Issue Related To Existence Of Arbitration Agreement Cannot Be Decided Ex-Parte, Without Hearing Respondent: Delhi High Court

A Delhi High Court Bench of Justice Navin Chawla and Justice Shalinder Kaur held that the District Judge should not have decided the issue related to the existence of an arbitration agreement ex-parte, without calling upon the respondent to give its stand on the same.Additionally, the court held that an arbitration agreement, by virtue of the presumption of separability, survives the principal contract in which it was contained.Brief Facts: The dispute arose with respect to a lease deed between the parties. The lease was initially for a period of three years and later it was extended for a period of a further three years. Certain disputes arose between the parties and the appellant filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 before the District Judge. The District Judge dismissed the petition and held that the arbitration agreement contained in the lease deed, was no longer valid. Aggrieved by this, the appellant filed an appeal before the High Court challenging the order passed by the District Judge.The appellant contended that the District Judge, at a preliminary stage of the petition and without even issuing notice of the same to the respondents, has dismissed the petition. The appellant relied on the judgment in Mukesh Khurana vs. Rahul Chaudhary (2024).Observations:The court observed that the arbitration agreement, by virtue of the presumption of separability, survives the principal contract in which it was contained. The Arbitration Agreement forming part of a contract is treated as an agreement independent of other terms of the contract. The question of whether the underlying agreement stands discharged itself may be a dispute arising out of or in relation to or under the substantive contract and would not be precluded from reference to arbitration.The court noted that the District Judge had not even called upon a response from the respondents as to whether they admitted to the existence of an arbitration agreement between the parties.Moving further, the court held that “It was, therefore, premature for the learned District Judge to have determined this issue ex-parte without even calling upon the respondent to give its stand on the same. The above-referred pleadings of the appellant, in our view, do not in any manner justify a finding that the arbitration agreement between the parties stood extinguished. The learned District Judge has, therefore, fallen in passing the Impugned Order and dismissing the petition filed by the appellant in-limine.”Finally, the court set aside the impugned order passed by the District Judge.Case Title: WTC NOIDA DEVELOPMENT COMPANY PVT. LTD V. MS. ARTI KHATTAR & ORS.Citation: 2025 LiveLaw (Del) 83Case Number: FAO (COMM) 12/2025Counsel for the Appellant: Mr. Shaunak Kashyap, Ms. Nistha Gupta & Ms. Gayatri Dahiya, Advs.Counsel for the Respondents: None.Date of Judgment: 16.01.2025Click Here To Read/Download Order

Issue Related To Existence Of Arbitration Agreement Cannot Be Decided Ex-Parte, Without Hearing Respondent: Delhi High Court

Soumya Chakrabarti

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