Vidya Drolia & Ors. vs Durga Trading Corporation

Referring the matter to larger bench, the Court HELD: 1. A close reading of Section 114 of Transfer of Property Act, 1882 would show that the rights of landlord and tenant are balanced by the said provision. This is because where a lease of immoveable property has determined by forfeiture for non-payment of rent, and at the hearing of the suit, the lessee pays or tenders to the lessor the rent in arrears, together with interest thereon and his full costs within 15 days, the Court in its discretion may relieve the lessee against the forfeiture. This shows two things – one that the landlord’s interest is secured not only by the deposit of rent in arrears but also interest thereon and full costs of the suit. The option given, of course, is that security may also be given but what is important is that the Court is given a discretion in making a decree for ejectment if this is done. The discretion may be exercised in favour of the tenant or it may not. This itself shows that Section 114 cannot be said to be a provision conceived for relief of tenants as a class as a matter of public policy. The same goes for Section 114A. Here again, a lessee is given one opportunity to remedy breach of an express condition, provided such condition is capable of remedy. However, the exception contained in this section shows that it is a very limited right that is given to a tenant, as this would not apply to assigning, sub-letting, parting with the possession, or disposing of the property leased, or even to an express condition relating 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. [Para 14] [476-B-F]

2. The decision in Himangni Enterprises, concerned itself with a landlord-tenant dispute in which the Delhi Rent Act, 1995 was admittedly inapplicable. However, in paragraph 18 of the said judgment, this Court said that the question involved in the appeal was no longer res integra and stood answered by two decisions of this Court in Natraj Studios and Booz Allen against the appellant and in favour of the respondent. The judgment in Natraj Studios 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”. In Booz Allen, it was held that only those tenancy matters that are (i) governed by special statutes (ii) where the tenant enjoys statutory protection against eviction and (iii) where only specified courts are conferred jurisdiction to grant eviction or decide disputes, are cases where the dispute between landlord and tenant can be said to be non-arbitrable. A perusal of Natraj Studios and Booz Allen judgments shows that a Transfer of Property Act situation between a landlord and tenant is very far removed from the situation in either Natraj Studios or in Booz Allen. Therefore, the question involved in a Transfer of Property Act situation cannot possibly be said to have been answered by the two decisions of this Court. [Paras 15-19] [478-A-D; 479-B-D]

3. None of the provisions of the Transfer of Property Act were noticed by Himangni Enterprises case. In fact, none of the said provisions would indicate that disputes under the said Act are triable only by the civil court and not by arbitration, as has been held in this paragraph. It is clear that the Transfer of Property Act is silent on arbitrability, and does not negate arbitrability. 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, in particular, of Booz Allen. 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 not correct. [Paras 21, 23, 24] [480-B-F] Himangni Enterprises v. Kamaljeet Singh Ahluwalia (2017) 10 SCC 706: [2017] 10 SCR 139; Duro

Felguera, S.A. v. Gangavaram Port Ltd. (2017) 9 SCC

729 : [2017] 10 SCR 285 ; Praduman Kumar v. Virendra Goyal (Dead) by LRs. (1969) 3 SCR 950; Namdeo

Lokman Lodhi v. Narmadabai & Ors. [1953] SCR

1109 ; Booz Allen and Hamilton Inc. v. SBI Home Finance Limited and Others (2011) 5 SCC 532 : [2011]

7 SCR 310 ; Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan and Others (1999) 5 SCC 651 : [1999] 3 SCR 490; Vimal Kishor Shah and Others v. Jayesh Dinesh Shah and Others (2016) 8 SCC 788 : [2016] 7 SCR 102; Dhulabhai v. State of M.P. [1968] 3 SCR 662; Emaar MGF Land Limited v. Aftab Singh 2018 SCC OnLine SC 2771 – referred to.

Wolverhampton New Waterworks Co. v. Hawkesford

141 ER 486 – referred to.