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SUPREME COURT OF INDIA
J. B. PARDIWALA, K.V. VISWANATHAN, JJ.
Motilal Oswal Financial Services Limited – Appellant
Versus
Santosh Cordeiro and Another – Respondent
Civil Appeal No. 36 of 2026 (@ Special Leave Petition (Civil) No. 5834 of 2025)
Decided On : 05-01-2026
Certainly. Based on the provided legal document, here are the key points:
The Supreme Court affirmed that arbitration agreements under the Arbitration & Conciliation Act remain valid and enforceable even when there are claims of exclusive jurisdiction by special statutes, such as the Presidency Small Cause Courts Act (!) (!) .
The dispute involved a Leave and License Agreement concerning immovable property, with an arbitration clause specifying Mumbai as the seat of arbitration and referring to the Arbitration & Conciliation Act, 1996 (!) (!) .
The appellant argued that jurisdiction was exclusively with the Small Causes Court under the 1882 Act, citing its provisions that generally confer exclusive jurisdiction for recovery of possession and license fees relating to immovable property in Greater Bombay (!) (!) .
The respondent contended that the dispute was purely monetary—specifically for payment of license fees or damages for the lock-in period—and not for possession or rent, thus falling within the scope of the arbitration clause (!) (!) .
The High Court initially appointed an arbitrator, but the appellant challenged this, asserting that the dispute was non-arbitrable due to the provisions of the 1882 Act, particularly Section 41, which confers exclusive jurisdiction on Small Causes Courts for certain landlord-tenant disputes (!) (!) .
The Supreme Court clarified that the mere existence of a jurisdictional statute like the 1882 Act does not automatically invalidate arbitration agreements, especially when the dispute pertains to a monetary claim rather than possession or rent recovery (!) (!) .
The Court emphasized that the scope of judicial review at the Section 11 stage is limited to examining the existence of an arbitration agreement, not its validity or the substantive arbitrability of the dispute (!) (!) .
The Court discussed the legislative history and clarified that arbitration clauses are generally valid unless explicitly rendered invalid by specific statutes or public policy considerations. It also clarified that provisions like Section 41 of the 1882 Act do not automatically nullify arbitration agreements concerning monetary disputes (!) (!) .
The Court highlighted the importance of the doctrine of competence-competence, which allows arbitral tribunals to rule on their jurisdiction, including the existence and validity of arbitration agreements, thereby reinforcing the limited role of courts at the appointment stage (!) (!) (!) .
Ultimately, the Supreme Court held that the arbitration agreement in this case was valid and that the High Court erred in holding otherwise. The appeal was dismissed, and the arbitrator was directed to proceed with the adjudication within six months (!) .
The Court also noted that the question of whether the dispute is arbitrable under specific statutes depends on the nature of the claim—whether it is for possession, rent, or monetary damages—and that disputes purely for monetary recovery are generally arbitrable unless explicitly excluded by law (!) (!) .
The decision underscores that provisions conferring jurisdiction on specialized courts do not automatically preclude arbitration unless the dispute falls squarely within the scope of those statutes, such as cases involving recovery of possession or rent under landlord-tenant laws (!) (!) .
Please let me know if you require a more detailed analysis or assistance with drafting legal documents based on these points.
| Table of Content |
|---|
| 1. details of the underlying contract and events. (Para 2 , 3 , 4 , 5 , 6) |
| 2. arguments regarding arbitration and jurisdiction. (Para 11 , 12) |
| 3. analysis of arbitration agreement existence. (Para 14 , 16 , 17 , 19 , 20 , 21 , 22 , 25) |
| 4. judicial interpretation of jurisdiction scope. (Para 18) |
| 5. final ruling and dismissal of the appeal. (Para 28) |
JUDGMENT :
K.V. Viswanathan, J.
1. Leave granted.
2. The present appeal calls in question the correctness of the order dated 02.05.2024 passed by the Single Judge of the High Court of Judicature at Bombay in Commercial Arbitration Application No.9 of 2024. By the said order, the learned Single Judge allowed the Section 11 Application filed by the respondent under the Arbitration & Conciliation Act, 1996 (for short “the A&C Act”) and appointed an arbitrator to adjudicate the dispute between the parties. The only objection taken by the appellant herein was that the dispute is non-arbitrable in view of Section 41 of the Presidency Small Cause Courts Act, 1882 (for short “the 1882 Act”). The learned Single Judge made a short shrift of the said objection by holding that the place where the property in question, which was the subject matter of the dispute, was situated, i.e. Malad, was outside the jurisdiction of the Small Causes Court. This finding has now turned out to be a damp squib, since parties before us are ad idem that Malad area is covered under the jurisdiction of the Small Causes Court. We could have rest content by remanding the matter to the High Court for fresh consideration. However, that will only prolong the dispute and, hence, we have decided to answer the issues arising in the case ourselves.
BRIEF FACTS OF THE CASE: -
3. With regard to the premises situated at Unit No.718, admeasuring 2925 sq. ft., 7th Floor, Palm Spring Centre, Link Road, Malad (West), Mumbai, the appellant entered into a Leave and License Agreement on 06.10.2017 with the respondent. The period of the Leave and License was 60 months from 01.10.2017 to 30.10.2022. Though the appellant terminated the said agreement on 31.12.2019, after exchange of correspondence between the parties, the said termination was reversed and an Addendum dated 13.03.2020 was entered into extending the Leave and License period from 60 months to 96 months with a lock-in period of 72 months.
4. According to the appellant, due to COVID-19 pandemic, they were unable to continue the arrangement and citing the force majeure clause in the agreement, they handed over the keys and vacant peaceful possession of the premises to the respondent on 09.09.2020. According to the appellant, they intimated the respondents about the same on 10.10.2020 by writing an email. The appellant also sought refund of the security deposit.
5. On 28.06.2023, the respondent No.1 called upon the appellant to pay a sum of Rs.94,40,152/- along with interest @ 24% towards the alleged arrears of license fees for the balance lock-in period i.e. from 01.09.2020 to 14.06.2023. The appellants wrote back on 17.07.2023 denying any liability and seeking refund of security deposit of Rs. 10 lakhs.
6. The appellant on 17.07.2023 received a notice dated 15.07.2023 issued by the respondent under Section 21 of the A&C Act invoking Clause 33 of the arbitration agreement of the Leave and License Agreement dated 06.10.2017 and Addendum dated 13.03.2020. Clause 33 of the Leave and License Agreement dated 06.10.2017 reads as under: -
Arbitration agreements under the Arbitration & Conciliation Act remain valid and binding despite exclusive jurisdiction claims by special statutes like the Presidency Small Cause Courts Act.
The main legal point established in the judgment is that the dispute over the refund of the security deposit and alleged damages and expenses for repairs was amenable to arbitration, and the exclusiv....
The court established that lease disputes, without special tenant protections, are arbitrable, overruling prior decisions and endorsing the Supreme Court's findings in Vidya Drolia.
The jurisdiction for appointing an arbitrator lies with the court where the principal agreement was executed, as per Section 11(6), despite a venue specified in an ancillary agreement.
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