MRS. HEMA KHATTAR & ANR. versus SHIV KHERA
[2017] 4 S.C.R. 425, Supreme Court of India, 2017
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
[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 
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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 KHATTAR & ANR. v. SHIV KHERA 
427 
fact, which, if traversed, it would be necessary for the plaintiff to 
A 
prove in order to support his right to a judgment of the court. In 
other words, it is a bundle of facts which taken with the law 
applicable to them gives the plaintiff a right to relief against the 
defendant. It must include some act done by the defendant since 
in the absence of such an act no cause of action can possibly 8 
accrue. It is not limited to the actual infringement of the right 
sued on but includes all the material facts on which it is founded. 
[Para 18)[436-G-H; 437-A] 
2;2 Order II, Rule 3, provides for the joinder of several 
causes of action and states that a plaintiff may unite in the same 
suit several causes of action against the same defendant, or the 
C 
same defendants jointly or several plaintiffs having causes of 
action in which they are jointly interested against the same 
defendant or defendants jointly may unite them in one suit. The 
remedy for any possible inconvenience with regard to said rule 
is supplied by the provisions of Order II, Rule 6, which authorizes D 
the Court to order separate trials of causes of action which though 
joined in one suit cannot be conveniently tried or disposed of 
together. Similarly, Order I Rule 1 of the Code permits joinder 
of more than one persons any right to relief in respect of, or 
arising out of, the same act or transaction or series of acts or 
transactions is alleged to exist in
such persons, whether jointly, 
E 
severally or in the alternative; and if such persons brought 
.separate suits, any common question of law or fact would arise. 
Order I Rule 2 provides that where it appears to the court that 
any joinder of plaintiffs may embarrass or delay the trial of the 
suit, the court may put the plaintiffs to their election or order F 
separate trials or make such other order as may be expedient. 
(Paras 19, 20](43J-B-E] 
3. The appellants even though had different causes of action 
against the respondent but it was a continuity of the agreement 
dated 06.06.2009, therefore, both the appellants could have joined G 
as plaintiffs in a suit and the suit is not bad for misjoinder of parties 
or causes of action, Hence, the High Court was ~ot right in 
giving an option to the appellants to pursue reliefs qua appellant 
No. 1 or qua appellant No. 2 only. In the instant facts and 
circumstances of the case, it is also imperative to find out whether 
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428 
SUPREME COURT REPORTS 
[20 I 7] 4 S.C.R. 
A the High Court was justified in deciding the maintainability of the 
suit when an application under Section 8 of the Act is pending 
adjudication before the Arbitral Tribunal. Where an agreement 
is terminated by one party on account of the breach committed 
by the other, particularly, in a case where the clause is framed in 
B 
c 
wide and general terms, merely because agreement has come to 
an end by its termination by mutual consent, the arbitration clause 
does not get perished nor is rendered inoperative. 
In cases 
where there is an arbitration clause in the agreement, it is 
obligatory for the court to refer the parties to arbitration and 
nothing remains to be decided in the original action after such an 
application is made except to refer the dispute to an arbitrator. 
Therefore, it is clear that in an agreement between the parties 
before the civil court, if there is a clause for arbitration, it is 
mandatory for the civil court to refer the dispute to an arbitrator. 
In the instant case, the pre-requisites for an applicatior. under 
D Section 8 are fulfilled, viz., there is an arbitration agreement; the 
party to the agreement brings an action in the court against the 
other party; the subject matter of the action is the same as the 
S"bject-matter of the arbitration agreement; and the other party 
moves the court for referring the parties to arbitration before it 
E 
F 
submits his first statement on the substance
of the dispute. The 
civil court had no jurisdiction to entertain a suit after an application 
under Section 8 of the Act is made for arbitration. In such a 
situation, refusal to refer the dispute to arbitration would amount 
to failure of justice as also causing irreparable injury to the 
defendant. The ornl agreement as evidenced by the transcript of 
conversation between the appellant No.2 and the respondent on 
06/07.04.2011 substituting the alleged written agreement dated 
06.06.2009 and which contained a clause for arbitration, the same 
clause for arbitration would also be applicable to the oral 
agreement. The disputes raised by the appellants is referred to 
the sole arbitrator already appointed. (Paras 22, 23, 26, 27, 28 
G and 29][438-B, C-D; 440-C-H; 441-A, C) 
H 
Ramesh Hirachand Kundanmal 
v. 
