MoU vs Agreement: When a "Handshake" Accidentally Becomes a Legal Contract

In the world of business, collaborations often start with optimism — two parties connecting, exchanging ideas, and putting a shared vision down on paper. This document is often called a Memorandum of Understanding (MoU).

On the other hand, when things are serious, parties sign an Agreement, a legally binding contract that sets every detail in stone.

At first glance, an MoU and an Agreement may look similar. Both outline objectives, roles, and expectations. But their legal weight is dramatically different — and misunderstanding this line can lead to costly legal surprises.

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What is difference between bond and agreement?

 For an instrument to partake the character of a bond an

obligation must have been created in the instrument itself. On such an understanding of the definition of bond, as given in the Act, the contents of Ext.P3 document need to be analysed. Clause (2) of Ext.P3 only states that both parties today settled the accounts involved in the said business transaction carried out during the last three years by mutual consent in full satisfaction. A reading of Clause (2) of the agreement will only show that the parties have settled the accounts involved in the business transaction on that day and not by the said agreement and the liability is not created by the same. Further in Clause (3) of Ext. P3 agreement it is admitted by the respondent that he owes Rs.53,57,000/- to the petitioner and that he admits and acknowledges that Rs.53,57,000/- is outstanding to be paid to the petitioner. The wording in Clause (3) of the said document makes it explicitly clear that it is only an acknowledgment of an amount that is outstanding to be paid to the petitioner as on the date of execution of the Ext P3 document. As per the said agreement, the respondent only undertook to repay the existing liability within a time frame.{Para 8}

9. In Mathai Mathew's case (supra) this Court held that the

distinguishing feature of a bond is that the obligation must have been created in the instrument itself and that if the obligation was a pre-existing one, it does not partake the character of a bond. This Court further held that one of the principles to be followed in interpreting a taxing statute is that if two interpretations are possible effect should be given to that which favours the citizen and not that which imposed a greater burden on them and that the said principle can be followed in construing the provisions of the Act where a citizen has to pay stamp duty on the instruments defined therein. In Krishnan Kutty's case (supra) this Court held that where an obligation is a pre-existing one, the subsequent document giving the nature of the obligation or the terms and conditions of the contract shall be a mere agreement. In Radha's case (supra) it is held that the distinguishing feature of a bond is that the obligation must have been created in the instrument itself and if the obligation was a pre-existing one, it does not partake the character of a bond.

10. As there is a specific acknowledgment in the agreement of an

amount that is outstanding to be paid to the petitioner as on the date of execution of Ext P3 document, the same can only be construed as an agreement and it does not partake the character of a bond as defined in Section 2(a) of the Act. The decisions referred to above are squarely applicable in the facts of the present case since Ext.P3 document only acknowledges a pre-existing liability of an amount to be paid by the respondent to the petitioner. In the facts and circumstances of this case, Ext.P3 can only be construed as an agreement and not as a bond.

 IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT

 MR.JUSTICE VIJU ABRAHAM

 O.P.(C) No.2748 of 2019

SAFIR,AGED  Vs  SAJID, 

Dated: 13th day of October, 2021

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Whether Court should interpret an agreement made between two individuals or entities like a statute?

 Coming now to the last submission of Mr. Anturkar, it is clear

that the agreement between the sugar factory and the union did

acknowledge that considering the financial circumstances of the sugar factory, it was problematic for the factory to implement the agreement according permanent status to the complainants immediately; it provided for implementation by the management by written orders as soon as possible and, at any rate, before 24 November 2015. This does not comprehend a resolution on the part of the board of directors of the sugar factory for implementing the agreement. What the agreement envisages is a written order of the management for implementing the agreement. This written order admittedly was passed on 5 November 2015, that is to say, before the last date of implementation, i.e. 30 November 2015. Mr. Anturkar tried to show some other provisions of the agreement in support of his contention that the word 'management' used in clause-7 of the agreement comprehends the board of directors of the sugar factory and not its executive authority. An agreement made between two individuals or entities cannot be construed like a statute. The meaning to be accorded to individual terms and conditions of the agreement has to be from a common sense and business point of view. When the agreement requires a written order of the management of the factory for its implementation, the written order passed by the Managing Director could very well be subsumed within it. In any event, assessment of this issue by the industrial court cannot be termed as unreasonable or perverse on the basis of submissions advanced by Mr. Anbturkar. 

