Madras High Court
Madan Sundararajan vs Dr.K.Sampath on 9 September, 2025
Author: N.Anand Venkatesh
Bench: N.Anand Venkatesh
2025:MHC:2224
Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 09.09.2025
CORAM
THE HONOURABLE MR.JUSTICE N.ANAND VENKATESH
Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
1. Madan Sundararajan,
S/o.Sundararajan
2. Malini Madan
W/o.Madan Sundararajan .... Petitioner & Applicant in both petitions
Vs.
1. Dr.K.Sampath,
S/o.Dr.B.R.Kulasekhar
2. Mrs.Sasirekha Sampath,
W/o.Dr.K.Sampath
3. Mrs.Suchitra Busch (Deceased)
W/o.Mr.Daniel Busch
4. Mr.Daniel Busch
5. Mr.Nathan Sampath Busch
S/o.Daniel Busch .... Respondents in both petitions.
[respondents 4 and 5 are brought on record as the legal heirs of the
deceased 3rd respondent as per order dated 14.07.2025 in Appn.No.3258
of 2025]
1/17
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
Prayer in Arb.O.P(Com.Div)No.176 of 2025:
Arbitration Original Petition filed under Section 11 of the
Arbitration and Conciliation Act, 1996 to appoint an Arbitrator to decide
the disputes between the petitioner and the respondent to the present
petition along with costs.
Prayer in O.A.No.993 of 2024:
Original Application filed under Section 9 of the Arbitration
and Conciliation Act, 1996, to pass an order of ad interim injunction
restraining the respondents, their delegates, agents, nominees, legal heirs
and/or any other person claiming through them from disturbing our
peaceful possession in the schedule mentioned property pending arbitral
proceedings.
For Petitioner : Mr.A.K.Sriram, Senior Counsel
[in both petitions] for M/s.A.S.Kailasam & Associates
For Respondents : Mr.S.R.Raghunathan
[in both petitions]
*****
COMMON ORDER
The arbitration O.P.No.176 of 2025 has been filed under
Section 11 of the Arbitration and Conciliation Act, 1996 [for brevity,
hereinafter referred to as 'the Act'] for appointment of an arbitrator to
decide the dispute between the petitioners and the respondents.
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
2. O.A.No.993 of 2024 has been filed under Section 9 of the
Act for interim injunction restraining the respondents from disturbing the
peaceful possession and enjoyment in the schedule property pending the
arbitral proceedings.
3. The case of the petitioners is that the parties in the present
case are close relatives and the schedule mentioned property originally
belonged to the first respondent, which was purchased through a sale
deed dated 15.09.1971. Subsequent to the purchase, the first respondent
declared that the schedule property can be equally divided amongst the
second and third respondents in the year 1984. The second respondent
was appointed as a power agent by the first and third respondent in the
year 1995 and the second respondent in her capacity as the power agent
and in her individual capacity, conveyed one-half share in the land and
the superstructure to the second petitioner, the first petitioner's mother
and the first petitioner through three separate sale deeds dated
18.08.1995. The second respondent thereafter acted as a power agent of
the first and third respondents and in her individual capacity executed a
power of attorney dated 18.08.1995 appointing the first petitioner as the
sub-power agent. The first petitioner's mother viz., Mrs.Jayalakshmi
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
executed a settlement deed dated 01.09.2004 in favour of the first
petitioner, conveying her 1/6th share in the schedule mentioned property.
4. The petitioners and the respondents decided to construct a
building in the first floor in the year 2007 and they entered into a
supplementary agreement and memorandum of agreement dated
24.03.2007. The supplementary agreement confirmed the ownership of
the superstructure in the ground floor to the petitioners as per the earlier
oral arrangement and the respondents were given consent for putting up a
superstructure in the first floor of the property. Thus, the ownership over
the ground floor and the first floor was properly defined under the
supplementary agreement dated 24.03.2007.
5. The above arrangement was going on without any problem
till the year 2021. Thereafter, the first and second respondents wanted to
sell their shares in the schedule mentioned property. They also offered the
first and second petitioners with the right of first choice/refusal. Even
though it does not form part of the supplementary agreement, the
communication that took place between the parties made it clear that it is
in continuation of the supplementary agreement dated 24.03.2007. In
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
other words, the earlier supplementary agreement was amended by
introduction of this offer made by the first and second respondents.
6. The petitioners communicated their acceptance to the
respondents through e-mail dated 17.07.2023 and expressed their
willingness to invoke their right of first choice. Pursuant to the same, the
petitioners reached out to the bankers and independent valuers to
ascertain the market value. The petitioners also sought for the title
documents along with other documents to initiate the valuation process.
The second respondent acknowledged the e-mail dated 17.07.2023 and
requested for time to gather all the documents through e-mail dated
23.07.2023. The petitioners performed their obligations and initiated all
necessary actions for completing the same. However, the respondents did
not come forward to perform their part of the contract for over an year.