Municipal 
Corporation of Greater Bombay and Others [1992] 2 
SCR 1 : 1992 (2) SCC 524; Sundaram Finance Limited 
and Another v. T. Thankam [2015] 2 SCR 228 : (2015)
MRS. HEMA KHATTAR & ANR. v. SHIV KHERA 
14 SCC 444; P Anand Gajapathi Raju & Others v. 
P V.G Raju (Dead) and Others [2000] 2 SCR 684 : 
(2000) 4 SCC 539; P.R. Shah, Shares and Stock 
Brokers Private Limited v. B.HH Securities Private 
Limited and Others [2011) 16 SCR 87 : (2012) 1 SCC 
594 - relied on. 
Kvaerner Cementation India Limited v. Bajranglal 
Aganval and Another (2012) 5 SCC 214 - referred to. 
Case Law Reference 
[2all] 16 SCR 87 
relied on 
Para 8 
(2012) 5 sec 214 
referred to 
Para 11 
[1992] 2 SCR 1 
relied on 
Para 21 
[2015) 2 SCR 228 
relied on 
Para 25 
[2000] 2 SCR 684 
relied on 
Para26 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. i!837 
of 2016. 
From the Judgment and Order dated 28.09.2012 of the High Court 
of Delhi at New Delhi in FAO (OS) No. 470of2012. 
429 
A 
B 
c 
D 
Jayant Bhushan, Sr. Adv., Ms. Prachi V. Sharma, Pradeep Kumar 
E 
Bakshi, Advs. for the Appellants. 
Sakal Bhushan, Firasat Ali, Chetan Roy, Rajeev Gupta, Zishan 
A., P. D. Sharma, Advs. for the Respondent. 
The Judgment of the Court delivered by 
R. K. AGRAWAL, J. I. Challenge in this appeal is to the legality 
of the judgment and order dated 28.09.2012 rendered by a Division Bench 
of the High Court of Delhi at New Delhi in FAO (OS) No. 470of2012 
whereby the High Court dismissed the appeal filed by the appellants 
herein. 
2. Factual position in a nutshell is as follows:-
a) An agreement to reconstruct a building situated at C-6/4, Vasant 
Vihar, New Delhi was executed
between Hema Khattar-the appellant 
F 
G 
No. I herein, wife of Ashwani Khattar - the appellant No. 2 herein, 
carrying on business in construction under the name and style of Mis 
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430 
SUPREME COURT REPORTS 
[20 l 7] 4 S.C.R. 
A Dessignz and Shiv Khera-the respondent herein on 06.06.2009. 
b) Pursuant to the said agreement, the building site was handed 
over to the appellant No. l herein on 09.11.2010 and thereafter the 
execution of the work had started. In March 2011, as per Clau3e 16 of 
the Agreement dated 06.06.2009, a spot inspection was conducted by 
B renowned structural engineers which pointed out several structural 
lacunae. On coming to know about the same, the respondent further 
arranged inspection by various specialized agencies which confirmed 
the same in their reports. 
c) Being aggrieved by the quality of construction, the respondent 
c served a legal notice dated 19.09.2011 to the appellant No. 1 seeking 
damages. The respondent, vide Clause 33 of the said agreement, 
appointed a sole arbitrator claiming that the appellant No. 1 has not 
complied with the terms of the agreement whereby disputes, requiring 
adjudication; have arisen between the parties. In statement of claims, 
the respondent, besides other claims, also sought for a sum of Rs. 39.85 
D lakhs paid to the appellant No. 1 along with a sum of Rs. 35,000/- for the 
TDS deposited to her credit. 
