In Brief
Hema Khattar and her husband Ashwani Khattar sued Shiv Khera for declarations, injunction, and recovery of money (Rs. 45 lakhs), claiming that an agreement dated 06.06.2009 was procured by fraud and had been terminated by mutual consent by an oral agreement in April 2011. The respondent raised a preliminary objection that the suit was bad for misjoinder of parties and causes of action, and sought referral to arbitration under Section 8 of the Arbitration Act. The High Court upheld the objection and offered the appellants an election to pursue reliefs under either appellant alone. The Supreme Court held that despite different causes of action, both appellants could join in a single suit as the causes of action arose from continuity of the same transaction. The Court also held that once an arbitration application was made and the prerequisites of Section 8 were satisfied, the civil court must refer the dispute to arbitration; the arbitration clause does not become inoperative due to termination of the written agreement and continues to apply to the oral agreement that substituted it.
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