7. On 15.05.2024, a whatsapp message was received from the
second respondent seeking for possession of the property in the next 4 to
6 months. Thereafter, the second respondent also informed the first
petitioner on 06.06.2024 that she is not willing to go further with the sale
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
agreement on a ground that the offer made by the petitioner was not on
par with the market value of the property.
8. In the light of the above development, a cause of action arose
for the petitioners to resolve the dispute by referring the same to the
arbitrator as per the arbitration clause that was available in the
supplementary agreement. Accordingly, a notice under Section 21 of the
Act was issued on 07.08.2024 and pursuant to the same, a petition has
been filed under Section 11 of the Act to appoint an arbitrator.
9. The application in O.A.No.993 of 2024 has been filed
seeking for an interim injunction to restrain the respondents from
disturbing the peaceful possession and enjoyment of the property pending
the arbitral proceedings.
10. This Court carefully considered the submissions made on
either side and perused the materials available on record.
11. The moot question that arises for consideration is as to
whether the alleged agreement to sell and the right of pre-emption had
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
actually arisen in the light of the communications/conversations that took
place between the parties and whether it was in continuation of
supplementary agreement dated 24.03.2007, which alone contained an
arbitration clause and therefore, that arbitration clause can be read into
the subsequent agreement between the parties, where it is alleged that the
respondents were willing to sell their share of the property and a
preemptive right was given to the petitioners to exercise their first option
to purchase the share of the respondents.
12. The petitioners are attempting to rely upon Section 7(5) of
the Act and develop a case as if the communication between the parties
and the conversations that happened between them through whatsapp
messages, actually constituted an agreement and that agreement was in
continuation of the supplementary agreement dated 24.03.2007.
Consequently the subsequent agreement that took place between the
parties can also become a subject matter of arbitration before the Arbitral
Tribunal.
13. The scope of Section 7(5) of the Act was dealt with by the
Apex Court in the case of M.R.Engineers and Contractors Private
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
Limited Vs. Som Datt Builders Limited reported in 2009 7 SCC 696.
Paragraph 24 in that judgment is extracted hereunder:
"24. The scope and intent of section 7(5) of the
Act may therefore be summarized thus:
(i) An arbitration clause in another document, would get
incorporated into a contract by reference, if the following
conditions are fulfilled : (i) The contract should contain a
clear reference to the documents containing arbitration
clause, (ii) the reference to the other document should
clearly indicate an intention to incorporate the arbitration
clause into the contract,
(iii) The arbitration clause should be appropriate, that is
capable of application in respect of disputes under the
contract and should not be repugnant to any term of the
contract.
(ii) When the parties enter into a contract, making a
general reference to another contract, such general
reference would not have the effect of incorporating the
arbitration clause from the referred document into the
contract between the parties. The arbitration clause from
another contract can be incorporated into the contract
(where such reference is made), only by a specific reference
to arbitration clause.
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
(iii) Where a contract between the parties provides that the
execution or performance of that contract shall be in terms
of another contract (which contains the terms and
conditions relating to performance and a provision for
settlement of disputes by arbitration), then, the terms of the
referred contract in regard to execution/performance alone
will apply, and not the arbitration agreement in the referred
contract, unless there is special reference to the arbitration
clause also.
(iv) Where the contract provides that the standard form of
terms and conditions of an independent Trade or
Professional Institution (as for example the Standard Terms
& Conditions of a Trade Association or Architects
Association) will bind them or apply to the contract,
such standard form of terms and conditions including any
provision for arbitration in such standard terms and
conditions, shall be deemed to be incorporated by
reference. Sometimes the contract may also say that the
parties are familiar with those terms and conditions or that
the parties have read and understood the said terms and
conditions.
(v) Where the contract between the parties stipulates that
the Conditions of Contract of one of the parties to the
contract shall form a part of their contract (as for example
the General Conditions of Contract of the Government
where Government is a party), the arbitration clause
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
forming part of such General Conditions of contract will
apply to the contract between the parties."
14. The above judgment was taken note in the subsequent
judgment in the case of NBCC (India)Limited Vs. Zillion Infra Projects
Private Limited reported in 2024 7 SCC 174. The relevant portions are
extracted hereunder:
"17. It could thus be seen that this Court has held
that when the parties enter into a contract, making a
general reference to another contract, such general
reference would not have the effect of incorporating the
arbitration clause from the referred document into the
contract between the parties. It has been held that the
arbitration clause from another contract can be
incorporated into the contract (where such reference is
made), only by a specific reference to arbitration clause. It
has further been held that where a contract between the
parties provides that the execution or performance of that
contract shall be in terms of another contract (which
contains the terms and conditions relating to performance
and a provision for settlement of disputes by arbitration),
then, the terms of the referred contract in regard to
execution/performance alone will apply, and not the
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
arbitration agreement in the referred contract, unless there
is special reference to the arbitration clause also.
18. This Court further held that where the
contract provides that the standard form of terms and
conditions of an independent trade or professional
institution will bind them or apply to the contract, such
standard form of terms and conditions including any
provision for arbitration in such standard terms and
conditions, shall be deemed to be incorporated by
reference. It has been held that sometimes the contract may
also say that the parties are familiar with those terms and
conditions or that the parties have read and understood the
said terms and conditions. It has also been held that where
the contract between the parties stipulates that the
conditions of contract of one of the parties to the contract
shall form a part of their contract, the arbitration clause
forming part of such general conditions of contract will
apply to the contract between the parties.
