On July 13, 2018,  the Hon’ble High Court at Bombay passed a judgment in the matter of Ashok Thapar v. Tarang Exports Pvt. Ltd. (2018 SccOnline Bom 14809).

In this matter, the Hon’ble High Court decided on the enforceability of arbitration clause in an agreement mutually terminated by parties to it.

The Court placed reliance on Ford Credit Kotak Mahindra Ltd. v. M. Swaminathan reported in AIR 2005 Madras 218 where it was held that an arbitration clause survives even after the termination of the agreement containing it. The Court also placed reliance on the Judgment of the Supreme Court in the case of SMS Tea Estate Pvt. Ltd. v. Chandmari Tea Company Pvt. Ltd. (2011) 14 SCC 66 wherein the Supreme Court had held that: “Even if a deed of transfer of immoveable property is challenged as not valid or enforceable, the arbitration agreement would remain unaffected for the purpose of resolution of disputes arising with reference to the deed of transfer.”

The view of the aforementioned, the Court concluded:  “Once the parties have intended to refer the dispute to the Arbitrator in their Agreement, then any dispute pertaining to the contents of the Agreement or touched the subject matter of the Agreement is necessarily to be referred to the Arbitrator even though Arbitration Agreement is mutually terminated by both the parties.”