Dispute Resolution & Arbitration Monthly Update | May 2025

Disortho S.A.S Versus Meril Life Sciences Private Limited

Arbitration Petition No.48 of 2023

Background facts

• Disortho S.A.S (Petitioner) and The Meril Life Sciences Private Limited (Respondent) are companies incorporated in Bogota, Columbia and Gujarat, India, respectively. The parties executed an International Exclusive Distributor Agreement, dated May 16, 2016, for the distribution of medical products in Colombia.
• The Agreement stipulated that it shall be governed by and construed in accordance with the laws of India. Additionally, the Agreement provided that all the matters arising as consequence of this agreement will be subject to jurisdiction of courts in Gujarat, India. The dispute settlement clause in the agreement mandates that the parties shall endeavour to resolve any disputes through conciliation in accordance with the Rules of the Arbitration and Conciliation of the Chamber of Commerce of Bogota, DC.
• Subsequently, disputes emerged between the parties, resulting the Petitioner to file a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 before the Hon'ble Supreme Court of India (SC), seeking appointment of an arbitrator. The petition was opposed by the Respondent on jurisdictional grounds, contending that the Indian courts lacked the jurisdiction.

Issue(s) at hand

• Whether the arbitration agreement is governed by Indian law when the agreement states that it is governed by Indian law, but a foreign location is designated as the venue?

Findings of the Court

• At the outset, the SC noted that there exists divergence of judicial opinions regarding the appropriate test to determine jurisdiction in case of trans-border arbitration, where distinct legal system come into play upon emergence of a dispute, particularly the law governing the substantive contractual issues, the law governing the arbitration agreement and the performance of this agreement; and the law governing the procedural aspects of arbitration.
• In determining the law that governs the arbitration agreement in the present case, the SC relied upon the decision laid down by UK Supreme Court in Enka Insaat Ve Sanayi AS v. OOO Insurance Company Chubb¹ , wherein it was held that law governing the substantive contractual issues should govern the arbitration agreement. Enka Insaat (supra) followed the principles enunciated in Sulamérica Cia Nacional De Seguros S.A. and Others v. Enesa Engenharia S.A. and Others² concluding that, in the absence of an express choice of law governing the arbitration agreement, the law governing the substantive contract will generally also govern the arbitration agreement, regarding it as an integral part of the substantive contract rather than an independent agreement.
• The SC reiterated that mere designation of a different country as seat of arbitration, such as London, is insufficient to infer an intention that a different law should govern the arbitration agreement, additional indica of such intention must be demonstrated. Accordingly, the SC inferred that the Arbitration Agreement is governed by the same law as the substantive agreement.
• The SC noted that the clauses of the Distributor Agreement stipulates that the Agreement shall be governed by and construed in accordance with laws of India. It was further stated that all matters arising from agreement shall be subject to the jurisdiction of the courts in Gujarat, India. The seat of arbitration was not expressly designated by the parties and Bogota DC was only specified as the venue for arbitration.
• The SC held that the designation of Bogota DC as the venue for arbitration, along with the choice of the Rules of the Arbitration and Conciliation of the Chamber of Commerce of Bogota DC does not derogate from the jurisdiction expressly conferred upon the Indian courts.
• Moreover, as the Agreement does not implicitly identify a separate law governing the arbitration agreement, the SC held that, by implication, Indian laws govern the Arbitration Agreement. SC further held that mere selection of 'place' does not suffice to imply that Columbian law would govern the arbitration agreement, rather, the applicability of Colombian law is limited to the arbitration proceedings and matters relating to the award.
• In view of the above, the SC allowed the arbitration petition.

In The Supreme Court of India Somnath (Appellant) Vs. Ravinder Kumar (Respondent)

