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Sushma Shivkumar Daga & Anr. vs Madhurkumar Ramkrishnaji Bajaj & Ors.

Civil Appeal · 2023 INSC 1081Decided 15 Dec 2023
Civil Appeal No. 1854 of 2023
Aniruddha Bose · Sudhanshu Dhulia

Background

The appellants (widow and son of the late Shivkumar Daga) filed a civil suit in 2021 seeking to have a 2019 Conveyance Deed declared void and certain Development Agreements declared validly terminated. These documents all traced back to two earlier Tripartite Agreements (2007 and 2008) between Shivkumar Daga, Madhurkumar Bajaj, and a company they had set up, which contained a wide arbitration clause. The defendants applied under Section 8 of the Arbitration Act to have the dispute sent to arbitration instead of being tried in court, and both the Trial Court and the Bombay High Court agreed, prompting this appeal.

Decision Breakdown

The Supreme Court held that since the Conveyance Deed and Development Agreements all originated from the two Tripartite Agreements containing a broad arbitration clause, the dispute fell squarely within its scope and was rightly referred to arbitration. It rejected the appellants' three objections: the arbitration clause did cover the dispute even though it wasn't repeated verbatim in every later document; a suit for cancellation of a document relating to land is an action "in personam" (between the parties) and not "in rem" (affecting the whole world), so it is arbitrable; and the appellants' bare, unsubstantiated allegation of fraud was not serious enough to oust the arbitrator's jurisdiction. The Court reaffirmed that under the post-2015 amended law, judicial interference in referring disputes to arbitration must be minimal, and the arbitral tribunal itself has the power to rule on its own jurisdiction (the "kompetenz-kompetenz" doctrine).

Lesson Learnt

If a contract contains a broadly worded arbitration clause, disputes over related or downstream agreements arising from it will usually have to go to arbitration rather than court, and courts will only refuse such a reference in rare cases involving a non-existent arbitration agreement, a genuinely non-arbitrable subject matter, or serious fraud implicating the public domain.

Official source (sci.gov.in)View Judgment (PDF)

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