A) ABSTRACT / HEADNOTE

The judgment in Suresh Shah v. Hipad Technology India Private Limited authoritatively examines the arbitrability of landlord–tenant disputes arising out of lease and sub-lease deeds governed by the Transfer of Property Act, 1882. The Supreme Court was called upon to determine whether disputes concerning determination of lease, forfeiture, and eviction under the TP Act could be resolved through arbitration when an arbitration clause exists between the parties. The Court undertook a detailed doctrinal and statutory analysis of Sections 111, 114, and 114A of the TP Act and clarified that these provisions confer equitable and discretionary relief, not statutory protection akin to Rent Control legislations.

The judgment resolves the doctrinal conflict created by Himangni Enterprises v. Kamaljeet Singh Ahluwalia, which had expanded the category of non-arbitrable disputes to include TP Act governed tenancies. Relying on the reasoning in Vidya Drolia v. Durga Trading Corporation, the Court conclusively held that landlord–tenant disputes under the TP Act are arbitrable, provided the tenancy is not protected by a special rent statute. The Court further clarified that arbitrators are competent to consider equitable reliefs available under Sections 114 and 114A while adjudicating eviction claims.

The decision reinforces party autonomy, strengthens arbitration jurisprudence, and draws a clear distinction between statutory tenancies and contractual leases. It also confirms the Supreme Court’s jurisdiction to appoint an arbitrator in cases qualifying as international commercial arbitration under Section 2(1)(f) of the Arbitration and Conciliation Act, 1996.

Keywords:
Arbitrability; Lease disputes; Transfer of Property Act; Eviction; Arbitration clause; International Commercial Arbitration

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute emerged in the evolving legal landscape concerning the arbitrability of landlord–tenant disputes. Historically, Indian jurisprudence treated tenancy matters with caution, particularly where eviction and possession were concerned. Earlier rulings such as Natraj Studios Ltd. v. Navrang Studios and Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. had recognized that tenancies governed by special rent control statutes are non-arbitrable due to statutory protections and exclusive jurisdiction of designated courts.

However, ambiguity arose when Himangni Enterprises appeared to extend this exclusion even to tenancies governed by the Transfer of Property Act. This expansion created uncertainty, undermining contractual arbitration clauses in ordinary lease deeds. The reference to a larger bench in Vidya Drolia initiated doctrinal correction by reaffirming that TP Act tenancies lack statutory eviction protection and remain contractual in nature.

The present case provided an opportunity for the Supreme Court to operationalize this clarification. The Court was not merely appointing an arbitrator under Section 11 but was required to determine whether such appointment was legally permissible at all. The involvement of a foreign national lessor further raised issues of international commercial arbitration jurisdiction.

Against this background, the judgment serves as a reaffirmation of arbitration as a legitimate forum for resolving commercial lease disputes while preserving the statutory sanctity of rent control legislations.

D) FACTS OF THE CASE

The petitioner acquired long-term leasehold rights over an industrial property situated at Sector-63, NOIDA through a transfer memorandum dated 13.04.2011. The property was originally leased by the New Okhla Industrial Development Authority under a lease deed dated 26.03.2003.

Subsequently, the petitioner executed a Sub-Lease Deed dated 14.11.2018 in favour of the respondent company. The sub-lease deed expressly incorporated Clause 12, which provided for resolution of disputes through arbitration. The clause envisaged mutual appointment of a sole arbitrator, failing which appointment was to be made by the High Court of Delhi.

Disputes arose concerning alleged defaults by the respondent, including breach of lease conditions. The petitioner issued a notice dated 11.12.2019 invoking the arbitration clause and nominated Justice (Retd.) Mukul Mudgal as sole arbitrator. The respondent neither replied nor raised objections.

The petitioner, a Kenyan national and habitual resident of Nairobi, approached the Supreme Court under Section 11(5) seeking appointment of an arbitrator. The respondent chose not to appear despite service of notice.

The Court, while examining the petition, identified that the nationality of the petitioner rendered the dispute an international commercial arbitration, thereby vesting jurisdiction in the Supreme Court under Section 11(6). The central controversy, however, revolved around whether disputes arising from lease determination under the TP Act were arbitrable at all.

