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TMI Blog2019 (2) TMI 2116X X X X Extracts X X X X X X X X Extracts X X X X ..... ecide as to whether a lease has or has not determined. In a similar situation, this Court, in OLYMPUS SUPERSTRUCTURES PVT. LTD. VERSUS MEENA VIJAY KHETAN [ 1999 (5) TMI 581 - SUPREME COURT ], held that when it came to the grant of specific performance, there is no prohibition in the Specific Relief Act that issues relating to specific performance cannot be referred to arbitration, unlike the English statute. 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. It is clear, therefore, that the judgment in Himangni Enterprises will require a relook by a Bench of three Hon ble Judges of this Court - One more thing held in Himangni Enterprises is that the mere fact that an exemption from the Rent Act is available does not mean that the matter becomes non-arbitrable. The Court held that as soon as the exemption is withdrawn, the Rent Act will apply, and therefore, it cannot be contended that the Arbitration Conciliation Act would apply. This reasoning is also, in our respectful view, not correct. Persons may be exempt from a Rent Act not merely for a certain p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Rohinton Fali Nariman and Vineet Saran, JJ. For the Appellant : Debjyoti Basu, Hiren Dasan, Harish Dasan, Chand Qureshi and M.K. Tripathi, Advs. For the Respondents : Saurav Agrawal, P.C. Sharma, Anirudha Agarwalla, T.R.B. Sivakumar, Anshuman Chowdhury and Akanksha Sisodia, Advs. JUDGMENT Rohinton Fali Nariman, J. 1. Leave granted. 2. The facts, in this appeal, are as follows: (i) A Tenancy Agreement was entered into between the landlord's predecessor-in-title (Shree Bajrang Land & Trading Company) and the Appellants/tenant on 02.02.2006 in respect of certain godowns and other structures. (ii) The maximum period of tenancy was for 10 years. The initial period was 5 years, with an option for renewal for another 5 years with a 10% enhancement in the rent. (iii) It was agreed that the tenant should pay the agreed rent of Rs. 12,985/- per month. It was also agreed that upon expiry or earlier determination of the lease, the tenant shall deliver vacant and peaceful possession of the premises. Clause 23 of the aforesaid Agreement stated as follows: 23. That in case of any disputes, differences and/or claims arising by and between the parties out of this agreement and/o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court on 08.06.2018. 3. Mr. Debajyoti Basu, learned Counsel appearing for the Appellants has argued that the Transfer of Property Act is an Act which created rights in rem insofar as the landlord and tenant are concerned. He has further argued that the public policy contained in the statute in Sections 111(g), 114, and 114A, in particular, make it clear that by necessary implication the Arbitration & Conciliation Act, 1996 stands excluded. For this purpose, he also relied upon Section 2(3) of the Arbitration & Conciliation Act read with Section 5 thereof. He referred us to the statement of claim made before the learned Arbitrator and said that, in any event, grant of mesne profits would be outside the arbitration agreement inasmuch as mesne profits are to be decided by way of damages only after the agreement has come to an end. He also referred to and relied upon Order XX Rule 12 of the Code of Civil Procedure ["CPC"] to state that mesne profits could only be given in the manner provided in Order XX Rule 12, i.e., by a Civil Court and not by an arbitrator. He further went on to argue that even if it be held that certain Sub-clauses of Section 111 would be arbitrabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld require reconsideration as it did not state the law correctly. 5. Having heard the learned Counsel on both sides, we may first set out Section 11(6A) of the Arbitration & Conciliation Act, which reads as follows: 11. Appointment of arbitrators.-- xxx xxx xxx (6A) The Supreme Court or, as the case may be, the High Court, while considering any application Under Sub-section (4) or Sub-section (5) or Sub-section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement. xxx xxx xxx The 246th Law Commission Report, which led to the enactment of Section 11(6A), stated as follows: Section 11(6A) of the amendment contemplates a two-step process to be adopted by a judicial authority when considering an application seeking the reference of a pending action to arbitration. The amendment envisages that the judicial authority shall not refer the parties to arbitration only if it finds that there does not exist an arbitration agreement or that it is null and void. If the judicial authority is of the opinion that prima facie the arbitration agreement exists, then it shall refer the dispute to ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss. The legislative policy and purpose is essentially to minimise the Court's intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respected. 8. We now come to the meat of the matter. 9. It is important first to set out certain provisions of the Transfer of Property Act, 1882 and the Arbitration & Conciliation Act, 1996 in order to appreciate the controversy before us. Section 111 of the Transfer of Property Act, relating to determination of lease, reads as follows: 111. Determination of lease.-- A lease of immovable property, determines-- (a) by efflux of the time limited thereby; (b) where such time is limited conditionally on the happening of some event--by the happening of such event; (c) where the interest of the lessor in the property terminates on, or his power to dispose of the same extends only to, the happening of any event--by the happening of such event; (d) in case the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right; (e) by express surrender; that is to say, in case the lessee yields up his interest und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession, or disposing, of the property leased, or to an express condition relating to forfeiture in case of non-payment of rent. 