The court reaffirms the expansive nature of arbitration clauses allowing disputes from associated agreements to be subject to arbitration, notwithstanding allegations of fraud.

JUDGMENT :

Somasekhar Sundaresan, J.

Context and Factual Background:

1. This is an Appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (“the Act”) challenging an order dated March 11, 2025 (“Impugned Order”) rejecting an application filed by the Appellant under Section 8 of the Act. The disputes and differences between the parties relate to transactions between them arising out of a Development Agreement, dated May 3, 2011 (“Development Agreement”) and a further Supplemental Agreement dated May 25, 2021 (“Supplemental Agreement”).

2. The Appellant, Om Swayambhu Siddhivinayak (“Developer”) had agreed under the Development Agreement to provide a certain specified area of developed property to the Respondents, who are the owners of the land on which the development was to take place (“Owners”). The Owners have filed Special Civil Suit No. 157 of 2024 before the 4^th Joint Civil Judge, Senior Division, Kalyan, inter alia, seeking specific performance of the provision of certain saleable area to the Owners (in the quantum of 8,937 sq.ft and 4927 sq.ft.), and a cancellation of the Supplemental Agreement.

3. It is the case of the Appellant that Clause 30 of the Development Agreement, which contains the arbitration clause, is an expansive clause and all disputes and differences between the parties in connection with the development contracted in that Development Agreement are amenable to arbitration, and therefore, no Civil Court could take cognizance of any dispute between the parties in connection with the Development Agreement.

4. A detailed reading of the Impugned Order would show that the Learned District Court was swayed by only one factor, namely, that Supplemental Agreement did not contain any arbitration clause and the Development Agreement alone contains an arbitration clause. In paragraph 4 of the Impugned Order, it is recorded by the Learned Judge that the suit is for cancellation of the Development Agreement as well as the Supplemental Agreement. The Learned Judge was persuaded to rule that in the absence of an arbitration clause in the subsequent agreement and considering the nature of the dispute, the arbitrator is not competent and empowered to decide the disputes between the parties. Therefore, the Learned Judge refused to refer the parties to arbitration and has continued to deal with the suit himself.

Contentions of the Parties:

5. Dr. Warunjikar, Learned Senior Advocate on behalf of the Respondents seeks to defend the Impugned Order on the premise that the parties had a layered and a structured approach of dispute resolution divided between Clause 13 of the Development Agreement, and Clause 30 of the Development Agreement. According to him, Clause 30 of the Development Agreement deals with all disputes and differences connected to the development contracted in the Development Agreement, but Clause 13 deals with the provision of the developed area in terms of Clauses 1 and 2, for which, the parties had agreed that they would approach a Court for a declaration which would be binding on the parties. Dr. Warunjikar would also contend that the Suit seeks a declaration that the Supplemental Agreement is a product of fraud and that arbitral tribunals cannot adjudicate serious allegations of fraud.

6. Mr. Dinesh Tiwari, Learned Advocate on behalf of the Appellant would submit that even a plain reading of the prayers in the Suit would demonstrate that the relief sought is of specific performance of the Development Agreement, which is subject matter of the arbitration agreement. As regards the distinction between Clause 13