Mr.Hiren Shashikant Dhruva And ANR. v. M/S Suraj Constructions Through Its Partner Mr. Aman C. Patel And ORS.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION ARBITRATION APPEAL NO.5 OF 2026 Mr. Hiren Shashikant Dhruva & Anr.
....Appellants
Versus
M/s Suraj Constructions & Ors.
.....Respondents Mr. Suyash Sule, for Appellants.
Mr. Prabhanjan Gujar, for Respondent No.3 and 4. CORAM: SOMASEKHAR SUNDARESAN, J.
DATE : MARCH 7, 2026 ORDER :
1.
This is a Petition under Section 37 of the Arbitration and Conciliation Act, 1996 ("the Act") impugning an order dated January 13, 2026 ("Impugned Order"), by which the Learned Civil Judge, Senior Division, Belapur has dismissed an application filed by the Appellants under Section 8 of the Arbitration and Conciliation Act, 1996 ("the Act").
2.
The disputes and differences between the parties relate to a Memorandum of Understanding ("MOU") dated March 31, 2021, which admittedly contains an arbitration clause.
by AARTI GAJANAN PALKAR Date:
2026.03.11 11:45:44 +0530 AARTI GAJANAN PALKAR
3.
Respondent No.1, who is the Original Plaintiff, filed Special Civil Suit No. 262 of 2025 ("Suit") which at the threshold, pleads that the Suit was instituted for enforcement of contractual and equitable rights, arising out of the aforesaid MOU.
4.
Upon a careful perusal of the pleadings in the Plaint, it is apparent that the substratum of the Suit is enforcement of the MOU. In Paragraph 49 of the Plaint, it has been submitted by the original Plaintiff that third-party rights have been created on the suit property purely to defeat the rights which have already accrued to the original Plaintiff under the aforesaid MOU. In Paragraph 50, it is pleaded that an attempt was made to raise an objection before the Maharashtra Industrial Development Corporation ("MIDC") asking it not to permit sub-division of the land since interests had been created under the MOU. The MIDC is said to have replied indicating that it could not recognize any agreement entered into without its prior permission and that without a Court order, the MIDC could not be prevented from carrying out its activity. The activity in question is sub-division of 4000 square meters of land, of which, the acquisition of 3000 square meters by the original Plaintiff is the subject matter of the MOU. 5.
Having seen the Impugned Order, it is clear that the Impugned Order is difficult to be sustained. The Impugned Order holds that once the MOU has been terminated, the Petitioner cannot blow hot and cold
and rely on the arbitration clause contained in it. This is in conflict with the codified and well-declared position that the arbitration agreement is severable and on its own count, would survive termination of the contract in which it is housed. 6.
That apart, the prayers in the Plaint have been noticed in the Impugned Order to hold that seeking a permanent injunction restraining alienation, construction, creation of third-party interest and seeking a relief against MIDC would be non-arbitrable in terms of the law declared in Vidya Drolia1. The Impugned Order has essentially taken a view that the Courts are duty bound at the Section 8 stage to examine whether the subject matter of the dispute is arbitrable. 7.
It would be difficult to sustain the Impugned Order. It is clear from a plain reading of Section 8 of the Act, in particular, after its amendment in 2015, that unless the Section 8 Court finds that prima facie no valid arbitration agreement exists, it must make a reference of the disputes to arbitration since the Court should not be allowed to be made a forum to frustrate a binding arbitration agreement. 8.
The earlier law declared in Sukanya Holdings2 on the inability to "fragment" a cause of action, in fact led to the amendment to Section 8(1) of the Act and the provision that reference would need to be made 1 Vidya Drolia v. Durga Trading Corporation - (2021) 2 SCC 1 2 Sukanya Holdings (P) Ltd. v. Javed H. Pandya & Anr. - (2003) 5 SCC 531.
notwithstanding anything contained in any judgement of the Supreme Court or any other Court. Therefore, the amended Section 8 requires the Court to refer the parties to arbitration, unless of course it finds prima facie that no valid arbitration agreement exists. 9.
Similar facts have been dealt with by me already in the case of M/s. Sab Developers3 and Villa Realcon LLP4. The current matter can be said to be covered by the aforesaid judgements. 10.
In view of what is stated above, it is difficult to agree with the analysis set out in the Impugned Order. Merely adding MIDC or a subsequent purchaser of third party interests as a party, would not disturb the position that the facts giving rise to the cause of action are firmly rooted in the MOU, disputes over which are explicitly subject to arbitration.
11.
Needless to say, it would always be open to raise all contentions on merits before a Learned Arbitral Tribunal. Any facet of entitlements in law as perceived by the original Plaintiff and not covered by the arbitration agreement, will always be open for pursuit in accordance with law - say, a writ petition against any statutory body such as the MIDC.
3 M/s Sab Developers Through Partners & Ors. v. M/s Vijay Enterprises Through Partners & Anr. in Arbitration Appeal No.3 of 2025 with IA/1436/2025 - Judgement dated July 16, 2025.
4 Villa Realcon LLP Vs. Chandresh Parbat Gothi & 11 Ors. in Arbitration Appeal (St) No.30899 of 2025 - Judgement dated December 3, 2025.
12.
Therefore, the Impugned Order is unsustainable and the Appeal is allowed.
13.
At this stage, Learned Counsel for the Respondents fairly states that instead of another round for appointment of an arbitrator, an arbitrator may be appointed here and now, so that the parties could pursue the dispute resolution expeditiously. Therefore, this Petition is hereby finally disposed of, by constituting an Arbitral Tribunal in the following terms:
A] Justice (Retd.) Sadhana Jadhav, a former judge 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 details of the Learned Arbitrator are set out below:- Address : 153, 15th Floor, Jolly Maker 3, Next to D M Somani School, Cutte Parade, Mumbai.
Email Id :
: sjadhav0660@gmail.com 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 of upload of this order. The Appellant shall provide the contact and communication particulars of the parties to the Arbitral 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 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 fixing a schedule for pleadings, examination of witnesses, if any, schedule of hearings etc. At such meeting, the parties shall provide 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;
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 Tribunal in relation to costs.
14.
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. 15.
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.]