E 
d) The appellants filed a suit for declarations, permanent injunction 
and recovery before the High Court being CS(OS) No. 1532 of 2012 
seeking a decree that the agreement dated 06.06.2009 ente:-ed into 
between the appellant No. 1 and the respondent was vitiated and had 
been
terminated by mutual consent by both the parties and any proceeding 
initiated pursuant to the agreement is null, non-est and void and also for 
recovery of an amount ofRs.45,50,000/-. 
e) It is also pertinent to mention here that it was alleged in the 
F 
plaint that a formal meeting was held between the parties in which it 
was decided that appellant No. 1 will no longer be the contractor and the 
agreement dated 06.06.2009 would stand terminated by mutual consent 
and the construction would be carried out by the sub-contractors to be 
appointed as per the advice of appellant No. 2 who would supervise the 
G same without remuneration/profit. 
t) The respondent filed I.A. No. 12124 of2012 in CS(OS) No. 
1532 of2012 under Section 8 of the Arbitration and Conciliation Act, 
1996 (in short 'the Act') claiming that the subject-matter of dispute in 
the prnsent suit is already pending adjudication before the Arbitral Tribunal, 
H hence, the suit cannot be proceeded with which was denied by the
MRS. HEMA KHATTAR & ANR. v. SHIV KHERA 
43 l 
[R. K. AGRAWAL, J.] 
appellants in their reply to the above said application. 
A 
g) Vide order dated 17.09.2012, learned single Judge of the High 
Court, found that the suit is bad for misjoinder of parties as well as for 
causes of action and gave an option to the appellants therein to elect 
whether ~hey want the suit to be treated as a suit for recovery of money 
by appellant No. 2 herein against the respondent or a suit for declarations 
B 
and injur.ction by appellant No. I. 
h) Being aggrieved by the order dated 17.09.2012, the appellants 
went in appeal and filed FAO (OS) being No. 470 of 2012 before the 
High Court. A division bench of the High Court, vide order dated 
28.09.2012, dismissed the appeal. 
c 
O Aggrieved by the order dated 28.09.2012, the appellants have 
filed this appeal by way of special leave before this Court. 
3. Heard Mr. Jayant Bhushan, learned senior counsel for the 
appellants and Mr. Sakal Bhushan, learned counsel for the respondent 
and perused the records. 
D 
Point for consideration:-
4. The only point for consideration before this Court is whether in 
the pres1rnt facts and circumstances of the case the suit is barl for 
misjoinder of parties as well as for causes of action? 
E 
Rival submissions:-
5. Learned senior counsel for the appellants contended before 
this Court that the agreement dated 06.06.2009 was executed with 
dishonest intention containing the arbitration clause and in any
event the 
same has been superseded by a subsequent oral agreement between 
F 
appellant No. 2 herein and the respondent. 
6. Learned senior counsel further contended that the High Court 
erred in upholding that the cause ofaction with respectto relief of money 
is an independent cause of action from that of the relief of declarations 
and injunction. The High Court failed to appreciate that common trial of G 
joint causes of action is necessary, if at all, as they raise common questions 
oflaw and facts and the course adopted by the High Court would I.e}d to 
multiplicity of proceedings causing delay. Learned senior counsel finally 
contended that in view of the patent illegality in the orders passed by the 
High Court, the same are liable to be set aside. 
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432 
A 
B 
SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
7. Without prejudice to the aforesaid, learned senior counsel for 
the appellants, in the alternative submitted that the entire matter be 
referred to another sole arbitrator which may be appointed by this Court 
as according to him, in the written contract, there was a clause for 
arbitration and, subsequently, in the oral contract also, the terms of the 
earlier contract continued to remain in operation except those which 
were modified in the oral contract. 
8. In support of the above submission, learned senior counsel for 
the appellants placed reliance upon a judgment of this Court in P.R. 
Shah, Shares and Stock Brokers Private Limited vs. B.H.H. 