E) LEGAL ISSUES RAISED

i. Whether disputes relating to determination and forfeiture of lease under the Transfer of Property Act, 1882 are arbitrable?
ii. Whether the existence of Sections 114 and 114A of the TP Act excludes arbitral jurisdiction?
iii. Whether tenancy disputes not governed by rent control statutes fall within the category of non-arbitrable disputes?
iv. Whether the Supreme Court had jurisdiction to appoint the arbitrator in the present case?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for the petitioner submitted that the tenancy was purely contractual and governed exclusively by the Transfer of Property Act. It was argued that no special rent legislation applied to the premises, and therefore no statutory bar to arbitration existed. Reliance was placed on Booz Allen to argue that only tenancies under special statutes are non-arbitrable.

It was further contended that Sections 114 and 114A merely confer discretionary equitable relief and do not oust arbitral jurisdiction. The petitioner emphasized party autonomy and the binding nature of the arbitration clause.

On jurisdiction, it was submitted that the petitioner’s foreign nationality squarely attracted Section 2(1)(f), making the arbitration international and conferring jurisdiction on the Supreme Court.

G) RESPONDENT’S ARGUMENTS

No submissions were advanced as the respondent remained absent and unrepresented despite due service of notice.

H) RELATED LEGAL PROVISIONS

i. Section 11(5) & 11(6), Arbitration and Conciliation Act, 1996
ii. Section 2(1)(f), Arbitration and Conciliation Act, 1996
iii. Sections 111, 114, 114A, Transfer of Property Act, 1882

I) JUDGEMENT

The Court first affirmed its jurisdiction under Section 11(6) by holding that the petitioner’s foreign nationality rendered the arbitration an international commercial arbitration. The contractual stipulation vesting appointment power in the High Court was overridden by statutory mandate.

On arbitrability, the Court undertook a detailed statutory analysis of Sections 111, 114, and 114A of the TP Act. It held that these provisions merely regulate modes of lease determination and confer discretionary equitable relief against forfeiture. They do not create statutory tenancy rights or bar alternate dispute resolution.

The Court distinguished tenancies under special rent statutes, which involve public policy considerations like bona fide requirement and comparative hardship. Such disputes were held to be non-arbitrable. However, TP Act tenancies were held to be arbitrable.

The Court expressly approved the reasoning in Vidya Drolia and declared that the contrary view in Himangni Enterprises stood overruled. The arbitrator, it held, is competent to consider reliefs analogous to those under Sections 114 and 114A.

Accordingly, the petition was allowed and Justice (Retd.) Mukul Mudgal was appointed as sole arbitrator.

a) RATIO DECIDENDI

Disputes arising from lease and tenancy agreements governed solely by the Transfer of Property Act, 1882 are arbitrable when parties have agreed to arbitration, as the Act does not confer statutory protection against eviction akin to rent control statutes.

b) OBITER DICTA

The Court observed that equitable reliefs under Sections 114 and 114A are discretionary and context-specific, and their existence does not imply exclusive court jurisdiction. Arbitrators may exercise similar discretion while passing awards.

c) GUIDELINES

i. Tenancies governed by special rent statutes are non-arbitrable.
ii. TP Act governed leases remain arbitrable.
iii. Arbitrators may consider equitable reliefs under Sections 114 and 114A.
iv. Nationality of parties determines jurisdiction under Section 11.

J) REFERENCES

a) Important Cases Referred

i. Vidya Drolia v. Durga Trading Corporation, 2019 (3) SCR 465
ii. Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., [2011] 7 SCR 310
iii. Himangni Enterprises v. Kamaljeet Singh Ahluwalia, [2017] 10 SCR 139
iv. Natraj Studios Ltd. v. Navrang Studios, [1981] 2 SCR 466
v. Namdeo Lokman Lodhi v. Narmadabai, [1953] SCR 1009

b) Important Statutes Referred

i. Arbitration and Conciliation Act, 1996
ii. Transfer of Property Act, 1882