[Cites 11, Cited by 0]
Bombay High Court
Villa Realcon Llp. A Limited Co. vs Chandrish Parbat Gothi And Ors. on 3 December, 2025
2025:BHC-AS:52791
ARAST-30899-2025 - F-.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
ARBITRATION APPEAL (ST) NO. 30899 OF 2025
Villa Realcon LLP ...Appellant
Versus
Digitally
signed by
SHRADDHA
SHRADDHA KAMLESH
KAMLESH TALEKAR
Chandresh Parbat Gothi
TALEKAR Date:
2025.12.03
18:07:50
and 11 Ors. ...Respondents
+0530
Mr. Vineet Naik, Senior Advocate a/w Mr. Akhilesh Dubey, Mr.
Amit Dubey, Mr. Uttam Dubey, Mr. Shubham Sharma, Mr.Alex
D'souza i/b Law Counselors, for Appellant.
Dr. Virendra Tuljapurkar, Senior Advocate a/w Mr. Onkar
Chandurkar, Mr. Nachiket Khaladkar, for Respondent No.1.
Mr. Rahul Sinha a/w Mr. Soham Bhalerao and Mr. Harshit Tyagi
i/b DSK Legal, for Respondent Nos.3 to 8-CIDCO.
CORAM : SOMASEKHAR SUNDARESAN, J.
Date December 3, 2025
JUDGEMENT:
Context and Factual Background:
1. This is an Appeal filed under Section 37 of the Arbitration and
Conciliation Act, 1996 ("the Arbitration Act") impugning an order dated
September 4, 2025, by which the Learned 2 nd Joint Civil Judge, Senior
Division, Panvel rejected an Application filed by the Appellant under
Section 8 of the Arbitration Act.
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2. An Application under Section 8 of the Arbitration Act had
been filed in Special Civil Suit No. 130 of 2025 (" Suit 130") filed by
Respondent No.1, Chandresh Parbat Gothi ("Chandresh"). Villa Modern
Constructions L.L.P. ("Villa Modern") was Defendant No.1. and Villa
Realcon LLP was Defendant No.2 ("Villa Realcon") in Suit 130.
3. City and Industrial Development Corporation Limited
("CIDCO") was Defendant No.3 and its various office bearers were
Defendant Nos. 4 to 8. The Panvel Municipal Corporation (" PMC") was
Defendant No.9 while Director, Town Planning of PMC was Defendant
No.10. There were two other Defendants namely Abhijeet Prabhakar
Jail, Defendant No.11 ("Abhijeet") and James Pascal D'Silva, Defendant
No.12 ("D'Silva").
4. At the heart of Suit 130 is a scheme popularly known as
"12.5% Scheme" under which landowners whose land had been acquired
by the State of Maharashtra and CIDCO would be allotted land of an
area equal to 12.5% of the acquired land as project affected persons, at
concessional rates. One Smt. Radhabai Janardan Jail ("Radhabai"),
mother of Mr. Prabhakar Jail ("Prabhakar") had been entitled to such
allotment of additional land under the 12.5% Scheme.
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5. According to pleadings by Chandresh in Suit 130, the land to
be so made available had been estimated by Prabhakar at about 9800
square meters. Prabhakar entered into an agreement on November 28,
2002 with M/s D'silva Corporation, through its sole proprietor D'Silva,
for assignment and development of such potential land, for a
consideration of Rs. 81 Lakhs and other terms and conditions contained
therein. Thereafter, Prabhakar and D'Silva are said to have executed an
agreement dated December 19, 2007, to enhance the consideration to
Rs.8.41 Crores.
6. Prabhakar died on August 3, 2012 and his entitlement under
12.5% scheme was inherited by Abhijeet, his son. Abhijeet is pleaded as
having executed one more Agreement with D'Silva on December 07,
2012 with a re-estimation of the land potentially to be allotted to him at
14,500 square meters confirming that all such land would be transferred
and assigned to D'Silva.
