Court’s Decision
The Bombay High Court dismissed the developer Ambit Urbanspace’s appeals under Section 9 of the Arbitration and Conciliation Act seeking interim mandatory injunctions to compel garage occupants to vacate garages for redevelopment. The Court held that since the garage occupants were not parties to the Development Agreement containing the arbitration clause and there was no intention to invoke arbitration, Section 9 interim relief could not be granted against non-signatory tenants resisting eviction. It affirmed the learned Single Judge’s refusal to grant the relief sought by the developer for possession, stating that arbitration provisions cannot bypass statutory tenancy rights under the Rent Control Act and disputes of this nature are non-arbitrable.
Facts
Ambit Urbanspace entered into a Development Agreement with Poddar Apartment Co-operative Housing Society to redevelop a property comprising flats, shops, garages, and basements. The developer obtained permissions, including the Letter of Intent and IOA, and most members and tenants vacated the premises, allowing demolition of the building except for four garages still occupied by tenants claiming tenancy rights. The developer filed a Section 9 petition for an interim mandatory injunction to evict these occupants, arguing they were obstructing the redevelopment process. The single judge rejected the plea, leading to the present appeals by the developer and cross-appeals by the landlords on tenancy findings.
Issues
- Whether interim relief under Section 9 of the Arbitration Act can be granted against non-signatory tenants resisting eviction for redevelopment.
- Whether garage occupants using garages for commercial purposes without consent can obstruct redevelopment.
- Whether arbitration can bypass the jurisdiction of the Small Causes Court under the Rent Control Act regarding tenancy disputes.
Petitioner’s Arguments
The developer argued that under the Development Agreement, the society and its members were obligated to vacate the premises for redevelopment, and this obligation extended to the tenants of garages, who had no independent superior rights over the society’s obligations. It argued that tenants using garages for commercial purposes were illegally obstructing redevelopment and sought interim mandatory injunctions to vacate the garages, referencing the Girish Mulchand Mehta judgment allowing courts to grant interim measures under Section 9 against non-cooperative members in redevelopment disputes.
Respondent’s Arguments
The garage occupants argued they were lawful tenants inducted by the landlords and were not signatories to the Development Agreement, making arbitration clauses inapplicable. They contended the developer was using Section 9 to bypass statutory protections under the Rent Control Act, which requires tenancy disputes to be decided by the Small Causes Court. They relied on Supreme Court judgments, including Sundaram Finance Ltd. vs. NEPC India Ltd., to argue that without an intent to invoke arbitration, Section 9 interim measures cannot be granted, and that tenancy disputes are non-arbitrable.
Analysis of the Law
The Court examined the scope of Section 9, reaffirming that while interim relief under Section 9 can be granted against non-signatories in redevelopment disputes when parties intend to invoke arbitration, it cannot override statutory provisions of the Rent Control Act. It held that tenancy disputes requiring adjudication of the tenant-landlord relationship fall within the exclusive jurisdiction of the Small Causes Court, and there was no arbitration agreement between the developer and garage occupants.
Precedent Analysis
The Court considered:
- Sundaram Finance Ltd. vs. NEPC India Ltd. (1999) 2 SCC 479: Emphasising that Section 9 is intended to aid prospective arbitration, not bypass it.
- Firm Ashok Traders vs. Gurumukh Das Saluja (2004) 3 SCC 155: Holding that interim measures under Section 9 require a manifest intention to arbitrate.
- Central Warehousing Corporation vs. Fortpoint Automotive (2010): Clarifying the non-arbitrability of tenancy disputes under special statutes.
- Girish Mulchand Mehta: Permitting Section 9 interim measures against non-cooperative society members, but the present case was distinguished as the garage occupants were non-members and non-signatories claiming statutory tenant rights.
Court’s Reasoning
The Court noted that while the society and members are bound by the Development Agreement, the garage occupants, as non-signatories and non-members, cannot be compelled under Section 9 without a valid arbitration agreement or intention to arbitrate. It emphasized that the dispute was essentially about tenancy rights, which are non-arbitrable under the Rent Act, and therefore, eviction cannot be sought through arbitration to bypass statutory forums. The developer’s reliance on Girish Mulchand Mehta was found inapplicable as it did not deal with statutory tenancy disputes against non-signatories.
Conclusion
The Bombay High Court dismissed the appeals, upholding the learned Single Judge’s decision refusing interim mandatory injunctions under Section 9 of the Arbitration Act to evict garage occupants. It clarified that arbitration cannot override statutory protections for tenants and that tenancy disputes remain within the exclusive jurisdiction of the Small Causes Court.
Implications
- Confirms arbitration cannot be used to bypass Rent Control Act protections.
- Clarifies non-signatories cannot be compelled under Section 9 unless an intent to arbitrate exists.
- Reinforces distinction between redevelopment disputes against members vs. statutory tenancy disputes.
Referred Cases and Their Relevance
- Sundaram Finance Ltd. vs. NEPC India Ltd. – Section 9 is not a substitute for arbitration; requires intent to arbitrate.
- Firm Ashok Traders vs. Gurumukh Das Saluja – Interim measures under Section 9 need a manifest intent to arbitrate.
- Central Warehousing Corporation vs. Fortpoint Automotive – Tenancy disputes under Rent Control Act are non-arbitrable.
- Girish Mulchand Mehta – Section 9 can bind non-cooperative members in redevelopment, but inapplicable to statutory tenants.
- Shree Ahuja Properties – Garage occupants using garages commercially cannot demand shops; yet the dispute remains non-arbitrable if tenancy is claimed.
FAQs
1. Can a developer force tenants to vacate under arbitration during redevelopment?
No, unless tenants are signatories to the arbitration agreement, Section 9 relief cannot compel them, especially when tenancy rights are protected under the Rent Act.
2. Are tenancy disputes during redevelopment arbitrable?
No, tenancy disputes governed by the Rent Control Act must be decided by the Small Causes Court and are non-arbitrable.
3. Can non-signatories be bound by arbitration clauses in redevelopment agreements?
Only if there is a clear intention to arbitrate and the non-signatories are members or beneficiaries; otherwise, non-signatories claiming independent tenancy rights are not bound.