Case BriefsHigh Courts

Delhi High Court: Jayant Nath, J., while addressing a matter noted the essential ingredients that a landlord is required to show for the purpose of getting an eviction order for bonafide needs.

Respondents counsel in the present application vehemently relied upon various orders passed by this Court to hold that once possession was regained by the respondent/landlord the revision petition was rendered infructuous.

Counsel for the Petitioner/Tenant did not deny that in the Execution Proceedings the respondent/landlord had received physical possession of the property. He denied that the instant petition was infructuous.

Referring to the decisions of this Court, Court stated that “it is manifest that present petition is infructuous”

 Background

In the interest of justice, High Court considered the impugned order on merits. Further, dealing with the submissions of the petitioner whereby it had been strongly urged that the impugned order passed by the ARC was liable to be set aside by this court and possession restored.

Present petition was filed under Section 25-B of the Delhi Rent Control Act, 1958 seeking to impugn the eviction order pertaining to the property.

Respondent/Landlord had filed a petition for eviction under Section 14(1)(e) read with Section 25-B of the Delhi Rent Control Act, 1958 on ground of bona fide requirements.

Counsel for the petitioner reiterated that the five shops have been mentioned in the application for leave to defend which are available to the respondent/landlord. He has also further stated that he has denied the need for additional accommodation in his application for leave to defend. Hence, it is pleaded that this denial itself would be a ground for grant of leave to defend as it raises a triable issue.

Analysis, Law and Decision

Looking at the aspect with regard to the scope of present petition, Bench referred to the Supreme Court decision in Shiv Sarup Gupta v. Dr Mahesh Chand Gupta, (1999) 6 SCC 222.

Bench tested the order of the ARC to see whether it is according to law, and whether the conclusions are not wholly unreasonable.

Court noted that the essential ingredients which a landlord is required to show for the purpose of getting an eviction order for bona fide needs are:

  • the petitioner is the owner/landlady of the suit premises
  • the suit premises are required bona fide by the landlord for himself/herself and any of his/her family members dependent upon him/her.
  • the landlord/landlady or such other family members have no other reasonable suitable accommodation.

High Court opined that there was no dispute regarding the relationship of tenant and landlord between the parties.

Petitioner pleaded that there were 5 other properties available to the respondent/landlord which were sufficient for their alleged business. To this, the respondent submitted that the accommodation available with them fell short of carrying out their business of sweets and properties mentioned by petitioner were already being used.

Bench also referred to the Supreme Court decision in G.C. Kapoor v. Nan Kumar Bhasin, (2002) 1 SCC 610,

“9. It is settled position of law that bonafide requirement means that requirement must be honest and not tainted with any oblique motive and is not a mere desire or wish. In Dattatraya Laxman Kamble v. Abdul Rasul Moulali Kotkunde [1999] 2 SCR 912, this Court while considering the bonafide need of the landlord was of the view that when a landlord says that he needs the building for his own occupation, he has to prove it but there is no warrant for ‘presuming that his need is not bonafide’. It was also held that while deciding this question. Court would look into the broad aspects and if the Courts feels any doubt about bonafide requirement, it is for the landlord to clear such doubt.”

In the Supreme Court decision of Prativa Devi v. T.V. Krishnan, (1996) 5 SCC 353, it was held that the landlord is the best judge of his requirement and Courts have no concern to dictate to the landlord as to how and in what manner he should live. Bona fide personal need was a question of fact and should not be normally interfered with.

Further, impugned order rightly held that other than making bald averments without filing any documents, the petitioner/tenant has failed to plead any fact which would throw doubt on the bona fide requirement of the respondents/landlord.

Therefore, Court held that the respondents/landlord’s requirement was a bonafide requirement and is an honest one and not tainted with any oblique motive and is not a mere wish or desire.

Hence, petitioner failed to make out any triable issue and the petition was dismissed. [Bhawani Shankar v. Nand Lal, 2021 SCC OnLine Del 4284, decided on 7-09-2021]


Advocates before the Court:

For the petitioner: J.C. Mahindroo, Megha Verma Mahindroo, Shubham Agarwal and Cherry Singh, Advs.

For the Respondents: Jai Sahai Endlaw, Ajay Kumar Gupta, Subhoday Banerjee and Surbhi Gupta, Advocates

Case BriefsForeign Courts

Supreme Court of The United States: While deciding upon the instant emergency application brought in by the Alabama Association of Realtors challenging the nationwide moratorium on evictions of any tenants during the Covid-19 pandemic; the Court with a ratio of 6:3, decided to end the federal moratorium on residential evictions citing that the Centers for Disease Control and Prevention (hereinafter CDC) clearly exceeded its authority under the Coronavirus Aid, Re­lief, and Economic Security Act, 2020 by taking the matters into its own hands and subsequent extension of the March 2020 moratorium through July 2021.

Background: In March 2020, Congress passed the Coronavirus Aid, Re­lief, and Economic Security Act to ease the burdens caused by the rapidly increasing COVID–19 pandemic. Among other reliefs, the Act im­posed a 120-day eviction moratorium for properties that participated in federal assistance programs or were subject to federally backed loans. When the eviction moratorium expired in July, Congress did not renew it. However, the CDC upon concluding that further action was needed “did what the Congress did not” and renewed the moratorium, covering all residential properties nationwide and imposing criminal penalties on violators.

The CDC’s moratorium was originally slated to expire on December 31, 2020, but Congress extended it for one month as part of the second Covid–19 relief Act. As the new deadline approached, the CDC again took matters into its own hands and extended its moratorium through March, then again through June, and ultimately through July 2021.

Contentions: The CDC contended that S. 361(a) of the Public Health Service Act allows it to ‘make and enforce such regulations (as in his judgment) which are necessary to prevent the introduction, transmission, or spread of communicable diseases from foreign countries into the States or possessions, or from one State or possession into any other State or possession’. Thus the provision gives the CDC broad authority to take whatever measures it deems necessary to control the spread of COVID–19, in­cluding issuing the moratorium.

The Realtor associations and rental property managers in Al­abama and Georgia meanwhile argued that the moratorium has put the landlords across the country at risk of irreparable harm by depriving them of rent payments with no guarantee of eventual recov­ery. Despite the CDC’s determination that landlords should bear a significant financial cost of the pandemic, many landlords have modest means, and preventing them from evicting tenants who breach their leases intrudes on one of the most fundamental elements of property owner­ship—the right to exclude. It was also contended that the CDC has exceeded it statutory authority in renewing and extending the eviction moratorium.

Observations: The Majority comprising of John Roberts, C.J., Amy Coney Barrett, Brett Kavanaugh (concurring), Samuel Alito, Neil Gorsuch and Clarence Thomas, JJ., noted that it is indisputable that the public has a strong interest in combating the spread of the COVID–19 Delta variant, but “our system does not permit agencies to act unlawfully even in pursuit of desirable ends”. The Judges observed that the moratorium’s constant extension meant that the equities have begun to favour the landlords and their contentions became stronger because vaccine and rental-assistance distribution had improved since the stay was entered, while the harm to landlords had continued to increase. Perusing the aforementioned arguments of the CDC, the Court noted that the downstream connection between eviction and the interstate spread of disease is noticeably different from the direct tar­geting of disease that characterizes the measures identified in the statute. “Reading both sentences together, rather than the first in isolation, it is a stretch to maintain that S. 361(a) gives the CDC the authority to impose this eviction moratorium”.

Coming down heavily upon the CDC and the Government, the Court also observed that the issues at stake are not merely financial. The mor­atorium intrudes into an area that is the particular domain of state law: the landlord-tenant relationship- “This claim of expansive authority under S. 361(a) is un­precedented. Since that provision’s enactment in 1944, no regulation premised on it has even begun to approach the size or scope of the eviction moratorium. And it is further amplified by the CDC’s decision to impose criminal penal­ties of up to a $250,000 fine and one year in jail on those who violate the moratorium. Section 361(a) is a wafer-thin reed on which to rest such sweeping power”.

The Majority concluded by holding that even if the Government believed that its action was necessary to avert a national catastrophe, the same could not over­come a lack of Congressional authorization. It is up to Con­gress, not the CDC, to decide whether the public interest merits further action here. “If a federally imposed eviction moratorium is to continue, Congress must specifically authorize it”.

Dissenting Opinion: Stephen Breyer, Sonia Sotomayor and Elena Kagan, JJ., disagreed with the observations of the majority and observed that the Court should not set aside the CDC’s evic­tion moratorium in this summary proceeding as the criteria for granting the emergency application have not been met in the instant matter. It was further observed that, “Applicants raise contested legal questions about an im­portant federal statute on which the lower courts are split and on which this Court has never actually spoken. These questions call for considered decision making, informed by full briefing and argument”.