7. Owing to financial constraints, D'Silva and Abhijeet are
pleaded as having executed a Memorandum of Understanding dated
October 17, 2013 ("2013 MoU") with Chandresh on the terms set out
thereof. It is pleaded that the actual entitlement was far more than even
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14,500 square meters. Under the 2013 MoU, the assignment was meant
to cover 34,500 square meters on the terms set out therein.
8. Chandresh is said to have complied with all the obligations
under the 2013 MoU and also engaged with CIDCO and its authorities
for allotment of the said land. It is contended by Chandresh that CIDCO
executed diverse lease agreements on January 5, 2017 allotting land
admeasuring 8323.55 square meters ("Allotted Land") in village
Kamothe. Since Abhijeet and D'Silva had agreed to assign their entire
entitlement under the 12.5% scheme in favour of Chandresh, they were
meant to execute a tripartite agreement and transfer the aforesaid land
of 8323.55 square meters to Chandresh.
9. The claim for entitlement of additional land over and above
the Allotted Land is pleaded as not having been acted upon by CIDCO
on the premise that there arose competing claims to such land made by
persons who had been agricultural tenants of Radhabai. The disputes
over non-compliance with the 2013 MoU found its way to court in the
form of Special Civil Suit No. 44 of 2018 ("Suit 44") before the Civil
Judge, Senior Division, Panvel, with Chandresh seeking specific
performance.
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10. This suit had initially been filed against Abhijeet, D'Silva and
also CIDCO and two of its officers. Meanwhile, even while Suit 44 was
pending, Abhijeet and D'Silva are said to have assigned the Allotted
Land and entitlements in favour of Villa Realcon. Therefore, Villa
Realcon was made Defendant No.6 in Suit 44.
11. Thereafter, Villa Realcon, Chandresh, Abhijeet and D'Silva
engaged in negotiations and arrived at a settlement, which was reduced
to writing in Consent Terms between the parties. The Consent Terms
were approved by the Learned Civil Judge, Senior Division, Panvel in
the form of a Consent Decree dated June 21, 2018 (" Consent Decree").
12. In terms of the Consent Decree, Chandresh was to be allotted
total constructed area admeasuring 20,586 square feet of developed
area ("Developed Area"), all of which was to be constructed on the
Allotted Land. It is pleaded in Suit 130 that in addition, D'Silva also
agreed to pay an aggregate consideration of Rs. 15 Crores to Chandresh.
Since the potential allotment of 34,500 square meters had been agreed
to be transferred and assigned to Chandresh in the 2013 MoU,
considering that the Allotted Land was only 8,323.55 square meters,
Abhijeet and Chandresh were acknowledged as being entitled to a share
even in any balance allotment that may be made by CIDCO.
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13. Towards this end, it was agreed that Chandresh would be
allotted 50% of the balance entitlement subject to Chandresh paying a
lumpsum consideration to Abhijeet at the rate of Rs.20,000/- per
square meter. D'Silva also agreed to share 50% of the balance
entitlement with Chandresh, and Villa Realcon agreed to acquire such
50% in the additional area and in lieu of the same, hand over additional
constructed area admeasuring 25,015 square feet (" Additional
Developed Area") in the buildings proposed to be constructed on the
Allotted Land.
14. It is clear from Chandresh's pleadings that his entitlement to
the Additional Developed Area was not contingent on any additional
land actually being allotted by CIDCO. The Additional Developed Area
was to be constructed on the Allotted Land, regardless of any additional
land being allotted by CIDCO. Villa Realcon is said to have agreed to
pay @ Rs.20,000/- per square meter to Abhijeet for and on behalf of
Chandresh. Therefore, the total developed area agreed to be given by
Villa Realcon to Chandresh was of the Developed Area (20,586 square
feet) and the Additional Developed Area (25,015 square feet).
15. While the Consent Decree resolved Suit 44, thereafter, Villa
Realcon and Villa Modern, its affiliate entered into another
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Memorandum of Understanding dated February 21, 2019 (" 2019 MoU")
with Chandresh to deal with the additional allotment of land that would
potentially be made by CIDCO in favour of Abhijeet, of which,
Chandresh was entitled to 50%. The 2019 MoU contains a short and all-
encompassing arbitration clause.
