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5. In Vidya Drolia, another division bench referring to Section 11(6- A) has observed that the referral stage requirement is to only examine ‘existence of an arbitration agreement’ and not validity of the arbitration agreement. 246th Report of the Law Commission of India had suggested twin examination whether the agreement ‘exists’ or is ‘null and void’, albeit the Section 11(6-A), as enacted, requires ‘existence of an arbitration agreement’, and the  prerequisite that the arbitration agreement should not be ‘null and void’ was deliberately omitted. The wording of Section 11(6-A) was contrasted with Section 16(1) to draw distinction between ‘validity of an arbitration agreement’ and ‘existence of an arbitration agreement’. Reference was made to observations of Kurian Joseph, J. in Duro Felguera, S.A v. Gangavaram Port Limited,5 to the effect that the scope of Section 11(6-A) is limited, only to see whether an arbitration agreement exists – nothing more, nothing less. The legislative policy and purpose are to essentially minimize judicial intervention at the appointment stage. Referring to Sections 111, 114 and 114A of the Transfer of Property Act, it is observed that there is nothing in this Act and law to show that a dispute relating to the determination of lease, arrears of rent etc. cannot be decided by an arbitrator. The grounds predicated on public policy could be raised before the arbitrator as they could be raised before the court. The arbitrator could well abide by the provisions of Sections 114 and 114A, and apply the public policy considerations for the protection of tenants as a class. Referring to Booz Allen & Hamilton Inc., it was observed that the right in rem is a right exercisable against the world at large and is not amenable to 5 (2017) 9 SCC 729 arbitration, whereas in case of rights in personam an interest is protected against a specific individual, and is referable to arbitration. Further, subordinate rights in personam arising from rights in rem have always been considered to be arbitrable. Decision in Natraj Studios (P) Ltd. was distinguishable, as the rent control legislation being applicable, the tenancy disputes were to be exclusively decided by the small cause court in Bombay. The legislation had provided that no other court would have jurisdiction to entertain any suit, proceedings or deal with such claim or questions. The exception in the form of non-arbitrable landlord- tenant disputes, as per Booz Allen & Hamilton Inc., was confined only to those cases/matters governed by: (i) special statues, (ii) where the tenant enjoys statutory protection and (iii) where only specific courts are conferred jurisdiction to decide disputes. Transfer of Property Act does not negate arbitrability. In Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan and Others,6 it was held that there is no prohibition in the Specific Relief Act, 1963 for referring disputes relating to specific performance of contracts to arbitration. Equally, the discretion to refuse or grant specific performance would not militate against arbitrability. Reference was 6 (1999) 5 SCC 651  made to Vimal Kishor Shah and Others v. Jayesh Dinesh Shah and Other,7 which had referred to Dhulabhai Etc. v. State of Madhya Pradesh and Another,8 in the context of whether the disputes under the Indian Trusts Act, 1882 were arbitrable. The disputes under the Trusts Act were held to be non-arbitrable by necessary implication, as the Trusts Act had conferred specific powers on the principal judge of the civil court, which powers an arbitrator could not exercise. The judgment in Vimal Kishor Shah was followed by another Division Bench in Emaar MGF Land Limited v. Aftab Singh,9 a case relating to the Consumer Protection Act, 1986. Reasoning that the exemption from rent control legislation can be withdrawn and thereupon Arbitration Act would not apply, it was observed, was not a valid justification and ground to hold that the subject matter was not arbitrable.

However, the aforesaid principles have to be applied with care and caution as observed in Olympus Superstructures Pvt. Ltd.:

“35...Reference is made there to certain disputes like criminal offences of a public nature, disputes arising out of illegal agreements and disputes relating to status, such as divorce, which cannot be referred to arbitration. It has, however, been held that if in respect of fats relating to a criminal matter, say, physical injury, if there is a right to damages for personal injury, then such a dispute can be referred to arbitration (Keir v. Leeman). Similarly, it has been held that a husband and a wife may refer to arbitration the terms on which they shall separate, because they can make a valid agreement between themselves on that matter (Soilleux v. Herbst, Wilson v. Wilson and Cahill v. Cahill).”

Section 8, pre and post Act 3 of 2016, read as under:

                  SECTION 8                                         SECTION 8
             (before Act 3 of 2016)                             (post Act 3 of 2016)

8. Power to refer parties to arbitration where     8. Power to refer parties to arbitration
there is an arbitration agreement. —               where there is an arbitration agreement.
                                                   —

(1) A judicial authority before which an action is (1) A judicial authority, before which an brought in a matter which is the subject of an action is brought in a matter which is the arbitration agreement shall, if a party so applies subject of an arbitration agreement shall, if not later than when submitting his first statement a party to the arbitration agreement or any on the substance of the dispute, refer the parties person claiming through or under him, so to arbitration. applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.] (2) The application referred to in sub-section (1) (2) The application referred to in sub- shall not be entertained unless it is accompanied section (1) shall not be entertained unless by the original arbitration agreement or a duly it is accompanied by the original arbitration certified copy thereof. agreement or a duly certified copy thereof.

(12) (a) Where the matters (12) (a) Where the matters (12) Where the matter referred to in sub-sections (4), referred to in sub-sections (4), referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise (5), (6), (7), (8) and sub- (5), (6) and (8) arise in an in an international commercial section (10) arise in an international commercial arbitration, the reference to international commercial arbitration or any other Chief Justice in those sub- arbitration, the reference to arbitration, the reference to sections shall be construed as the Supreme Court or, as the the arbitral institution in those a reference to the Chief case may be, the High Court sub-sections shall be Justice of India in those sub-sections shall be construed as a reference to