Holding

The Supreme Court held that the arbitration clause in Clause 33 is valid and Section 41 does not preclude arbitration, so the High Court was correct in appointing an arbitrator.

Summary

The dispute arose from a Leave and License Agreement between Motilal Oswal Financial Services Ltd. and Santosh Cordeiro, which contained an arbitration clause in Clause 33. The respondent filed a Section 11 application under the Arbitration & Conciliation Act, 1996 seeking appointment of a sole arbitrator, which the High Court allowed despite the appellant’s claim that the matter was non‑arbitrable under Section 41 of the Presidency Small Cause Courts Act, 1882. The Supreme Court examined whether Section 11(6A) requires the court to look only at the existence of an arbitration agreement and whether Section 41 bars arbitration in such landlord‑tenant disputes. Relying on the language of Section 11(6A) and distinguishing the facts from the Central Warehousing case, the Court held that an arbitration agreement does exist and Section 41 does not automatically invalidate it. The Court also reiterated that questions of arbitrability and the merits of the claim are for the arbitrator to decide under Section 16. Consequently, the appeal was dismissed and the arbitrator was directed to proceed with the arbitration.

Issues considered

The applicability of Section 11(6A) of the Arbitration & Conciliation Act, 1996 in determining the existence of an arbitration agreement.
Whether Section 41 of the Presidency Small Cause Courts Act, 1882 renders the arbitration clause in the Leave and License Agreement non‑arbitrable.
Whether the High Court was correct in appointing an arbitrator despite the appellant’s objection of non‑arbitrability.

Legislation cited

Arbitration & Conciliation Act, 1996s. 11, s. 11(6A), s. 16, s. 34, s. 37, s. 8
Indian Contract Act, 1872s. 10, s. 28
Presidency Small Cause Courts Act, 1882s. 41
Transfer of Property Act, 1882

Headnote

Issue for Consideration Whether the High Court has rightly allowed the application filed by the respondent u/s.11, Arbitration & Conciliation Act, 1996. Headnotes† Arbitration & Conciliation Act, 1996 – s.11(6A) – Presidency Small Cause Courts Act, 1882 – s.41 A&C Act application filed by the respondent seeking appointment of a sole arbitrator in accordance with clause 33 of the arbitration agreement of the Leave and License Agreement, and appointed an arbitrator to adjudicate the dispute between the parties – Appellant took objection that

Subjects

ArbitrationSection 11(6A)Section 41Non‑arbitrabilityLeave and License AgreementCompetence‑competenceArbitration agreementPresidency Small Cause Courts ActArbitral jurisdiction

Judgment

[2026] 1 S.C.R. 1 : 2026 INSC 5

Motilal Oswal Financial Services Limited
v.
Santosh Cordeiro and Another
(Civil Appeal No. 36 of 2026)
05 January 2026
[J.B. Pardiwala and K.V. Viswanathan,* JJ.]

Issue for Consideration
Whether the High Court has rightly allowed the application filed by
the respondent u/s.11, Arbitration & Conciliation Act, 1996.

Headnotes†
Arbitration & Conciliation Act, 1996 – s.11(6A) – Presidency
Small Cause Courts Act, 1882 – s.41 – Single Judge allowed
the s.11, A&C Act application filed by the respondent seeking
appointment of a sole arbitrator in accordance with clause
33 of the arbitration agreement of the Leave and License
Agreement, and appointed an arbitrator to adjudicate the
dispute between the parties – Appellant took objection that
the dispute is non-arbitrable in view of s.41, 1882 Act –
Raised the ground of non-arbitrability u/s.41,1882 Act before
the arbitrator and filed a s.16 application under the A&C Act
before the arbitrator – Dismissed by arbitrator – Whether the
High Court had rightly allowed the application filed by the
respondent u/s.11, A&C Act:
Held: Leave and License agreement in Clause 33 contained an
Arbitration clause – Paragraph 40 of the Full Bench judgment of
the Bombay High Court in Central Warehousing relied on by the
appellant cannot be understood on the facts of the present case
to mean that Clause 33 of the Leave and License Agreement
containing the arbitration clause has ceased to exist – An
examination u/s.11(6-A) indicates that there exists an arbitration
agreement between the parties – Furthermore, s.41 is a provision
conferring jurisdiction on the Small Causes Court for certain types
of disputes and cannot be interpreted to mean that ex proprio vigore
(by its own force), it neutralizes arbitration clauses in agreements –
Conferment of jurisdiction on a specific court or creation of a public

* Author
2 [2026] 1 S.C.R.

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forum, may not be the decisive test to answer and decide whether
arbitrability is impliedly barred – Since, the Arbitrator has taken a
decision on the s.16 application thus, parties have to work out their
remedies in accordance with law – As and when such remedies
are resorted to, they will be decided uninfluenced by any of the
observations made herein – All questions between the parties
other than the one answered herein based on s.11(6-A), A&C Act
are left open. [Paras 14, 17, 21, 23, 27]

Arbitration & Conciliation Act, 1996 – s.11(6A) – Presidency
Small Cause Courts Act, 1882 – Appellant relied on the
Full Bench judgment of the Bombay High Court in Central
Warehousing which inter alia held that the Arbitration
Agreement in the situation referred therein would be invalid
and inoperative on the principle that it would be against public
policy to allow the parties to contract out of the exclusive
jurisdiction of Small Causes Court by virtue of s.41 of the Act
of 1882 – Appellant submitted that in view of this holding, even
while examining within the contours of s.11(6-A) this Court will
be obliged to conclude that no arbitration agreement existed:
Held: Submission not countenanced, reasons stated – Paragraph
40 of Central Warehousing cannot be understood on the facts
of the present case to mean that Clause 33 of the Leave and
License Agreement has ceased to exist – The judgement in Central
Warehousing is dealt with only to decipher whether on account
of the said judgement, Clause 33 of the Leave and License
Agreement in the present case, containing the arbitration clause
is non-existent – It is not – An examination u/s.11(6-A) indicates
that there exists an arbitration agreement between the parties – An
appeal is pending in this Court against the judgement in Central
Warehousing – That appeal may be decided on its own merits – This
Court is not to be taken to have pronounced on the correctness of
Central Warehousing one way or the other. [Paras 21, 23]