16. According to Chandresh, the Consent Decree and the 2019
MoU are interconnected and Chandresh would have never given up his
rights even in respect of the Allotted Land but for the promise of his
share in the balance entitlement that would potentially come from
CIDCO. The 2019 MoU recorded that Chandresh would be entitled to
approximately 26,175 square meters in terms of the balance entitlement
and Chandresh would transfer and assign his share out of it to Villa
Realcon and Villa Modern on an as-is-where-is and as-is-what-is basis.
In return for his relinquishment of entitlement in favour of Villa
Realcon and Villa Modern, they were to allot to Chandresh free of cost,
the Additional Developed Area. Since Villa Realcon and Villa Modern
agreed to pay the amounts owed by Chandresh to Abhijeet and D'Silva,
Chandresh was absolved and exonerated of such liability to pay the
aforesaid sum.
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17. Chandresh pleaded that various approvals for the building
plan and requisite compliances were meant to be sought and obtained
by Villa Realcon and Villa Modern on their own. The consensus and
confirmations from Abhijeet and D'Silva in this regard, were also meant
to be the responsibility of Villa Realcon and Villa Modern.
18. Disputes and differences broke out between the parties in
connection with the Consent Decree read with the 2019 MoU.
Chandresh would specifically plead in Suit 130 that the 2019 MoU
explicitly recorded that even if no additional land was allotted by CIDCO
to Abhijeet, the allotment of the Additional Developed Area, as
contracted in the 2019 MoU, which was to be developed on the Allotted
Land, would need to be complied with by Villa Realcon and Villa
Modern. It is stated by Chandresh that Suit 44 had been disposed of in
terms of the Consent Decree while the 2019 MoU was executed only
seven months later on February 21, 2019. However, it is claimed, since
the understanding set out in the 2019 MoU had already been reached
even at the time of the Consent Decree, building plans had already been
approved by the local authorities on February 22, 2019, which,
coincidently, fell just one day after the execution of the 2019 MoU.
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19. Chandresh has pleaded that Abhijeet filed Writ Petition No.
5146 of 2019 in this Court seeking a direction that the balance
entitlement claimed by him be allotted. An order was passed on August
27, 2019 noting that the State of Maharashtra would hear his
representation afresh and pass a fresh order. Eventually, the State of
Maharashtra directed CIDCO to maintain status quo on the
development of even the Allotted Land. The PMC stayed the sanction
that had been given to the building proposal and therefore no
construction activity was taken up even on the Allotted Land.
20. Chandresh called upon the Villa Realcon and Villa Modern to
abide by the commitments under the Consent Decree and the 2019 MoU
and it is pleaded by Chandresh that these parties did not deny their
obligations. However, they stated that since development had not even
started and development activity on even the Allotted Land had been
put on hold, the time for making such allotment of any developed area
had not arrived. Therefore, as and when the ability to discharge the
obligations would come about, they would comply with all their
obligations.
21. Eventually, the State of Maharashtra lifted the status quo
order on the construction and development of the Allotted Land and
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confirmed the allotment already made in favour of Abhijeet. However,
it was held that Abhijeet had no further entitlement to land. Chandresh
claims to be unaware of whether the rejection of the balance entitlement
forms subject matter of any challenge in any court by Abhijeet.
22. The decision of the State Government to lift the status quo
order on development of the Allotted Land and the decision that there
was no entitlement to any additional land, was conveyed by a letter
dated January 15, 2024 ("January 2024 Order"). Chandresh has
pleaded that while the January 2024 Order affects the rights perceived
to be enjoyed by all the parties, it has paved the way for development
and construction on the Allotted Land. Work on the Allotted Land had
commenced, and Chandresh demanded that he must be allotted free of
cost the Additional Developed Area as contracted in the 2019 MoU.
23. According to Chandresh, Villa Realcon and Villa Modern
turned hostile and took the position that they would abide by the
allotment of the Developed Area as provided in the Consent Terms but
would not allot the Additional Developed Area as mentioned in the 2019
MoU. Chandresh has pleaded that the right to the Additional
Developed Area is a clean and clear obligation under the 2019 MoU,
regardless of whether any additional land was to be allotted by CIDCO.
