REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2402 OF 2019 (Arising out of Special Leave Petition (C) No. 22211/2018)

VIDYA DROLIA & ORS.   … APPELLANT(S)

VERSUS

DURGA TRADING CORPORATION   … RESPONDENT(S)

J U D G M E N T

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 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.

1

(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/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  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 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.

(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

2

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 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

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.   

(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.

(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.

3

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 arbitrable, yet it being clear that so far 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

4

which may relate to other grounds. Therefore, according to him, the

entirety of 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  waiver  be  inferred  so  as  to  confer

jurisdiction.  He  relied  strongly  upon  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

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 case in which the appellants have participated in the arbitral

proceedings.  Arbitral  proceedings  are  well  on  their  way,  and  we

5

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 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)

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:

“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:-

6

“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  arbitration,  and  leave  the existence  of  the  arbitration  agreement  to  be  finally determined  by  the  arbitral  tribunal.  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)

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:

“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,—

(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 clause.”

7

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 weeding-out arbitration clauses in agreements which

indicate that the 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  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  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.

9. It is important first to set out certain provisions of the Transfer

of Property Act, 1882 and the Arbitration & Conciliation Act, 1996 in

8

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 under the lease to the lessor, by mutual agreement between them;

(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 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;

9

(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:-

“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 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.”

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 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 remedy the breach;

10

and the lessee fails, within a reasonable time from the date of 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 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 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.   

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 costs of the suit. Jurisdiction to relieve against forfeiture for non-payment of rent may be exercised by the Court if

11

the tenant in a suit in ejectment at the hearing of the suit  pays  the  arrears  of  rent  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:

“… 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  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

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 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

12

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.

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 has laid down in great detail what is the meaning of the

13

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  implication.  Adjudication  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 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:

“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 sepa- ration, restitution of conjugal rights, child custody; (iii) guardianship matters;  (iv)  insolvency and winding-up matters;  (v)  testamentary  matters  (grant  of  probate, letters  of  administration  and  succession  certificate); and (vi) eviction or tenancy matters governed by spe- cial statutes where the tenant enjoys statutory protec- tion against eviction and only the specified courts are conferred jurisdiction  to  grant  eviction or  decide  the disputes.”

14

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 pro-

tected against specific individuals, is. It was also stated that disputes

relating to subordinate rights in personam arising from rights in rem

have always been considered to be arbitrable.

16. We now come to the sheet anchor of the appellants’ case be-

fore us, namely, the decision in Himangni Enterprises (supra).  This

judgment concerned itself with a landlord-tenant dispute in which the

Delhi Rent Act, 1995 was admittedly inapplicable.  However, in para-

graph 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 Stu- dios (P) Ltd.  vs.  Navrang Studios, (1981) 1 SCC 523 and Booz Allen & Hamilton Inc. vs. SBI Home Finance Ltd. against the appellant and in favour of the respon- dent.”

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

15

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 legislative  mandate  which  requires  certain  kind  of disputes to be 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:

“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 of Small Causes has and the Arbitrator has not the jurisdiction to 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

extracted paragraph 36. Sub-paragraph (vi) of this paragraph makes

16

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.

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 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:

“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.

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

17

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 in this paragraph. It is clear that the Transfer of Property

Act is silent on arbitrability, and does not negate arbitrability.

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 [see paragraph 34].

18

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

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 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 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

19

these reasons, we are of the view that this reason also does not

hold good.

25. In Vimal Kishor Shah and Others v. Jayesh Dinesh Shah

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:

“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 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

20

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 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,  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  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  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 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 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

21

the trust deed and further provides a specific remedy 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 disputes is barred by implication.”

 Dhulabhai (supra) refers to and relies upon the three famous cate-

gories that are contained in Wolverhampton New Waterworks Co.

v. Hawkesford, 141 ER 486. Willes, J. had set out these three cate-

gories 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 spe- cial  and  peculiar  form  of  remedy  different  from  the remedy which existed at  common law: there,  unless the statute contains words which expressly or by nec- essary 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 in mind the fact that the statute, considered as a

22

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 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 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 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

23

property or any part thereof.  Here again, such permission can only

be given by an 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 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.

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

a Consumer Protection Act  situation,  been recently followed by a

Division Bench of this Court in  Emaar  MGF Land Limited v. Aftab

24

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.   

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.  

   ………........................... J.

                                                            (R.F. NARIMAN)

………........................... J.                                   (VINEET SARAN)

New Delhi; February 28, 2019.  

25