J. Sagar Associates successfully represented Gujarat Informatics Limited (“GIL”) in defending proceedings initiated by Creative Infocity Limited before the Supreme Court of India. A three judge Bench of the Supreme Court of India gave a landmark judgement on the arbitrability of tenancy disputes governed by the Transfer of Property Act, 1882 (“TP Act”).
The Bench laid down four parameters for determining when a dispute is arbitrable: (i) when the cause of action and subject matter of the dispute relates to actions in rem, and do not involve subordinate rights in personam that arise from rights in rem; (ii) when cause of action and subject matter of the dispute affects third party rights; has effect towards all; require centralized adjudication, and mutual adjudication would not be appropriate and enforceable; (iii) when cause of action and subject matter of the dispute relates to inalienable sovereign and public interest functions of the State and hence adjudication by a private tribunal would not be enforceable; and (iv) when the subject-matter of the dispute is expressly or by necessary implication non-arbitrable as per mandatory statutory provisions.
The Bench also held that the scope of judicial scrutiny under Sections 8 and 11 of the Arbitration Act is extremely limited and only involves a prima facie examination of the existence of a valid arbitration agreement.
The Bench overruled the judgement in Himangni Enterprises v. Kamaljeet Singh Alhuwalia and held that disputes pertaining to leasehold rights are arbitrable since the TP Act does not forbid or foreclose arbitration. The only exception is in case of tenancy disputes covered under and governed by a rent control legislation whereby a specific court or forum has been given exclusive jurisdiction
The matter was handled by the JSA Team comprising Partners- Bijal H. Chhatrapati and Dheeraj Nair, Senior Associate- Anjali Anchayil and Associates – Siddharth Sinha and Avni Sharma.