[Alabama Association for Realtors v. Dept. of Health and Human Services, No. 21A23, decided on 26-08-2021]


Sucheta Sarkar, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: The Division Bench comprising of Sanjay Kishan Kaul and R. Subhash Reddy, JJ., addressed the instant petition regarding landlord-tenant dispute, wherein the petitioner had challenged the judgment of Civil Judge by which the Court had affirmed the execution proceedings for evicting the petitioner. The Bench remarked,

This is a classical case of how civil proceedings can be prolonged ad infinitum, causing grave injustice to one of the parties.”

The facts of the case relate back to the case of Debashish Sinha v. Sreejib Sinha, 2019 SCC OnLine Cal 7890. One Rabindra Nath Sinha, the original tenant was inducted as a lessee by the respondent under an agreement for 21 years in 1967. After expiry of the said period the respondent filed a suit for eviction against the original tenant which was decreed in favour of the respondent by the decree dated 17-08-2005. The original tenant challenged the judgment and decree passed by the Trial Court successively up to the Supreme Court. However, the appeals were dismissed on contest, affirming the decree of eviction.

However, after conclusion of initial legal battle, the respondent put the decree in execution in the year 2009. It was at that stage that the present petitioner, Debashish Sinha entered appearance claiming himself to be a nephew of the original tenant and filed an application under Order XXI Rule 97, 99 and 100 read with Sections 47 and 151 of the CPC contending, inter alia, that he had been running a business in a decreetal shop room under the name and style “The Wardrope” since 1977 with the original tenant. It was also pleaded that the agreement of partnership in respect of the said business was executed in the year 1980. On the basis of said partnership agreement the petitioner claimed independent title over the decreetal property as that of a tenant.

The petitioner contended that the decree passed against the original tenant was not binding upon the petitioner and it could not be executed against him. The Executing Court by an order dated 20-09-2011 dismissed the said objection. The petitioner preferred an appeal against the said judgment before Civil Judge (Senior Division), which was again dismissed and the judgment of the Execution Court was affirmed.

The Supreme Court observed, there being no privity of contract between the decree holder and the petitioner with regard to tenancy in respect of decreetal shop room, the Courts below rightly dismissed the application filed by the petitioner under Order XXI Rule 97, 99, 100 read with Sections 47 and 151 of the CPC. The Bench, while dismissing the appeal, remarked,

“The landlord filed suit for possession which succeeded right till this Court. The execution proceedings filed in the year 2009 has dragged on for 12 years. This application filed by the petitioner itself was an abuse of process of law.”

The Bench opined that merely dismissing the petition would not suffice as some signal must be sent to discourage this nature of litigation. Thus, while dismissing the SLP the Bench imposed the following directions:

1) The execution should be satisfied within a period of 15 days from this order being placed before the Trial Court.

2) Damages should be computed by the Executing Court at the market rates against the petitioner from the date of filing the objection i.e. 26-03-2010 till possession gets transferred.

3) For wastage of judicial time and for dragging on the proceedings, the petitioner should be burdened with costs of Rs. 1 lakh to be paid to the respondent within the period of three months.

[Debashish Sinha v. Sreejib Sinha, SLP No. 4148 of 2020, 08-03-2021]


*Kamini Sharma, Editorial Assistant has put this report together 

Appearance before the Court by:

For Petitioner: Adv. S.K. Bhattacharya, Adv. Anindo Mukherjee and AOR  Sarla Chandra,

For Respondent:  Adv. Pijush K Roy, Adv. Sudipa Roy, Adv. Kakali Roy and AOR Rajan K. Chourasia

Legislation UpdatesStatutes/Bills/Ordinances

Governor of Uttar Pradesh promulgates the Uttar Pradesh Regulation of Urban Premises Tenancy Ordinance, 2021

Purpose of the Ordinance: To establish Rent Authority and Rent Tribunals to regulate renting of premises and to protect the interests of landlords and tenants and to provide speedy adjudication mechanism for resolution of disputes and matter connected therewith or incidental thereto.

[Section 3] Ordinance not to apply to certain premises:

  • Premises owned by the Central or State Government or Union Territory Administration or a Government undertaking or Enterprises or Statutory Body or Cantonment Board.
  • Premises owned by a Company, University or Organisation given on rent to its employees as part of service contract
  • Premises owned by religious or charitable institution as may be specified, by State Government’s notification.
  • Premise owned by Auqaf registered under the Waqf Act, 1995 or by any public trust registered under applicable law.
  • Other building or category of buildings specifically exempted in public interest by notification by the State Government.

 [Section 4] Tenancy Agreement

 No person shall, after the commencement of this Ordinance, let or take on rent any premises except by an agreement in writing, which shall be informed to the Rent Authority by the landlord and tenant jointly.

In case the tenant and landlord fail to jointly inform the execution of the tenancy agreement, the both of them shall separately inform the execution of tenancy agreement to the Rent Authority within a period of 1 month from the date of expiry.

[Section 5] Period of Tenancy

 Every tenancy entered into after the commencement of this Ordinance shall be valid for a period as agreed upon between the landlord and the tenant.

Tenant may request the landlord for renewal or extension of the tenancy, within the period agreed to in tenancy agreement, and if agreeable to the landlord, may enter into a new tenancy agreement with the landlord or mutually agreed terms and conditions.

 If a tenancy for a fixed term ends and has not been renewed or the tenant fails to vacate the premises at the end of such tenancy, then such tenant shall be liable to pay an enhanced rent to the landlord.

[Section 6] Rights and Obligations of successor in case of death

 Terms of agreement shall be binding upon their successors in the event of the death of the landlord or tenant, the successor of the deceased landlord or tenant shall have the same rights and obligations as agreed to in the tenancy agreement for the remaining period of such tenancy.

In the event of the death of tenant, the right of tenancy shall devolve on his successors, namely:

Spouse, son or daughter or where there are both son and daughter, both of them; parents; daughter-in-law, being the widow of his pre-deceased son; widowed or divorced sister

[Section 7] Restriction on sub-letting

 No tenant shall, except by entering into a supplementary agreement to the existing tenancy agreement:

  • Sub-let whole or part of the premises held by him as a tenant
  • Transfer or assign his rights in the tenancy agreement or any part thereof

[Section 10] Rent Authority to determine the revised rent in case of dispute

 In determining the rent to be revised, the rent authority may be guided by the prevailing market rent in the surrounding areas let out on rent.

[Section 11] Security Deposit

 Security deposit to be paid by the tenant in advance shall be such as may be agreed upon between the landlord and the tenant in the tenancy agreement, which shall be:

  • Not exceed two months’ rent, in case of residential premises; and
  • Not exceed 6 months’ rent, in case of non-residential premises.

Security Deposit shall be refunded to the tenant on the date of taking over vacant possession of the premises from the tenant, after making due deduction of any liability of the tenant.

[Section 14] Deposit of rent with Rent Authority

 Where the landlord refuses to accept any rent and other charges payable or refuses to give a receipt, the rent and other charges shall be paid to the landlord by postal money order or any other method, in such manner as may be prescribed, consecutively for two months, and if the landlord refuses to accept the rent and other charges within such period, then the tenant may deposit the same with the Rent Authority.

In case the tenant is unable to decide as to whom the rent is payable during the period of tenancy agreement, the tenant may, in such case, deposit the rent with the rent authority.

[Section 15] Repair and Maintenance of Property

 In case tenant fails or refuses to carry out the repairs, the landlord may carry out the repairs and deduct the amount incurred for such repairs from the security deposit and the amount so deducted shall be paid by the tenant within a period of one month of the issue of notice by the landlord.


To read more, click on the link below: Tenancy Ordinance

Case BriefsHigh Courts

Rajasthan High Court: Mahendar Kumar Goyal, J., dismissed a writ petition which was filed aggrieved by the order of the Rent Tribunal which had dismissed an application filed by the petitioner/non-applicant/tenant under Order 7 Rule 11 CPC.

The respondent-applicant had filed an Original Application under Section 18 of the Rajasthan Rent Control Act, 2001 stating therein that the petitioner was the tenant in his flat under a rent agreement. Alleging default in the payment of rent, his eviction was sought by the respondent. The petitioner-tenant had filed the application under Order 7 Rule 11 CPC which had been dismissed by the Rent Tribunal.

The Counsel for the petitioner, Yogesh Chandra Joshi, contended that the rent agreement does not reveal that the petitioner was tenant in Flat No. 606 but simply read “TWO ROOM SET on 6th FLOOR, OUT OF SOCIETY” in the layout plan of Vaidant Height, Nand Puri-B, Near Mahima Group Apartment, Guru Circle, Pratap Nagar, Sanganer, Jaipur. He further submitted that while dismissing the application, the Rent Tribunal did not appreciate signatures of the first party; second party and witness 2 were obtained later on as the signatures followed mark ‘X’.

