Holding

Disputes arising under the Transfer of Property Act relating to lease determination are arbitrable and the Himangni Enterprises decision requires reconsideration.

Summary

The parties entered into a ten‑year tenancy agreement for godowns that contained an arbitration clause. When the lease expired, the landlord sought possession and invoked the arbitration clause, appointing an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. The tenant appealed, arguing that the dispute over determination of the lease under Sections 111, 114 and 114A of the Transfer of Property Act, 1882 was non‑arbitrable, relying on the Supreme Court’s decision in Himangni Enterprises. The Court examined the scope of arbitrability, the meaning of "existence" of an arbitration agreement under Section 11(6A), and held that the Transfer of Property Act is silent on arbitrability and does not bar arbitration of such lease‑determination disputes. It further observed that the Himangni Enterprises judgment misapplied earlier precedents and should be reconsidered by a larger bench. Consequently, the stay on the arbitral proceedings was lifted and the arbitration was allowed to continue, with the appeal disposed.

Issues considered

Whether disputes concerning determination of a lease under Sections 111, 114 and 114A of the Transfer of Property Act, 1882 are arbitrable under the Arbitration and Conciliation Act, 1996.
Whether Section 11(6A) of the Arbitration and Conciliation Act requires a court to examine the arbitrability of the subject‑matter before appointing an arbitrator.
Whether the decision in Himangni Enterprises v. Kamaljeet Singh Ahluwalia, which held such disputes non‑arbitrable, is applicable to the present case.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(6A), s. 16(1)
Bombay Rent Act, 1947s. 28
Delhi Rent Act, 1995
Indian Trusts Act, 1882s. 34, s. 46, s. 49, s. 53, s. 74
Transfer of Property Act, 1882s. 111, s. 114, s. 114A

Subjects

arbitrabilitylease determinationTransfer of Property ActArbitration agreementSection 11(6A)landlord‑tenant disputepublic policyrent arrearsforfeiture

Judgment

[2019] 3 S.C.R. 465 465

VIDYA DROLIA & ORS. A
v.
DURGA TRADING CORPORATION
(Civil Appeal No. 2402 of 2019)
FEBRUARY 28, 2019 B
[R. F. NARIMAN AND VINEET SARAN, JJ.]
Arbitration and Conciliation Act, 1996 – s.11(6) – Dispute
between landlord and tenant regarding determination of lease –
Arbitrator appointed on petition filed by respondent-landlord –
C
Appellant-tenant objected on arbitrability of the dispute by relying
on Himangni Enterprises case wherein it was held that where the
Transfer of Property Act applied between the landlord and tenant,
disputes between them would not be arbitrable – Held: None of the
provisions of the Transfer of Property Act were noticed by Himangni
Enterprises case – In Himangni Enterprises case, it was held that the D
question involved was answered by decision in Natraj Studios case
and Booz Allen case – However, perusal of decision in Natraj Studios
and Booz Allen showed that no such question was answered by these
two decisions – Therefore, Himangni Enterprises case requires a
relook – In view of this, matter is referred to larger bench –
E
Transfer of Property Act, 1882 – ss.111, 114 and 114A –
Reference to larger bench – Landlord-tenant dispute.
Words and Phrases: Expression ‘arbitrability’ – Meaning of,
Discussed.
Referring the matter to larger bench, the Court F
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 G
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
H
465
466 SUPREME COURT REPORTS [2019] 3 S.C.R.

A 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
B
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
C 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
D
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
E 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.
F 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
G 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
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VIDYA DROLIA & ORS. v. DURGA TRADING CORPORATION 467

Property Act situation between a landlord and tenant is very far A
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]
B
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. C
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 D
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 E
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 F
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 G
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. H
468 SUPREME COURT REPORTS [2019] 3 S.C.R.