{Para 11}

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

WRIT PETITION NO.10372 OF 2018

Shri Bhogawati Sahakari Sakhar  Karkhana, Vs  Shri Ananda Ishwara Kumbhar

CORAM : S.C. GUPTE, J.

DATE : 9 JANUARY 2020

Citation: 2020 (6) MHLJ 493

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Whether stranger to agreement can challenge that agreement?

 The learned senior counsel for appellant has vehemently argued that agreement on behalf of Jyoti Nirmal Singh Bedi (minor) and execution of sale deed thereof by Kumari Mohani without getting permission of Guardian Judge are illegal and cannot be acted upon.

26. On the other hand, the learned senior counsel for respondent Nos. 1 and 2 has argued that only Jyoti Nirmal Singh Bedi (minor) could challenge said agreement and sale deed. Jyoti Nirmal Singh Bedi did not challenge same and did not claim before any authority that agreement and sale deed is not binding upon her. The agreement and sale deed were executed in the year 1983. Now, 35 years have elapsed. Jyoti Nirmal Singh Bedi (minor) has become major and she has not challenged agreement and sale deed against defendant Nos. 9 and 10. Therefore, third party cannot challenge same.

27. I am of the view that it was for Jyoti Nirmal Singh Bedi (minor) to challenge agreement and sale deed. Plaintiff being stranger to agreement cannot challenge that agreement and sale deed on behalf of Jyoti Nirmal Singh Bedi (minor) on the ground that it was executed without completing legal formalities.

28. In this case, Jyoti Nirmal Singh Bedi (minor) is not party. She is one of the co-owners of suit land. Therefore, decree could not be passed against her. Defendant Nos. 9 and 10 are stated to be in possession of suit land. In such circumstances, only right of plaintiff is for refund of earnest money alongwith interest. Since, agreement of defendant Nos. 9 and 10 is not ante-dated, therefore, it will take precedent over the agreement set up by plaintiff.

IN THE HIGH COURT OF PUNJAB AND HARYANA

RSA No. 4261 of 1999 (O/M)

Decided On: 19.11.2018

Tript Rajinder Singh Bajwa  Vs. Chander Bhushan Singh and Ors.

Hon'ble Judges/Coram:

Kuldip Singh, J.

Citation: AIR 2019 P & H 24

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Whether conditional gift deed is valid even if condition for gift is mentioned in separate agreement?

As to the execution and validity of the agreement, the first appellate court recorded a categorical finding based on the pleadings and evidence that it was a genuine document. The finding of fact recorded by the first appellate court was not interfered with by the High Court in the second appeal and rightly so. The gift deed and agreement were executed on the same day. Having regard to the evidence, the High Court and the first appellate court were right in taking the view that both formed the part of one transaction. It is not disputed that the gift deed did not contain any conditions in regard to the building of college on the suit plot but in the agreement it is clearly stated that in the suit land, there are built up chabutaras of 'samadhis' of the father and mother of the plaintiff, shall be maintained in the same condition; the suit land shall be used for the construction of a degree college and not for any other purpose; if the college is not built within six months, the gift deed will be deemed to have come to an end and that the plaintiff shall be considered to be the owner of the land; the possession will be of the plaintiff till the degree college is not built; in case the college building is not constructed within the said period, the plaintiff will be entitled to take appropriate action in the court of law and in the event the degree college is constructed, the plaintiff will have no right over the land. From these terms contained in the said deed of agreement, it is clear that the gift was not absolute and/or unconditional. the gift deed and the agreement forming one transaction are to be read together and given effect to accordingly. In other words, the defendants had to take both the benefit and burden. They could not reap the benefit and avoid to unload the burden. Since the defendants did not construct a college building on the suit land, the gift did not come into effect.

IN THE SUPREME COURT OF INDIA

Appeal (civil) 6972 of 1999

Decided On: 11.05.2001

Thakur Raghunath Ji Maharaj  vs. Ramesh Chandra

Hon'ble Judges/Coram:

S. Rajendra Babu and Shivaraj V. Patil, JJ.

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When agreement giving option to parties to resolve dispute by arbitration or court can be treated as arbitration clause?