19. A perusal of sub-section (5) of Section 7 of the
Arbitration Act itself would reveal that it provides for a
conscious acceptance of the arbitration clause from another
document, by the parties, as a part of their contract, before
such arbitration clause could be read as a part of the
contract between the parties.
20. It is thus clear that a reference to the
document in the contract should be such that shows the
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
intention to incorporate the arbitration clause contained in
the document into the contract.
21. The law laid down in the case of M.R.
Engineers and Contractors Private Limited(supra) has been
followed by this Court in the cases of Duro Felguera, S.A.
vs Gangavaram Port Limited and Elite Engineering and
Construction (Hyderabad) Private Limited represented by
its Managing Director vs Techtrans Construction India
Private Limited represented by its Managing Director3.
22. No doubt that this Court in the case of Inox
Wind Limited vs Thermocables Limited has distinguished
the law laid down in the case of M.R. Engineers and
Contractors Private Limited(supra). In the said case (i.e.
Inox Wind Limited), this Court has held that though general
reference to an earlier contract is not 2 (2017) 9 SCC 729 3
(2018) 4 SCC 281 4 (2018) 2 SCC 519 sufficient for
incorporation of an arbitration clause in the later contract,
a general reference to a standard form would be enough for
incorporation of the arbitration clause. Though this Court
in the case of Inox Wind Limited (supra) agrees with the
judgment in the case of M.R. Engineers and Contractors
Private Limited (supra), it holds that general reference to a
standard form of contract of one party along with those of
trade associations and professional bodies will be sufficient
to incorporate the arbitration clause. In the said case (i.e.
Inox Wind Limited), this Court found that the purchase
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
order was issued by the appellant therein in which it was
categorically mentioned that the supply would be as per the
terms mentioned therein and in the attached standard terms
and conditions. The respondent therein by his letter had
confirmed its acceptance. This Court found that the case
before it was a case of a single-contract and not two-
contract case and, therefore, held that the arbitration
clause as mentioned in the terms and conditions would be
applicable."
15. The above judgments makes it clear that an arbitration
clause in other documents, would get incorporated into a contract that
takes place subsequently, where such reference is made to the earlier
agreement only if the contract contains a clear reference to the document
containing the arbitration clause and the reference to the other document
should clearly indicate an intention to incorporate the arbitration clause
into the subsequent contract and making a general reference to another
contract would not have the effect of incorporating the arbitration clause
from the referred document into the subsequent contract between the
parties, unless the arbitration clause from another contract is incorporated
into the subsequent contract.
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
16. If the above test is applied to the facts of the present case, it
is seen that the supplementary agreement dated 24.03.2007 merely dealt
with the manner in which the parties wanted to enjoy the subject
property. That agreement had nothing to do with the so called agreement
of sale claimed by the petitioners or the right of first choice given to them
by the respondents. Even though a passing reference has been made to the
supplementary agreement in some of the communications, there is
absolutely no material to show that the arbitration clause in the
supplementary agreement was intended /agreed upon to be incorporated
in the subsequent agreement of sale that is claimed to have arisen by the
conduct of the parties in terms of the communications/conversations that
took place between the parties.
17. The cause of action for filing these applications has arisen
on the claim made by the petitioners for purchasing the share of the
respondents on the alleged agreement of sale. This Court finds that the
supplementary agreement had nothing to do with the subsequent
conversation that took place between the parties and it is too far-fetched
for the petitioners in making an attempt to read the arbitration clause
contained in the supplementary agreement in a subsequent development,
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
which took place where the parties were discussing about possibilities of
selling their respective shares.
18. In the case in hand, there exists no arbitration agreement
between the parties in the so called agreement of sale/right of preemption
offered in favour of the petitioners. Apart from that, the entire materials
placed before this Court show that there was no concluded agreement of
sale between the parties and the letters dated 15.05.2023, 17.07.2023 and
23.07.2023 only show that the respondents had expressed an initial
interest in selling their shares and subsequently decided not to pursue
with this decision. It is an ingenious attempt made by the petitioners to
read an arbitration clause into the so called agreement of sale, which is
not in existence.
19. If an arbitration clause is non-existent, there is no scope for
dealing with the application under Section 9 of the Act and obviously
there is no question of appointing an Arbitrator, when this Court finds
that the arbitration clause does not exist.
20. In the light of the above discussions, this Court does not
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Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
find any merits in these application/petition and accordingly, both the
petitions stand dismissed.
09.09.2025
Neutral Citation:Yes
Speaking Order
mp
N.ANAND VENKATESH, J.
mp
Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
https://www.mhc.tn.gov.in/judis ( Uploaded on: 18/09/2025 01:18:00 pm )
Arbitration Original Petition (Com.Div).No.176 of 2025
and Original Application No.993 of 2024
09.09.2025
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