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This contention is said to have been rebuffed by Villa Realcon and Villa
Modern. This led to issuance of a legal notice by Chandresh on June
20, 2024, after which Suit 130 was filed.
24. The prayers in the suit primarily seek declaration that the
2019 MoU is a legal, valid, subsisting and an enforceable agreement
contracted in its terms, for provision of the Additional Developed Area
of 25,015 square feet area to Chandresh in any eventuality whatsoever.
Chandresh sought a restraint on constructed area admeasuring 25015
square feet out of the building proposed to be constructed. Interim
reliefs in terms of prohibition on creating any third-party interests on
the properties being developed were also sought.
25. In addition, prayer clause (d) sought a direction to CIDCO and
its officers who are arrayed as Defendant Nos. 3 to 8, to recall the
January 2024 Order and to allot the balance entitlement of land and to
conduct a fresh hearing and give an opportunity of hearing to
Chandresh as well ("CIDCO-related Prayer").
26. Finally, a prayer is also made against Abhijeet and D'Silva
seeking a restraint on them providing any further approval of any
development proposal that may be made by Villa Realcon and Villa
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Modern, without taking cognizance of Chandresh's grievances in the
matter.
27. Villa Realcon filed an application under Section 8 of the Act
pointing out that since the 2019 MoU contained an arbitration
agreement, Suit 130 could not have been filed, and the disputes and
differences ought to have been referred to arbitration. The Impugned
Order rejected the Section 8 Application.
Impugned Order:
28. The Impugned Order records that the 2019 MoU indeed
contains an arbitration clause. However, on the premise that CIDCO
and its officials were made parties to Suit 130, and that they are not
signatories to the 2019 MoU, the Impugned Order holds that such
parties not being signatories, and the cause of action arising from a
combination of the Consent Decree and the 2019 MoU, the cause of
action pursued in Suit 130 could not be segregated to refer only a part of
the cause of action to arbitration.
29. The Impugned Order notes that the suit involves " complex
and interlinked issues involving both the parties to the MOU as well as
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non signatories and therefore the matter is not fit for reference to
arbitration".
Analysis and Findings:
30. I have heard at length, Mr. Vineet Naik, Learned Senior
Advocate for Villa Realcon and Dr. Virendra Tulzapurkar, Learned
Senior Advocate for Chandresh. With their assistance, I have examined
the material on record including the Consent Terms, the 2019 MoU and
the Plaint in Suit 130.
31. Going purely by the case disclosed and pleaded in the Plaint
and the two underlying instruments namely the Consent Decree and the
2019 MoU, it is apparent that the subject matter of the disputes between
the parties relates to the allotment of the Additional Developed Area
contracted under the 2019 MoU to be provided by Villa Realcon and
Villa Modern to Chandresh. It is also common ground that the alleged
non-compliance with the Consent Decree forms subject matter of
execution proceedings.
32. The core subject matter of Suit 130 involves interpretation of
the terms of the 2019 MoU under which the parties are said to have
contracted that the Additional Developed Area is said to be handed over
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to Chandresh by Villa Realcon and Villa Modern. It is Chandresh's own
case that such obligation under the 2019 MoU is to be discharged
regardless of whether CIDCO allots any further land under the 12.5%
Scheme. Therefore, it is writ large on the face of the Plaint that the core
cause of action pursued is for enforcement of the 2019 MoU.
33. It is also clear from Chandresh's own pleadings that he cannot
be called upon to ensure or procure that any additional land is actually
allotted by CIDCO to Abhijeet under the 12.5% Scheme in addition to
the Allotted Land, for such land to thereby be made available to Villa
Realcon and Villa Modern. Chandresh had also confirmed that subject
to Chandresh complying with all the respective obligations under the
Consent Terms and the 2019 MoU, there would be no claim whatsoever
in respect of the land in the event D'Silva committed a breach of his
obligations under the Consent Terms. Yet, Chandresh has also reserved
the right to litigate against D'Silva in the event of any breach by D'Silva
with respect to the Consent Decree. Under the 2019 MoU, prima facie,
it is clear that Chandresh has claimed to have assigned all entitlements
in respect of the land forming part of the Allotted Land as well as the
land expected to be allotted.