In the case at hand, as we find, Clause 15 refers to arbitration or court. Thus, there is an option and the Petitioner has invoked the arbitration Clause and, therefore, we have no hesitation, in the obtaining factual matrix of the case, for appointment of an arbitrator and, accordingly, Justice Prakash Prabhakar Naolekar, formerly a Judge of this Court, is appointed as sole Arbitrator to arbitrate upon the disputes which have arisen between the parties. The learned Arbitrator shall be guided by the Arbitration & Conciliation (Amendment) Act, 2015. The learned Arbitrator shall make positive efforts to complete the arbitration proceedings as per the Act of 2015.

IN THE SUPREME COURT OF INDIA

Arbitration Petition (Civil) No. 22 of 2018

Decided On: 14.09.2018

 Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd.

Vs.

 Jade Elevator Components

Hon'ble Judges/Coram:

Dipak Misra, C.J.I., A.M. Khanwilkar and Dr. D.Y. Chandrachud, JJ.

Citation: (2018) 9 SCC 774

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Whether arbitration clause in original agreement shall extinguish if said agreement is modified?

The first question, that arises for consideration is, whether the arbitration clause incorporated in the original agreement, dated 03.05.1958, can be stated to be subsisting and enforceable between the parties, or whether the same stood extinguished? Having given our thoughtful consideration to the issue in hand, keeping in view Clause 11 of the supplementary agreement dated 27.10.1988, we are satisfied, that the original arbitral clause, contained in the agreement dated 03.05.1958, subsisted and was never extinguished. We say so because, Clause 11, extracted above, clearly expressed, that the supplementary agreements(s) only altered the modifications provided for, and such of the terms and conditions, as were not modified "...shall remain in force and effect...". Since the arbitration Clause 16, was admittedly never modified/altered, it would necessarily not be considered as having been extinguished. In the above view of the matter, we must also express our satisfaction, that the dispute(s) between the parties, under their contractual obligations, were arbitrable.

IN THE SUPREME COURT OF INDIA

C.A. No. 3180 of 2007

Decided On: 19.04.2017

Grasim Industries Ltd. Vs.  State of Kerala

Hon'ble Judges/Coram:

J.S. Khehar, C.J.I., Dr. D.Y. Chandrachud and Sanjay Kishan Kaul, JJ.

Citation: (2018) 14 SCC 265

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Whether agreement will come into existence even if it is to be performed at future date?

Mr. Seervai contended that the said leave and licence agreements had not come into effect/existence. He based the submission on the fact that the agreements had been terminated prior to the commencement of the terms thereof.

10. The submission is not well founded. The agreements were executed by both the parties. The mere fact that they were to be performed at a later date cannot possibly lead to the conclusion that the agreements had not come into existence and that the parties were not bound by the terms thereof. There is a fundamental difference between an agreement coming into existence and the date for the performance thereof. Merely because obligations under an agreement are to be performed at a future date, it does not follow that the agreement has not come into existence upon the execution thereof or upon the terms and conditions thereof being agreed upon.

IN THE HIGH COURT OF BOMBAY

C.P. No. 898 of 2008

Decided On: 12.02.2009

 Corporate Management Council of India P. Ltd. Vs.  Lonza India P. Ltd.

Hon'ble Judges/Coram:

S.J. Vazifdar, J.

Citation: 2009(3) ALLMR 770

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Whether maintenance can be denied to daughter due to agreement between her father and mother?

 As per Section 23 of the Indian Contract Act, 1872, any consideration or object of an agreement is unlawful, if it defeats the provisions of any law, or the court regards it as opposed to public policy. It cannot be disputed that a contract which has a tendency to injure public interests or public welfare is one against public policy. Where a contractual provision is against a specific statutory provision or if it would result in frustration of a right conferred by law, then it can be regarded as opposed to public policy. It shall not become valid even if the parties thereto agree to it. A statutory right which has been conferred on a person under public policy cannot be waived by the said person by an agreement. When the obligation on the father to maintain an unmarried daughter is recognised by a statute, it is a matter of public policy and not of an individual. The father cannot divest himself of his liability to maintain his child by an agreement with the mother of the child. It would definitely be the public policy that children should not be left dependent on public assistance or on charity. They should therefore be able to come to the court for maintenance, notwithstanding any agreement to the contrary.