Securities Private Limited and Others (2012) I SCC 594. He has 
C referred to paragraph 19 of the judgment which reads as under:-
D 
E 
F 
"19. If A had a claim against Band C, and there was an arbitration 
agreement between A and B but there was no arbitration 
agreement between A and C, it might not be possible to have a 
joint arbitration againstB and C. A cannot make a claim against C 
in an arbitration against B, on the ground that the claim was being 
made jointly against Band C, as C was not a party to the arbitration 
agreement. But if A had a claim against Band C and if A had an 
arbitration agreement with Band A also had a separate arl,itration 
agreement with C, there is no reason why A cannot have ajoint 
arbitration against B and C. Obviously, having an
arbitration 
between A and B and another arbitration between A and C in 
regard to the same claim would lead to conflicting decisions. In 
such a case, to deny the benefit of a single arbitration against B 
and Con the ground that the arbitration agreements against Band 
Care different, would lead to multiplicity of proceedings, c0!1tlicting 
decisions and cause injustice. It would be proper and just to say 
that when A has a claim jointly against B and C, and when there 
are provisions for arbitration in respect of both Band C, there can 
be a single arbitration." 
9. Per contra, learned counsel for the respondent submi~ted that 
G the suit has been filed by the two appellants jointly with respect to the 
two separate alleged causes of action. He further submitted that the 
alleged cause of action of the appellant No. I is based upon the agreement 
dated 06.06.2009 between the appellant No. I and the respondent in 
which appellant No. 2 cannot be said to have any joint interest and the 
H alleged cause of action of appellant No. 2 is based upon an oral 
-
MRS. HEMA KHATTAR & ANR. v. SHIV KHERA 
433 
[R. K. AGRAWAL, J.] 
understanding arrived at between appellant No.2 and the respondent in 
A 
which appellant No. I cannot be said to have any joint interest. Learned 
counsel for the respondent further submitted that in such circumstances, 
the instant suit in the present form is not maintainable in terms of Order 
II Rule 3 of the Code of Civil Procedure, 1908 (in short 'the Code') and 
the suit of the appellant No. I is required to be separated under Order II 
Rule 6 of the Code. 
B 
10. Learned counsel further submitted that in view of the existence 
of the arbitration clause in the agreement dated 06.06.2009 and the subject 
matter of dispute between the patties in the present suit is already pe11.ding 
adjudication before the Arbitral Tribunal, the instant suit filed by the c 
appellant No. l cannot be proceeded with and the matter is required to 
be referred to arbitration. Learned counsel finally submitted that the 
judgment rendered by the division bench of the High Court upholding the 
decision of the learned single Judge is correct and no interference is 
called for in the appeal. 
11. Learned counsel further submitted that the oral contract did 
D 
not contain any clause for arbitration and the dispute raised by the appellant 
No. 2 cannot be referred to arbitration. In support whereof, he relied 
upon a decision of this Court in Kv<temer Cementation lndi<t Limited 
vs. Bajrangla/ Agarwal and Another (2012) 5 SCC 214
wherein this 
Court has held that there cannot be any dispute that in the absen~e of E 
arbitration clause in the agreement, no dispute could be referred for 
arbitration to an Arbitral Tribunal. 
12. Learned counsel, however, submitted that if this Court comes 
to the conclusion that the matter should be resolved by way of arbitration, 
the entif€ matter be referred to the sole arbitrator already appointed by 
F 
the respondent. 
Discussion: 
13. From the materials on record, it is evident that an agreement 
· dated 06.06.2009 was executed between the parties wherein appellant 
No. I was the contractor and the respondent as a client. The agreement G 
impugned clearly states that there is an arbitration clause therein. Owing 
to the dispute among parties, the respondent, in exercise of his right 
under the said clause, appointed a sole arbitrator. Subsequently, notices 
were issued to the appellant No. 1 and the matter remained pending 
despite appearance before the Arbitral Tribunal. In the meantime, the 
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434 
SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
A appellants jointly filed a suit before the High Court for declarations, 
permanent injunction and recovery claiming a formal meeting was held 
between the parties in which it was decided that appellant No. I will no 
longef be the contractor and the agreement dated 06.06.200Q would 
stand terminated by mutual consent and the construction would be carried 
B out by the sub-contractors to be appointed as per the advice of appellant 
No. 2 who would supervise the same without remuneration/profit. The 
respondent filed I.A. No. 12124 of2012 in CS(OS) No. 1532 of2012 
under Section 8 of the Act claiming that the subject-matter of dispute in 
the present suit is already pending adjudication before the Arbitral Tribunal, 
hence, the suit cannot be proceeded with. Vide order dated 17.09.2012, 
C learned single Judge of the High Court, found that the suit is bad for mis-
joindcr of parties as well as for causes of action and gave an option to 
the appellants to elect whether they want the suit to be treated as a suit 
for recovery of money by appellant No. 2 herein against the respondent 
or a suit for declarations and injunction by appellant No. l. The appellants 
D went in appeal before the division bench of the High Court. Vide order 
dated 28.09.2012, the division bench also dismissed the same. 