The Court while dismissing the writ petition affirmed the order of the Rent Tribunal and explained that Flat No.606 was specifically mentioned in the eviction application under tenancy of the petitioner which, as per the order impugned, was not been disputed even by the petitioner, further the effect of the absence of flat number in the rent agreement was to be examined by the Rent Tribunal, in case any such objection existed in the reply filed by the petitioner and the counsel for petitioner failed to point out any averment or omission in the eviction application which might invite application of the provisions of Order 7 Rule 11 CPC. The Court further stated that the application filed by the petitioner under Order 7 Rule 11 CPC does not reveal any reason for filing it at such belated stage when the case was fixed for the final arguments which indicated malafide intention to delay the disposal of the eviction application. [Anil Joshi v. Beejal Chopra, 2020 SCC OnLine Raj 1256, decided on 24-08-2020]


*Suchita Shukla, Editorial Assistant has put this story together

COVID 19Op EdsOP. ED.

I. Introduction

The spread of dreaded coronavirus has led to serious disruptions across the globe, India being no different. The virus has caused an unprecedented and incalculable damage to the economies worldwide, a situation equated to the Great Depression 1921, and caused deaths of millions of people across the globe. It has led to such a situation that even day to day activity such as access to print media is difficult.

The lack of demand and consequent lesser production has resulted in loss of millions of jobs worldwide apart from causing insurmountable damage to the social and economic conditions of the world. Among all these pertinent issues which are being faced by people, one of them is the effect of COVID-19 on businesses.

Even as the economy has virtually come to a standstill and people are being directed to remain quarantined in their respective homes, several tenants are being evicted by their landlords due to their inability to rental amount.

II. Intersection between landlord — Tenant Disputes due to COVID19 

As most of these tenants, belonged to the lower stature of the society and were primarily migrants working in the unorganised sectors, were left stranded on the streets high and dry and thus resultantly the Government had to step in to provide them basic facilities through shelter home and hunger relief camps. Further, as majority of these tenants were living in the tenanted premises on the bases of oral agreement and with the understanding that rental dues would have to be paid on month to month basis were also deprived of many essential safeguards provided under the law.

Insofar as commercial leases are concerned such as those of shops in shopping complex, office spaces, etc. are concerned, it is bit unclear whether the tenant can take recourse to the force majeure clause, assuming that such a clause is present in the lease deed in the first place, to avoid paying the rental amount till the lockdown persists. There is lack of clarity on this issue due to lack of authoritative judicial precedent and even after the lockdown is lifted, the businesses as such may find it difficult to pay the rent as it will take considerable time for the economy to bounce back to the same level as it was prior to the lockdown, further it is also to natural to expect that there would be significant reduction in consumer spending post the lockdown due to reduced purchasing power of the consumer.

III. Statutory framework and force majeure clause 

In India, the relationship between the landlord and the tenant is governed by various statues viz. the Contract Act, 1872[1] (hereafter, ‘the Contract Act), the Transfer of Property Act, 1881[2] (hereafter, ‘the Property Act), the Delhi Rent Control Act, 1958[3] (hereafter, ‘the Rent Control Act) etc.

Section 56 of the Contract Act stipulates when a contractual obligations may be excused, an extract whereof is reproduced herein below –

S.56. Agreement to do impossible act.— An agreement to do an act impossible in itself is void.

Contract to do an act afterwards becoming impossible or unlawful.— A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.’

However, it may be a bone of contention if one take resource of the aforestated provision in order to wriggle out of its liability to contractual rent amount especially when the relationship between the parties should be governed by the Property Act or the Rent Control Act, as the case may be, as both these two statues are special statues and it is well-settled law the special law prevails over the general law[4]. Further, as the relationship of landlord and tenant are based upon the lease deed/lease agreement which is primarily a contractual agreement and the disputes, including non-payment of rent, if any, shall be governed strictly under the terms and conditions provided thereof.

In addition to the definition of force majeure clause provided under the respective lease deed, to understood its true import, one may refer to their definition in general sense –

Black’s Law Dictionary, 8th Edition, defines force majeure as ‘A contractual provision allocating the risk if performance becomes impossible or impracticable, esp. as a result of an event or effect that the parties could not have anticipated or controlled.’

Similarly, Oxford Dictionary defines force majeure as ‘unexpected circumstances, such as war, that can be used as an excuse when they prevent somebody from doing something that is written in a contract.

It is to be noted that that term ‘force majeure’ is not to be equated as an ‘act of God’ as the former is of wider import than the latter. However, it has to borne in mind that since the former is an exception to the general rule of performance of contract, the same has to be construed narrowly.[5]

However, it is not the first time that the contracting parties have resorted to force majeure clause citing impossibility/frustration of performance, some of these cases wherein it has invoked earlier are –

In Bikram Chatterji  v. Union of India[6], it has been opined by the Supreme  Court that: (SCC Online para 129)

‘129. A blatant violation of the provisions of RERA has been done by the Amrapali Group. Since RERA contemplates timely completion of projects once registration has been granted Under Section 5 and extension of registration. Under Section 6, it is only in the event of force majeure in case there is no default on the part of the promoter, registration can be extended in aggregate for the period not exceeding one year. Force majeure shall mean a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature…..’                                                                                           

(emphasis supplied)

Similarly, in another case Dhanrajamal Gobindram v. Shamji Kalidas and Co.[7], the Supreme Court has opined as under –

‘19. McCardie, J. in Lebeaupin v. Crispin[8], has given an account of what is meant by “force majeure” with reference to its history. The expression “force majeure” is not a mere French version of the Latin expression “vis major”. It is undoubtedly a term of wider import. Difficulties have arisen in the past as to what could legitimately be included in “force majeure”. Judges have agreed that strikes, breakdown of machinery, which, though normally not included in “vis major” are included in “force majeure”. An analysis of rulings on the subject into which it is not necessary in this case to go, shows that where reference is made to “force majeure”, the intention is to save the performing party from the consequences of anything over which he has no control. This is the widest meaning that can be given to “force majeure”, and even if this be the meaning, it is obvious that the condition about “force majeure” in the agreement was not vague. The use of the word “usual” makes all the difference, and the meaning of the condition may be made certain by evidence about a force majeure clause, which was in contemplation of parties…’

In a very recent judgment rendered by the Bombay High Court in ‘Standard Retail Pvt. Ltd. v. G.S. Global Corp.[9]’, the  High Court has refused to accept the contention that COVID-19 pandemic and the lockdown declared by the Central/State Government would either tantamount to frustration, impossibility and impracticability of the contract or the same can be termed as a ‘force majeure clause’, and thus has declined to restrain the respondent therein from encashing the Letters of Credit opining inter alia that production of steel comes within the ambit of essential commodity and there was no restriction of movement of the same, an extract of the judgment is reproduced herein below –

2. It is the case of the petitioners that in view of the COVID-19 pandemic and the lockdown declared by the Central/State Government, its contracts with Respondent1 were terminated as unenforceable on account of frustration, impossibility and impracticability. The petitioners have relied upon Section 56 of the Contract Act, 1872.

** *

4. Having heard learned counsel for the petitioners and learned Senior Counsel forRespondent1 (in the first 3 petitions), learned counsel forRespondent1 (in the last 2 petitions), the learned counsel forRespondent3, Bank (the first 3 petitions), in my view the petitioners are not entitled to any ad interim reliefs for the reasons stated herein-below:***

e. In any event, the lockdown would be for a limited period and the lockdown cannot come to the rescue of the petitioners so as to resile from its contractual obligations with Respondent 1 of making payments.

f. The judgments relied upon by the learned counsel for the petitioner in Energy Watchdog v. CERC[10]and Satyabrata Ghose v. Mugneeram Bangure & Co.[11] do not assist the case of the petitioners and are distinguishable on facts.”

However, the Delhi High Court in ‘Halliburton Offshore Services Inc. v. Vedanta Limited[12] has opined  in para 20 that ‘The countrywide lockdown, which came into place on 24th March, 2020 was, in my opinion, prima facie in the nature of force majeure’, and thus thereby granted an ad interim stay on invocation and encashment of the bank guarantees.

Pertinently, both the aforestated two cases where instituted under Section 9 petition of the Arbitration and Conciliation Act, 1996[13], seeking the relief of injunction against the respondent.

Although, these aforementioned cases can be distinguished on the basis of the facts and were not pertaining to landlord – tenant dispute but nevertheless do aid in interpreting the term ‘Force Majeure Clause’, as perhaps it has been the first time, since the Spanish Flu in 1919, that a disease has spread to such an unimaginable extent that it was termed as global pandemic by  WHO, which further adds to the ambiguities due to lack of authoritative judicial precedent on the issue in hand i.e. if the spread of COVID-19 amounts to force majeure.