35. In the aforesaid factual and legal situation, the contention of the appellant that, the compromise decree passed by the court in the litigations between the father and the mother would preclude the daughters from claiming maintenance from the father, cannot be countenanced. The right of the daughters to get maintenance from the father was not forfeited by virtue of the agreement/compromise entered into between the mother and the father.

IN THE HIGH COURT OF KERALA AT ERNAKULAM

Mat. Appeal No. 841 of 2014

Decided On: 08.10.2018

 Vikraman Nair Vs. Aishwarya and Ors.

Hon'ble Judges/Coram:

C.K. Abdul Rehim and R. Narayana Pisharadi, JJ.

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Whether conditions printed at back of rent receipt constitute agreement between landlord and tenant?

For agreement between the parties, reliance is placed only on a condition printed at the back of the rent receipt issued by the landlords. In our view, it cannot be said on the basis of what is printed on the back side of the rent receipt that the parties had accepted it as a condition of the lease. The rent receipt is a document issued by the landlord acknowledging receipt of payment of rent by him. Conditions printed at the back of rent receipt cannot be said to be a conscious decision taken by the parties governing the lease of premises. Terms and conditions of a lease result from conscious decision of parties. Therefore, we are unable to accept that the parties have entered into an agreement about service of one months' notice in advance to vacate the premises before institution of eviction petition.

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 5574 and 5575 of 2000

Decided On: 19.09.2005

Jaswant Raj Soni and Jabar Lal Vs. Prakash Mal and Kan Mal

Hon'ble Judges/Coram:

Arun Kumar and A.K. Mathur, JJ.

Citation:(2005) 8 SCC38,2005(7) Scale 344

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Whether Small cause court has jurisdiction to try suit if it involves agreement relating to conduct of business?

 After this Court dismissed the writ petition, it appears that the petitioner had amended the written statement wherein he has also raised among other things another issue that the suit is not maintainable. In short, even considering the aforesaid agreement as one for conducting the business, section 41 of the Presidency Small Cause Courts Act, 1882 cannot be invoked because the said section clearly expresses that it applies only to the immovable property. 
 The learned Counsel for the petitioner Mr. Desai has contended that having this Court interpreted the said agreement to be one for conducting the business, the Small Causes Court has no jurisdiction. 1 find substance in the contention. This Court has interpreted the agreement and found that what was agreed between the parties is for conducting the business of tailoring. Therefore, possession of the room has become consequential thing. It has become indivisible part of the contract that for conducting the business, occupation of the room is necessary. In view of this categorical finding of the courts below, which was confirmed by this Court in aforesaid Writ Petition No. 1728 of 1984, what has been contended by the learned Counsel for the petitioner is legal.
As I observed earlier, when this Court has found that the contract was for conducting the business, section 41 of the said Act cannot be invoked and the decree passed against the petitioner by the trial Court and confirmed by the Appellate Court, is only to be set aside.

Bombay High Court

Smt. Anusuyabai Narayanro Ghate vs Smt. Maktumbi S. Nadaf on 17 February, 1999

Equivalent citations: 1999 (2) BomCR 374, 1999 (1) MhLj 836

Bench: T C Das

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Whether court can refer matter to arbitration if agreement containing arbitration clause has expired?

