Himangni Enterprises v. Kamaljeet Singh Ahluwalia

Supreme Court of India · 12 October 2017 · 2 judges

Overruled in whole or in part by Vidya Drolia v. Durga Trading Corporation (2020), which says: “we overrule the ratio laid down in Himangni Enterprises and hold that landlord-tenant disputes are arbitrable”

A landlord's suit for eviction and arrears of rent was held triable by the Civil Court, not by an arbitrator, even though the premises were exempt from the Delhi rent law; the tenant's Section 8 application failed.

Facts

The respondent sued the appellant tenant in the Court of the Additional District Judge, Saket, for eviction from a shop in a commercial complex at Jasola, New Delhi, arrears of rent and a permanent injunction. The shop had been let under a lease deed dated 31.08.2010 for three years; the lease expired by efflux of time and the tenancy continued month to month. The tenant applied under Section 8 of the Arbitration and Conciliation Act, 1996, relying on the arbitration clause (9.8) in the lease deed and contending that the suit was barred. The landlord replied that the lease had expired and that the disputes were incapable of being referred to arbitration. The Trial Court dismissed the application and the Delhi High Court dismissed the tenant's appeal. The tenant appealed to the Supreme Court.

Questions before the Court

Were the courts below right in rejecting the tenant's application under Section 8 of the Arbitration and Conciliation Act, 1996 in the landlord's suit for eviction and arrears of rent?
Does the exemption of the premises from the Delhi Rent Act under Section 3 make the eviction and rent dispute arbitrable?

What the Court held

The question was not res integra and stood answered by Natraj Studios (P) Ltd. v. Navrang Studios and Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. against the tenant. Applying them, the courts below rightly dismissed the Section 8 application and the suit was maintainable despite the arbitration clause.
The Delhi Rent Act is a special Act on rent and eviction. That Section 3 excludes certain premises from it does not mean the Arbitration Act applies to them ipso facto. Such premises are governed by the Transfer of Property Act and the suit is triable by the Civil Court, not by an arbitrator.
High Court decisions cited by the tenant could not be relied on; any High Court decision taking a view contrary to these two decisions of the Supreme Court stands overruled.
The appeal was dismissed and the Civil Court was directed to try the suit on merits expeditiously.

Why it matters

The Court applied the eviction and tenancy category of non-arbitrable disputes listed in Booz Allen to premises outside the Delhi rent law, holding that a landlord's eviction and rent suit for such premises must be tried by the Civil Court under the Transfer of Property Act regime despite an arbitration clause in the lease. It also declared contrary High Court decisions overruled.

In the Court's words

Copied from the official judgment; each passage links to its page.

“Keeping in view the law laid down by this Court in aforementioned two decisions and applying the same to the facts of this case, we have no hesitation to hold that both the Courts below were right in dismissing the appellant's application filed under Section 8 of the Act and thereby were justified in holding that the civil suit filed by the respondent was maintainable for grant of reliefs claimed in the plaint despite parties agreeing to get the disputes arising therefrom to be decided by the arbitrator.”

Page 11 of the judgment

“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 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 arbitrator.”

Page 12 of the judgment

Provisions interpreted

Section 8, Arbitration and Conciliation Act, 1996
Section 3(c), Delhi Rent Act (cited in the judgment as the Delhi Rent Act, 1955)

Related judgments

Case and bench

Parties: Himangni Enterprises v. Kamaljeet Singh Ahluwalia
Case: Civil Appeal No. 16850 of 2017 (arising out of S.L.P. (C) No. 27722 of 2017)
Decided: 12 October 2017
Bench: R.K. Agrawal, Abhay Manohar Sapre
Opinions: Unanimous. Judgment of the Court delivered by Abhay Manohar Sapre, J.