Commercial leases of offices, showrooms, warehouses and retail space regularly generate disputes over rent escalation, security deposits, maintenance charges, lock-in periods, early termination and fit-out costs. Whether these disputes can be arbitrated depends largely on which law governs the tenancy.
In Vidya Drolia v. Durga Trading Corporation (2020), the Supreme Court held that landlord-tenant disputes governed by the Transfer of Property Act, 1882 are arbitrable. However, tenancies protected by special rent control legislation — where the statute gives exclusive jurisdiction to a specified forum — are generally not arbitrable, because the statute creates rights and protections that private agreement cannot override.
For most modern commercial leases and leave-and-licence agreements, which fall outside rent control protection, arbitration is available and often the best choice. It resolves disputes over money quickly and keeps commercially sensitive rent and incentive terms private.
Eviction and possession remain the sensitive area. If a tenant refuses to vacate after the lease ends, the landlord will want a quick, enforceable order. An award directing possession is enforceable as a decree, and interim measures can be sought from the tribunal or the court while the arbitration is pending.
When drafting a commercial lease, include a clear arbitration clause, specify the seat, and deal expressly with interim relief. Also record clearly the lock-in period, the escalation formula and deposit refund terms — most lease disputes turn on ambiguity in exactly these provisions.