Arbitration & Conciliation Act, 1996 – s.11(6-A) – Presidency
Small Cause Courts Act, 1882 – s.41:
Held: Leave and License agreement in Clause 33 contained an
Arbitration clause – In a proceeding u/s.11, A&C Act, the Court
is to confine the examination to the existence of an Arbitration
Agreement – s.11(6-A) which was brought into force w.e.f
23.10.2015, though omitted by Act 33 of 2019, the omission has
[2026] 1 S.C.R. 3

Motilal Oswal Financial Services Limited v.
Santosh Cordeiro and Another

not yet been notified – Hence, the jurisdiction of this Court is
only to inspect or scrutinize the dealings between the parties for
determination about the existence of an Arbitration Agreement.
[Paras 14, 17]

Arbitration – Issue of arbitrability or otherwise of a dispute –
Conferment of jurisdiction on a specific court or creation of
a public forum not the decisive test to answer and decide
whether arbitrability is impliedly barred:
Held: Creation of a specific forum as a substitute for Civil Court
or specifying the Civil Court may not be enough to accept the
inference of implicit non-arbitrability – Conferment of jurisdiction
on a specific court or creation of a public forum though eminently
significant, may not be the decisive test to answer and decide
whether arbitrability is impliedly barred. [Para 21]

Case Law Cited
Natraj Studios Private Limited. v. Navrang Studios and Another
[1981] 2 SCR 466 : (1981) 1 SCC 523; Booz Allen and Hamilton
Inc v. SBI Home Finance Limited and Others [2011] 7 SCR 310 :
(2011) 5 SCC 532; Vidya Drolia and Others v. Durga Trading
Corporation [2020] 11 SCR 1001 : (2021) 2 SCC 1; In re Interplay
Between Arbitration Agreements under Arbitration and Conciliation
Act, 1996 & Stamp Act, 1899 [2023] 15 SCR 1081 : (2024) 6
SCC 1; Vidya Drolia and Others v. Durga Trading [2017] 10 SCR
139 : (2017) 10 SCC 706 – referred to.
Central Warehousing Corporation, Mumbai v. Fortpoint Automotive
Pvt. Ltd., Mumbai, 2009 SCC OnLine Bom 2023;Globsport
India Pvt. Ltd. v. Mayfair Housing Pvt. Ltd. (2015) OnLine Bom
4176 – referred to.

List of Acts
Arbitration & Conciliation Act, 1996; Presidency Small Cause Courts
Act, 1882; Contract Act, 1872.

List of Keywords
Section 11(6A), Arbitration & Conciliation Act, 1996; Section 41,
Presidency Small Cause Courts Act, 1882; Dispute non-arbitrable;
Non-arbitrability under Section 41, Presidency Small Cause
4 [2026] 1 S.C.R.

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Courts Act, 1882; Arbitration agreement of the Leave and License
Agreement; Leave and License agreement contained Arbitration
clause; Section 16, Arbitration & Conciliation Act, 1996; There
exists an arbitration agreement between the parties; Small Causes
Court; ex proprio vigore (by its own force).

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 36 of 2026
From the Judgment and Order dated 02.05.2024 of the High Court
of Judicature at Bombay in CAA No. 9 of 2024

Appearances for Parties
Advs. for the Appellant(s):
Chirag M. Shah, Ms. Sanjana Saddy.
Advs. for the Respondent(s):
Rishabh Shah, Dhaval Mehrotra, Ms. Shivani Bansal, Ms. Aditi
Desai, For M/s. ADS Legal.

Judgment / Order of the Supreme Court

Judgment

K.V. Viswanathan, J.

1. Leave granted.
2. The present appeal calls in question the correctness of the order
dated 02.05.2024 passed by the Single Judge of the High Court of
Judicature at Bombay in Commercial Arbitration Application No.9
of 2024. By the said order, the learned Single Judge allowed the
Section 11 Application filed by the respondent under the Arbitration
& Conciliation Act, 1996 (for short “the A&C Act”) and appointed
an arbitrator to adjudicate the dispute between the parties. The
only objection taken by the appellant herein was that the dispute is
non-arbitrable in view of Section 41 of the Presidency Small Cause
Courts Act, 1882 (for short “the 1882 Act”). The learned Single
Judge made a short shrift of the said objection by holding that the
place where the property in question, which was the subject matter
of the dispute, was situated, i.e. Malad, was outside the jurisdiction
of the Small Causes Court. This finding has now turned out to be
[2026] 1 S.C.R. 5

Motilal Oswal Financial Services Limited v.
Santosh Cordeiro and Another

a damp squib, since parties before us are ad idem that Malad area
is covered under the jurisdiction of the Small Causes Court. We
could have rest content by remanding the matter to the High Court
for fresh consideration. However, that will only prolong the dispute
and, hence, we have decided to answer the issues arising in the
case ourselves.

