arbitrator under Section 11(5) of the Arbitration and Conciliation Act, 1996:
The petitioner sought the appointment of a Sole Arbitrator to resolve disputes arising from a Sub-Lease Deed dated 14.11.2018. The Sub-Lease Deed included an arbitration clause (Clause 12) stipulating that disputes should be resolved through arbitration. Despite issuing a notice on 11.12.2019 and proposing Justice (Retired) Mukul Mudgal as the Sole Arbitrator, the respondent did not respond. Consequently, the petitioner approached the Supreme Court for the appointment of an Arbitrator.

2. Arbitrability of disputes under the Transfer of Property Act, 1882:
The Court examined whether disputes under the Transfer of Property Act (TP Act) are arbitrable. The Supreme Court's decision in Booz Allen and Hamilton Inc vs. SBI Home Finance Limited and Others (2011) 5 SCC 532 was referenced, which clarified that civil or commercial disputes, unless excluded by legislation, are generally arbitrable. However, certain disputes, including those governed by special statutes like Rent Acts, are non-arbitrable. The Court noted that the TP Act does not provide statutory protection to tenants akin to special statutes and that disputes under the TP Act can be arbitrated. The case of Himangni Enterprises vs. Kamaljeet Singh Ahluwalia (2017) 10 SCC 706 was discussed, which had suggested non-arbitrability of TP Act disputes. However, another decision in Vidya Drolia & Ors. vs. Durga Trading Corporation (2019) SCC online SC 358 clarified that TP Act disputes are arbitrable. The Court concluded that disputes under the TP Act are arbitrable, distinguishing them from those under special statutes.

3. Jurisdiction for appointing an Arbitrator in International Commercial Arbitration:
The petitioner, a citizen of Kenya, made the arbitration an International Commercial Arbitration under Section 2(f) of the Act, 1996. Despite the Sub-Lease Deed stating that the High Court of Delhi would appoint the Arbitrator, the Supreme Court held that it has the jurisdiction to appoint an Arbitrator in such international cases under Section 11(6) of the Act, 1996.

Conclusion:
The Supreme Court allowed the petition, appointing Justice (Retired) Mukul Mudgal as the Sole Arbitrator to resolve the dispute. The arbitral fee would be as per the Fourth Schedule to the Act, 1996, and no costs were ordered in the petition.