A Wolverhampton New Waterworks Co. v. Hawkesford
141 ER 486 – referred to.
Case Law Reference
[2017] 10 SCR 139 referred to Para 2 (viii)
B [2017] 10 SCR 285 referred to Para 7
[1969] 3 SCR 950 referred to Para 13
[1953] SCR 1109 referred to Para 13
[1999] 3 SCR 490 referred to Para 22
C [2016] 7 SCR 102 referred to Para 25
[1968] 3 SCR 662 referred to Para 25
[2011] 7 SCR 310 referred to Para 15
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2402
D of 2019.
From the Judgment and Order dated 07.09.2016 of the High Court
at Calcutta in A.P. No. 286 of 2016.
Debajyoti Basu, Hiren Dasan, Harish Dasan, Chand Qureshi,
M. K. Tripathi, Advs. for the Appellants.
E
Saurav Agarwal, P.C. Sharma, Anirudha Agarwalla, T. R. B.
Sivakumar, Anshuman Chowdhury, Ms. Akanksha Sisodia, Advs. for
the Respondent.
The Judgment of the Court was delivered by
F R. F. 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
G 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.

H
VIDYA DROLIA & ORS. v. DURGA TRADING CORPORATION 469
[R.F. NARIMAN, J.]

(iii) It was agreed that the tenant should pay the agreed rent of A
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 B
by and between the parties out of this agreement and/or in respect
to the subject matter of this agreement, the same shall be referred
to the Arbitral Tribunal consisting of three arbitrators, out of which
one arbitrator shall be appointed by the party of the first part, one
by the party of the other part collectively and the Presiding
C
Arbitrator shall be appointed mutually by the two arbitrators so
appointed by the parties. The decision of the Arbitral Tribunal
shall be final and binding on the parties. The Arbitration proceedings
shall be governed by the provisions of Arbitration & Conciliation
Act, 1996 with all statutory modifications for the time being in
force. The venue of arbitration shall always be within the Ordinary D
Original Civil Jurisdiction of the High Court at Kolkata.”
(iv) On 16.10.2012, the tenancy was attorned in the name of the
respondent, and the appellants paid rent to the respondent as the earlier
landlord had surrendered his leasehold rights in favour of the respondent
with effect from 01.11.2012. E

(v) On 24.08.2015, a letter was sent by the respondent calling
upon the appellants to deliver vacant and peaceful possession on the
expiry of the 10 year period, i.e., on 01.02.2016. A reminder to this effect
was also sent on 30.12.2015. As the tenant did not vacate the premises,
arbitration was invoked by the respondent on 29.02.2016 by a notice F
sent to the appellants.
(vi) On 28.04.2016, the respondent filed the present Section 11
petition before the Calcutta High Court for appointment of an arbitrator.
(vii) On 07.09.2016, the High Court passed the impugned order G
appointing an arbitrator, after rejecting the appellants’ objections on
arbitrability of the dispute between the parties. After this, the arbitral
proceedings began and we are informed that as many as 18 sittings
have taken place.
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470 SUPREME COURT REPORTS [2019] 3 S.C.R.

A (viii) Meanwhile, however, on 12.10.2017, a judgment was
delivered by this Court in Himangni Enterprises v. Kamaljeet Singh
Ahluwalia, (2017) 10 SCC 706 [“Himangni Enterprises”], in which it
was held that where the Transfer of Property Act, 1882 applied between
landlord and tenant, disputes between the said parties would not be
arbitrable.
B
(ix) Even though four arbitration sittings took place after this
judgment, a review/recall application was filed by the appellants before
the Calcutta High Court on 04.06.2018 in the light of this judgment. This
review was dismissed by the Calcutta High Court on 08.06.2018.
C 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.
D 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
E 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 arbitrable, yet it being clear that so far
F as at least arrears of rent and forfeiture are concerned, such disputes
being non-arbitrable, it would be difficult to bifurcate the aforesaid grounds
as often, one petition for eviction may contain several grounds, some of
which are relatable to arrears of rent and forfeiture and some of which
may relate to other grounds. Therefore, according to him, the entirety of
G the subject-matter of landlord and tenant disputes arising under the
Transfer of Property Act is excluded by necessary implication. He also
stated that it is well settled that this case is one of inherent lack of
jurisdiction and that therefore, participation in the arbitral proceedings
would make no difference as consent cannot confer jurisdiction, nor can