BRIEF FACTS OF THE CASE: -
3. With regard to the premises situated at Unit No.718, admeasuring
2925 sq. ft., 7th Floor, Palm Spring Centre, Link Road, Malad (West),
Mumbai, the appellant entered into a Leave and License Agreement
on 06.10.2017 with the respondent. The period of the Leave and
License was 60 months from 01.10.2017 to 30.10.2022. Though
the appellant terminated the said agreement on 31.12.2019, after
exchange of correspondence between the parties, the said termination
was reversed and an Addendum dated 13.03.2020 was entered
into extending the Leave and License period from 60 months to 96
months with a lock-in period of 72 months.
4. According to the appellant, due to COVID-19 pandemic, they were
unable to continue the arrangement and citing the force majeure
clause in the agreement, they handed over the keys and vacant
peaceful possession of the premises to the respondent on 09.09.2020.
According to the appellant, they intimated the respondents about the
same on 10.10.2020 by writing an email. The appellant also sought
refund of the security deposit.
5. On 28.06.2023, the respondent No.1 called upon the appellant to
pay a sum of Rs.94,40,152/- along with interest @ 24% towards the
alleged arrears of license fees for the balance lock-in period i.e. from
01.09.2020 to 14.06.2023. The appellants wrote back on 17.07.2023
denying any liability and seeking refund of security deposit of Rs.
10 lakhs.
6. The appellant on 17.07.2023 received a notice dated 15.07.2023
issued by the respondent under Section 21 of the A&C Act invoking
Clause 33 of the arbitration agreement of the Leave and License
Agreement dated 06.10.2017 and Addendum dated 13.03.2020.
Clause 33 of the Leave and License Agreement dated 06.10.2017
reads as under: -
6 [2026] 1 S.C.R.

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“In the event of the any dispute or difference arising
between the Licensors and the Licensee hereto concerning
or relating to the interpretation of these presents or the
interpretation or effect of any provisions thereof or relating
to the liability or obligation on the part of any of the parties
hereto, the same shall be referred to arbitration and Sole
Arbitrator shall be appointed by the mutual consent of
the Parties. The award passed by the sole arbitrator
shall be binding on both the parties. The arbitration shall
be in Mumbai and in accordance with and subject to the
provisions of the Arbitration and Conciliation Act, 1996 or
any statutory modification or re-enhancements thereof for
the time being in force.”
This was followed by an application under Section 11 of the A&C
Act filed on 13.08.2023 by the respondent seeking appointment of
a sole arbitrator in accordance with clause 33 set out above.
7. On 01.11.2023, the appellant filed its reply objecting to the appointment
of the arbitrator and specifically relied on Section 41 of the 1882 Act
and contended that only the Small Causes Court would have exclusive
jurisdiction to entertain and try any suit or proceeding arising from
the relationship between a licensor and licensee and that since the
said statute is a special remedy, the dispute is not arbitrable. The
High Court, by its order dated 02.05.2024, allowed the application
and appointed the arbitrator.
8. Section 41 of the 1882 Act reads as under:-
“41. Suits or Proceedings between licensors and
licensees or landlords and tenants for recovery of
possession of immovable property and license fees
or rent, except to those to which other Acts apply to
lie in Small Cause Court.- (1) Notwithstanding anything
contained elsewhere in this Act but subject to the provisions
of sub-section (2), the Court of Small Cause shall have
jurisdiction to entertain and try all suits and proceedings
between a licensor and licensee, or a landlord and tenant,
relating to the recovery of possession of any immovable
property situated in Greater Bombay, or relating to the
recovery of the licence fee or charges or rent therefor,
irrespective of the value of the subject-matter of such
suits or proceedings.
[2026] 1 S.C.R. 7

Motilal Oswal Financial Services Limited v.
Santosh Cordeiro and Another

(2) Nothing contained in sub-section (1) shall apply to
suits or proceedings for the recovery of possession of any
immovable property, or of licence fee for charges of rent
thereof, to which the provisions of the Bombay Rents, Hotel
and Lodging House Rates Control Act, 1947, the Bombay
Government Premises (Eviction) Act, 1955, the Bombay
Municipal Corporation Act, the Maharashtra Housing and
Area Development Act, 1976 or any other law for the time
being in force, apply.”
9. Proceedings before the arbitrator were carried on. On 03.06.2024,
the appellant raised the ground of non-arbitrability under Section 41
of the 1882 Act and filed a Section 16 application under the A&C
Act before the arbitrator. On 11.10.2024, the arbitrator dismissed
the Section 16 application by holding that the amount sought to be
recovered partakes the character of a ‘debt’ and is not a claim for
license fee for use and occupation. On 28.01.2025, the Special Leave
Petition was filed before this Court and this Court, on 21.02.2025,
stayed the impugned order. That is how the matter presents itself
before us.
10. We have heard Mr. Chirag M. Shah, learned advocate, for the appellant
and Mr. Rishabh Shah, learned advocate for the respondents. We
have perused the records as well as written submissions filed by
the respective parties.

CONTENTIONS OF THE APPELLANT: -
11. The learned counsel for the appellant contends that in the Section
11 application filed by the respondents, a clear case for recovery of
license fee was sought, and expressly it was stated that the amount
claimed did not partake the character of damages; that the reliance
on the judgment of the Division Bench of the Bombay High Court
in Globsport India Pvt. Ltd. vs. Mayfair Housing Pvt. Ltd1 was
untenable in view of the Full Bench judgment of the Bombay High
Court in Central Warehousing Corporation, Mumbai v. Fortpoint
Automotive Pvt. Ltd., Mumbai2; that Central Warehousing (supra)
clearly holds that exclusive jurisdiction is conferred on the Court

1 (2015) OnLine Bom 4176
2 2009 SCC OnLine Bom 2023
8 [2026] 1 S.C.R.

