Case Title : Motilal Oswal Financial Services Limited vs Santosh Cordeiro and Another
Citation : 2026 INSC 5
Date : 05.01.2026
Hon’ble Supreme Court Bench – Justices JB Pardiwala and KV Viswanathan
In a decision that carefully navigates the boundary between special local laws and the efficiency of arbitration, the Supreme Court of India in Motilal Oswal Financial Services Limited v. Santosh Cordeiro has paved the way for more commercial disputes to be resolved through private tribunals, even when they involve property relationships. The case began as a common commercial disagreement. Motilal Oswal (the licensee) had entered into a leave and license agreement for office space in Malad, Mumbai. Due to the COVID-19 pandemic, they vacated the premises in 2020, citing a force majeure clause, and requested a refund of their security deposit. The property owner (the licensor) responded by demanding over ₹94 lakhs for the remaining “lock-in period”. When the owner invoked the arbitration clause in the agreement, Motilal Oswal objected. They argued that under Section 41 of the Presidency Small Cause Courts Act, 1882, any dispute between a licensor and licensee in Mumbai belongs exclusively to the Small Causes Court and is, therefore, non-arbitrable. The appellant relied heavily on a previous Full Bench ruling (Central Warehousing), which suggested that allowing arbitration in these cases would be against public policy. They argued that special legislation intended to protect tenants and licensees should not be “contracted out” of through arbitration clauses.
However, the Supreme Court took a more nuanced view of the law :
- The Court reaffirmed that the arbitrator is fully empowered to rule on their own jurisdiction. If a party believes a case is non-arbitrable under local law, they can raise that objection directly before the arbitrator.
- A critical distinction was made: in this case, the tenant had already handed back the keys. The dispute was no longer about the “right to occupy” or eviction—which might require special court protections—but about a monetary claim regarding arrears and deposits.
- The Supreme Court dismissed the appeal, allowing the arbitration to proceed. The Arbitrator has now been directed to conclude the proceedings within six months.