H
VIDYA DROLIA & ORS. v. DURGA TRADING CORPORATION 471
[R.F. NARIMAN, J.]

waiver be inferred so as to confer jurisdiction. He relied strongly upon a A
number of judgments to buttress these submissions. In any event,
according to him, this Court’s judgment in Himangni Enterprises (supra)
would apply on all fours in the facts of his case and would therefore,
govern this case, which would necessarily lead to an arbitrator in the
present proceedings having no jurisdiction to decide disputes between
B
landlord and tenant. He also argued that Section 11(6A) of the Arbitration
& Conciliation Act should be read in a purposive manner, and that
“existence” of an arbitration agreement that is spoken of would also
refer to disputes which are non-arbitrable as such.
4. Mr. Saurav Agarwal, learned counsel appearing on behalf of
the respondent countered these submissions. According to him, this is a C
case in which the appellants have participated in the arbitral proceedings.
Arbitral proceedings are well on their way, and we ought, therefore, to
exercise our discretionary jurisdiction under Article 136 of the Constitution
of India against the appellants. He has further argued relying upon various
judgments, including certain High Court judgments that were passed D
after Himangni Enterprises (supra) to state that, on facts, Himangni
Enterprises (supra) was wholly distinguishable as it did not apply to a
situation of a lease expiring by efflux of time. He also pointed out that
certain High Court judgments had, after Himangni Enterprises (supra),
distinguished the said judgment on this and other grounds. As an alternative
submission, he said that, in any case, Himangni Enterprises (supra) E
would 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:
F
“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, G
decree or order of any court, confine to the examination of the
existence of an arbitration agreement.
xxx xxx xxx”

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472 SUPREME COURT REPORTS [2019] 3 S.C.R.

A 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
B 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 arbitration, and leave the existence of the
arbitration agreement to be finally determined by the arbitral tribunal.
C However, if the judicial authority concludes that the agreement does not
exist, then the conclusion will be final and not prima facie. The amendment
also envisages that there shall be a conclusive determination as to whether
the arbitration agreement is null and void.”
(emphasis supplied)
D
6. It will be seen that though the Law Commission Report speaks
not only of “existence” but also of an arbitration clause being null and
void, this has not translated itself into the language of Section 11(6A).
On the contrary, Section 11(6A) is to be contrasted with Section 16(1)
of the Act which reads as follows:
E
“16. Competence of arbitral tribunal to rule on its
jurisdiction.—(1) The arbitral tribunal may rule on its own
jurisdiction, including ruling on any objections with respect to the
existence or validity of the arbitration agreement, and for that
purpose,—
F
(a) an arbitration clause which forms part of a contract shall
be treated as an agreement independent of the other terms of
the contract; and
(b) a decision by the arbitral tribunal that the contract is null
and void shall not entail ipso jure the invalidity of the arbitration
G
clause.”
7. It will be noticed that “validity” of an arbitration agreement is,
therefore, apart from its “existence”. One moot question that therefore,
arises, and which needs to be authoritatively decided by a Bench of
three learned Judges, is whether the word “existence” would include
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VIDYA DROLIA & ORS. v. DURGA TRADING CORPORATION 473
[R.F. NARIMAN, J.]

weeding-out arbitration clauses in agreements which indicate that the A
subject-matter is incapable of arbitration. A Division Bench of this Court,
through one of the learned Judges, Kurian Joseph, J., has stated, in Duro
Felguera, S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729, that the
scope of Section 11(6A) is limited to the following:
“59. The scope of the power under Section 11(6) of the 1996 Act B
was considerably wide in view of the decisions in SBP and Co.
[SBP and Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] and
Boghara Polyfab [National Insurance Co. Ltd. v. Boghara
Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117].
This position continued till the amendment brought about in 2015.
After the amendment, all that the courts need to see is whether C
an arbitration agreement exists—nothing more, nothing less. 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. D

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:
E
“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; F
(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 G
person in the same right;
(e) by express surrender; that is to say, in case the lessee
yields up his interest under the lease to the lessor, by mutual
agreement between them;
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474 SUPREME COURT REPORTS [2019] 3 S.C.R.