Also, one may argue that even if the lockdown is in continuance, the tenants have continued to enjoy the possession of the tenanted premise and thus have unjustly enriched themselves at the cost of the landlord, thus the tenant ought to have paid the rent and lack of business thereof shall not be a ground for non-payment of rent. In this regard the judgement rendered by the Andhra Pradesh High Court in ‘Gandavalla Munuswamy v. Marugu Muniramiah[14], is quite apt, the relevant extract thereof is reproduced herein below –

9…In my opinion, such an indirect and, what is more ambiguous course of action on the part of a lessee cannot be regarded as sufficient for conveying to the lessor his intention to treat the lease as void under section 108(e). The lessee must directly and categorically express to the lessor his intention to treat the lease as void. Otherwise, it will be legitimate for the lessor to regard the lease as subsisting. There is nothing in Section 108(e) of the Transfer of Property Act which compels a lessee to treat a lease as void. It is optional with him to do so or to refrain from doing so. This aspect of the matter makes it all the more necessary that an unambiguous declaration of the lessee’s intention to treat the lease as void must be communicated to the lessor. The lessor would not otherwise be able to take appropriate steps on the footing that the lease has come to an end and he is therefore at liberty to deal with the property as he chooses. What is even more important is that a mere declaration of intention to treat the lease as void is not sufficient. The lessee must also yield up possession of the property to the lessor as required by the provision of the section 108(q) of the Transfer of Property Act. He cannot continue in possession and yet declare that he has treated the lease as void. That would obviously be an inconsistent and impermissible position to adopt. So long as a lessee has not surrendered to his lessor the possession which he obtained from the latter at the time of the lease, he cannot rid himself of his obligations under the lease. His holding to the possession into which he was inducted by his lessor will estop him from disputing the right of his lessor to evict him and to recover possession from him...”

Recently, the Delhi High Court in Ramanand v. Dr. Girish Soni[15], has held in relation to a landlord–tenant dispute governed by the Rent Control Act, that suspension of payment of rent by tenants owing to  COVID-19 lockdown crisis would not be justified though some relaxation may be given in the schedule of payment, the relevant extract is reproduced herein below:

“3. The urgent application under consideration, raises various issues relating to suspension of payment of rent by tenants owing to the COVID-19 lockdown crisis and the legal questions surrounding the same….

* * *

31. Finally, in the absence of a contract or a contractual stipulation, as in the present case, the tenant may generally seek suspension of rent by invoking the equitable jurisdiction of the Court due to temporary non-use of the premises. The question as to whether the suspension of rent ought to be granted or not would depend upon the facts and circumstances of each case as held by the Supreme Court in Surendra Nath Bibran v. Stephen Court[16]. In the said case, the Court directed payment of proportionate part of the rent as the tenant was not given possession of a part of the property…

The aforesaid case throws some light if one can rely upon the force majeure clause to justify non-payment of rental amount, however, the said case can be distinguished on the basis of the facts, as in that case the Court had already directed eviction of the tenant much prior to the coronavirus pandemic and the said judgment came to be delivered upon an application seeking suspension of rent. Moreover, the Court has itself noted in para 26 that ‘The question as to whether the suspension of rent ought to be granted or not would depend upon the facts and circumstances of each case as held by the Supreme Court in Surendra Nath Bibran v. Stephen Court[17], further the entire contract, if any, executed between the landlord and the tenant has to be kept in mind while deciding if non-payment of rent was justified or not.

IV. Government and Judicial Intervention

In the United Kingdom, the Government has passed the Coronavirus Act, 2020[18] w.e.f. 20th March, 2020, in view of the plight of tenants, with the objectives of protecting the tenant’s interest and thereby suspends the landlord’s right to evict business tenancies in England and Wales till normalcy is restored.

Similarly, even in India, the Ministry of Home Affairs (MHA) vide order dated 29th March, 2020 has inter alia directed the landlords of rented accommodation not to demand rent for a period of one month from workers including migrants.  Further it also has been directed that the  landlord shall not force labourers and students to vacate their premises and any violation thereof shall foist criminal action on them including but not limited to the Disaster Management Act, enforcement whereof is the responsibility of the respective State Government and Union Territory.

In addition to this, several PILs also have been filed before the Supreme Court and High Courts seeking exemption from paying rent during the lockdown, non-deduction of wages during the lockdown period, non-termination of workers/employees by the employers, waiver of Interest on EMIs during COVID lockdown, etc. Needless to say that the higher judiciary, which is already functioning in a limited capacity and conducting its proceedings through video conferencing, has become the hub of PILs. 

V. Conclusion 

In  view of the aforesaid, it is difficult to say with certitude as whether the tenants can avoid paying rental amount for the period of lockdown citing force majeure clause, primarily due to lack of judicial precedent coupled with the factum that the interest of tenants are being protected by executive direction rather than legislative command. All in all, it is quite certain that once the lockdown is lifted and normalcy of courts is restored, several cases are going to be instituted either seeking eviction and/or arrears of rental amount from the tenants.


*Author is advocate by profession, practising and appearing before the High Court of Delhi and other tribunals and courts situated in Delhi. Author can be reached at advananthkini@gmail.com for any suggestions/comments.

[1] Act No. 9 of 1872

[2] Act No. 4 of 1882 

[3] Act No. 59 of 1958 

[4] In Kidar Lall Seal  v. Hari Lall Seal,1952 SCR 179, the  Court had opined that “It is an established principle that where there is a general law and a special law dealing with a particular matter, the special excludes the general.” See also Dhruv Dev Chand v. Harmohinder Singh , (1968) 3 SCR 339

[5] See Energy Watchdog v. CERC, (2017) 14 SCC 80

[6] 2019 SCC OnLine SC 901 

[7] (1961) 3 SCR 1020 

[8] [1920] 2 KB 714

[9] 2020 SCC OnLine Bom 704  

[10] (2017) 14 SCC 80

[11] 1954 SCR 310

[12] 2020 SCC OnLine Del 542 

[13] Act No. 26 of 1996  

[14] 1964 SCC OnLine AP 20 

[15] 2020 SCC OnLine Del 635  

[16] (1966) 3 SCR 458  

[17] Ibid.

[18]Available at http://www.legislation.gov.uk/ukpga/2020/7/contents/enacted , last visited on 1st May, 2020.

[19] Noti. No. 40-3/2020-DM-I(A), dated March 29, 2020

[20] Many PILs have been filed on this subject such as Supreme Court Bar Association’s PIL on Government scheme for payment of office rent during lockdown; PIL to restrain landlords from evicting student and labourers; PIL on welfare schemes for migrant workers, etc.

Case BriefsForeign Courts

Supreme Court of the United Kingdom: A Full Bench of Lord Briggs (President), Lord Carnwath, Lord Hodge, Lord Wilson and Lady Arden, JJ. allowed the appeal by a majority of three to two. Lord Briggs gives the main Judgment with which Lord Carnwath and Lord Hodge agree. Lady Arden and Lord Wilson each give a dissenting Judgment with respect to withholding consent of the landlord.

Hautford Ltd. was a tenant of a whole building in Soho under a 100-year lease. The lease is permitted that the whole property is to be used for residential purposes, however, at the time when it was granted in 1986 only the top two floors were used for residential purposes. Around 2013 the tenant developed other floors of the building into residential flats and then sought planning permission for the change of use. The lease contained a provision that the tenant must obtain the landlord’s consent not to be unreasonably withheld for any application of planning permission. The tenant sought consent from the landlord, Rotrust Nominees Ltd., which was ultimately refused. The landlord’s ground for withholding consent were on the basis that by turning the whole building into residential use, the tenant could have a strong claim under the statute for enfranchisement meaning to compel the landlord to sell the freehold to the tenant.

The High Court and the Court of Appeal both ruled that refusing consent based on the risk of enfranchisement was unreasonable when taking into account that the lease permitted use of the whole building for residential purposes.

Lord Briggs delivered the majority opinion and remarked that the case was not one with complex disputed fact nor did it deal with complicated points of law. Rather it deals with one simple question: did the landlord act was reasonable or unreasonable.

The Court summarised the established principle which is to be followed when assessing whether a party has acted reasonably:

  • The grounds for withholding consent must be to do with the relationship of landlord and tenant in regard to the subject matter of the lease. 
  • Decisions should be based on the specific facts and care must be taken “not to elevate a decision made on the facts of a particular case into a principal of law”. 
  • The conduct only has to be reasonable it does not need to be right or justifiable.

With respect to the first test, Lord Briggs held that the real risk of enfranchisement was central to a landlord and tenant relationship and in relation to the third test; he held that enfranchisement would clearly adversely affect the landlord’s reversionary interest which was an essential type of consideration that the refusal of consent was reasonable.

Lady Arden and Lord Wilson disagreed with the majority holding and upheld the reasoning of the Court of Appeal and the High Court.

The Court granted the Appeal and considers that, on the undisputed facts; the landlord was acting reasonably in protecting the value of its property.[Sequent Nominees Ltd. v. Hautford Ltd, [2019] 3 WLR 981, decided on 30-10-2019]

Case BriefsForeign Courts

Malaysia Court of Appeal: A Full Bench of Hamid Sultan Bin Abu Backer, Hanipah Binti Farikullah, Kamaludin Bin Md Said, JCA overturned a decision of a High Court which ordered a tenant to vacant possession and pay double rental to the new owner of a land due to the non-existence of any legal tenancy agreement between the two.  

The appellant/defendant had been a tenant of the land the respondent/plaintiff bought at an auction on 12-09-2019 and hence, the validity of the tenancy agreement was called into question. The defendant contested that the tenancy agreement was until 14-10-2019 but there was no legal proof to support that claim. Essentially, there was no legal backing behind the defendant’s claims while the argument of the plaintiff was bolstered by Section 28(4) of the Civil Law Act, 1956 which allows for entitlement to double rental in case there is no valid tenancy agreement.