The Court:
The challenge is made to an Order No. 6 dated 30th August, 2016 passed
by the learned Civil Judge (Senior Division), Additional Court, Hooghly in Title
Suit No. 296 of 2016 by which an application under Section 8 of the Arbitration
and Conciliation Act, 1996 is allowed.
The Trial Court held that the subject dispute is covered by an arbitration
clause contained in an agreement dated 20th April, 2015 and therefore the Civil
Court cannot adjudicate such dispute but to refer the parties to arbitration.
The meaningful reading of the agreement dated 28.04.2015 does not
bring any sense of doubt that the same was operative during the specified period
and came to an end by efflux of time. It is nobody’s case that any dispute arose
during the subsistence of the said agreement.There is no clause present in the said agreement that the tenure can be
extended by mutual agreement. Once the agreement runs its tenure in absence
of any express conditions it cannot be unilaterally extended. None of the
correspondences exchanged between the parties would indicate that the lift of
spent grain was permitted under the said expired agreement so as to presume
the extension of period provided therein.
This Court, therefore, could not persuade itself to find any element
constituting arbitration agreement within the four corners of Section 7 of the said
Act.
HIGH COURT AT CALCUTTA
CIVIL REVISIONAL JURISDICTION
C.O. 3414 of 2016
M/s Rajib Basu Ray Vs Carlsberg India Pvt. Ltd. & Anr.
Present: Hon’ble Justice Harish Tandon

Judgment On: 06/10/2016.
Citation: AIR 2017(NOC) 130 Cal

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Whether arbitrator can be appointed if agree-ment/MoU containing arbitration clause is unstamped?

In view of the dictum of Supreme Court in SMS Tea Estates Pvt. Ltd. (MANU/SC/0836/2011 : 2011 AIR SCW 4484) (supra), the application under Section 11 of the Act of 1996 for seeking reference to the Arbitrator/appointment of the Arbitrator has to be held to be not maintainable if the agree-ment/MoU containing the arbitration clause is unstamped or not duly stamped. 

IN THE HIGH COURT OF RAJASTHAN (JAIPUR BENCH)

S.B. Civil Misc. Application (Arbitration) No. 54 of 2015

Decided On: 21.10.2016

 Ansal Properties and Infrastructure Limited
Vs.
Jhamru Chandaram and Ors.

Hon'ble Judges/Coram:Mohammad Rafiq, J.

Citation:AIR 2017 Raj 52

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Whether arbitration agreement will survive if agreement is terminated by mutual consent?

In view of the above, 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 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. 
 REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
 CIVIL APPEAL NO. 8837 OF 2016
Mrs. Hema Khattar & Anr.
V
Shiv Khera 
Dated:APRIL 10, 2017.

Citation: AIR 2017 SC 1793

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When court can grant permission to lead oral evidence contrary to terms of written agreement?

 The next contention on behalf of the appellant is that Sub-section (1) of Section 92 of the Evidence Act bars the respondent from contending that there was no sale and, it is submitted, the respondent should not have been permitted to lead parol evidence in support of the contention. Section 91 of the Evidence Act provides that when the terms of contract, or of a grant, or of any other disposition of property, have been reduced to the norm of a document, and in all cases in which any matter is required by law to be reduced to the form of a document, no evidence shall be given in proof of the terms of such contract, grant or other disposition of property, or of such matter, except the document itself. Sub-section (1) of Section 92 declares that when the terms of any contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting from, its terms And the first proviso to Section 92 says that any fact may be proved which would invalidate any document, or which would entitle any person to any decree or order relating thereto; such as fraud, intimidation, illegality, want of due execution, want of capacity in any contradicting party, want or failure of consideration, or mistake in fact or law. It is clear to us that the bar imposed by Sub-section (1) of Section 92 applies only when a party seeks to rely upon the document embodying the terms of the transaction. In that event, the law declares that the nature and intent of the transaction must be gathered from the terms of the document itself and no evidence of any oral agreement or statement can be admitted as between the parties to such document for the purpose of contradicting or modifying its terms. The sub-section is not attracted when the case of a party is that the transaction recorded in the document was never intended to be acted upon at all between the parties and that the document is a sham. Such a question arises when the party asserts that there was a different transaction altogether and what is recorded in the document was intended to be of no consequence whatever. For that purpose oral evidence is admissible to show that the document executed was never intended to operate as an agreement but that some other agreement altogether not recorded in the document, was entered into between the parties. Tyagaraja Mudaliyar and Anr. v. Vedathanni. MANU/PR/0014/1935. The Trial Court was right in permitting the respondent to lead parol evidence in support of her plea that the sale deed dated January 7, 1953 was a sham document and never intended to be acted upon. It is not disputed that if the parol evidence is admissible, the finding of the court below in favour of the respondent must be accepted. The second contention on behalf of the appellant must also fail.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 1537 of 1970

Decided On: 06.11.1981

Smt. Gangabai Rambilas Gilda

Vs.