A (f) by implied surrender;
(g) by forfeiture, that is to say, (1) in case the lessee breaks an
express condition which provides that on breach thereof the
lessor may re-enter; or (2) in case the lessee renounces his
character as such by setting up a title in a third person or by
B claiming title in himself; or (3) the lessee is adjudicated an
insolvent and the lease provides that the lessor may re-enter
on the happening of such event; and in any of these cases the
lessor or his transferee gives notice in writing to the lessee of
his intention to determine the lease;
C (h) on the expiration of a notice to determine the lease, or to
quit, or of intention to quit, the property leased, duly given by
one party to the other.”
10. Section 114, which deals with relief against forfeiture for non-
payment of rent, reads as follows:-
D “114. Relief against forfeiture for non-payment of rent.—
Where a lease of immovable property has been determined by
forfeiture for non-payment of rent, and the lessor sues to eject
the lessee, if, at the hearing of the suit, the lessee pays or tenders
to the lessor the rent in arrear, together with interest thereon and
E his full costs of the suit, or gives such security as the Court thinks
sufficient for making such payment within fifteen days, the Court
may, in lieu of making a decree for ejectment, pass an order
relieving the lessee against the forfeiture; and thereupon the lessee
shall hold the property leased as if the forfeiture had not occurred.”

F 11. Section 114A, which deals with relief against forfeiture in certain
other cases, reads as follows:
“114A. Relief against forfeiture in certain other cases.—
Where a lease of immovable property has been determined by
forfeiture for a breach of an express condition which provides
that on breach thereof the lessor may re-enter, no suit for ejectment
G
shall lie unless and until the lessor has served on the lessee a
notice in writing—
(a) specifying the particular breach complained of; and
(b) if the breach is capable of remedy, requiring the lessee to
H remedy the breach;
VIDYA DROLIA & ORS. v. DURGA TRADING CORPORATION 475
[R.F. NARIMAN, J.]

and the lessee fails, within a reasonable time from the date of A
the service of the notice, to remedy the breach, if it is capable
of remedy.
Nothing in this section shall apply to an express condition against
assigning, under-letting, parting with the possession, or disposing,
of the property leased, or to an express condition relating to B
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, C
what was argued was that Sections 114 and 114A, 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.
D
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 E
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
costs of the suit. Jurisdiction to relieve against forfeiture for non-
payment of rent may be exercised by the Court if the tenant in a
suit in ejectment at the hearing of the suit pays the arrears of rent F
together with interest thereon and full costs of the suit. ……”
(at page 953)
The Court went on to quote from Namdeo Lokman Lodhi v.
Narmadabai & Ors., [1953] SCR 1109 as follows:
G
“… in exercising the discretion (under Section 114 of the Transfer
of Property Act), each case must be judged by itself, the delay,
the conduct of the parties and the difficulties to which the landlord
has been put should be weighed against the tenant. … It is a
maxim of equity that a person who comes in equity must do equity
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476 SUPREME COURT REPORTS [2019] 3 S.C.R.

