The case revolves around whether disputes arising out of a Memorandum of Understanding (MoU) and related documents, which lacked a specific arbitration clause, could be referred to arbitration under an arbitration clause in an earlier Agreement for Sale. The Bombay High Court dismissed the Arbitration Appeal, holding that the original Agreement (with the arbitration clause) had merged into a subsequent Conveyance Deed, rendering the arbitration clause ineffective.

1. Background (Para 2-3)

• Respondent No.6 originally owned the subject property in Thane, Maharashtra.
• An Agreement for Sale (dated 5 November 2015) contained an arbitration clause (Clause 35) but was followed by other documents, including a MoU and Allotment Letter, that did not include arbitration clauses.

2. Legal Conflict (Para 10-12)

• The Respondents sought specific performance under the MoU and Allotment Letter.
• The Appellants argued that these documents were extensions of the original Agreement for Sale and subject to its arbitration clause.

3. Core Legal Questions (Para 30-32)

• Did the arbitration clause in the Agreement for Sale extend to subsequent independent documents like the MoU?
• Did the Agreement for Sale, including its arbitration clause, lose its enforceability upon execution of the Conveyance Deed?

Court's Findings

Merger of Agreement into Conveyance (Para 30-33):

The Agreement for Sale lost its validity after the execution of the Conveyance Deed, extinguishing the arbitration clause.

Independent Nature of MoU (Para 34-36):

The MoU and Allotment Letter, being separate agreements, could not be interpreted as governed by the arbitration clause of the Agreement for Sale.

Applicability of Arbitration Act Principles (Para 37-39):

The court ruled that the arbitration clause could not be incorporated into subsequent agreements merely by reference unless explicitly mentioned.

Historical Reference (Para 36):

The court noted that references to the Agreement for Sale in the pleadings were historical and not substantive.

Acts and Sections Discussed

1. Arbitration and Conciliation Act, 1996

   • Section 8: Referral to arbitration.
   • Section 16(1)(b): Doctrine of separability and the arbitration agreement's independent existence.

2. Relevant Precedents:

   • NBCC (India) v. Zillion Infraprojects Pvt. Ltd.
   • Union of India v. Kishorilal Gupta & Bros.

Ratio Decidendi:

• An arbitration clause within a contract ceases to apply if the contract merges into a new, independent agreement without explicit incorporation of the arbitration clause.

Subjects:

Arbitration Law, Contract Interpretation, Real Estate Disputes.

Arbitration, Contract Law, Merger Doctrine, Memorandum of Understanding, Conveyance Deed.