MRS. HEMA KHATTAR & ANR. versus SHIV KHERA

Citation: [2017] 4 S.C.R. 425 · Decided: 10-04-2017 · Supreme Court of India · Bench: MADAN B. LOKUR · Disposal: Appeal(s) allowed
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Judgment (excerpt)

[20 l 7] 4 S.C.R. 425 
MRS. HEMA KHATTAR & ANR. 
A 
v. 
SHIV KHERA 
(Civil Appeal No. 8837 of 2016) 
APRIL 10, 2017 
B 
[MADAN B. LOKUR AND R. K. AGRAWAL, JJ.] 
Code of Civil Procedure, 1908: 
Or.JI, r.3 - Joinder of cause of action - Agreement containing 
arbitration clause between appellant no. J and respon\ieni for C 
construction of house of respondent - Dispute arose as to quality 
of construction - Respondent appointed a sole arbitrator -
Thereafter in a meeting between them, it was decided that appellant 
no.] would no longer remain the contractor - Agreement terminated 
by mutual consent and it was decided that the construction would 0 
be carried out by sub-contractor to be appointed as per advice ·of 
appellant no.2, the husband of appellant no.1 - Appellant no.2 
incurred expenditure on behalf of respondent which he sought to 
recover in suit for declaration, permanent injunction and recovery 
before the High Court - Respondent filed application u/s.8 of 
Arbitration and Conciliation Act, 1996 claiming that the subject 
E 
matter of dispute in the suit was pending adjudication before the 
Arbitral Tribunal and, therefore, the suit cannot be proceeded -
High Court held that suit was bad for misjoinder of parties as well 
as for cause of action and gave an option to appellant lo elect 
whether they want the suit to be treated as a suit for recovery of F 
money by appellant no.2 against the respondent or a suit for 
declarations and injunction by appellant no.1 - Challenge against 
- Held: Appellant nos.1 and 2 even though had different causes of 
action against the respondent but the same was a continuity of written 
agreement - The alleged written agreement contained a clause of 
arbitration - Oral agreement having substituted the written G 
agreement, the clause of arbitration contained therein would also 
be applicable to the oral agreement - The civil court had no 
jurisdiction to entertain a suit after an application u/s. 8 of the said 
Act was made for arbitration - Jn such a situation, refusal to refer 
the dispute to arbitration amounted to failure o,fjustice as also 
425 
H 
426 
SUPRF.ME COURT REPORTS 
[2017) 4 S.C.R. 
A 
causing irreparable injury to the defendant - Dispute referred to 
sole arbitrator already appointed for decision - Arbitration and 
Conciliation Act, 1996 - s.8 - Cause of action. 
Cause of action - Meaning of - Held: Is a bundle o,ffacts 
which taken with the law applicable to them gives the plaintiff a 
B right to relief against the defendant. 
c 
Allowing the appeal, the Court 
HELD: 1. Admittedly, the cause of action for recovery of 
Rs. 45 lakhs claimed in the present suit was the expe;iditure 
alleged to have been incurred by appellant No. 2 pursuant to the 
oral agreement he claimed he had with the respondent. Appellant 
No. 1 was not a party to the alleged oral agreement between 
appellant No. 2 and the respondent for supervision of the 
construction by him. The materials available on record, 
particularly, the transcript of conversation between the appellant 
D No. 2 and the respondent show that the oral agreement was 
substituted in place of the alleged written agreement dated 
06.06.2009 between appellant no.I and the respondent. There 
was a complete discharge of the responsibilities and liabilities of 
appellant No. 1 vis-11-vis the respondent and vice-versa. The plaint 
also averred that after the accord between appellant No. 1 and 
E 
the respondent and simultaneous discharge of the obligations, a 
distinct oral agreement was entered into between appellllnt No. 
2 and the respondent. It is quite clear that the cause of action: 
the right to get declarations with regard to the said contract as 
null and void or a right to seek an injunction restraining the 
F 
respondent from taking any action on the basis of the said contract, 
if any, with regard to the prior written agreement arises in favour 
of appellant No. I against respondent and not in favour ofappellant 
No. 2 as he was not a party to agreement dated 06.06.2009. On 
the similar"Iines, the right to seek money decree, as is claimed 
by the appellants, would be a distinct cause of action founded on 
G subsequent oral agreement between the appellant No. 2 and the 
respondent. [Paras 15, 16][435-B, D-H] 
H 
2.1 In Black's Law Dictionary, it has been stated that the 
expression 'cause of action' is the fact or facts which give a person 
a right to judicial relief. A cause of action, thus, mean3 every 
MRS. HEMA
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