Wait a second. What you're talking about happende in the 1st Era (2920, to be exact) - time when all kinds of mad people summoned Daedric Princes to destroy their enemies, causing chaos and suffering. That was the time when the king of Anequina summoned Molag Bal to help him take revenge on someone who lived in the town of Gilverdale. That was also when Sotha Sil decided that enough is enough, and ventured into Oblivion to make a pact with Deadra Lords - from this day onward, they would only respond to sorcerers' and witches' callings, not to amateurs. He tried to avert disasters such as the ones that befell Gilverdale, when everyone and their mother could pit a Daedric Prince against someone they hated.
He did not confront Molag Bal per se. He talked to 8 Daedric Princes, and while we don't know what exactly happened there, we can safely assume it was more of a discussion than a battle.
A battle did happen later, in Mournhold, but that was agains Mehrunes Dagon, not Molag Bal. Sotha Sil's pact allowed witches to talk to the daedra, and one of them did - it was because of her that Dagon attacked Mournhold, despite Almalexia's and Sotha Sil's efforts to stop him. They managed to cast him back into Oblivion, but not before the city was destroyed.
None of this has anything to do with the storyline of TESO. However, in the 2nd Ear Sotha Sil is alive and kicking, so I don't see why we shouldn't meet him - apart from the fact that he's not the most sociable fellow. Maybe we'll get to talk to him, though