SLP (C)NO. 8801/2025

Background facts

• Som Nath (Appellant), owned the disputed premises and inducted Ravinder Kumar (Respondent), as a tenant in June 2007 at a monthly rent of ₹5,000.
• On 03.10.2007, an Agreement to Sell was executed, fixing October 31, 2007 for execution of the sale deed. This was later extended to 30.11.2007 via a fresh agreement on October 30, 2007.
• The respondent failed to perform his part and instead filed a suit for specific performance, which was conditionally decreed on 10.06.2008, requiring deposit of the balance amount within a month. He failed to comply, causing the decree to lapse
• The appellant then filed an eviction petition under Section 13 of the East Punjab Urban Rent Restriction Act, 1949, citing non-payment of rent since August 2007.The respondent denied the landlord-tenant relationship, calling the petition mala fide
• The Rent Controller, after evaluating oral and documentary evidence, held on December 7, 2020 that a landlord-tenant relationship did exist, and the respondent had not paid rent as admitted by him. It was further observed that the agreement to sell and decree did not extinguish the tenancy, particularly since no sale deed was ever executed. The eviction petition was allowed.
• The Appellate Authority upheld the eviction order on October 22, 2012.
• The High Court, in Civil Revision No. 7550/2012, allowed the revision on September 27, 2018, holding that no tenancy existed due to the absence of a written agreement and existence of the sale agreement.
• Aggrieved with the High Court's Order, the appellant filed a Special Leave Petition on March 25, 2025, before the Supreme Court.

Issue(s) at hand?

• Whether a contract for the sale of immovable property creates any interest or charge over the property unless a sale deed is executed?
• Whether the absence of a written agreement negate a landlord-tenant relationship?

Findings of the Court

• The Supreme Court analysed the High Court decision and emphasised on tenancy existing without a written agreement.
• The Court observed that the High Court exceeded its jurisdiction by interfering with factual findings of the Rent Controller and the Appellate Authority which had established tenancy based on evidence.
• Subsequently, the court noted that the High Court overlooked that the tenancy could be based on oral arguments also and that the High Court (revisional court) made a mistake in disturbing the decision of the lower courts.
• The Supreme Court reasoned that as per Section 54 of the Transfer of Property Act, 1882, a contract for immovable property is an agreement, but it does not transfer ownership or any rights over the property unless a registered sale deed is executed.
• The Court clarified that the ownership rights are transferred only upon registration of the conveyance deed and an unfulfilled agreement for sale does not terminate the landlord-tenant relationship.
• The Court held that there was no termination of a landlord-tenant relationship between the parties as per Section 111(d) of the Transfer of Property Act, 1882. As the Respondent failed to fulfil the conditional decree, in such circumstances, there was no transfer of property from the Appellant to the Respondent. A contract for sale does not create ownership rights unless a valid sale deed is executed.
• Consequently, the Court set aside the High Court ruling and restored the eviction order passed by the Rent Controller and affirmed by the Appellate Authority. The appeal was allowed and the High Court judgment was set aside.

In The High Court at Calcutta Sri Arun Kumar Jindal and Anr. (Petitioner) Vs. Smt. Rajni Poddar and Ors. (Opposite Party)

Revision Application being No. C.O. 441 of 2023

Background facts

• Radha Kishan Poddar ("Decree Holder") had instituted an execution proceeding for executing an arbitral award dated December 12th 2001 passed in his favour.
• During the pendency of the execution proceeding the Decree Holder passed away.
• Smt. Rajni Poddar and Ors ("Opposite Party") were the legal heirs of the Decree Holder
• Due to the death of the Decree Holder, the Hon'ble Court vide order dated October 30, 2014 substituted the name of the Decree Holder with the Opposite Party in the execution proceeding.
• In 2018, the Opposite Party realized that the executing court i.e. Civil Judge, Senior Division, Alipore lacked jurisdiction to try the said proceeding and hence they withdrew the execution proceeding and filed a fresh execution proceeding before the District Judge, Alipore, who in turn transferred the new execution proceeding to the Additional District Judge, 15th Court, Alipore.
• The new execution proceeding filed by the Opposite Party was subsequently transferred to Additional District Judge 6th Court, Alipore.
• During the pendency of the new execution proceeding, the Opposite Party filed an application under Order 21 Rules 37 & 38 read with Section 151 of Code of Civil Procedure, 1908 ("CPC").
• In the interim the Petitioner filed an application under Section 47 of CPC challenging the execution of the arbitral award.
• The Executing Court dismissed the application filed under Section 47 of CPC by the Petitioner application, holding that the Executing Court cannot go beyond the decree.
• Hence in view of the above the Petitioner filed the present proceeding.

Issue(s) at hand?

• Whether the execution proceeding for executing the arbitral award is barred by limitation?
• Whether the validity of the arbitration agreement and the appointment of the arbitrator could be challenged at the stage of execution under Section 47 of CPC?

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Footnotes

1. FAO (OS) 485-86/2011

2. CIVIL APPEAL NO. 2402 OF 2019

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