The Court of Appeals, however, found no basis for allowing the double rental. On one hand, the respondent does not want to recognise the appellant as a tenant and on the other, he wants double rental based on a tenancy agreement with the previous owner. Stating the same, the Court set aside the judgment of the High Court and said that the appellant should give up possession on the agreed date along with full but not double rental. The Court issues no order as to costs. [Abad Arena Juara Sdn Bhd v. Rajesh A/L Jaikishan, Appeal Civil No. N-04(NCVC)(W)-659-12 of 2018, decided on 26-07-2019]

Case BriefsHigh Courts

Delhi High Court: Sanjeev Sachdeva, J., allowed a petition that challenged the impugned order whereby petitioner’s application under Order 12 Rule 6 CPC for judgment on admissions was rejected.

The petitioner (landlord) had filed a suit for possession of the suit property which was owned by her. She had prayed for ejectment of the tenant-respondents. The petitioner moved an application under Order 12 Rule 6 CPC which was rejected by the trial court on the sole ground that the tenant did not make any admission as to the ownership of the petitioner and their tenancy in the suit property.

On facts, the High Court held that the trial court erred in reaching the said conclusion, as in the written statement filed by the tenant, there was a clear admission that they were tenants under the petitioner, and the petitioner was the owner of the suit property. Even the receipt of legal notice served by the petitioner for ejecting the tenants was admitted.

On the point of law, the Court noted that in a suit for ejectment, the landlord has to establish: (i) Relationship of landlord and tenant; (ii) Tenancy is not a protected tenancy under the Delhi Rent Control Act, 1958; (iii) There is no registered subsisting lease agreement; (iv) Tenancy has been terminated and the respondent tenant has failed to hand over possession.

The Court was of the opinion that since, there was an unequivocal admission of the ingredients that the landlord has to establish for seeking ejectment of its tenant, the application filed by the petitioner under Order 12 Rule 6 CPC ought to be allowed. Orders were made accordingly. [Geeta v. Mohd. Raza, 2019 SCC OnLine Del 11385, decided on 14-11-2019]

Case BriefsHigh Courts

Jharkhand High Court: Sujit Narayan Prasad, J. dismissed a writ petition under Article 226 of the Constitution of India whereby the petitioner sought for a direction upon the respondents to allot a shop situated at the Municipal Library in the name of the petitioner on the ground that he has been running the aforesaid shop since long. 

The petitioner was not the allottee of the shop, rather, the shop was sublet in his favour by the original allottee. As the period of lease of the original allottee had expired, the petitioner handed over the keys of the shop with an application for consideration for allotment of the shop in his favour, but the shop was allotted to someone else. The petitioner argued that he was not allotted the shop as he was not deemed fit or proper since he was a handicapped person. The petitioner further submitted that he has been running the shop for long, and therefore priority ought to have been given by the respondents in allotment of the said shop. Counsel for the State submitted that the petitioner had no right to claim the allotment of the said shop since the said shop was never allotted in his favour, rather, he was tenant of the original allottee and after expiry of the lease in favour of the original allottee, the petitioner had no right to remain in the said premises. Furthermore, the order of allotment made in favour of the other person was never assailed.

The Court heard both the parties and decided that the shop in question was never allotted in the favour of the petitioner, rather, he was claiming allotment of the said shop by virtue of the fact that he was in occupation by way of the tenant by the original allottee. The allotment of the shop by virtue of the expiry of the lease expired and therefore, the petitioner had no right to remain in possession of the said shop.  The petitioner had simply prayed in this writ petition for allotment of the said shop on the ground that he was handicapped and was running a shop in the said premises since long, but merely because the petitioner is handicapped, no sympathy could be shown by the Court ignoring the process of allotment of the shop. Also, the order of allotment was also never under challenge. The writ petition was dismissed. [Amarendra Kumar v. State of Jharkhand, 2019 SCC OnLine Jhar 1451, decided on 18-10-2019]

Op EdsOP. ED.

Introduction

In a recent order[1] the Supreme Court Bench consisting of Justice Nariman and Justice Saran raised questions on the correctness of the judgment of Himangni Enterprises v. Kamaljeet Singh Ahluwalia[2] holding lease disputes under the Transfer of Property Act, 1882 are non-arbitrable. The judges decided[3] to refer the Himangni Enterprises[4] decision to a larger Bench for review. In this background the authors analysing the Himangni Enterprises[5] decision argues that it is based on an orthodox and conservative approach limiting numerous subject-matters as non-arbitrable. The Court’s reason in Himangni Enterprises[6] that disputes arising under the Transfer of Property Act, 1882 involves a “right in rem” and thus non-arbitrable is seriously debatable. It reflects an unprogressive view on arbitration at a time when the public policy of India calls for increased reliance on alternate dispute resolution (ADR) mechanisms for resolution of civil and commercial disputes.

Brief Facts of the Case

In Himangni Enterprises[7] the respondent (Kamaljeet Singh Ahluwalia) filed an eviction suit in 2015 against the appellant (Himangni Enterprises) before the Additional District Judge, Saket, New Delhi. As per the respondents, the suit premises had been leased out to the appellants for a period of three years through a lease deed in 2010. The lease deed had lapsed due to passage of time and thereafter, no fresh lease deed was executed between the parties. The respondent prayed for the eviction of the appellants and recovery of arrear rent. The appellant responded by filing an application under Section 8 of the Arbitration and Conciliation Act, 1996 for referring the matter to arbitration since the lease deed contained an arbitration clause by virtue of which the disputes arising out of the suit premises had to be resolved through arbitration.[8] The respondents objected to this application on two principle grounds: first, that since the lease deed had expired, the arbitration clause in it cannot be enforced; second, that the subject-matter of the dispute cannot be resolved by arbitration. The District Court upheld the respondent’s objections and dismissed the Section 8 application. On an appeal, the High Court upheld the order of the District Court. Himangni Enterprises[9] appealed the to Supreme Court challenging the impugned order of the High Court.

Decision of the Supreme Court of India

The Supreme Court of India relying upon the judgment of Natraj Studios (P) Ltd. v. Navrang Studios[10] and of Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd.,[11] dismissed the appeal and held that the  courts below were right in dismissing the application of the applicants to refer the dispute for arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.[12]

With reference to Natraj Studios, the facts of which are similar to the facts in the instant case, the Supreme Court dismissed the application filed by the tenant under the Arbitration Act, 1940. Justice O. Chinnappa Reddy in his judgment held that “both by reason of Section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 and on the broader considerations of public policy” only the court and not the arbitrator has jurisdiction to hear the instant dispute.[13]

With reference to Booz Allen, the Supreme Court listed down the nature of disputes considered to be non-arbitrable in India.[14] One of the non-arbitrable matters recognised by the Court was “(vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes.”[15]

The Supreme Court in its judgment in Himangni Enterprises relying upon the law laid down by it in the above two judgments, unhesitantly dismissed the appeal, and held that the civil suit filed by the respondents is maintainable despite the parties having an agreement to arbitrate.[16]

The Court also rejected the appellants’ argument that the above two judgments may not be relied upon as the judgments speak of those matters governed by the special statute. The appellants had contended in support of this argument that in the instant matter, the Delhi Rent Control Act, 1958 not applicable by virtue of its Section 3(1)(c) and hence, the law laid down by the Supreme Court in the above two judgments may not apply. Refusing to accept this contention of the appellants the Court held that the Delhi Rent Control Act, 1955 is a special Act that covers the disputes relating to rent and eviction. Even though the provisions of the Act is not applicable in the present matter by virtue of its Section 3, that does not ipso facto makes the Arbitration and Conciliation Act, 1996 applicable to the present dispute. In case of the inapplicability of the Delhi Rent Control Act, 1955, the matter shall be governed by the Transfer of Property Act, 1882, and shall be determined by the civil court and not by the arbitrator.[17] Accordingly, the Court dismissed the appeal and directed the concerned civil court to proceed with the trial of the suit on the merits of the case.[18]

Analysis of the Judgment and its Contradictions

The correctness of Himangni Enterprises[19] is now been referred to a larger Bench of the Supreme Court, and in the authors’ opinion, the decision is not compatible with the contemporary law of arbitration and adversely affects it. The authors rely on this proposition based on the re-examination of the following three issues viz. (i) Whether the Court was justified in its ruling on Section 3(1)(c) of the Delhi Rent Act, 1995? (ii) Whether the Court has rightfully interpreted the Booz Allen[20] judgment vis-à-vis right in rem versus right in personam? (iii) Whether the Court was justified in relying upon Natraj Studios[21] judgment?