A and must come with clean hands and if the conduct of the tenant
is such that it disentitles him to relief in equity, then the court’s
hands are not tied to exercise it in his favour.”
(at page 1025)
14. In fact, a close reading of Section 114 would show that the
B rights of landlord and tenant are balanced by the aforesaid 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
C 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
D 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
E 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
F 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 Others, (2011) 5 SCC 532. This judgment
G 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
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VIDYA DROLIA & ORS. v. DURGA TRADING CORPORATION 477
[R.F. NARIMAN, J.]

courts and tribunals which are public fora constituted under the A
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 implication. Adjudication
B
of certain categories of proceedings are reserved by the legislature
exclusively for public fora as a matter of public policy. Certain
other categories of cases, though not expressly reserved for
adjudication by public fora (courts and tribunals), may by necessary
implication stand excluded from the purview of private fora.
Consequently, where the cause/dispute is inarbitrable, the court C
where a suit is pending, will refuse to refer the parties to arbitration,
under Section 8 of the Act, even if the parties might have agreed
upon arbitration as the forum for settlement of such disputes.”
Paragraph 36 then goes on to give certain well recognized
examples of non-arbitrable disputes as follows: D
“36. The well-recognised examples of non-arbitrable disputes are:
(i) disputes relating to rights and liabilities which give rise to or
arise out of criminal offences; (ii) matrimonial disputes relating to
divorce, judicial separation, restitution of conjugal rights, child
custody; (iii) guardianship matters; (iv) insolvency and winding- E
up matters; (v) testamentary matters (grant of probate, letters of
administration and succession certificate); and (vi) eviction or
tenancy matters governed by special statutes where the tenant
enjoys statutory protection against eviction and only the specified
courts are conferred jurisdiction to grant eviction or decide the
disputes.” F

Paragraphs 37 and 38 then go on to state that a right in rem is a
right exercisable against the world at large, and is not amenable to
arbitration, whereas a right in personam, in which an interest is protected
against specific individuals, is. It was also stated that disputes relating to
subordinate rights in personam arising from rights in rem have always G
been considered to be arbitrable.
16. We now come to the sheet anchor of the appellants’ case
before us, namely, the decision in Himangni Enterprises (supra). This
judgment concerned itself with a landlord-tenant dispute in which the
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478 SUPREME COURT REPORTS [2019] 3 S.C.R.

A Delhi Rent Act, 1995 was admittedly inapplicable. However, in paragraph
18 of the said judgment, this Court said:
“18. In our considered opinion, the question involved in the appeal
remains no longer res integra and stands answered by two
decisions of this Court in Natraj Studios (P) Ltd. vs. Navrang
B Studios, (1981) 1 SCC 523 and Booz Allen & Hamilton Inc. vs.
SBI Home Finance Ltd. against the 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
C 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:
D
“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
E 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
legislative mandate which requires certain kind of disputes to be
F settled by special Courts constituted by the Act. It follows that
arbitration agreements between parties whose rights are regulated
by the Bombay Rent Act cannot be recognized by a Court
of law.”
It then concluded in paragraph 24 as follows:
G “24. In the light of the foregoing discussion and the authority of
the precedents, we hold that both by reason of S. 28 of the Bombay
Rents, Hotel and Lodging House Rates Control Act, 1947 and by
reason of the broader considerations of public policy mentioned
by us earlier and also in Deccan Merchants Co-operative Bank
Ltd. v. M/s Dalichand Jugraj Jain (AIR 1969 SC 1320), the Court
H
VIDYA DROLIA & ORS. v. DURGA TRADING CORPORATION 479
[R.F. NARIMAN, J.]

of Small Causes has and the Arbitrator has not the jurisdiction to A
decide the question whether the respondent-licensor-landlord is
entitled to seek possession of the two studios and other premises
together with machinery and equipment from the appellant-
licensee-tenant.”
18. So far as Booz Allen (supra) is concerned, we have already B
extracted paragraph 36. Sub-paragraph (vi) of this paragraph makes it
clear 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. C

