Vidya Drolia v. Durga Trading Corporation | An Explainer

Introduction

In February 2019, a division bench of the Supreme Court of India ("SC"), while considering the arbitrability of tenancy disputes under lease deeds in Vidya Drolia and Others v. Durga Trading Corporation and Others¹ disagreed with the ratio laid down by another division bench of the SC in Himangni Enterprises v. Kamaljeet Singh Ahluwalia². It was held in Himangni Enterprises³ that disputes arising out of lease deeds were governed by the Transfer of Property Act, 1882, hence, were non-arbitrable. Pursuant to the reference, a three-member bench of the SC recently passed a judgment⁴ ("Vidya Drolia"), inter alia, holding that lease deeds are arbitrable if they meet certain criteria. Apart from settling the conundrum around arbitrability of tenancy disputes under lease deeds, Vidya Drolia touched upon other legal positions in connection with the Arbitration and Conciliation Act, 1996 ("Act"). This article delves into the nuances of arbitration brought out