I. The Court was not Justified in its Ruling on Section 3(1)(c) of the Delhi Rent Act, 1995:

The Court in Himangni Enterprises was not correct in its reasoning while dealing with the issue of the non-applicability of Section 3(1)(c) of the Delhi Rent Act, 1995. The Court held that if the Delhi Rent Act, 1995, by virtue of its Section 3(1)(c) is not applicable to the present case, then the civil suit shall be tried under Transfer of Property Act, 1882, by the civil court and not by the arbitrator.[22] The Court based its deduction on the reasoning that:

24. …by virtue of Section 3 of the Act [Delhi Rent Act, 1995], 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 particular premises, the Act becomes applicable to such premises.[23]

But such a conclusion does not fit with the basic objective behind this enactment.

Section 3(1)(c) of the Delhi Rent Act, 1995 is enacted with an intent to protect the tenants who belong to weaker section of the society.[24] The Supreme Court of India in D.C. Bhatia v. Union of India[25] said that Section 3(1)(c) of the Delhi Rent Act, 1995 purposefully exclude its application over the premises rented higher than the specified limit, since the latter are used by relatively affluent tenants.[26] The Court further said that the enactments of Rent Control Acts are “temporary measures” in order to protect the tenants from arbitrary eviction and from landlord’s unprecedented enhancement of rent,[27] and hence, the application of Delhi Rent Act, 1995, in the wisdom of legislature, is restricted only to the premises those are rented up to Rs 3500.[28]

The same principle has been followed by the Delhi High Court in P.S. Jain Co. Ltd. v. Atma Ram Properties (P) Ltd.,[29] and in Atma Ram Properties (P) Ltd. v. Pal Properties (India) (P) Ltd.,[30] where the Court said that “the intention behind Section 3(c) is that a premises which fetches a rent of Rs 3500 per month should be exempt and that protection should be restricted to buildings fetching a rent less than Rs 3500 per month.[31] Further, the Supreme Court in Parripati Chandrasekharrao and Sons v. Alapati Jalaiah,[32] also took the same view while dealing with the inapplicability of A.P. Rent Act,[33] over the premises rented out on above Rs 1000.[34]

Thus, it is quite clear that the Court’s reason in Himangni Enterprises on the issue of non-applicability of the Delhi Rent Act, 1995 over the premises is in question. According to the Court, the Act is applicable “no sooner the exemption is withdrawn or ceased to have its application”.[35] It is clear from the above discussion that the Rent Control Acts are special Acts, which are enacted as “temporary measures” for protection of special category of tenants. Since the parties in the instant case do not fall within the category of tenant for those the Act has been enacted for, neither the Act, nor the rights and liabilities arising out of it, shall be applicable over the appellant at any stage of time. Hence, the judgment of Booz Allen is also not applicable in the instant case. In Booz Allen, the Court held that “eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes” are non-arbitrable.[36] However, in this case, there is no protection granted to the appellant under the special statute, and hence, it can be inferred that the Court has inappropriately applied the rationale of Booz Allen[37] where it is certainly not applicable at all.[38]

II. That the Court has Incorrectly Interpreted the Booz Allen[39] Judgment vis-à-vis Right in Rem Versus Right in Personam

The Booz Allen judgment marks the difference between right in rem and right in personam.[40] The Court in Booz Allen held that all the disputes pertaining to right in rem are to be adjudicated by the Courts and public tribunal, while the disputes pertaining to right in personam can be considered to be resolved by arbitration.[41] However, the Court clarified, that it is not an “inflexible rule” for the “disputes relating to subordinate rights in personam arising out of right in rem have always been considered to be arbitrable.”[42] Hence, it is inferred that in the instant judgment of Himangni Enterprises[43], where even though the dispute between the parties is in a nature of right in rem, such dispute is arising out of contract/lease between the parties; and hence, the horizon of right to enjoy the property versus the ownership is completely between the lessee and lessor; and therefore, such dispute can be resolved by arbitration.

It was said by the Supreme Court of India in Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan,[44] that disputes pertaining to specific performance of the contract can be resolved by arbitration,[45] and thus, the Court held that the arbitrator can pass an arbitral award granting the specific performance of the contract pertaining to immovable property.[46] Further, in Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums,[47] where the respondent resisted arbitration because the dispute was of criminal nature under special statute, the Supreme Court of India rejected the respondent’s plea, and held that the rights of the claimant under the contract is independent of the statutory provisions and therefore the contractual rights could be adjudged upon by the arbitrator.[48] The Court further noticed that “the existence of a dual procedure; one under the criminal law and the other under the contractual law is a well-accepted legal phenomenon in Indian jurisprudence.[49]

Hence, it can be inferred from the above discussion that in Himangni Enterprises[50], the impugned dispute could have easily been referred to arbitration, and hence, the decision of the Court is representing the orthodox approach and sets an unfortunate impetus towards the non-arbitration regime in India.

That the Court is not Justified in Relying upon the Natraj Studios[51] judgment

Lastly, the reliance of the Natraj Studios (P) Ltd. v. Navrang Studios[52] by the Court in Himangni Enterprises[53] is also not well justified. The Natraj Studios[54] is 1981 judgment decided under the Arbitration Act of 1940, and it is a well-settled law in arbitration jurisprudence in India, that the cases decided on the basis of Arbitration Act of 1940, cannot be blindly relied upon as a valid precedent for the cases governed by Arbitration and Conciliation Act of 1996 for the objectives of both the acts are entirely different.[55]  The Supreme Court of India in Sundaram Finance Ltd v. NEPC India Ltd.[56] said that the Acts of 1996 Act and 1940 are very different from each other and therefore the provisions of the 1996 Act have to be interpreted independently and separately from the 1940 Act to avoid any form of misconception.[57] Thus, it is concluded that the over-reliance on the Court in the judgment of Himangni Enterprises[58] on Natraj Studios[59] as a precedent was not appropriate.

This inference is further emphasised in light of the view on the mandatory nature of Section 8 of the Arbitration and Conciliation Act, 1996 as held by Justice Chandrachud in A. Ayyasamy v. A. Paramasivam[60]. Justice Chandrachud in his opinion has cautioned that for courts deciding a dispute is non-arbitrable under the law for the time being in force must carefully look into the facts and materials for the purpose of determining whether the defence is merely a pretext to avoid arbitration. He emphasises the importance of respecting the parties’ choice of arbitration by observing:

45.2. …Once parties have agreed to refer disputes to arbitration, the court must plainly discourage and discountenance litigative strategies designed to avoid recourse to arbitration. Any other approach would seriously place uncertainty on the institutional efficacy of arbitration. Such a consequence must be eschewed.[61]

Conclusion

The analysis of the judgment above reveals that this decision upholds a conservative approach not quite in line with the contemporary legislative and judicial reforms underway to strengthen arbitration in India. Also, this judgment is not in line with the pro-arbitration approach and may impede the growth of arbitration in India. Therefore, the authors most respectfully submit that it is both timely and essential to revisit the judgment by a larger Bench of the Supreme Court of India.


 †  Associate Professor of Law, Maharashtra National Law University, Nagpur.

††  III year student, BA LLB (Hons.), Maharashtra National Law University, Nagpur.

[1]  Vidya Drolia v. Durga Trading Corpn., 2019 SCC OnLine SC 358.

[2]  (2017) 10 SCC 706.

[3]  Vidya Drolia v. Durga Trading Corpn., 2019 SCC OnLine SC 358.

[4]  (2017) 10 SCC 706.

[5]  (2017) 10 SCC 706.

[6]  (2017) 10 SCC 706.

[7]  (2017) 10 SCC 706.

[8]  Cl. (9.8) of the Arbitration Agreement, Himangni Enterprises v. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706.

[9]  (2017) 10 SCC 706

[10]  (1981) 1 SCC 523.

[11]  (2011) 5 SCC 532.

[12] Himangni Enterprises v. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706.

 [13]  Natraj Studios (P) Ltd. v. Navrang Studios, (1981) 1 SCC 523, para 24.

[14]  Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532, para 36.

[15]  Ibid.

[16]  Himangni Enterprises v. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706.

[17]  Himangni Enterprises v. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706, para 24.

[18]  Para 28, Id.

[19]  (2017) 10 SCC 706.

[20]  (2011) 5 SCC 532.

[21]  (1981) 1 SCC 523.

[22]  Himangni Enterprises v. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706, para 24.

[23]  Id., p. 712.

[24]  D.C. Bhatia v. Union of India, (1995) 1 SCC 104; P.S. Jain Co. Ltd. v. Atma Ram Properties (P) Ltd., 1996 SCC OnLine Del 875 : (1997) 40 DRJ 220; Atma Ram Properties (P) Ltd. v. Pal Properties (India) (P) Ltd., 2001 SCC OnLine Del 438 : (2002) 62 DRJ 623.

[25]  (1995) 1 SCC 104.

[26]  D.C. Bhatia v. Union of India, (1995) 1 SCC 104, para 11.

[27]  Para 22, Id.

[28]  Para 28, Id.

[29]  1996 SCC OnLine Del 875 : (1997) 40 DRJ 220.

[30]  2001 SCC OnLine Del 438 : (2002) 62 DRJ 623.