19. A perusal of both the aforesaid judgments, therefore, shows
that a Transfer of Property Act situation between a landlord and tenant
is very far removed from the situation in either Natraj Studios (supra)
or in sub-paragraph (vi) of paragraph 36 of Booz Allen (supra). We are,
therefore, of the respectful view that the question involved in a Transfer D
of Property Act situation cannot possibly be said to have been answered
by the two decisions of this Court, as has been stated in paragraph 18 of
the said judgment.
20. The said judgment then goes on to state:
E
“23. The learned counsel for the appellant, however, argued that
the provisions of the Delhi Rent Act, 1995 are not applicable to
the premises by virtue of Section 3(1)(c) of the Act and hence,
the law laid down in the aforementioned two cases would not
apply. We do not agree.
F
24. The Delhi Rent Act, which deals with the cases relating to
rent and eviction of the premises, is a special 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 G
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
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480 SUPREME COURT REPORTS [2019] 3 S.C.R.

A 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.”
B 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 in
this paragraph. It is clear that the Transfer of Property Act is silent on
arbitrability, and does not negate arbitrability.
C
22. In a similar situation, this Court, in Olympus Superstructures
Pvt. Ltd. v. Meena Vijay Khetan and Others, (1999) 5 SCC 651,
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
D [see paragraph 34].
23. 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
E judgment in Himangni Enterprises (supra) will require a relook by a
Bench of three Hon’ble Judges of this Court.
24. One more thing held in Himangni Enterprises (supra) 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
F 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 period but also
because the rent contained in the agreement between the landlord and
G tenant is above a certain amount. When the rent is fixed above the
amount stated by a statute, in the normal course of human conduct, such
rent can only be increased and not decreased so as to fall back within
the provisions of the Rent Act. Further, the exemption based on a certain
rent payable need not be withdrawn or cease to have application to a
particular premises for many years to come. For all these reasons, we
H are of the view that this reason also does not hold good.
VIDYA DROLIA & ORS. v. DURGA TRADING CORPORATION 481
[R.F. NARIMAN, J.]

25. In Vimal Kishor Shah and Others v. Jayesh Dinesh Shah A
and Others, (2016) 8 SCC 788, this Court, after referring to Dhulabhai
v. State of M.P., (1968) 3 SCR 662, came to the conclusion that disputes
which arose under the Indian Trusts Act, 1882, which applies only to
private trusts, were also not arbitrable as this was excluded by necessary
implication. This was so stated as follows:
B
“49. So far as the question involved in the case at hand is
concerned, it is governed 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 C
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 D
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 E
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 F
in concluding that though the Trusts Act, 1882 does not provide
any express bar in relation to applicability of other Acts for
deciding the disputes arising under the Trusts Act, 1882 yet, in our
considered view, there exists an implied exclusion of applicability
of the Arbitration Act for deciding the disputes relating to trust, G
trustees and beneficiaries through private arbitration. In other
words, when the Trusts Act, 1882 exhaustively deals with the
trust, trustees and beneficiaries and provides for adequate and
sufficient remedies to all aggrieved persons by giving them a right
to approach the Principal Civil Court of Original Jurisdiction for
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482 SUPREME COURT REPORTS [2019] 3 S.C.R.

A redressal of their disputes arising out of trust deed and the Trusts
Act, 1882 then, in our opinion, any such dispute pertaining to
affairs of the trust including the dispute inter se trustee and
beneficiary in relation to their right, duties, obligations, removal,
etc. cannot be decided by the arbitrator by taking recourse to the
provisions of the Act. Such disputes have to be decided by the
B
civil court as specified under the Trusts Act, 1882.
51. The principle of interpretation that where a specific remedy
is given, it thereby deprives the person who insists upon a remedy
of any other form of remedy than that given by the statute, is one
which is very familiar, and which runs through the law, was adopted
C by this Court in Premier Automobiles Ltd. v. Kamlekar
Shantaram Wadke [Premier Automobiles Ltd. v. Kamlekar
Shantaram Wadke, (1976) 1 SCC 496 : 1976 SCC (L&S) 70 :
AIR 1975 SC 2238] while examining the question of bar in filing
civil suit in the context of remedies provided under the Industrial
D Disputes Act (see G.P. Singh, Principles of Statutory
Interpretation, 12th Edn., pp. 763-64). We apply this principle
here because, as held above, the Trusts Act, 1882 creates an
obligation and further specifies the rights and duties of the settlor,
trustees and the beneficiaries apart from several conditions
specified in the trust deed and further provides a specific remedy
E for its enforcement by filing applications in civil court. It is for this
reason, we are of the view that since sufficient and adequate
remedy is provided under the Trusts Act, 1882 for deciding the
disputes in relation to trust deed, trustees and beneficiaries, the
remedy provided under the Arbitration Act for deciding such
F disputes is barred by implication.”
Dhulabhai (supra) refers to and relies upon the three 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:
G “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
H statute contains words which expressly or by necessary implication
VIDYA DROLIA & ORS. v. DURGA TRADING CORPORATION 483
[R.F. NARIMAN, J.]