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34. On the face of it, the subject matter of the disputes and
differences between Chandresh on the one hand and Villa Realcon and
Villa Modern on the other squarely fall within the ambit of the 2019
MoU. The 2019 MoU builds further upon the Consent Decree and
entails allotment of the Additional Developed Area, all of which is to be
developed and constructed on the Allotted Land. The Consent Decree is
the subject matter of execution proceedings. The Additional Developed
Area is covered by the 2019 MoU, which admittedly and without doubt
contains an arbitration clause. In these circumstances, it would follow
that all disputes and differences between Chandresh on the one hand
and Villa Realcon and Villa Modern on the other, would form subject
matter of the arbitration agreement between the parties.
35. This brings one to the issue of the cause of action against
CIDCO. Indeed, Chandresh as dominus litus is entitled to fashion the
manner of prosecution of his claim. However, there is no connection
between Chandresh's purported claim against CIDCO and his claims
against Villa Realcon and Villa Modern. On the contrary, it is
Chandresh's own case that regardless of what CIDCO does with allotting
any additional land, Chandresh's entitlement to the Additional
Developed Area is crystallised and binding. Therefore, the entitlement
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claimed against Villa Realcon and Villa Modern has nothing to do with
the purported claim against CIDCO.
36. It is in this light that the relief purportedly sought against
CIDCO is to be considered. The prayer is to direct CIDCO to recall the
January 2024 Order, which is not even an order of CIDCO. This letter is
not part of the record because it is an annexure to the Plaint and has not
been attached to the Appeal, but on a request from the Court, the parties
handed a copy across the bar. The January 2024 Order is a letter from
the Government of Maharashtra to CIDCO and not a letter by CIDCO
for it to be recalled by CIDCO. What is apparent is that the Plaint is
therefore a product of clever drafting of plugging in CIDCO and making
a purported prayer against CIDCO, which only serves to suggest that a
non-signatory to the arbitration agreement is also a party to Suit 130,
and thereby sidestep the arbitration agreement.
37. The core ground raised by Dr. Tulzapurkar to resist this
Appeal is that when a reference of a proceedings filed before the Section
8 Court is made to arbitration, the proceedings as filed in that Court
ought to be capable of being referred to arbitration. If it is found that the
Plaint as it stands cannot be referred to arbitration but only a part of
what is pursued in the Suit, howsoever material a part of the suit it may
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be, the reference must not be made. Therefore, he would submit, the
Impugned Order does not call for interference.
38. I am afraid this is another means of indicating that the cause
of action purported to be covered by the suit cannot be "fragmented"
when considering an application under Section 8 of the Act. This is
precisely the law that had been declared in Sukanya Holdings1, which
has been overcome by the amendment effected to Section 8 of the Act in
2015, explicitly with a non-obstante provision that consideration of the
reference would be notwithstanding any judgement of the Supreme
Court or any other Court. It is now declared in multiple judgements of
multiple courts that the very objective of the amendments effected in
2015 was to overcome the position obtaining in Sukanya Holdings as is
also seen in the Law Commission report whose recommendation for the
amendment led to Section 8 being amended.
39. In Lindsay International2 , a Learned Single Judge of the
Calcutta High Court has discussed the issue threadbare under Section
(paragraphs 24 to 35) to hold that without doubt, Sukanya Holdings is
no longer a relevant factor for the Section 8 Court. It was held that the
Section 8 Court is not even mandated to adjudicate on the " bifurcability
Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya & Anr. - (2003) 5 SCC 531
Lindsay International Private Ltd. & Ors. Vs. Laxmi Niwas Mittal & Ors. - 2022
SCC OnLine Cal 171
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of the causes of action of the presence of parties who are necessary
parties to the action but not to the arbitration ". It was explicitly held
that Sukanya Holdings would not be good law for any suit filed after
October 23, 2015, when the amended Section 8 took effect.
