High Court of Madras decision on questioned the maintainability of the suit in the face of an arbitration agreement having been incorporated in the contract.
Case Title : Madhu Sudan Sharma & Ors vs Omaxe Ltd on 6 November, 2023\
Decided on : 6th November 2023
Case No. : RFA 823/2019
CORAM : HON’BLE MR. JUSTICE C.HARI SHANKAR
Introduction
This appeal, under Section 96 of the Code of Civil Procedure, 1908 (CPC) assails judgment and decree dated 15 July 2019, passed by the learned Additional District Judge (“the learned ADJ”), whereby Suit CS 10977/2016, instituted by the respondent against the appellants, stands decreed in favour of the respondent. Said suit was instituted by the respondent against the appellants under Order XXXVII of the CPC. The appellants, as the defendants in the suit, questioned the maintainability of the suit in the face of an arbitration agreement having been incorporated into the contract between the RFA 823/2019 Digitally Signed By:HARIOM Signing Date:06.11.2023 16:58:54 appellants and the respondent, relying, for the purpose, Section 8 of the Arbitration and Conciliation Act 1996.
Fact of the Case
A Memorandum of Understanding (MOU) was executed between the appellants and the respondent on 2 May 2005, whereunder 29 bighas of land owned by the respondent were to be acquired by the appellants. For the purposes of this judgment, it is not necessary to enter into the covenants of the MOU. Suffice it to state that, in terms of the MOU, the respondent paid ₹ 64,22,925/- to the appellants. The MOU provided that, in the event of the appellants failing to obtain necessary permissions from statutory authorities in respect of the covenanted land, the MOU would stand terminated at the option of the respondent and the appellants would refund the amount paid by the respondent along with costs, expenses, fees and charges.
Case Analysis and Judgment
In view of the aforesaid, the impugned order dated 15 July 2019, passed by the learned ADJ, insofar as it proceeds to adjudicate the suit on merits, despite a valid Section 8 objection having been raised by the appellants, cannot sustain. It is accordingly quashed and set aside. The dispute between the parties would, therefore, be referable to arbitration. The parties are at liberty, therefore, to initiate arbitral proceedings in accordance with law. The appeal is accordingly allowed, albeit without costs.
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