COMS/621/17.

CORAM: SOMASEKHAR SUNDARESAN, J.

RESERVED ON: MAY 6, 2026

PRONOUNCED ON: JUNE 9, 2026

Judgement:

Context and Factual Background:

1. Notice of Motion No. 665 of 2019 is an Application filed under Section 8 (“Section 8 Application”) of the Arbitration and Conciliation Act, 1996 (“the Act”) in Commercial Suit No. 621 of 2017 (“2017 Suit”). Plaintiff No. 1, Shashi Sumeet Production Ltd. (“Company”), and Plaintiff Nos. 2 and 3, Mr. Sumeet H. Mittal, and Mrs. Shashi Sumeet Mittal, (all collectively, “Plaintiffs”) have sued the Defendant, Kuresh R. Kushesh (“Defendant”), seeking a declaratory relief that the Memorandum of Understanding (“MOU”) dated November 23, 2016 and the Share Subscription cum Shareholder Agreement dated December 21, 2016 (“Agreement”) are illegal void, non est and not binding on the Plaintiffs.

2. The 2017 Suit also seeks a direction to the Defendant to deliver and deposit the alleged MOU and the Agreement with this Court for cancellation and that, upon delivery of the same, they be cancelled by an order and decree of this Court. The other relief sought in the 2017 Suit is a claim for Rs. 3 crores with interest rate 18% and interim reliefs pending the adjudication of the Suit in the form of an injunction restraining the Defendant from acting in any manner in furtherance of the MOU and the Agreement.

3. The MOU was admittedly a “preliminary document” under which the parties agreed to record “the preliminary terms and conditions of the transaction between them”. In paragraph 6 of the Plaint, the Plaintiffs have further contended that the person who signed on behalf of the Plaintiffs had no authority to sign such a document, but that the Defendant insisted on a full-fledged agreement having to be signed by the Plaintiffs. According to the Plaintiffs, it was always made clear to the Defendant that the final document containing the final contract would be signed by Mr. Sumeet Mittal, Plaintiff No. 2.

4. Paragraph 7 of the plaint sets out the broad terms of the transaction between the parties, namely, that the Defendant would be issued shares in Plaintiff No. 1 Company for a total consideration of Rs. 8.25 crores, which would give him a 15% stake in the equity share capital of the Company. Admittedly, (paragraph 8 of the Plaint) Rs. 60 lakhs was received in cash and Rs. ~1.4 crores was received by cheque against share subscription. According to the Plaintiffs the final agreement had to be signed by the parties and the Plaintiffs contend that the Plaintiffs are not in possession of the Agreement on which the signature of one Mr. Prashant Rathi had been taken.

5. Various SMS exchanges between the parties have been produced in the Plaint in the form of screenshots pasted into the body of the Plaint, to contend that the parties were not ad idem on the final contours of the transaction between the parties. According to the Plaintiffs, there were frequent changes in the Defendant’s thought process and the Plaintiffs called off the transaction and sought to give a buy back option to the Defendant, offering to return the money that the Defendant had invested, along with interest.

6. The Plaintiffs therefore contend that there was no concluded contract between the parties in the form of the Agreement which is relied upon by the Defendant. According to the Plaintiffs, the Agreement in the possession of the Defendant was obtained by fraud or misrepresentation and that the Plaintiff Nos. 2 and 3, being out of the country, could have never signed the Agreement on December 21, 2016.

7. The Section 8 Application has been filed in reliance upon the arbitration clause contained in the Agreement. The arbitration clause is evidently contained in Clause 25 and sets out that disputes and differences between the parties would be adjudicated by a Sole Arbitrator to be appointed by consent of the parties, failing which the arbitrator shall be appointed by the Court under Section 11 of the Act. Clause 21 of the Agreement also con