Case Note & Summary
The petitioner, Suresh Shah, a Kenyan national and habitual resident of Nairobi, Kenya, filed a petition under Section 11(5) of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator to resolve disputes arising from a Sub-Lease deed dated 14.11.2018 with the respondent, Hipad Technology India Private Limited. The property, located in NOIDA, was originally leased by NOIDA in 2003 and later transferred to the petitioner in 2011. The petitioner sub-leased the property to the respondent under the Sub-Lease deed, which contained an arbitration clause (Clause 12) providing for dispute resolution through arbitration, with the venue in New Delhi and the arbitrator to be appointed by the Delhi High Court in case of disagreement. Disputes arose, and the petitioner issued a notice on 11.12.2019 invoking arbitration and proposing Justice (Retired) Mukul Mudgal as sole arbitrator. The respondent did not respond, leading to the present petition. The Supreme Court examined two issues: first, whether the dispute is arbitrable given that it involves a lease governed by the Transfer of Property Act, 1882 (TP Act); and second, which court has jurisdiction to appoint the arbitrator. On arbitrability, the Court relied on Booz Allen and Hamilton Inc vs. SBI Home Finance Limited (2011) 5 SCC 532, which held that disputes relating to eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection are non-arbitrable, but disputes under the TP Act are arbitrable. The Court distinguished Himangni Enterprises vs. Kamaljeet Singh Ahluwalia (2017) 10 SCC 706, which had suggested otherwise, and followed Vidya Drolia & Ors. vs. Durga Trading Corporation (2019) SCC online SC 358, which clarified that lease disputes under the TP Act are arbitrable. On jurisdiction, since the petitioner is a foreign national, the matter qualifies as international commercial arbitration under Section 2(f) of the Act, and therefore the Supreme Court, not the High Court, has jurisdiction to appoint the arbitrator under Section 11(6). The Court appointed Justice (Retired) Mukul Mudgal as the sole arbitrator to adjudicate the disputes.
Headnote
A) Arbitration Law - International Commercial Arbitration - Section 2(f) Arbitration and Conciliation Act, 1996 - Appointment of Arbitrator - Petitioner, a Kenyan national and habitual resident of Kenya, entered into a sub-lease deed with respondent - Disputes arose - Arbitration clause provided for appointment by Delhi High Court - Held that since petitioner is a foreign national, the matter qualifies as international commercial arbitration under Section 2(f) and the Supreme Court has jurisdiction to appoint arbitrator under Section 11(6) (Paras 7-8). B) Arbitration Law - Arbitrability of Lease Disputes - Transfer of Property Act, 1882 - Sections 111, 114, 114A - Sub-lease deed governed by TP Act, not by any special rent control statute - Respondent tenant does not enjoy statutory protection against eviction - Held that disputes relating to lease/tenancy under TP Act are arbitrable, following Booz Allen and Vidya Drolia, and the contrary observations in Himangni Enterprises are not good law (Paras 8-12). C) Arbitration Law - Appointment of Arbitrator - Section 11(5) and 11(6) Arbitration and Conciliation Act, 1996 - Petitioner invoked arbitration clause and proposed sole arbitrator - Respondent did not respond - Held that since respondent failed to concur, the Supreme Court appoints Justice (Retired) Mukul Mudgal as sole arbitrator to adjudicate disputes arising from sub-lease deed dated 14.11.2018 (Paras 13-14).
Issue of Consideration
Whether disputes arising from a sub-lease deed governed by the Transfer of Property Act, 1882 are arbitrable, and whether the Supreme Court or the High Court has jurisdiction to appoint an arbitrator in an international commercial arbitration.
Final Decision
The Supreme Court appointed Justice (Retired) Mukul Mudgal as the Sole Arbitrator to adjudicate the disputes between the parties arising out of the Sub-Lease deed dated 14.11.2018. The arbitrator shall be entitled to fee as per the schedule under the Arbitration and Conciliation Act, 1996, and the proceedings shall be conducted in accordance with the Act.
Law Points
- International Commercial Arbitration
- Arbitrability of lease disputes
- Section 2(f) Arbitration and Conciliation Act
- 1996
- Section 11(5) and 11(6) Arbitration and Conciliation Act
- Transfer of Property Act
- 1882
- Booz Allen and Hamilton Inc vs. SBI Home Finance Limited
- Vidya Drolia & Ors. vs. Durga Trading Corporation
- Himangni Enterprises vs. Kamaljeet Singh Ahluwalia