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of Small Causes to entertain and decide all suits and proceedings
between a licensor and licensee or a landlord and tenant relating
to recovery of possession or recovery of license fee/rent in respect
of premises situated in Greater Bombay; that this Court in Natraj
Studios Private Limited. v. Navrang Studios and Another3, while
interpreting a pari materia provision held that the parties could not
contract out of a special legislation that conferred exclusive jurisdiction
over landlord-tenant disputes to the Small Causes Court; that as
long as the suit was between a licensor and licensee or a landlord
and tenant, concerning immovable property, relating to recovery of
possession or recovery of license fee, charges or rent, it will lie only
before the Small Causes Court and the jurisdiction of all other courts
is ousted; that the 1882 Act is a special legislation with a special
purpose and grants exclusive jurisdiction on special courts which
have been set up under such legislation and that in Booz Allen
and Hamilton Inc vs. SBI Home Finance Limited And Others4,
this Court held that tenancy/licensor/licensee disputes governed by
special statutes are not arbitrable.

CONTENTIONS OF THE RESPONDENT: -
12. The learned counsel for the respondent submitted the only exclusion
in Clause 355 of the agreement was that the arbitrator was not to
have power to interfere or arbitrate on issue of vacating the premises
on expiry of license period and there was no bar to arbitrate on the
obligation on the parties to pay the license fee/rent/use and occupation
charges; that the dispute was only for payment of compensation
for the “balance lock-in period”; that the claim of the respondents
is neither for recovery of possession nor license fee; that the
respondents’ case is supported by the judgment in Globsport (supra);
that the judgment in Vidya Drolia And Others vs. Durga Trading
Corporation6, (hereinafter called Vidya Drolia - II), makes it clear
that mere conferral of jurisdiction on a specific court or creation of a
public fora would not be decisive to answer the issue of arbitrability

3 (1981) 1 SCC 523
4 (2011) 5 SCC 532
5 The reference to arbitration will in no way affect the obligation of the Licensee to vacate the licensed
premises on the expiry or earlier determination of the License period and the arbitrators shall have no
power to interfere with or arbitrate on issue of vacating the licensed premises on expiry of the licensed
period.
6 (2021) 2 SCC 1
[2026] 1 S.C.R. 9

Motilal Oswal Financial Services Limited v.
Santosh Cordeiro and Another

or otherwise of a dispute; and that no statutory protection under the
Maharashtra Rent Control Act was denied to the appellant.

QUESTION FOR CONSIDERATION: -
13. In the above background, the question for consideration is whether the
High Court has rightly allowed the application filed by the respondent
under Section 11 of the A&C Act?

ANALYSIS AND DISCUSSION: -
14. There is no dispute that the Leave and License agreement of
06.10.2017, in Clause 33, contained an Arbitration clause. In a
proceeding under Section 11 of the A&C Act, the Court is to confine
the examination to the existence of an Arbitration Agreement. Section
11 (6-A) which was brought into force with effect from 23.10.2015,
though omitted by Act 33 of 2019, the omission has not yet been
notified.
15. Section 11(6A) of the A&C Act is reproduced hereunder:-
“11. Appointment of arbitrators.—(1) xxx xxx .
(2) xxx xxx
(3) xxx xxx
(4) xxx xxx
(5) xxx xxx
(6) xxx xxx
(6A) The Supreme Court or, as the case may be, the
High Court, while considering any application under sub-
section (4) or sub-section (5) or sub-section (6), shall,
notwithstanding any judgment, decree or order of any
Court, confine to the examination of the existence of an
arbitration agreement.”
16. A Seven Judge Bench of this Court in In re Interplay Between
Arbitration Agreements under Arbitration and Conciliation Act,
1996 & Stamp Act, 18997, (hereinafter called as ‘In re-Interplay’)

7 (2024) 6 SCC 1
10 [2026] 1 S.C.R.

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while dealing with the aspect of how Vidya Drolia (Supra) proceeded
on the assumption that Section 11(6-A) has been omitted, clarified
the position thus:-
“62. A plain reading of Section 11(6-A) makes it evident
that it is referring to an arbitration agreement. Section
11(6-A) provides that courts must confine themselves to an
examination of the existence of the arbitration agreement.
The word “confine” indicates the intention of the legislature
to limit the jurisdiction of the Courts at the stage of the
appointment of an arbitrator.
63. In Vidya Drolia [Vidya Drolia v. Durga Trading Corpn.,
(2021) 2 SCC 1], this Court held : (SCC p. 49, para 21)
“21. The term “agreement” is not defined in the Arbitration
Act, albeit it is defined in Section 10 of the Contract Act,
1872 (for short “the Contract Act”), … as contracts made
by free consent of parties competent to contract, for a
lawful consideration and with a lawful object, and are not
thereby expressly declared to be void. Section 10 of the
Contract Act also stipulates that aforesaid requirements
shall not affect any law in force in India (and not expressly
repealed) by which a contract is required to be made in
writing, in presence of witnesses or any law relating to
registration of documents. Thus, an arbitration agreement
should satisfy the mandate of Section 10 of the Contract
Act, in addition to satisfying other requirements stipulated
in Section 7 of the Arbitration Act.”
64. The above observations are correct insofar as the
arbitration agreement must satisfy the requirements of
the Contract Act. However, the authority empowered to
adjudicate whether the requirements of the Contract Act
are satisfied is the Arbitral Tribunal, under Section 16 of
the Arbitration Act. This is addressed in greater detail in
the following segments.
163. We are of the opinion that the above premise of the
Court in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn.,
[(2021) 2 SCC 1] is erroneous because the omission of
Section 11(6-A) has not been notified and, therefore, the
[2026] 1 S.C.R. 11

