The existence of an arbitration clause in a contract necessitates mandatory referral to arbitration despite contestations of arbitrability based on special statutes.

ORDER

This petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (in short “the Act”) seeking for appointment of an Arbitrator by this Court.

2. There seems to be a dispute between the petitioners and the respondent arising out of the lease agreement dated 27.11.2014. The petitioners have invoked arbitration in accordance with the arbitration clause contained in the lease agreement dated 27.11.2014 by issuing notice to the respondent on 20.02.2025 to comply with the requirements of Section 21 of the Act. A reply has also been sent by the respondent on 27.02.2025 for the same. Since there is no consensus between the parties with regard to arbitration, the petitioner has filed this petition under Section 11 of the Act seeking for appointment of an Arbitrator by this Court.

3. A counter affidavit has been filed by the respondent disputing the contentions of the petitioners. The only objection raised by the respondent is that the dispute raised by the petitioners is not an arbitrable dispute, since it is governed by a special statute, namely, Pondicherry Buildings (Lease and Rent Control) Act, 1969, and therefore, the petitioners will have to approach the Rent Controller and cannot go for arbitration as per the arbitration clause contained in the contract, which is the subject matter of the dispute between the parties. The respondent has also stated in the counter affidavit that they had incurred certain sums of monies on behalf of the petitioners in the property occupied by them as tenants. Therefore, according to the respondent, no monies are due and payable by the respondent to the petitioner and it is only the petitioners, who owe monies to the respondent.

4. The learned Senior Counsel for the respondent drew the attention of this Court to the following authorities, in support of his contention that the dispute raised by the petitioners is not an arbitrable dispute:-

(a) Booz Allen and Hamilton Inc. Vs. SBI Home Finance Ltd. And others [ 2011 (5) SCC 532 ]; and (b) Vidya Drolia and others Vs. Durga Trading Corporation [ 2021 (2) SCC 1 ].

5. Relying upon the aforesaid authorities, the learned Senior counsel for the respondent would submit that all tenancy disputes governed by a special rent control statute is not an arbitrable dispute. Therefore, he would submit that the present petition filed under Section 11 of the Act is not maintainable in law.

6. On the other hand, the learned Senior counsel for the petitioners would submit that the petitioners are only seeking compensation, which includes arrears of rent due and payable by the respondent to the petitioners. The petitioners are not seeking for eviction of the respondent from the property. Therefore, he would submit that the decisions relied upon by the learned Senior counsel for the respondent referred to supra have no bearing for the facts of the instant case.

DISCUSSION:-

7. The arbitration clause contained in the lease agreement dated

27.11.2014 is re-produced hereunder:-

“ARBITRATION:

All questions, differences and disputes arising between the parties hereto relating to any matter under this agreement, its performance, breach or termination either during the currency of this agreement or extension thereof, shall be referred to arbitration in accordance with the Arbitration and Conciliation Act, 1996 or any modification or re-enactment thereof.

The Arbitrators may associate with themselves /

himself or requisition the service of any expert as may be deemed fit or proper by them / him for the purpose of carrying on any inquiry, investigation or advice on any matter referred to them/him and expenses of such experts shall be borne by