E 
F 
14. From the facts of this case, we find that a suit was filed for 
declarations, permanent injunction and recovery of money by the
appellants stating that a meeting was held in between the parties in which 
it was decided that appellant No. I would no longer be the contractor 
and the agreement dated 06.06.2009 would stand terminated by mutual 
consent and the construction would be carried out by the sub-contractors 
to be appointed as per the suggestions of appellant No.2, who would 
supervise the same but without any profit/remuneration as per the oral 
agreement. The respondent agreed to make all payments towards 
purchase of material, construction, fee ofarchitect etc. Appellant No. 2 
incurred an amount of Rs. 45 lakhs for and on behalf of the respondent 
which is sought to be recovered under this suit. The appellants also 
claimed a declaration to the effect that the agreement dated 06.06.2009 
between appellant No. I and the respondent was obtained by fraud and 
mis-representation, hence, it is null and void. Another declaration sought 
G for in the suit was that the agreement dated 06.06.2009 stood terminated 
by mutual consent. A decree for injunction is also sought for restraining 
the respondent from initiating and carrying on any proceeding ari3ing out 
of and on the basis of agreement dated 06.06.2009 between appellant 
No. I and the respondent. On the other hand, the respondent took the 
H
MRS. HEMA KHATTAR & ANR. v. SHIV KHERA 
435 
[R. K. AGRAWAL, J.] 
preliminary objection that the suit is bad for misjoinder of parties and 
A 
causes of action and further that the arbitration proceedings initiated by 
the respondent, in terms of the arbitration clause, is pending adjudication 
before the Arbitral Tribunal. 
15. Admittedly, the cause of action for recovery of Rs. 45 hkhs 
claimed in the present suit is the expenditure alleged to have been 
B 
incurred by appellant No. 2 pursuant to the oral agreement he claims he 
had with the respondent sometime in April, 2011. On the other hand, the 
cause of action with respect to reliefs of declarations and injunction is 
the agreement dated 06.06.2009. 
The alleged agreement dated 
06.06.2009 was, admittedly, between the appellant No. l and the 
respondent to which appellant No. 2 was only a witness, which as per C 
. the terms of the plaint terminated later on by mutual agreement between 
the appellant No. l and the respondent. At this stage, it was agreed 
orally that appellant No. 2, who is the husband ofappellant No. 1, would 
take over the execution of the pending works. Admittedly, Appellant No. 
1 is not a party to the alleged oral agreement between Appellant No. 2 D 
and the respondent for supervision of the construction by him. 
16. From the materials available on record, particularly, the 
transcript of conversation between the appellant No. 2 and the respondent 
on 6th and 7th April, 2011, we find that the
oral agreement was substituted 
in place of the alleged written agreement dated 06.06.2009. There is a 
complete accord and discharge of the re~ponsibilities and liabilities of 
appellant No. l vis-a-vis the defendant and vice-versa. The plaint also 
avers that after the.accord between appellant No. 1 and the respondent 
and simultaneous discharge of the obligations, a distinct oral agreement 
was entered into between appellant No. 2 and the respondent. It is quite 
clear from what has been stated above 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 respondent from taking any 
action or. the basis of the said contract, if any, with regard to the prior 
written agreement arises in favour of appellant No. l against respondent 
E 
F 
and not in favour of appellant No. 2 as he was not a party to the agreement 
G 
dated 06.06.2009. On the siinilar lines, the right to seek money decree, 
as is claimed by the appellants, would be a distinct cause of action founded 
on subsequent oral agreement between the appellant No. 2 and the 
respondent 
17. Learned single Judge of the High Court, vide order dated 
H 
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436 
SUPREME COURT REPORTS 
[20 l 7] 4 S.C.R. 