Smt. Chhabubai Pukharajji Gandhi

Coram:

D.A. Desai and R.S. Pathak, JJ.

Citation:AIR 1982 SC 20

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Whether magistrate can grant maintenance U/S 125 of CRPC to muslim wife if there is no legal divorce?

If we consider the submissions put forth by the Counsel for the parties and a perusal of the record what clearly appears is that fact that the Petitioner in the instant case has not been able to establish the fact that there was a customary Talak (except claiming Talak to have been made by sending a Registered letter) between the parties, coupled with the fact that there was an allegation made by the Respondent wife that she was subjected to physical and mental harassment and torture at the hands of the Petitioner and therefore she was forced to leave the matrimonial house and live separately. Further so far as agreement between the parties is concerned there is also an averment specifically made by Respondent No. 1 that the said agreement has been got executed by playing mischief by her father and uncle and she was not aware of the said proceeding, therefore the same would not be binding upon her. These pleadings have also come on record where it is the finding of fact that there was no customary ritual Talak which is said to have been executed by the Petitioner by sending the same by registered post to the house of the Respondent-wife. Further it also reflects from the Ikrarnama that the payment of Rs. 3.5 lakhs was by way of payment made as Mehar as well as amount payable during Iddat, therefore the same cannot be said to be an amount paid to the Respondents as one time settlement towards the maintenance of the Respondents for the life time. Further even if there was an agreement between the parties which the Respondent No. 1 has denied clearly would be contrary to the legal provisions of law. Mere agreement entered at between the parties would not disentitle wife and their children from claiming maintenance for their sustenance. Thus, till his wife is remarried it would be the responsibility of the Petitioner husband alone to maintain the wife and children born from them. An agreement in another words cannot be construed that the amount which have been paid as "Mehar" and during "Iddat" would be liable of being also considered for payment of maintenance of the Respondent Nos. 1 to 3.

5. So far as law in respect of maintainability of the provisions of Section 125 of the Cr.P.C. is concerned much water has since flown. Until and unless there is a proper legal divorce between the parties under the Provisions of the Act, 1986 the wife under normal circumstance can move claim for grant of maintenance under Section 125 of the Cr.P.C.

IN THE HIGH COURT OF CHHATTISGARH

Criminal Misc. Petition No. 599 of 2016

Decided On: 23.08.2016

 Shakil Usman Ansari

Vs.

 Afsana Bano and Ors.

Hon'ble Judges/Coram:

P. Sam Koshy, J.

Citation: 2017 CRLJ 834

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How to prove that doctor had agreed to perform operation of patient?

It has to be seen whether the proposal of the original Plaintiffs was accepted by Defendant No. 1 as the promise. If he accepted the promise, there would be an agreement. The agreement is for treating a patient for consideration. It would, therefore, be an agreement enforceable at law and consequently a contract under Section 2 (h) of the Indian Contract Act, 1872. The acceptance by Defendant No. 1 as the promise has to the absolute and unqualified under Section 7 (1) of the Act and be expressed in some usual and reasonable manner under Section 7 (2) of the Act. The relevant portion of Section 7 which runs thus:

7. Acceptance must be absolute.- In order to convert a proposal into a promise, the acceptance must-
(1) be absolute and unqualified;
(2) be expressed in some usual and reasonable manner...

What is the usual and reasonable manner makes for the acceptance by performance or by implications under Sections 8 & 9 of the Act which run thus :

8. Acceptance by performing conditions, or receiving consideration.- Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal.

9. Promises, express and implied.- In so far as the proposal or acceptance of any promise is made in words, the promise is said to be express. Insofar as such proposal or acceptance is made otherwise than in words, the promise is said to be implied.