40. Dr. Tulzapurkar would press into service the decision of the
Supreme Court in Vinod Kumar Sachdeva3 to point to how the Supreme
Court reversed a reference to arbitration by taking note of the fact that
the cause of action pursued in one of the two underlying plaints involved
reliefs being sought against a bank not to disburse any financial
assistance, with the bank not having been party to the arbitration
agreement. The first suit was evidently filed before 2015 while the
second suit is identified as one filed in 2015 but the orders do not
indicate the date on which it was filed. That apart, on facts, the reliefs
sought in those proceedings against the third party bank was an integral
and interwoven element in the disputes between the parties.
41. In sharp contrast, in the instant case, there is no interlinkage
of the cause of action pursued by Chandresh against Villa Realcon and
Villa Modern with the purported cause of action against CIDCO. On the
contrary, Chandresh's own pleading indicates that regardless of what
Vinod Kumar Sachdeva (Dead) Through Legal Representatives Vs. Ashok Kumar
Sachdeva & Ors. - (2023) 20 SCC 190
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CIDCO does, there is a clear and segregated cause of action under the
2019 MoU to which CIDCO is not a party. The law on segregation of
elements of a suit has been dealt with in a seminal discussion by a
Learned Single Judge of this Court in the case of Taru Meghani4 to hold
that the litigant has the right to legitimately join more than one cause of
action in the same proceedings invoking Order II, Rule 3 of the Code of
Civil Procedure, 1908 ("CPC"), but the Court has the power to separate
causes of action invoking Order II, Rule 6 of the CPC, when the joinder
of multiple causes of action in one suit may embarrass or delay the trial
or make it inconvenient. To take the benefit of the detailed discussion
already made in Taru Meghani, the following portions are extracted
below:
17. In the aforesaid backdrop, the crucial question which wrenches
to the fore is, whether the effect and force of the aforesaid arbitration
clause gets diluted on account of inclusion in the suit, of a claim in re-
spect of a dispute which is not governed the arbitration clause......
18. The question posed by the facts of the instant case, however, is
required to be considered from the perspective of the legislative object
contained in section 8 of the Act. It is trite that the language of section
8 is peremptory in nature. In the cases where there is an arbitration
clause in the agreement, the Court is enjoined to refer the dispute to
arbitration in terms of the arbitration agreement and the Court would
Taru Meghani, Through his Constituted Attorney Ms. Shraddha Khandhadia and
Others vs. Shree Tirupati Greenfield (Shree Tirupati Greenfield Developers) and
Others - 2020 SCC OnLine Bom 110
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have no jurisdiction to adjudicate the dispute after such an application
seeking a reference under section 8 of the Act. Can this salutary object
of the Act be defeated by adding a claim over and above the claim in
respect of the matter which is squarely covered by arbitration agree-
ment?
19. In the facts of the case, the question which crops up for consid-
eration is whether there would be splitting of cause of action in the
event the arbitration agreement in the MOU is given effect to. There
appears a fine distinction between splitting of a single cause of action
into parts, each being made a subject matter of a distinct proceedings
and the separation of causes of caution which are joined together, al-
beit in conformity with the provisions of the Code of Civil Procedure,
1908('the Code').
20. The plaintiffs are within their rights in joining multiple causes
of action against the defendants. In fact, the provisions contained in
the Code envisage such joining of several causes of action by the
plaintiffs against the defendants.......
21. A conjoint reading of the aforesaid provisions would indicate
that Rule 3 provides for joinder of causes of action and permits the
plaintiffs to unite in the same suit, several causes of action against the
same defendants. The remedy for any possible embarrassment, delay
or inconvenience on account of the joinder of causes of action in one
suit is provided in Rule 6. It authorizes the Court to order separate tri-
als or make other order as may be expedient in the interest of justice,
where the joinder of causes of action in one suit, though permissible
under Rule (3)(1), would result in embarrassment, inconvenience or
delay.