[31]  P.S. Jain Co. Ltd. v. Atma Ram Properties (P) Ltd., 1996 SCC OnLine Del 875 : (1997) 40 DRJ 220; Atma Ram Properties (P) Ltd. v. Pal Properties (India) (P) Ltd., 2001 SCC OnLine Del 438 : (2002) 62 DRJ 623.

[32]  (1995) 3 SCC 709.

[33]  A.P. Buildings (Lease, Rent and Eviction) Control Act, 1960.

[34]  In Parripati Chandrasekharrao and Sons v. Alapati Jalaiah, (1995) 3 SCC 709,  the Court held that “in the case of a tenant, the protective shield extended to him survives only so long as and to the extent the special legislation operates. The rights and remedies of the tenants are not vested and could be taken away”.

[35]  Himangni Enterprises v. Kamaljeet Singh Ahluwalia, (2017) 10 SCC 706, para 24.

[36]  Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532, para 36.

[37]  (2011) 5 SCC 532.

[38]  Here, it is noteworthy that in Bharat Petroleum Corpn. Ltd. v. P. Kesavan, (2004) 9 SCC 772: AIR 2004 SC 2206, it was held that the Transfer of Property Act, 1882 is not a special statute and only codifies the general law of transfer of property. Thus, even if the present case falls within the purview of the Transfer of Property Act, 1882, the Booz Allen judgment cannot be relied upon. The same position has also been confirmed by the Calcutta High Court in Ambuja Neotia Holdings (P) Ltd. v. Planet M Retail Ltd., 2015 SCC OnLine Cal 7000, in which the Court held that the disputes governed by Transfer of Property Act are arbitrable as the Transfer of Property Act is not a special statute and only codifies the general law of transfer of property.

[39]  (2011) 5 SCC 532.

[40]  Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532, para 37.

[41]  Para 38, Id.

[42]  Para 38, Id.

[43]  (2017) 10 SCC 706.

[44]  (1999) 5 SCC 651.

[45]  Para 36, Olympus Superstructure (P) Ltd. v. Meena Vijay Khetan, (1999) 5 SCC 651.

[46]  Para 33, Olympus Superstructure (P) Ltd. v. Meena Vijay Khetan, (1999) 5 SCC 651. The position that the arbitrator can grant specific performance of the contract has been reiterated in Lakshmi Narain v. Raghbir Singh,1956 SCC OnLine P&H 17: AIR 1956 P&H 249; in Fertilizer Corpn. of India v. Chemical Construction Corpn., 1973 SCC OnLine Bom 55 : ILR 1974 Bom 856, 858; in Keventer Agro Ltd. v. Seegram Comp. Ltd., Apo 498 of 1997 & APO 449 of (401) dated 27-1-1998 (Cal); the judgment of Delhi High Court in Sulochana Uppal v. Surinder Sheel Bhakri, 1990 SCC OnLine Del 250 : AIR 1991 Del 138 has been overruled.

[47]  (2003) 6 SCC 503.

[48]  Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums, (2003) 6 SCC 503.

[49]  Ibid.

[50]  (2017) 10 SCC 706.

[51]  (1981) 1 SCC 523.

[52]  Natraj Studios (P) Ltd. v. Navrang Studios, (1981) 1 SCC 523.

[53]  (2017) 10 SCC 706.

[54]  (1981) 1 SCC 523.

[55]  Sundaram Finance Ltd v. NEPC India Ltd., (1999) 2 SCC 479: AIR 1999 SCC 565; Union of India v. Arctic India, 2010 SCC Online Del 2518; McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181.

[56]  (1999) 2 SCC 479 : AIR 1999 SCC 565.

[57]  Sundaram Finance Ltd. v. NEPC India Ltd., (1999) 2 SCC 479: AIR 1999 SCC 565; Union of India v. Arctic India, 2010 SCC Online Del 2518.

[58]  (2017) 10 SCC 706.

[59]  (1981) 1 SCC 523.

[60]  A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386.

[61]  Id., p. 415.

Case BriefsHigh Courts

Himachal Pradesh High Court: The instant petition involved a question that whether the eviction of tenant could be ordered for settling married son of the landlord under Section 14(3)(a)(i) of H.P. Urban Rent Control Act, 1987, even the same was not covered by Section 14(3)(d) of the Act. The same question was contemplated by Tarlok Singh Chauhan, J.

Factual matrix of the case was that the landlord filed a rent petition under Section 14 of the Act of 1987, before the Rent Controller. He sought eviction of the tenant on the ground that his son intended to settle his business in the same premises and that since he and his wife were old, they wanted to live with their son at Solan. The landlord also claimed arrears of rent and sought eviction on the ground of material addition and alteration being carried out by the tenant in the premises in question.

The tenant contested the petition tooth and nail and denied the grounds taken in the petition seeking his eviction from the premises in question. Subsequently, an order was passed in favor of the landlord and the tenant-petitioner was directed to be evicted on the grounds of non-payment of arrears of rent and that the son of the landlord needed the premise for the running business. The tenant was aggrieved by the order and he went into an appeal, the appellate authority dismissed his appeal and hence, the tenant had no other option but to file the instant petition.

Pratap Singh Gover, counsel for the landlord, relied on cases where the similar reiteration of law was found in the Judgments, Nand Lal Sharma v. Bimla Sharma, HLJ 2007 (HP) 1112; Jasvinder Singh v. Kedar Nath, HLJ (2012) (HP) 1452; Jagat Ram Chauhan v. Avinash Partap, HLJ 2014 (HP) 420 etc. further the counsel presented the witnesses, one of them was the son of the landlord, who testified that the said premise was needed by them, as his parents were old and he wanted to start his own business, but for the time being he was residing in Delhi.

On the contrary, tenant appeared as a witness and deposed that son of the landlord was residing abroad in Mexico and was doing business there and he had no intention to shift or settle at the said premise. He stated that the landlord intended to sell the tenanted premises and the proposed buyer had been forcing the landlord to get the tenanted premises vacated and in order to give vacant possession to the buyer, the landlord had concocted false plea of bona fide requirement.

The Court after the submissions of the parties observed that, there was no reason to doubt the bona fide requirement of the landlord as admitted, he was a senior citizen aged about 83 years and thus required someone to look after him and his property. The testimony of the son of the landlord was also not doubted. It was further observed that the tenant had no proof of what he alleged that the landlord wanted to sell the premise. Hence, the Court found no merit in the petition and dismissed the same.[Mandeep Singh v. Gian Chand, 2019 SCC OnLine HP 1029, decided on 18-07-2019]

Case BriefsHigh Courts

Sikkim High Court: Bhaskar Raj Pradhan, J. confirmed a decree of eviction passed against the appellant-tenant by the District Judge on the bonafide requirement of the landlord.

The sole ground for eviction being contended in the application was the requirement of suit premises for the personal occupation of the landlord. Under the relevant statutory notification, the landlord could evict the tenant only on showing the bonafide requirement for personal occupation. A holistic reading of the plaint suggested that the landlord required the suit premises as his house was in a dilapidated condition; his ill health including mental illness for which he desired to accommodate a help; to accommodate his growing children who did not have adequate personal space in the house and who were pestering him for it which was causing him mental stress; to establish them in business as they were completing their education; etc.

The appellant -tenant was represented by Laxmi Chakraborty and Manju Rai, Advocates. Per contra, Zangpo Sherpa, Deven Sharma, Jushan Lepcha and Mon Maya Subba, Advocates represented the respondent-landlord.

On perusal of the record, the High Court found the facts as claimed of the landlord to be true. Referring to its earlier case in Pradeep Golyan v. Durga Prasad Mukhia, 2016 SCC OnLine Sikk 225, the Court observed: “That personal occupation of the landlord includes the requirement of the dependents as well is now well settled.” The landlord pleaded hardship and proved it. He proved a bonafide requirement of personal occupation. Furthermore, the appellant did was unable to show any special equities in his favour against the eviction.

In such circumstances, the Court confirmed the decree of eviction passed by the District Judge. However, considering the fact that the appellant was in occupation of the suit premises and doing his business from there since 1999, he was given four months’ time to vacate the suit premises on the condition that he will continue to pay rent till then. [Bishnu Prasad Bhagat v. Prakash Basnett, 2019 SCC OnLine Sikk 84, decided on 15-06-2019]

Case BriefsHigh Courts

Delhi High Court: Sanjeev Sachdeva, J., allowed a petition filed by the allottee of the subject shop who was charged with an offence punishable under Section 447 (punishment for criminal trespass) IPC, and quashed the order whereby the charge was farmed against him.

The petitioner was the allottee of the subject shop. It was alleged by the respondent that the petitioner had agreed to rent out the shop to him and had demanded a sum of Rs 50,000 to be paid in advance, after the payment of which the petitioner handed over the keys to him. The respondent, in his complaint filed under Section 200 CrPC, alleged that the petitioner, however, did not remove his articles from the shop with malafide intentions. And on 27-02-2011, while the complainant was getting the woodwork done, the petitioner broke the lock and trespassed into the shop.