90. Defendant No. 1 accepted the proposal of the original Plaintiffs in the usual and reasonable manner that surgeons do. Surgeons would not accept only by saying "I will operate" but by actually operating, by aiding and assisting in operation as circumstances require, by charging the fees for the operation, by contriving to fix the operation to accommodate themselves as per their schedule and, of course, by being shown as one such surgeon in the records of the hospital. By all of these modes the contract between the parties in this case must be implied and is demonstrated by performance. It is implied by the patient accepting the surgeon's command to fix the operation at his convenience. It is accepted by the fact that it is fixed on a given day, 5 days after his advice in an O.T. adjoining another O.T.  where he admittedly performed another surgery. It is further implied by the charges that are levied to the patient by way of the surgeon's fees as per the schedule prevailing at the relevant time. It is further manifest in the surgeon actually remaining at the door of the O.T. where he was expected to come as per his implied obligations and where he admittedly conferred with another surgeon to understand the medical position of the patient and to command a further act before walking out.

91. This case falls squarely within the aforesaid Sections denoting an absolute and unqualified acceptance expressed by the usual mode which surgeons reasonably adopt. The acceptance is seen by the consideration sought to be charged for his fees. of course, in this case there is no direct acceptance; it could not be because there was a stiff resistance. Nevertheless the charge was demanded. It was stated to be specifically of Defendant No. 1 and none other in the notices of demand, Exhibits O & P in evidence. The charge of the anesthetist was indeed accepted which was in terms of the schedule of fees depending of the charge of the surgeons. The acceptance was not made in so many words "I will operate"; it was implied in the condescending act of Defendant No. 1 to fix the O.T. coordinated with Defendant No. 2 on the day that would convenience none other than he.

IN THE HIGH COURT OF BOMBAY

Suit No. 1101 of 1989

Decided On: 02.09.2011

 Padam Chandra Singhi and Ors.
Vs.
Dr. P.B. Desai and Ors.

Hon'ble Judges/Coram:
R.S. Dalvi, J.

Citation: 2012(1) ALLMR 510

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How to ascertain cause of action for filing of suit if there is agreement to vacate suit property?

As regards the contention of the Respondents on limitation, we
may observe that the issue of limitation is not pleaded in any of the reply
affidavits.  The oral plea is on the basis  of the Article 137 of the Limitation
Act which provides for a limitation of three years for 'any other application'
to be filed for which no period of limitation is provided elsewhere, and
which would begin to run from when the right accrues. In our opinion, the
plea that the prayers in the application are barred by limitation as urged on
behalf   of   the   Respondents,   cannot   be   sustained.   Admittedly   the
Respondents have failed to vacate the suit premises  on the expiry of three
years of the extended lease period (i.e. on or before 31 December 2014).
The cause of action to seek enforcement of the agreement as contained in
the minutes would arise with effect from 31 December 2014.  In the fact
situation, there is no need to relate back the cause of action to the date on
which the agreement in the said minutes (i.e. 8 November 2011) came to
be executed.  The right to sue has accrued to the Applicant only when the
Respondents refused to vacate i.e. after the expiry of the three years on 31
December   2014.     This   application   was   filed   on   10   July   2015.     The
application is therefore fully within limitation from applying Article 137 of
the Limitation Act.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
Civil Application NO. 2433 OF 2015
AND
First Appeal NO. 780 OF 2009
Mr. Manoj Pransukhlal Sagar  
v
Indian Oil Corporation Ltd.
    CORAM :         ANOOP V. MOHTA &
    G.S.KULKARNI,    JJ.

Pronounced on     : 02nd September,2016.
Citation:2016(6) ALLMR568

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Whether ouster of jurisdiction of civil court can be readily inferred in case of arbitration clause in an agreement?

 As rightly held in Bijoy Ballav Kundu (supra) to
which we agree that the clause in an agreement, which
provides for deciding the disputes arising out of such

agreement through private arbitration, affects the
jurisdiction of the Civil Court and the ouster of
jurisdiction of Courts cannot be inferred readily. The
Arbitration Act is one such law, which provides for
ouster of jurisdiction of the Civil Courts. The Act,
inter alia, provides a forum for deciding the disputes
inter se parties to an agreement through arbitration.
Such clause, in our opinion, requires strict rule of
interpretation to find out whether it provides an ouster
of jurisdiction and, if so, to which
Court/Tribunal/Authority as the case may be. In the
case at hand, when we apply this principle of
interpretation, we do not find that clause 20 enables
the arbitrator to assume the jurisdiction to decide the
disputes arising between the beneficiaries. In other
words, clause 20 does not satisfy the rigour of

Sections 2(b), 2(h) and 7 of the Act.

Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.8164 OF 2016
(ARISING OUT OF SLP(C) No. 13369 of 2013)
Shri Vimal Kishor Shah & Ors.
V
Mr. Jayesh Dinesh Shah & Ors

Abhay Manohar Sapre, J.
Dated:August 17, 2016.
Citation:AIR 2016 SC3889,(2016) 8 SCC788,2017(1) MHLJ
36 SC

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Whether high court can direct arbitrator to decide question of legality and validity of agreement/(MoU)?

Following the decision in SBP & Co.
(supra) this Court in National Insurance Co.
Ltd.(supra) held as follows: (National
Insurance Co. Ltd. Case (supra), SCC p. 283,
paras 22 & 22.1-22.3)
“22. Where the intervention of
the court is sought for
appointment of an Arbitral
Tribunal under Section 11, the
duty of the Chief Justice or his
designate is defined in SBP & Co.
This Court identified and
segregated the preliminary issues
that may arise for consideration
in an application under Section
11 of the Act into three
categories, that is, (i) issues
which the Chief Justice or his
designate is bound to decide; (ii)
issues which he can also decide,
that is, issues which he may
choose to decide; and (iii) issues
which should be left to the
Arbitral Tribunal to decide.
22.1. The issues (first category)
which the Chief Justice/his
designate will have to decide are:
(a) Whether the party making the
application has approached the
appropriate High Court.

(b) Whether there is an
arbitration agreement and
whether the party who has
applied under Section 11 of the
Act, is a party to such an
agreement.
22.2. The issues (second category)
which the Chief Justice/his
designate may choose to decide
(or leave them to the decision of
the Arbitral Tribunal) are:
(a) Whether the claim is a dead
(long-barred) claim or a live claim.
(b) Whether the parties have
concluded the contract
/transaction by recording
satisfaction of their mutual rights
and obligation or by receiving the
final payment without objection.
22.3. The issues (third category)
which the Chief Justice/his
designate should leave exclusively
to the Arbitral Tribunal are:
(i) Whether a claim made falls
within the arbitration clause (as
for example, a matter which is
reserved for final decision of a
departmental authority and
excepted or excluded from
arbitration).
(ii) Merits or any claim involved
in the arbitration.”
 (emphasis supplied)

13. It is clear from the said two decisions
that the question whether there is an
arbitration agreement has to be decided only
by the Chief Justice or his designate and
should not be left to the decision of the
Arbitral Tribunal. This is because the
question whether there is an arbitration
agreement is a jurisdictional issue and unless
there is a valid arbitration agreement, the
application under Section 11 of the Act will
not be maintainable and the Chief Justice or
his designate will have no jurisdiction to
appoint an arbitrator under Section 11 of the
Act. This Court also made it clear that only
in regard to the issues shown in the second
category, the Chief Justice or his designate
has the choice of either deciding them or
leaving them to the decision of the Arbitral
Tribunal. Even in regard to the issues falling
under the second category, this Court made
it clear that where allegations of forgery or
fabrication are made in regard to the
documents, it would be appropriate for the
Chief Justice or his designate to decide the
issue. In view of this settled position of law,
the issue whether there was an arbitration
agreement ought to have been decided by the
designate of the Chief Justice and only if the
finding was in the affirmative, he could have
proceeded to appoint the arbitrator.”
 (emphasis supplied)
25. Keeping in view the law laid down in the
aforementioned three cases quoted supra which
does not need any more elaboration by us, we have
no hesitation in setting aside the direction which

directs the arbitrator to decide the question of
legality and validity of the agreement/(MoU).
REPORTABLE
 IN THE SUPREME COURT OF INDIA
 CIVIL APPELLATE JURISDICTION
 CIVIL APPEAL No. 6198 OF 2016
 (ARISING OUT OF SLP (C) No. 25473/2015)
Velugubanti Hari Babu …….Appellant(s)
VERSUS
Parvathini Narasimha Rao & Anr. ……Respondent(s)
Citation: AIR 2016 SC 3285
Abhay Manohar Sapre, J.

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