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11 March 2019

Arbitrability of dispute under TP Act – SC refers matter to Larger Bench


11th March

Supreme Court has referred the question of arbitrability under Transfer of Property Act to the Larger Bench.

Holding that judgment in Himangni Enterprises is required to relooked, it observed that there is nothing in TP Act that shows that a dispute as to determination of lease cannot be decided by arbitration. It was noted that grounds u/s.111 whether r/w s.114 or 114A can be raised before an arbitrator.

Court in Vidya Drolia v. Durga Trading Corp. lifted stay on arbitral proceedings noticing that 18 hearings had already been held.

Considering the 246th Law Commission Report, the Apex Court noticed that validity of an arbitration agreement is apart from its existence and held that whether the word “existence” would include weeding out arbitration clauses in agreements, where subject matter is incapable of arbitration, is a moot question to be decided by a three-Judge Bench.

It was observed that arbitration can be excluded only by necessary implication, which is so with the Indian Trusts Act, 1882 but not with the Transfer of Property Act.