22. ........ If a Court is empowered to order separate trial when it
finds that the joinder of causes of action would embarrass or delay the
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trial or it is otherwise inconvenient, a fortiori a Court cannot be said
to be divested of the authority to direct separation of causes of action
when the joinder of causes of action, in pursuance of an enabling pro-
vision like Rule 3 has the effect of defeating the provisions of a special
law, like section 8 of the Act.
23. The aforesaid legal position is required to be considered
coupled with the approach which is expected of the Court where an
application seeking reference of the dispute to arbitration on the
strength of an arbitration clause is preferred. Such an application, in
substance, constitutes a plea of statutory exclusion of the jurisdiction
of the court....... A useful reference in this context can be made to the
judgment of the Supreme Court in the case of Sundaram Finance
Limited v. T. Thankam, wherein the Supreme Court delineated the
approach expected of the Civil Court in dealing with an application
under section 8 of the Act, in Paragraph 13:
"13. Once an application in due compliance of Section 8 of
the Arbitration Act is filed, the approach of the civil court
should be not to see whether the court has jurisdiction. It
should be to see whether its jurisdiction has been ousted. There
is a lot of difference between the two approaches. Once it is
brought to the notice of the court that its jurisdiction has been
taken away in terms of the procedure prescribed under a spe-
cial statue, the civil court should first see whether there is
ouster of jurisdiction in terms or compliance of the procedure
under the special statute. The general law should yield to the
special law - generalia specialibus non derogant. In such a
situation, the approach shall not be to see whether there is still
jurisdiction in the civil court under the general law. Such ap-
proaches would only delay the resolution of disputes and com-
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plicate the redressal of grievance and of course unnecessarily
increase the pendency in the court."
24. In the light of the aforesaid exposition of the legal position, I
am of the considered view that the broad submission on behalf of the
plaintiffs that the reference of the dispute to arbitration as regards the
first transaction, would entail the bifurcation of the subject matter of
the suit and, thus, it is impermissible in law, cannot accepted in an un-
qualified manner. The submission is fraught with the danger of defeat-
ing an arbitration agreement by simply adding a cause of action the
plaintiff may have against the defendants, which is not covered by the
arbitration agreement. If such a course is readily accepted, it has the
propensity to give a long leash to the plaintiff to circumvent the arbit-
ration agreement by uniting a cause of action which is beyond the pur-
view of the arbitration agreement. It would have the effect of denuding
section 8 of the Act of its force and vigour. Such an interpretation
would also derogate from the object which the Arbitration and Con-
ciliation Act, 1996 is intended to achieve; of minimum judicial inter-
vention where parties have agreed to arbitrate the dispute.
25. In the peculiar facts of the case, in my view, the Court would
be justified in referring the dispute to arbitration in respect of first
transaction, as it is squarely covered by the arbitration clause and all
the conditions of section 8 of the Act are fulfilled, and exercising its
power under Order II Rule 6 of the Code to direct the plaintiffs to in-
stitute a separate suit in respect of the second tranch of Rs. 19 lakhs.
[Emphasis Supplied]
42. One cannot declare the law in clearer conceptual terms. The
analysis extracted above squarely applies to the facts of the instant case,
and I am in respectful agreement with the same. One need not even go
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into whether Chandresh indeed has a cause of action against CIDCO
when the Plaint itself pleads that Abhijeet may have the right to pursue
action against CIDCO as he had by filing a Writ Petition earlier.
43. The scope of jurisdiction of the Section 8 Court involves
examining the existence of an arbitration agreement (this has been
confirmed in the Impugned Order); comparing the subject matter of the
arbitration agreement and the subject matter of the suit; taking a view
as to whether the arbitration agreement covers the subject matter of the
suit; and refusing to refer the dispute to arbitration only if there is a
prima facie view that the arbitration agreement does not exist.