Motilal Oswal Financial Services Limited v.
Santosh Cordeiro and Another

said provision continues to remain in full force. Since
Section 11(6-A) continues to remain in force, pending the
notification of the Central Government, it is incumbent
upon this Court to give true effect to the legislative intent.
164. The 2015 Amendment Act has laid down different
parameters for judicial review under Section 8 and
Section 11. Where Section 8 requires the Referral
Court to look into the prima facie existence of a valid
arbitration agreement, Section 11 confines the Court’s
jurisdiction to the examination of the existence of
an arbitration agreement. Although the object and
purpose behind both Sections 8 and 11 is to compel
parties to abide by their contractual understanding, the
scope of power of the Referral Courts under the said
provisions is intended to be different. The same is also
evident from the fact that Section 37 of the Arbitration
Act allows an appeal from the order of an Arbitral
Tribunal refusing to refer the parties to arbitration
under Section 8, but not from Section 11. Thus, the
2015 Amendment Act has legislatively overruled the
dictum of Patel Engg. [SBP & Co. v. Patel Engg. Ltd.,
(2005) 8 SCC 618] where it was held that Section 8 and
Section 11 are complementary in nature. Accordingly,
the two provisions cannot be read as laying down a
similar standard.
165. The legislature confined the scope of reference
under Section 11(6-A) to the examination of the
existence of an arbitration agreement. The use of the
term “examination” in itself connotes that the scope
of the power is limited to a prima facie determination.
Since the Arbitration Act is a self-contained code, the
requirement of “existence” of an arbitration agreement
draws effect from Section 7 of the Arbitration Act. In
Duro Felguera [Duro Felguera, S.A. v. Gangavaram
Port Ltd., (2017) 9 SCC 729, this Court held that the
Referral Courts only need to consider one aspect to
determine the existence of an arbitration agreement —
whether the underlying contract contains an arbitration
agreement which provides for arbitration pertaining to
12 [2026] 1 S.C.R.

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the disputes which have arisen between the parties to
the agreement. Therefore, the scope of examination
under Section 11(6-A) should be confined to the
existence of an arbitration agreement on the basis
of Section 7. Similarly, the validity of an arbitration
agreement, in view of Section 7, should be restricted
to the requirement of formal validity such as the
requirement that the agreement be in writing. This
interpretation also gives true effect to the doctrine
of competence-competence by leaving the issue of
substantive existence and validity of an arbitration
agreement to be decided by Arbitral Tribunal under
Section 16. We accordingly clarify the position of law
laid down in Vidya Drolia [Vidya Drolia v. Durga Trading
Corpn., (2021) 2 SCC 1 in the context of Section 8 and
Section 11 of the Arbitration Act.
166. The burden of proving the existence of arbitration
agreement generally lies on the party seeking to rely on
such agreement. In jurisdictions such as India, which
accept the doctrine of competence-competence, only prima
facie proof of the existence of an arbitration agreement
must be adduced before the Referral Court. The Referral
Court is not the appropriate forum to conduct a mini-trial
by allowing the parties to adduce the evidence in regard to
the existence or validity of an arbitration agreement. The
determination of the existence and validity of an arbitration
agreement on the basis of evidence ought to be left to the
Arbitral Tribunal. This position of law can also be gauged
from the plain language of the statute.
167. Section 11(6-A) uses the expression “examination
of the existence of an arbitration agreement”. The
purport of using the word “examination” connotes
that the legislature intends that the Referral Court
has to inspect or scrutinise the dealings between the
parties for the existence of an arbitration agreement.
Moreover, the expression “examination” does not
connote or imply a laborious or contested inquiry. [ P.
Ramanatha Aiyar, The Law Lexicon (2nd Edn., 1997)
666.] On the other hand, Section 16 provides that the
[2026] 1 S.C.R. 13

Motilal Oswal Financial Services Limited v.
Santosh Cordeiro and Another

Arbitral Tribunal can “rule” on its jurisdiction, including
the existence and validity of an arbitration agreement.
A “ruling” connotes adjudication of disputes after
admitting evidence from the parties. Therefore, it
is evident that the Referral Court is only required
to examine the existence of arbitration agreements,
whereas the Arbitral Tribunal ought to rule on its
jurisdiction, including the issues pertaining to the
existence and validity of an arbitration agreement. A
similar view was adopted by this Court in Shin-Etsu
Chemical Co. Ltd. v. Aksh Optifibre Ltd., (2005) 7 SCC
234].
169. When the Referral Court renders a prima facie opinion,
neither the Arbitral Tribunal, nor the Court enforcing the
arbitral award will be bound by such a prima facie view.
If a prima facie view as to the existence of an arbitration
agreement is taken by the Referral Court, it still allows
the Arbitral Tribunal to examine the issue in depth. Such
a legal approach will help the Referral Court in weeding
out prima facie non-existent arbitration agreements. It will
also protect the jurisdictional competence of the Arbitral
Tribunals to decide on issues pertaining to the existence
and validity of an arbitration agreement.”
[Emphasis supplied]

17. Hence, it is very clear that our jurisdiction is only to inspect or
scrutinize the dealings between the parties for determination about
the existence of an Arbitration Agreement. We are not to launch a
laborious or a contested inquiry.
18. Our task would have been much simpler but for the reliance placed
by the learned counsel for the appellant on the Full Bench judgment
of the Bombay High Court in Central Warehousing (supra). Central
Warehousing (supra) examined the question whether in view of
Section 58 of the A&C Act, if in any agreement between licensor

