VILLA REALCON LLP. A LIMITED CO. v. CHANDRISH PARBAT GOTHI AND ORS.
Upholding Arbitration Agreements: Disputes Under MoU Referred to Arbitration Despite Non-Signatories and Multiple Causes of Action; Section 8 Analysis.
Court: Bombay High Court
Citation: 2025:BHC-AS:52791
Decision Date: 03-12-2025
List of Laws
The Arbitration and Conciliation Act, 1996; Section 8 of the Arbitration and Conciliation Act, 1996; Section 37 of the Arbitration and Conciliation Act, 1996; Section 11 of the Arbitration and Conciliation Act, 1996; Code of Civil Procedure, 1908
Case Brief
- Facts: Villa Realcon LLP appealed an order rejecting its application under Section 8 of the Arbitration and Conciliation Act, 1996. The underlying dispute arose from a 2019 Memorandum of Understanding (MoU) between Chandresh, Villa Realcon, and Villa Modern concerning the allotment of an "Additional Developed Area" as part of a larger land development scheme involving CIDCO and the "12.5% Scheme". Chandresh filed Suit 130 seeking enforcement of the 2019 MoU, but Villa Realcon argued that the suit should be referred to arbitration due to the MoU's arbitration clause. The initial court rejected this application, leading to the present appeal.
- Procedural Posture: This is an appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996, against the order of the 2nd Joint Civil Judge, Senior Division, Panvel, who rejected the Appellant's application under Section 8 of the same Act.
- Issue: Whether the disputes in Suit 130, which involves multiple parties and agreements (including the 2019 MoU and a Consent Decree), can be referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996, despite the presence of non-signatories to the arbitration agreement (CIDCO) and the joinder of causes of action.
- Holding: Yes, the appeal is allowed. The disputes and differences between Chandresh, Villa Realcon, and Villa Modern are declared to be covered by the arbitration agreement contained in the 2019 MoU, and the matter is referred to arbitration.
- Reasoning: The Court reasoned that the core subject matter of Suit 130 involves the interpretation of the 2019 MoU, which contains an arbitration clause. The Court found that the cause of action against CIDCO was distinct and separable from the disputes arising under the MoU between Chandresh, Villa Realcon, and Villa Modern. Relying on the principle that an arbitration agreement should not be defeated by adding a cause of action against parties not covered by the agreement, the Court held that the disputes between the parties to the MoU should be referred to arbitration. The Court also noted that the amendments to Section 8 of the Arbitration and Conciliation Act in 2015 have clarified that the presence of non-signatories or the joinder of multiple causes of action should not prevent a reference to arbitration if the core dispute falls within the scope of the arbitration agreement. The Court cited Taru Meghani and Sundaram Finance Limited v. T. Thankam to support the view that courts should strive to give effect to arbitration agreements and minimize judicial intervention.