A 
17 .09 .20 l 2, directed the parties· to elect as to whether they want the suit 
to be treated as a suit for recovery of money by appellant No. 2 against 
the respondent or a suit for declarations and injunction by appellant No. 
l against the respondent and to amend the plaint accordingly. Learned 
· single Judge, after taking a considered view that the suit is bad for 
B misjoinder of parties and/or misjoinder of causes of action, held that the 
application filed by the defendant under Section 8 of the Act would be 
disposed of only after the appellants make an election in terms of this 
ord•!r. The appellants herein, instead of amending the plaint, went in 
appeal before the division bench, which got dismissed vide order dated 
28.09.2012. 
c 
D 
E 
18. Since the suit was dismissed for misjoinder of parties and/or 
causys of action, it is pertinent to mention here the law on the point 
which is as under:-
Order II Rule 3 
"Joinder of causes of action - (I) Save as otherwise provided, 
a plaintiff may unite in the same suit several causes of action 
against the same defendant, or the same defendants jointly; and 
any plaintiffs having causes of action in which they are jointly 
interested against the same defendant or the same defendants 
jointly may unite such causes of action in the same suit. 
(2) Where causes of action are united, the jurisdiction of the Court 
as regards the suit shall depend on the amount or value of
the 
aggregate subject matters at the date of instituting the suit." 
Order II Rule 6 
F 
"Power of Court to order separate trials - Where it appears 
to the court that the joinder of causes of action in one suit may 
embarrass or delay the trial or is otherwise inconvenient, the Court 
may order separate trials or make such other order as may be 
expedient in the interests of justice." 
G 
In Black's Law Dictionary it has been stated that the expression 
H 
'cause of action' is the fact or facts which give a person a ·right to 
judicial relief. A cause of action, thus, means every fact, which, if 
traversed, it would be necessary for the plaintiff to prove in order to 
support his right to a judgment of the court. In other words, it is a bundle 
of facts which taken with the law applicable to them gives the plaintiff a
MRS. HEMA KHATTAR & ANR. v. SHIV KHERA 
437 
[R. K. AGRAWAL, J.] 
right to relief against the defendant. It must include some act done by 
A 
the defendant since in the absence of such an act no cause of action can 
possibly accrue. It is not limited to the actual infringement of the right 
sued on but includes all the material facts on which it is founded. 
19. Order II, Rule 3, provides for the joinder of several causes of 
action and states that a plaintiff may unite in the same suit several causes 
B 
of action against the same defendant, or the same defendants jointly or 
several plaintiffs having causes of action in which they are jointly 
interested against the same defendant or defendants jointly may unite 
them in one suit. The remedy for any possible inconvenience with regard 
to said rule is supplied by the provisions of Order II, Rule 6, which 
C 
authorizes the Court to order separate trials of causes of action which 
though joined in one suit cannot be conveniently tried or disposed of 
together. 
20. Similarly, Order I Rule l of the Code permits joinder of more 
than one persons any right to relief in respect ot: or arising out of, the 
same act or transaction or series of acts or transactions is alleged to 
D 
exist in such persons, whether jointly, severally or in the alternative; and 
if such persons brought separate suits, any common question of law or 
fact would arise. Order I Rule 2 provides that where it appears to the 
court tha< any joinder of
plaintiffs may embarrass or delay the trial of the 
suit, the comt may put the plaintiffs to their election or order separate 
E 
trials or make such other order as may be expedient. 
21. In this connection, it is pertinent to refer to a judgment of this 
Court in Rameslt Hiracltand Ku11da11mal vs. Municipal Corporation 
of Greater Bombay and Otlters 1992 (2) SCC 524 wherein it was held 
as under:-
"14. It cannot be said that the main object of the rule is to prevent 
multiplicity of actions though it may incidentally have that effect. 