8 Extent of judicial intervention.- Notwithstanding anything contained in any other law for the time being
in force, in matters governed by this Part, no judicial authority shall intervene except where so provided
in this Part.
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and licensee an arbitration clause exists, the jurisdiction of the Small
Causes Court under the Presidency Small Causes Court Act, 1882,
would be ousted.
19. While answering the said question, the Full Bench traced the
legislative history of Section 41(2) of the Act of 1882. It found that
the object of introducing Section 41 in the amended form, was to
avoid multiplicity of proceedings in different Courts and consequent
waste of public time and money and to avoid unnecessary delay and
hardship to the suitors. The Full Bench found that the objective was
to have uniformity of the procedure so that all suits and proceedings
between a landlord and tenant or a licensor and licensee for recovery
of possession of premises or for recovery of rent or license fee,
irrespective of the value of the subject matter, should go to and be
disposed of by Small Causes Court. The Full Bench found that the
provision vested exclusive jurisdiction of the Court of Small Causes
to entertain such suits. Ultimately, for the purpose of our case we
only need to deal with the operative portion set out in Para 40 of
the said judgment which reads as under: -
“40. In summation, we would hold that section 41(1) of the
Act of 1882 is a special law which in turn has constituted
special Courts for adjudication of disputes specified
therein between the licensor and licensee or a landlord
and tenant. The effect of section 41(2) of the Act of 1882
is only the suits or proceedings for recovery of possession
of immovable property or of licence fee thereof, to which,
the provisions of specified Acts or any other law for the
time being in force apply, have been excepted from the
application of non-obstante clause contained in section
41(1) of the Act. The expression “or any other law for the
time being in force” appearing in section 41(2) will have
to be construed to mean that such law should provide for
resolution of disputes between licensor and licensee or
a landlord and tenant in relation to immovable property
or licence fee thereof, to which immovable property, the
provisions of that Act are applicable. The Act of 1996 is not
covered within the ambit of section 41(2) in particular the
expression “or any other law for the time being in force”
contained therein. The question whether the exclusive
jurisdiction of the Small Causes Court vested in terms of
[2026] 1 S.C.R. 15

Motilal Oswal Financial Services Limited v.
Santosh Cordeiro and Another

section 41 of the Act of 1882 is ousted, if an agreement
between the licensor and licensee contains a clause for
arbitration, the same will have to be answered in the
negative. For, section 5 of the Act of 1996 in that sense is
not an absolute non-obstante clause. Section 5 of the Act
of 1996 cannot affect the laws for the time being in force
by virtue of which certain disputes may not be submitted
to arbitration, as stipulated in section 2(3) of the Act of
1996. We hold that section 41 of the Act of 1882 falls
within the ambit of section 2(3) of the Act of 1996. As a
result of which, even if the Licence Agreement contains
Arbitration Agreement, the exclusive jurisdiction of
the Courts of Small Causes under section 41 of the
Act of 1882 is not affected in any manner. Whereas,
Arbitration Agreement in such cases would be invalid
and inoperative on the principle that it would be against
public policy to allow the parties to contract out of the
exclusive jurisdiction of the Small Causes Courts by
virtue of section 41 of the Act of 1882.”
[Emphasis supplied]

20. The appellant relies on the above paragraph which holds that the
Arbitration Agreement in the situation referred to in the paragraph
would be invalid and inoperative on the principle that it would be
against public policy to allow the parties to contract out of the
exclusive jurisdiction of Small Causes Court by virtue of Section 41
of the Act of 1882.
21. The learned counsel for the appellant submits that in view of this
holding, even while examining within the contours of Section 11(6-A)
this Court will be obliged to conclude that no arbitration agreement
existed. We are not able to countenance the submission of the
learned counsel for the appellant for the following reasons: -
I. (a). Firstly, Central Warehousing (supra) has to be understood
in the context in which it came to be decided. The said context
does not obtain here. In Central Warehousing (supra), the
petitioner therein, issued termination notices terminating the
storage warehouse facilities of the respondent therein – FAP
Limited. In response thereto, the respondent therein FAP
Limited invoked the arbitration clause. Respondent-FAP Limited
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thereafter, filed a suit under Section 41 of the Act of 1882 for
a declaration that the agreement providing storage facility was
subsisting and obtained interim orders restraining the petitioner
therein from giving effect to the termination notices. The petitioner
therein - Central Warehousing raised an objection based on the
provisions of Section 8 of the A&C Act. The preliminary objection
was overruled. Aggrieved, Central Warehousing approached
the High Court under Article 227 of the Constitution of India.
What is significant to notice is that the respondent therein FAP
Limited was in possession of the premises.
(b). In the present case, it is undisputed by both parties that
possession had been handed over by the appellant to the
respondents in September 2020. The dispute between the
parties is with regard to a monetary claim with the appellant
asserting that the security deposit should be repaid by the
respondents and the respondents claiming sums of money
towards alleged arrears of amounts payable for the balance
lock-in period. This aspect is set out only for explaining the
context of the present case and contrasting with the context in
Central Warehousing (supra).
II. (a). Secondly, pursuant to a reference made to a three-
Judge Bench in Vidya Drolia and Others v. Durga Trading
Corporation9., (hereinafter called Vidya Drolia-I), this Court
pronounced the judgment in Vidya Drolia–II (supra). Though the
judgment in re - Interplay (supra) corrected Vidya Drolia-II on
the aspect of the continuance of Section 11(6-A) in the statute
and the interpretation of the said sub-section, the other aspects
in Vidya Drolia-II have not been diluted in re - Interplay (supra).
(b). Vidya Drolia-II was actually occasioned due to another
judgment of this Court in Himangni Enterprises v. Kamaljeet
Singh Ahluwalia10, which had treated cases of ejectment
under the Transfer of Property Act similar to cases of eviction
under the Rent Control Act of the State. The Bench in Vidya
Drolia-I doubted the said judgment and in a detailed referral
order distinguished the applicability of the prior judgments of