44. From a reading the pleadings in the Plaint and the cause of
action as disclosed in the plaint, the substratum of the suit evidently
entails adjudication of disputes and differences relating to the 2019
MoU. The MoU indeed contains an arbitration clause. In these
circumstances, I am unable to agree with the finding in the Impugned
Order that the case involves any complicated interlinkages between the
action sought against Villa Realcon and Villa Modern, and the action
purportedly pursued against CIDCO. In fact, Chandresh who had
received his rights from D'Silva who in turn had received his rights from
Abhijeet, has explicitly reserved the right to pursue against D'Silva.
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Indeed, Chandresh is not left remediless and has considered the
existence of avenues available to him. The joining of the causes of
action is a material inconvenience and has the effect of exercise of the
right to join separable causes of action to defeat the legislative objectives
of Section 8 of the Act.
45. In these circumstances, the Appeal deserves to be allowed,
referring the disputes and differences between Chandresh and Villa
Realcon and Villa Modern to arbitration. If the parties are unable to
agree on an arbitrator, an appropriate application may be made under
Section 11 of the Act.
Directions and Order:
46. In the result the following order is passed:-
a) The Impugned Order is quashed and set aside and
Suit 130 is directed to be returned to Chandresh, with refund
of Court fees in accordance with the rules;
b) Disputes and differences between Chandresh and
Villa Realcon and Villa Modern are declared as being covered
by the arbitration agreement contained in the 2019 MoU;
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c) Chandresh is at liberty to pursue such action against
CIDCO as he may perceive to be his entitlement, in whichever
forum he is advised to pursue it;
d) The aspect of costs for this round of litigation is left
open for the parties to agitate in the arbitration proceedings
for the Arbitral Tribunal to consider.
47. The Appeal finally disposed of in the aforesaid terms. Interim
Applications, if any, shall also stand disposed of in these terms.
48. After the judgment was pronounced, the parties have
expressed their willingness to proceed to arbitration to avoid one more
round under Section 11 of the Arbitration Act. In these circumstances,
taking the consent of the parties on board, an Arbitral Tribunal is also
appointed in the following terms :-
A] Justice Jai Narayan Patel (Retired), former judge of this
Court, is hereby appointed as the Sole Arbitrator to adjudicate
upon the disputes and differences between the parties arising out
of and in connection with the Agreement referred to above. The
contact particulars of the arbitrator are set out below :
Office Address:- Raheja Chambers, 2nd floor,
Near Tulsiani, Nariman Point,
Mumbai - 400 021.
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B] A copy of this Order will be communicated to the Learned
Sole Arbitrator by the Advocates for the Appellant within a
period of one week from the date on which this order is uploaded
on the website of this Court. The Appellant shall provide the
contact and communication particulars of the parties to the Arbi-
tral Tribunal along with a copy of this Order;
C] The Learned Sole Arbitrator is requested to forward the
statutory Statement of Disclosure under Section 11(8) read with
Section 12(1) of the Arbitration Act to the parties within a period
of two weeks from receipt of a copy of this Order;
D] The parties shall appear before the Learned Sole Arbitrator
on such date and at such place as indicated, to obtain appropriate
directions with regard to conduct of the arbitration including fix-
ing a schedule for pleadings, examination of witnesses, if any,
schedule of hearings etc. At such meeting, the parties shall pro-
vide a valid and functional email address along with mobile and
landline numbers of the respective Advocates of the parties to the
Arbitral Tribunal. Communications to such email addresses shall
constitute valid service of correspondence in connection with the
arbitration;
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E] All arbitral costs and fees of the Arbitral Tribunal shall be
borne by the parties equally in the first instance, and shall be
subject to any final Award that may be passed by the Arbitral Tri-
bunal in relation to costs.
49. Needless to say, nothing contained in this order is an
expression of an opinion on merits of the matter or the relative strength
of the parties. All issues on merits are expressly kept open to be agitated
before the Arbitral Tribunal appointed hereby.
50. The parties shall approach the Learned Arbitrator within a
period of one week from the upload of this order on the website of this
Court and seek directions including any interlocutory arrangements that
may desire.
51. All actions required to be taken pursuant to this order shall be
taken upon receipt of a downloaded copy as available on this Court's
website.
[SOMASEKHAR SUNDARESAN, J.]
December 3, 2025
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