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HIGH COURT OF DELHI
JUDGMENT
SUSHIL KUMAR SAHDEV .....Appellant
For the Appellant: Mr. Prosenjeet Banerjee, Ms. Shreya Singhal and
Mr. Sarthak Bhardwaj, Advocates.
For the Respondents: Mr. Sandeep Sharma, Mr. Amit Chjoudhary and
Ms. Kavya Dank, Advocates.
HON'BLE MR. JUSTICE MANOJ JAIN
1. Issue notice. Notice is accepted by learned counsel appearing for the respondent.
2. In view of the averments made in the application, delay in filing the appeal is condoned. FAO (OS) 94/2023 & CM. APPLS. 45542/2023 & 45582/2023
1. Appellant impugns order dated 19.07.2023, whereby parties have been referred to arbitration.
2. Issue notice. Notice is accepted by learned counsel for respondent.
3. With the consent of parties, the appeal is taken up for final disposal.
4. Respondent had filed a suit for recovery of a sum of Rs.4,27,70,000/- against the appellant and three other parties.
5. Appellant on receipt of summons of the suit entered appearance and filed and application under Section 8 of the Arbitration and Conciliation Act, 1996, contending that the entire claim of the respondent was based on a Memorandum of Understanding (MoU) dated 05.07.2012 for redeveloping the suit property. It was contended that the MoU contained an arbitration clause in clause 5. It was accordingly prayed in the said application that since there is an Arbitration Agreement between the appellant and respondent, the suit was barred and accordingly, the claim should be referred to arbitration as contained in the Arbitration Agreement.
6. The application was opposed by the respondent/plaintiff contending that after the MoU was executed, there was an oral understanding between the parties which superseded the majority of the terms of the MoU and as such the disputes could not be referred to arbitration.
7. The application filed by the appellant under Section 8 was dismissed on 22.11.2017 by a learned Single Judge. The contentions of the appellant were noted that there was an Arbitration Agreement. On the other hand, the contention of the respondent that the MoU stood superseded by the oral agreement. Learned single Judge was of the view that in view of the specific pleading that an oral agreement had been executed between the plaintiff and defendants subsequent to the execution of the MoU and the Court could not at that stage reach the conclusion that there was no oral agreement between the parties and as such held that it was not possible to refer the parties to arbitration and consequently, the application was dismissed.
8. The case of the appellant is that proceedings were not taken any further and the order dismissing the Section 8 application became final and binding between the parties.
9. Learned counsel for appellant submits that since the application under Section 8 had been dismissed and thereafter, appellant had filed a written statement without taking an objection with regard to the Arbitration Agreement, the Court could not have referred the parties to arbitration by the impugned order.
10. Per contra, learned counsel for the respondent contends that though the application under Section 8 was dismissed, however, at the time when the application under Section 8 was taken up for consideration, there were three more parties to the suit i.e. defendants 2 to 4, who were not parties to the MoU, but were parties only to the oral agreement and the said three defendants have already been deleted from the array of parties and now the lis is only between the appellant and respondent and since both are the parties to MoU, the disputes could be referred to arbitration.
11. At first blush, there appears to be merit in the contention of learned counsel for the appellant that once the Section 8 application has been dismissed and is not thereafter pressed by the defendant, the Court could not refer the parties to arbitration. However, a deeper examination of the impugned order shows that the learned single Judge in effect recorded a fresh submission on behalf of the respondent that parties be referred to arbitration and a consent being given by the appellant for reference to arbitration.
12. It is contended by learned counsel for appellant that the consent as recorded by the learned single Judge does not amount to consent to refer to arbitration and he never agreed to referring the disputes to arbitration.
13. We are unable to accept the contention of learned counsel for appellant. For appreciating the said submission, it may be necessary to extract the relevant portion of the order, which reads:-
14. No doubt, in para 3 and 4 there is a vehement opposition on behalf of the appellant to referring the disputes to arbitration primarily on the ground that the application under Section 8 stood dismissed and the order was not carried forward and thereafter, no steps were taken by the defendant prior to filing the written statement for referring the disputes to arbitration.
15. However, paragraph 6 of the impugned order notes the observation of the learned single Judge with regard to deletion of the defendants who were not parties to the MoU and records that in the view of the Court, it would be appropriate that the disputes be referred to and determined by a Sole Arbitrator. Thereafter, in paragraph 7 contention of the learned counsel for respondent/plaintiff is noticed that instead of relegating the plaintiff to moving an application under Section 11, the Court could itself appoint a Sole Arbitrator for adjudication of the disputes of the parties.
16. At that juncture, there is no opposition recorded on behalf of the appellant that the disputes could not be referred to arbitration. Learned counsel for appellant has given his no objection to the prayer made by the plaintiff of being relegated to moving an application under Section 11, however, contended that he would not be in a position to bear the expenses of arbitration. Thereafter, under instructions, learned counsel for appellant had stated before the learned Single Judge that the plaintiff may be directed to pay the entire fee of the Arbitrator for adjudication of the claim and the appellant would pay the differential fee for raising the counter-claim before the Sole Arbitrator. This suggestion of apportionment of the fee was accepted by the learned counsel for respondent/plaintiff.
17. Thereafter, paragraphs 8, 9 and 10 of the impugned order record the appointment of the Arbitrator and conduct of proceedings by the Arbitrator. At no point has the appellant raised any objection to the reference of disputes to arbitration.
18. We are of the view that paragraph 7 is an unequivocal consent given by the appellant for referring the disputes to arbitration. Further, there is no merit in the contention of the learned counsel for appellant that because the application under Section 8 had been dismissed, the Court could not have referred the disputes to arbitration. Even if there is no arbitration agreement between the parties, it is open to the parties at any stage of the proceedings to consent to reference of the disputes to arbitration. Even if the Court could not have referred the parties to arbitration under Section 8, however, it was open to the parties to consent to referring the disputes to arbitration. In our view, paragraph 7 of the impugned order records an agreement between the parties to once again refer the disputes to arbitration.
19. The reference of the disputes to arbitration and appointment of an arbitrator is a consent order and does not warrant any interference.
20. In view of the above, we find no merit in the appeal. The appeal is consequently dismissed.
21. Dasti under signature of the Court Master.
SANJEEV SACHDEVA, J,,,,,, SEPTEMBER 05, 2023/NA MANOJ JAIN, J.