F 
But that appears to be a desirable consequence of the rule rather 
than its main objectives. The person to be joined must be one 
whose presence is necessary as a party. What makes a person a G 
necessary party is not merely that he has relevant evidence to 
giye on some of the questions involved; that would only make him 
a necessary witness. It is not merely that he has an interest in the 
correct solution of some questions involved and has thought or 
relevant arguments to advance. The only reason which makes it 
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[2017] 4 S.C.R. 
A 
necessary to make a person a party to an action is that he should 
be bound by the result of the action and the question to be settled, 
therefore, must be ir question in the action which cannot be 
effectually and completely set~led unless he is a party." 
22. In view of the foregoing discussion, we are of the opinion that 
B the appelJants even though had different causes of action against the 
respondent but it was a continuity of the agreement dated 06.06.2009 
and oral agreement is evidenced by the transcript of conversation between 
the appellant No. 2 and the respondent on 6/07.04.2011, therefore, both 
the appellants could have joined as plaintiffs in a suit and the suit is not 
. C 
bad for misjo!nder of parties or causes of action. Hence, learned single 
Judge as also the division bench, was not right in giving an option to the 
appellants to pursue reliefs qua appellant No. I or qua appellant No. 2 
only. 
23. In the present facts and circumstances of the case, it is also 
imperativ.e to find out whether the High Cou1t was justified in deciding 
D the maintainability of the suit when an application under Section 8 of the 
Act is pending adjudication before the Arbitral Tribunal. Before 
·proceeding further, it is appropriate to quote here Section 8 of the Act 
E 
F 
G 
H 
which reads as under:-
"8. Power to refer parties to arbitration where there is an 
arbitration agreement. -[(I) Ajudicial authority, before which
an action is brought in a matter which is the subject of an arbitration 
agreement shall, if a party to the arbitration agreement or any 
person claiming through or under him, so applies not later than the 
date of submitting his first statement on the substance of the dispute, 
·.:-·. then, notwithstanding any judgment, decree or order of the 
Suprt1me Court or any Court, refer the paities to arbitration unless 
it finds that prima facie no valid arbitration agreement exists.] 
(2) The application referred to in sub-section (l) shall not be 
entertained unless it is accompanied by the original arbitration 
agreement or a duly certified copy thereof: 
[Provided that where the original arbitration agreement or a 
certified copy thereof is not available with the party applying 
for reference to arbitration under sub-section (I), and the said 
agreement or certified copy is retained by the other party to 
that agreement, then, the party so applying shall file such
MRS. HEMA KHATTAR & ANR. v. SHIV KHERA 
439 
[R. K. AGRAWAL, J.] 
application along with a copy of the arbitration agreement and 
A 
a petition praying the Court to call upon the other party to 
produce the original arbitration agreement or its duly certified 
copy before the Court.] 
(3) Notwithstanding that an application has been made under sub-
section ( 1) and thatthe issue is pending before the judicial auth1)fity, 
B 
an arbitration may be commenced or continued and an arbitral 
award made." 
24. It is also worthwhile to note Clause 33(d) of the agreement 
dated 06.06.2009 which refers the parties to Arbitration:-
"Governing Law & Dispute Resolution: All or any disputes · (" ~. 
and differences whatsoever between the parties arising out of 
this Agreement or relating to or touching the mutual rights and 
obligations of the parties shall be subject to the jurisdiction of the 
Courts/Forums in Delhi only and shall be referred for adjudication 
to the sole arbitrator, to be appointed solely and exclusively by the 
D 
FIRST PARTY, whose decision shall be final and binding upon 
the parties. The arbitration proceedings shall be held at New 
Delhi, India and only the Courts at New Delhi, India alone shall 
have jurisdiction over the subject matter of this AG REEM ENT." 