9 (2019) 20 SCC 406
10 (2017) 10 SCC 706
[2026] 1 S.C.R. 17

Motilal Oswal Financial Services Limited v.
Santosh Cordeiro and Another

this Court in Natraj Studios (supra) and Booz Allen (supra)
to ejectment suits under the Transfer of Property Act.
(c). While dealing with the aspect of implied bars on arbitrability,
Vidya Drolia-II made the following pertinent observations: -
“53.Dhulabhai case [Dhulabhai v. State of M.P.,
(1968) 3 SCR 662 : AIR 1969 SC 78] is not directly
applicable as it relates to exclusion of jurisdiction of
civil courts, albeit we respectfully agree with the order
of reference [Vidya Drolia v. Durga Trading Corpn.,
(2019) 20 SCC 406] that Condition 2 is apposite while
examining the question of non-arbitrability. Implied
legislative intention to exclude arbitration can be seen
if it appears that the statute creates a special right or
a liability and provides for determination of the right
and liability to be dealt with by the specified courts or
the tribunals specially constituted in that behalf and
further lays down that all questions about the said
right and liability shall be determined by the court or
tribunals so empowered and vested with exclusive
jurisdiction. Therefore, mere creation of a specific
forum as a substitute for civil court or specifying
the civil court, may not be enough to accept the
inference of implicit non-arbitrability. Conferment
of jurisdiction on a specific court or creation of a
public forum though eminently significant, may
not be the decisive test to answer and decide
whether arbitrability is impliedly barred.”
[Emphasis supplied]

What is crucial to notice is that this Court clearly emphasized
that creation of a specific forum as a substitute for Civil Court
or specifying the Civil Court may not be enough to accept the
inference of implicit non-arbitrability. Conferment of jurisdiction
on a specific court or creation of a public forum though eminently
significant, may not be the decisive test to answer and decide
whether arbitrability is impliedly barred.
(d). Further for the completion of record, it is also mentioned
herein that Vidya Drolia-II expressly overruled Himangni (supra)
and held as under: -
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“79. Landlord-tenant disputes governed by the
Transfer of Property Act are arbitrable as they are
not actions in rem but pertain to subordinate rights in
personam that arise from rights in rem. Such actions
normally [Ed. : Certainly in those cases where the
dispute only affects the parties to the arbitration
clause, third-party rights would not be affected, as in
the facts of the present case. It is in such cases that
“such actions under the TPA normally would not affect
third-party rights or have erga omnes effect”. However,
one may consider cases for instance, where a sub-
tenancy exists or where the head lessee has taken a
mortgage on the lease, and the landlord invokes the
arbitration clause against the head lessee seeking
to terminate the head lease, can the sub-tenant or
mortgagee of the head lessee seek to be impleaded
in the arbitration proceedings? For termination of the
head lease would also extinguish the rights of the
sub-tenant and the mortgagee of the head lessee. The
situations posited are relatively simple ones. Often
there are numerous prior and subsequent transferees
who might be affected by the result of a dispute
between a landlord and tenant, or even between other
transferees. In such complex situations involving prior
and subsequent transfers, it would appear that the
matter would be non-arbitrable as it would appear to
satisfy the first two tests of non-arbitrability laid down
herein—see Shortnotes B and C. In a case where
the mortgagee is covered by the RDB Act and the
Sarfaesi Act, it might be rendered non-arbitrable by
virtue of the fourth test as well—see Shortnotes E
and G.] would not affect third-party rights or have
erga omnes effect or require centralised adjudication.
An award passed deciding landlord-tenant disputes
can be executed and enforced like a decree of the
civil court. Landlord-tenant disputes do not relate
to inalienable and sovereign functions of the State.
The provisions of the Transfer of Property Act do not
expressly or by necessary implication bar arbitration.
[2026] 1 S.C.R. 19

Motilal Oswal Financial Services Limited v.
Santosh Cordeiro and Another

The Transfer of Property Act, like all other Acts, has
a public purpose, that is, to regulate landlord-tenant
relationships and the arbitrator would be bound by
the provisions, including provisions which enure and
protect the tenants.
80. In view of the aforesaid, we overrule the ratio
laid down in Himangni Enterprises [Himangni
Enterprises v. Kamaljeet Singh Ahluwalia, (2017)
10 SCC 706 : (2018) 1 SCC (Civ) 82] and hold
that landlord-tenant disputes are arbitrable as the
Transfer of Property Act does not forbid or foreclose
arbitration. However, landlord-tenant disputes covered
and governed by rent control legislation would not
be arbitrable when specific court or forum has been
given exclusive jurisdiction to apply and decide special
rights and obligations. Such rights and obligations can
only be adjudicated and enforced by the specified
court/forum, and not through arbitration.”
III. Thirdly, if in this context, Section 41 is appreciated, it will be
clear that Section 41 is a provision conferring jurisdiction on the
Small Causes Court for certain types of disputes and cannot be
interpreted to mean that ex proprio vigore (by its own force), it
neutralizes arbitration clauses in agreements.
IV. Fourthly, Arbitration clauses have their roots in Section 28 of the
Contract Act, 1872, a provision completely missed in Central
Warehousing (Supra). Section 28 which speaks of agreements
in restraint of legal proceeding being void, has two important
exceptions. Relevant part of Section 28 and exceptions are
extracted hereinbelow.
“28. Agreements in restraint of legal proceedings,
void.— Every agreement,— (a) by which any party
thereto is restricted absolutely from enforcing his
rights under or in respect of any contract, by the usual
legal proceedings in the ordinary tribunals, or which
limits the time within which he may thus enforce his
rights; or (b) which extinguishes the rights of any
party thereto, or discharges any party thereto, from
any liability, under or in respect of any contract on
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the expiry of a specified period so as to restrict any
party from enforcing his rights, is void to the extent.”
Exception 1.—Saving of contract to refer to
arbitration dispute that may arise.—This section
shall not render illegal a contract, by which two or
more persons agree that any dispute which may
arise between them in respect of any subject or class
of subjects shall be referred to arbitration, and that
only the amount awarded in such arbitration shall
be recoverable in respect of the dispute so referred.
Exception 2.- Saving of contract to refer questions
that have already arisen.- Nor shall this section
render illegal any contract in writing, by which two
or more persons agree to refer to arbitration any
question between them which has already arisen, or
affect any provision of any law in force for the time
being as to references to arbitration.”
It will be clear that when two or more persons agree to refer a matter
to arbitration, Section 28 will not render that agreement invalid.
22. Considerable arguments were advanced both in the oral submissions
and in the written note about whether the nature of the claim is in
the form of debt or whether it pertains to a matter covered by the
ambit of Section 41(1). Arguments were also advanced on the issue
as to how the dispute between the parties is a dispute in personam
(as contended by the respondent) pertaining only to the recovery of
a debt as opposed to the appellant contending that it is a dispute
relating to the recovery of the license fee or charges or rent, covered
under Section 41(1) of the 1882 Act. Reliance was placed on Natraj
Studios (supra) and Booz Allen (supra) by the appellant and
Globsport (supra) by the respondents.
23. In exercise of our jurisdiction under Section 11, we are not concerned
with the said dispute. That will be for the arbitrator to decide. We have
been told that the Arbitrator has taken a decision on the Section 16
application. If that be so, parties have to work out their remedies in
accordance with law. As and when such remedies are resorted to,
they will be decided uninfluenced by any of the observations made
herein. All questions between the parties other than the one answered
herein based on Section 11(6-A) of the A&C Act are left open.
[2026] 1 S.C.R. 21