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, which provide for statutory reliefs against forfeiture for nonpayment 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. 13. In Praduman Kumar v. Virendra Goyal (Dead) by LRs., (1969) 3 SCR 950, this Court explained the raison d'etre for Section 114 as follows: The covenant of forfeiture of tenancy for non-payment of rent is regarded by the courts as merely a Clause for securing payment of rent, and unless the tenant has by his conduct disentitled himself to equitable relief the courts grant relief against forfeiture of tenancy on the tenant paying the rent due, interest thereon and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to forfeiture in case of non-payment of rent. Thus, it is clear that every one of the grounds stated in Section 111, whether read with Section 114 and/or 114A, are grounds which can be raised before an arbitrator to decide as to whether a lease has or has not determined. 15. So far so good on principle. However, we have now to refer to certain decisions of this Court. The basic decision in cases of this kind is the judgment contained in Booz Allen and Hamilton Inc. v. SBI Home Finance Limited and Ors. (2011) 5 SCC 532. This judgment has laid down in great detail what is the meaning of the expression "arbitrability" [see paragraph 34]. Paragraph 35 is important and reads as follows: 35. The Arbitral Tribunals are private fora chosen voluntarily by the parties to the dispute, to adjudicate their disputes in place of courts and tribunals which are public fora constituted under the laws of the country. Every civil or commercial dispute, either contractual or non-contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of the Arbitral Tribunals is excluded either expressly or by necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant and in favour of the Respondent. 17. We may point out that the judgment in Natraj Studios (supra) is a judgment in which Section 28 of the Bombay Rent Act, in the context of arbitrability, arose for consideration. This Section made it clear that disputes between landlords and statutory tenants would be referable only to the small causes court in Bombay and "no other court has jurisdiction to entertain any such suit, proceeding or application or to deal with such claim or question". Given this provision, and the fact that the Bombay Rent Act is a welfare legislation, this Court held: 17. The Bombay Rent Act is a welfare legislation aimed at the definite social objective of protection of tenants against harassment by landlords in various ways. It is a matter of public policy. The scheme of the Act shows that the conferment of exclusive jurisdiction on certain Courts is pursuant to the social objective at which the legislation aims. Public policy requires that contracts to the contrary which nullify the rights conferred on tenants by the Act cannot be permitted. Therefore, public policy requires that parties cannot also be permitted to contract out of the legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Though it contains a provision (Section 3) by virtue of it, the provisions of the Act do not apply to certain premises but that does not mean that the Arbitration Act, ipso facto, would be applicable to such premises conferring jurisdiction on the arbitrator to decide the eviction/rent disputes. In such a situation, the rights of the parties and the demised premises would be governed by the Transfer of Property Act and the civil suit would be triable by the civil court and not by the arbitration. In other words, though by virtue of Section 3 of the Act, the provisions of the Act are not applicable to certain premises but no sooner the exemption is withdrawn or ceased to have its application to a particular premises, the Act becomes applicable to such premises. In this view of the matter, it cannot be contended that the provisions of the Arbitration Act would, therefore, apply to such premises. 21. It may be noticed that none of the provisions of the Transfer of Property Act have been noticed by this judgment. In fact, none of the aforesaid provisions would indicate that disputes under the said Act are triable only by the civil court and not by arbitration, as has been held i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verned by Condition 2 of Dhulabhai case [Dhulabhai v. State of M.P. AIR 1969 SC 78] which reads as under: (AIR p. 89, para 32) 32. (2) Where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil court. Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, and whether remedies normally associated with actions in civil courts are prescribed by the said statute or not. 50. When we examine the scheme of the Trusts Act, 1882 in the light of the principle laid down in Condition 2, we find no difficulty in concluding that though the Trusts Act, 1882 does not provide an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... famous categories that are contained in Wolverhampton New Waterworks Co. v. Hawkesford, 141 ER 486. Willes, J. had set out these three categories as follows: There are three classes of cases in which a liability may be established founded upon a statute. One is, where there was a liability existing at common law, and that liability is affirmed by a statute which gives a special and peculiar form of remedy different from the remedy which existed at common law: there, unless the statute contains words which expressly or by necessary implication exclude the common law remedy, and the party suing has his election to pursue either that or the statutory remedy. The second class of cases is, where the statute gives the right to sue merely, but provides no particular form of remedy: there, the party can only proceed by action at common law. But there is a third class, viz. where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it. (at page 495) 26. The Indian Trusts Act, 1882, in fact, provides an excellent instance of how arbitration is excluded by necessary implication. It is important to bear i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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