CASE COMMENTARY "VIDYA DROLIA AND OTHERS V. DURGA TRADING CORPORATION (2021) 2 SCC 1 | Supreme Court of India | 14 December 2020"

In India for a long time there is a debate that which kind of disputes can go to arbitration. Landlords & tenants often not sure whether the arbitration clause in their agreements and lease deed was actually enforceable. This debate was settled by the Supreme Court’s three bench judgement in Vidya Drolia and Others v. Durga Trading Corporation, (2021) 2 SCC 1, decided on 14 December 2020. It started when a two-judge bench in February 2019, questioned whether an earlier court decision in Himangni Enterprises v. Kamaljeet Singh Ahlumalia ((2017) 10 SCC 706) was correct. In the Himangani Enterprises case, the court said that landlord-tenant dispute under the Transfer of Property Act, 1882 could not be settled through arbitration. Justice Sanjiv Khanna, in the Vidya Drolia case disagreed with the earlier decision and laid down a four-fold test for non-arbitrability. Court also restricts the scope of judicial inquiry under Section 8 and 11 of the Arbitration and Conciliation Act, 1996, and clarified the legal rules for disputes involving fraud.