25. In Sundaram Finance Limited andA11other vs. T. Thank am 
(2015) 14 SCC 444, this Court has held as under:-
E 
"8. Once there is an agreement between the parties to refer the 
disputes or differences
arising out of the agreement to arbitration, 
and in case either party, ignoring the terms of the agreement, 
approaches the civil court and the other party, in terms of Section 
8 of the Arbitration Act, moves the court for referring the parties 
F 
to arbitration before the first statement on the substance of the 
di~pute is filed, in view of the peremptory language of Section 8 
of the Arbitration Act, it is obligatory for the court to refer the 
parties to arbitration in terms of the agreement, as held by this 
Court in P. Anand Gajapathi Raju v. P. V.G Raju." 
G 
26. In P. Anand Gajapatl1i Raju & Others vs. P. V.G Raju (Dead) 
and Others (2000) 4 SCC 539, it was held as under:-
"5. The conditions which are required to be satisfied under sub-
sections ( l) and (2) of Section 8 before the court can exercise its 
powers are: 
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[2017) 4 S.C.R. 
(I) there is an arbitration agreement; 
(2) a party to the agreement brings an action in the court against 
the other party; 
(3) subject-matter of the action is the same as the subject-
matter of the arbitration agreement; 
( 4) the other party moves the court for referring the parties to 
arbitration before it submits his first statement on the substance 
of the dispute." 
In view of the above, where an agreement is terminated by one 
C party on ac:count of the breach committed by the other, pa11icularly, in a 
case where the clause is framed in wide and general terms, merely 
because agreement has come to an end by its termination by mutual 
consent, the arbitration clause does not get perished nor is r011dered 
inoperative. This Court, in the case of P. Anand Gajapatlii Raju (.mpra), 
has held that the language of Section 8 is peremptory in nature. Therefore, 
D 
in cases where there is an arbitration clause in the agreement, it is 
obligatory for the court to referthe parties to arbitration in terms of their 
arbitration agreement and nothing remains to be decided in the original 
action after such an application is made except to refer the dispute to an 
arbitrator. Therefore, it is clear that in an agreement between the parties 
E 
before the civil court, ifthere is a clause for arbitration, it is mandatory 
for the civil court to refer the dispute to an arbitrator. 
F 
27. Jn view of the above, we are of the
considered opinion that in 
the present case, the prerequisites for an application under Section 8 are 
fulfilled, viz.., there is an arbitration agreement; the party to the agreement 
brings an action in the court against the other party; the subject matter 
of the action is the same as the subject-matter of the arbitration 
agreement; and the other party moves the court for referring the parties 
to arbitration before it submits his first statement on the substance of the 
dispute. We have come to the conclusion that the civil court had no 
jurisdiction to entertain a suit after an application under Section 8 of the 
G Act is made for arbitration. In such a situation, refusal to refer the dispute 
to arbitration would amount to failure of justice as also causing irreparable 
inj uiy to the defendant. 
H 
28. As we have already held that the oral agreement as ev,idenced 
by the transcript of conversation between the appellant No. 2 and the
MRS. HEMA KHATTAR & ANR. v. SHIV KHERA 
44 l 
[R. K. AGRAWAL, J.] 
respondent on 06/07 .04.20 l I substituting the alleged written agreement A 
dated 06.06.2009 and which contained a clause for arbitration, the same 
clause for arbitration would also be applicable to the oral agreement. 
The Division Bench has also erred in law in affirming the order pi:ssed 
by learned single Judge. Both the orders, therefore, cannot be sustained 
and are set aside and, therefore, in view of the decision in P.R. Shah 
(supra), there can only be one arbitrator and there can only be a single 
arbitration. 
29. In view of the foregoing discussion, the appeal succeeds and 
B 
is allowed. However, instead of remitting the matter back to the learned 
single Judge for deciding the suit itself on merits, we refer the disputes 
raised by the appellants in CS(OS) I 532 of 2012 to the sole arbitrator C 
already appointed, viz., Hon'ble Mr. Justice V.K. Gupta (Retd.) and 
request the arbitrator to decide the disputes expeditiously in accordance 
with law. 
D 
Devika Gujral 
Appeal al!owed.