Motilal Oswal Financial Services Limited v.
Santosh Cordeiro and Another

24. Section 16 of the A&C Act reads as under: -
“16. Competence of arbitral tribunal to rule on its
jurisdiction.—(1) The arbitral tribunal may rule on its own
jurisdiction, including ruling on any objections with respect
to the existence or validity of the arbitration agreement,
and for that purpose,—
(a) an arbitration clause which forms part of a contract
shall be treated as an agreement independent of the other
terms of the contract; and
(b) a decision by the arbitral tribunal that the contract is
null and void shall not entail ipso jure the invalidity of the
arbitration clause.
(2) A plea that the arbitral tribunal does not have
jurisdiction shall be raised not later than the submission
of the statement of defence; however, a party shall not
be precluded from raising such a plea merely because
that he has appointed, or participated in the appointment
of, an arbitrator.
(3) A plea that the arbitral tribunal is exceeding the scope of
its authority shall be raised as soon as the matter alleged
to be beyond the scope of its authority is raised during
the arbitral proceedings.
(4) The arbitral tribunal may, in either of the cases referred
to in sub-section (2) or sub-section (3), admit a later plea
if it considers the delay justified.
(5) The arbitral tribunal shall decide on a plea referred to
in sub-section (2) or sub-section (3) and, where the arbitral
tribunal takes a decision rejecting the plea, continue with
the arbitral proceedings and make an arbitral award.
(6) A party aggrieved by such an arbitral award may make
an application for setting aside such an arbitral award in
accordance with section 34.”
25. In re Interplay (supra), this Court held as follows: -
“123. The doctrine of kompetenz-kompetenz (also known
as competence-competence), as originally developed
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in Germany, was traditionally understood to imply that
arbitrators are empowered to make a final ruling on their
own jurisdiction, with no subsequent judicial review of the
decision by any court. [ Fouchard, Gaillard, Goldman on
International Commercial Arbitration, Emmanuel Gaillard
and John Savage (Eds.), (1999) 396.] However, many
jurisdictions allow an Arbitral Tribunal to render a decision
on its jurisdiction, subject to substantive judicial review.
[Gary Born, International Arbitration Law and Practice (3rd
Edn., 2021) 1143.]
124. It is a well-recognised principle of public international
law that a legal authority possessing adjudicatory powers
has the right to decide its own jurisdiction. [Interpretation
of the Greco-Turkish Agreement of December 1st, 1926,
In re, 1928 SCC OnLine PCIJ 5] Similarly, it is a general
rule of international arbitration law that an Arbitral Tribunal
has the power to determine its own jurisdiction. The ability
of an Arbitral Tribunal to determine its own jurisdiction is
an important facet of arbitration jurisprudence because it
gives effect to the separability presumption. The separability
presumption insulates the arbitration agreement from the
defects of the underlying contract, and thereby ensures
the sustenance of the tribunal’s jurisdiction over the
substantive rights and obligations of the parties under the
underlying contract even after such a contract is put to an
end. The doctrine of competence-competence allows the
tribunal to decide on all substantive issues arising out of
the underlying contract, including the existence and validity
of the arbitration agreement.”
26. For the reasons set out hereinabove, paragraph 40 of Central
Warehousing (Supra) cannot be understood on the facts of the
present case to mean that Clause 33 of the Leave and License
Agreement has ceased to exist.
27. We have been constrained to deal with the judgement in Central
Warehousing (supra) only to decipher whether on account of the said
judgement, Clause 33 of the Leave and License Agreement dated
06.10.2017, in the present case, containing the arbitration clause is
non-existent. We hold that it is not and that an examination under
Section 11(6-A) indicates that there exists an arbitration agreement
[2026] 1 S.C.R. 23

Motilal Oswal Financial Services Limited v.
Santosh Cordeiro and Another

between the parties. We are conscious that an appeal is pending
in this Court against the judgement in Central Warehousing
(supra). That appeal may be decided on its own merits and we are
not to be taken to have pronounced on the correctness of Central
Warehousing (supra) one way or the other.
28. The appeal is dismissed for the reasons stated above. No order as
to costs. The Arbitrator shall proceed with the adjudication of the
disputes and conclude the proceedings within 6 months from today.

Result of the case: Appeal dismissed.

†
Headnotes prepared by: Divya Pandey