Aditya Madan, Advocate for the petitioner contended that the trial court erred in framing the charge and not appreciating there was the allottee of and in possession of the shop. Per contra, Subodh Kumar Pathak, Advocate for the respondent supported the impugned order.

The High Court noted that admittedly, the petitioner was the allottee of the shop. The respondent did not produce any evidence to corroborate that any tenancy was created in his favour or the possession was handed over to him. It was observed: Section 447 is punishment for Criminal Trespass which is defined under Section 441 to be committed when a person enters into or upon property in the possession of another with intent to commit an offence or to intimidate, insult or annoy any person in possession of such property. The impugned order clearly is erroneous in as much as the Trial Court has framed the charge on the presumption that the complainant was in possession of the shop at that time. As there is no material to show that possession was parted with by the petitioner or handed over to the complainant, petitioner could not have been charged with the offence under Section 447 IPC.”

In such view of the matter, the petition was allowed and the charge framed against the petitioner was quashed. [Jagdish Kapila v. Raj Kumar, 2019 SCC OnLine Del 8617, decided on 21-05-2019]

Case BriefsHigh Courts

Kerala High Court: The Division Bench of Hrishikesh Roy and A.K. Jayasankaran Nambiar. JJ. dismissed a writ appeal filed by landlord against an order dispensing with the requirement of his consent, for renewal of his tenant’s trade licence.

A partnership firm (tenant) – Vijaya Jyothi Traders ­– had filed an application before the Thrissur Municipal Corporation for a D&O (Dangerous & Offensive) licence. The Corporation refused to consider this application on the ground that the application was not supported by landlord’s (appellant herein) consent which was the mandate under Sections 492(3) and 492(4) of the Kerala Municipality Act, 1994.

In a petition filed by the managing partner of the firm (respondent herein), it was averred that averred that since there were some disputes between him and the appellant-landlord, therefore obtaining consent letter from the landlord must not be insisted for consideration of the renewal of the licence. Learned Single judge allowed the petition and directed the Corporation to consider the subject application without insisting for consent from the appellant-landlord. Aggrieved thereby, the instant writ appeal was filed.

The Court noted that the learned Single Judge had taken note of pending suits between the landlord and tenant and had also provided an opportunity of hearing to both the parties. It relied on the judgment in Sudhakaran v. Corporation of Trivandrum, (2016) 14 SCC 263 where the Apex Court while deciding the on renewal of trade licence, stated that a tenant could not be deprived of running a lawful business merely because the landlord withheld his consent. A valid tenancy has implied the authority of the landlord for the legitimate use of the premises by the tenant.

In view of the above, the Court upheld the impugned judgment. [C.S. Babu v. C. Vijayan, 2018 SCC OnLine Ker 5783, Order dated 14-12-2018]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Vinod Goel, J. dismissed a revision petition filed against the order of the Additional Rent Controller whereby he allowed the eviction petition filed by the respondent-landlord under Section 14(1)(e) of the Delhi Rent Control Act, 1958.

The petitioner was a tenant of the respondent. The respondent, in the eviction petition filed by him, had sought ejectment of the petitioner from the suit property. the ground taken by him was a bona fide requirement. It was pleaded that the suit property was required by the respondent for expansion of the business. The petitioner, per contra, submitted that the said property was not suitable for expansion of business as sought by the respondent. the Additional Rent Controller, however, decreed the suit and passed the eviction orders against the petitioner. Aggrieved thereby, he filed the instant revision under Section 25-B of the DRC Act.

The High Court, while adjudicating on the matter, referred to a Supreme Court decision in Baldev Singh Bajwa v. Monish Saini, (2005) 12 SCC 778. It was observed that whenever a landlord seeks ejectment of a tenant for bona fide requirement, it shall be presumed to be genuine and bona fide. Furthermore, the burden to rebut the said presumption lies on the tenant; however, the mere assertion on part of the tenant does not suffice. In the instant case, the testimony of the respondent as to his bona fide requirement went unrebutted. In such view of the matter, the revision petition was dismissed and the order impugned was accordingly upheld. [Metro Bearings v. Faizunnisa, 2018 SCC OnLine Del 12313, Order dated 31-10-2018]

Case BriefsHigh Courts

Punjab and Haryana High Court: A Single Judge Bench comprising of Gurvinder Singh Gill, J., dismissed a revision petition filed assailing the order of the Appellate Authority which in turn upheld the order of Rent Controller, Ludhiana, whereby the petitioner was ejected from the property in question.

The respondent filed an ejectment petition before the Rent Controller on the grounds that the petitioner-tenant had defaulted in paying the rent since June 2008. The petitioner contended that the respondent was not the landlord as he had taken the premises on rent from one Narinder Singh. The Rent Controller found that a relationship between tenant and landlord existed between the parties. And since the petitioner defaulted in paying the rent, petitioner was ordered to be ejected from the property concerned. The Appellate Authority confirmed the findings and upheld the order passed by the Rent Controller. Feeling aggrieved, the petitioner approached the High Court.

The High Court perused the record and found that the abovementioned Narinder Singh, in his examination, had stated that he had sold the property concerned to the petitioner. A power of attorney and a Will was also executed in favor of the petitioner. The Court did not find any registered sale deed proving the factum of sale; however, the abovesaid documents showed that there was some arrangement between the petitioner and Narinder Singh whereby the petitioner exercised the rights of the landlord. The Court held the law to be well settled that a person can be a landlord even without having ownership rights in the property. The High Court did not find any infirmity in the impugned order and the revision petition was thereby dismissed. [Ashok Kumar v. Piara Singh, 2018 SCC OnLine P&H 733, dated 29-05-2018]

Case BriefsForeign Courts

Supreme Court of United Kingdom: In an appeal filed by a Landlord against the liability from failure to keep ‘paved area outside the building’ in repair as per the Section 11 of the Landlord and Tenant Act, 1985, the Court allowing the appeal, held that the landlord is not in breach of his statutorily implied obligation for carrying out repairs until he has the notice of the disrepair.

Section 11 of the 1985 Act applies to Sub-tenancy agreements and extends the landlord’s statutory repairing covenants to “keep in repair the structure and the exterior of the dwelling-house”. In the present case, the subtenant having tripped over an uneven stone on a paved way which was the main access to the building and suffered injuries, had brought action against the landlord for the breach of the provision. The Court of Appeals had allowed the case but in the present appeal the Court took a contrary view.

The Court held that the expressions of the obligations under the Section 11 should be given a natural meaning rather than an artificially wide one. It held that, the fact that a piece of property is a necessary means of access to a building cannot be sufficient for it to constitute part of the ‘exterior’ of that building. Therefore, the paved way did not fall within the ambit of the provision.  Moreover, the Court as an exception to the general principle upheld the rule that, the landlord is not liable under a covenant with his tenant to repair premises which are in the possession of the tenant and not of the landlord unless and until the landlord has notice of the disrepair. Relying on a number of cases which had earlier upheld the rule the Court held that the landlord  could only be held liable if he had had notice of the disrepair before the accident, which he did not have. In accordance with both the observation the appeal of the landlord was allowed. [Edwards  v. Kumarasamy  [2016] UKSC 40, decided on 13 July 2016]

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of Ranjan Gogoi, Arun Mishra and P.C.Pant, JJ, were hearing a reference to decide the question as to whether after the expiry of the fixed term tenancy in respect of an agricultural lease under the Punjab Security of Land Tenure Act, 1953, the tenancy gets automatically terminated and the person occupying the leased premises ceases to be a tenant, as a 2-judge bench did not agree with the decision of a coordinate bench in Sukhdev Singh v. Puran , (2015) 12 SCC 344 where it was held that tenant under the 1953 Act ceases to be one on expiry of the fixed term tenancy under the contract whereafter he is not entitled to the statutory protection from eviction as envisaged under the Act.

The Court held that to be entitled to protection from eviction under the 1953 Act any person claiming such protection has to come within the fold of the expression “tenant” under the 1953 Act read with the relevant provisions of the Punjab tenancy Act, 1887 Act. Statutory protection would be available only to a statutory tenant, namely, a tenant under the Act. The 1953 Act read with the relevant provisions of the 1887 Act does not include a tenant whose lease has expired. Nevertheless, retention/continuance of possession after expiry of the duration of the lease with the consent of the landlord will continue to vest in the erstwhile tenant the same status on the principle of holding over.

The Court, further held that such continuance even after expiry of the deemed period of the lease under Section 106 of the Transfer of Property Act, 1888 would clothe the occupant with the status of a tenant under the Act in view of Section 116 of the Transfer of Property Act which deals with the consequences of holding over. The operation of Section 116 of the Transfer of Property Act would confer legitimacy to the possession of the tenant even after the termination or expiration of the deemed period of the lease so as to confer on him a status akin to that of a statutory tenant and hence protection from eviction as envisaged by the provisions of the Act of 1953. [Shyam Lal v. Deepa Dass Chela Ram Chela Garib Dass, 2016 SCC OnLine SC 661, decided on 05.07.2016]