Case Title: Sushil Kumar Sahdev v. Kohli Realtors Pvt. Ltd.
Date of Decision: September 5, 2023
Case Number: FAO (OS) 94/2023
Coram: Hon’ble Mr. Justice Sanjeev Sachdeva, Hon’ble Mr. Justice Manoj Jain
Introduction
This case involves an appeal (FAO) in the High Court of Delhi, where the Appellant, Sushil Kumar Sahdev, challenged an order dated July 19, 2023, which referred the parties to arbitration. The Respondent in the case is Kohli Realtors Pvt. Ltd. The key issue in contention was whether the disputes between the parties should be resolved through arbitration or litigation.
Factual Background
- The respondent, Kohli Realtors Pvt. Ltd., had filed a suit for the recovery of a substantial sum against the appellant and three other parties.
- The appellant argued that the entire claim was based on a Memorandum of Understanding (MoU) for redeveloping the suit property, which contained an arbitration clause.
- The appellant filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, requesting that the claim be referred to arbitration due to the existence of an arbitration agreement.
- The respondent opposed the application, claiming that an oral understanding had superseded the MoU, rendering the disputes ineligible for arbitration.
- The application under Section 8 was dismissed on November 22, 2017, by a learned Single Judge, who accepted the respondent’s contention of an oral agreement superseding the MoU.
Legal Issues
The key legal issue in this case was whether the disputes between the parties should be resolved through arbitration or litigation, considering the existence of an arbitration clause in the MoU and subsequent disputes over its validity.
Contentions
- The Appellant argued that the disputes should be referred to arbitration based on the arbitration clause in the MoU.
- The Respondent contended that the MoU had been superseded by an oral agreement, making arbitration unsuitable.
Observation and Analysis
The learned Single Judge had initially dismissed the Appellant’s Section 8 application based on the Respondent’s claim that an oral agreement had superseded the MoU. However, during the proceedings, it became apparent that the parties were willing to consent to arbitration. This consent was recorded in the impugned order.
The Appellant’s argument that the dismissal of the Section 8 application should prevent arbitration was found to be without merit, as parties can consent to arbitration at any stage of proceedings. Therefore, the Court concluded that the parties had agreed to refer their disputes to arbitration.
Decision
The appeal was dismissed by the High Court, as it found that the reference of the disputes to arbitration was a result of the parties’ consent, which was recorded in the impugned order. The Court upheld the appointment of the arbitrator and the decision to resolve the disputes through arbitration.
Conclusion
This case underscores the importance of parties’ consent in arbitration matters and highlights that consent can be given at any stage, even after initial legal proceedings have taken place.
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Written by – Ananya Chaudhary