exclude the common law remedy, and the party suing has his A
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
B
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 C
important to bear in mind the fact that the statute, considered as a whole,
must lead necessarily to a conclusion that the disputes which arise under
it cannot be the subject matter of arbitration.
27. A few sections of the Indian Trusts Act will suffice to
demonstrate how disputes under this Act cannot possibly be the subject D
matter of arbitration. Under Section 34 of the Indian Trusts Act, a trustee
may, without instituting a suit, apply by petition to a principal Civil Court
of original jurisdiction for its opinion, advice, or direction on any present
questions respecting management or administration of trust property,
subject to other conditions laid down in the Section. Obviously, an
arbitrator cannot possibly give such opinion, advice, or direction. Under E
Section 46, a trustee who has accepted the trust, cannot afterwards
renounce it, except, inter alia, with the permission of a principal Civil
Court of original jurisdiction. This again cannot be the subject matter of
arbitration. Equally, under Section 49 of the Indian Trusts Act, where a
discretionary power conferred on a trustee is not exercised reasonably F
and in good faith, only a principal Civil Court of original jurisdiction can
control such power, again making it clear that a private consensual
adjudicator has no part in the scheme of this Act. Under Section 53, no
trustee may, without the permission of a principal Civil Court of original
jurisdiction, buy or become mortgagee or lessee of the trust property or
any part thereof. Here again, such permission can only be given by an G
arm of the State, namely, the principal Civil Court of original jurisdiction.
Under Section 74 of the Indian Trusts Act, under certain circumstances,
a beneficiary may apply by petition to a principal Civil Court of original
jurisdiction for the appointment of a trustee or a new trustee, and the
Court may appoint such trustee accordingly. Here again, such appointment H
484 SUPREME COURT REPORTS [2019] 3 S.C.R.

A cannot possibly be by a consensual adjudicator. It can only be done by a
petition to a principal Civil Court of original jurisdiction. Also, it is important
to note that it is not any civil court that has jurisdiction, but only one
designated court, namely, a principal Civil Court of original jurisdiction.
All this goes to show that by necessary implication, disputes arising under
the Indian Trusts Act cannot possibly be referred to arbitration.
B
28. Insofar as the Transfer of Property Act or the Specific Relief
Act, no such thing exists, as has been held by Olympus Superstructures
(supra) and by Booz Allen (supra).
29. We may only indicate that Vimal Kishor Shah (supra) has, in
C a Consumer Protection Act situation, been recently followed by a Division
Bench of this Court in Emaar MGF Land Limited v. Aftab Singh,
2018 SCC OnLine SC 2771.
30. In this view of the matter, this case is referred to a Bench of
three Hon’ble Judges.
D 31. Given the facts of this case and the fact that 18 hearings have
been held, the stay that has been granted to the arbitral proceedings by
our order dated 13.08.2018 is lifted, and the proceedings may go on and
culminate in an award. The award cannot be executed without applying
to this Court. The appeal is disposed of accordingly.
E
Devika Gujral Matter referred to larger Bench.

F

G

H