- Bench: Justices Ranjan Gogoi, R.Bhanumathi
- Appellant: Ameet Lalchand Shah
- Respondent: Rishabh Enterprises
Issues
- Were all the four agreements entered between the parties interconnected?
- Was there an arbitration clause in the Sale and Purchase Agreement?
- Whether refusal of granting arbitration was on the grounds of fraud levelled against the appellants?
Facts
- The appellant and the respondent entered into various agreements with three agreements containing an arbitration clause and one agreement containing no arbitration clause.
- The dispute arose as a result of allegations by the respondents of default in payment by the appellant. It was also alleged that the appellants have committed misrepresentation and criminal breach of trust so far as the pieces of equipment procured by the respondent.
- On noticing the dispute arising, the appellant issued notice to invoke the arbitration clause, the respondents levelled charges alleging fraud and misrepresentation by the appellant.
- After receiving the notice, the appellant, under Section 8 of the Arbitration And Conciliation Act, 1996 sought reference of the dispute to arbitration relating to all four agreements.
- The application was dismissed on the grounds of the issue with the principal and ancillary agreement of the case. The case was further taken to Division Bench were it was again set aside.
Appellant's Contentions
• The appellant argued that all the four agreements were interconnected and needed to be recommended for arbitration.
• It based its arguments on the wordings contained in Section 8 of the Act whereby the word " a matter" indicates that the entire subject-matter of the suit should be subject to an arbitration agreement.
• It was submitted that the companies were involved in a single commercial deal and that the agreement was binding to all of it.
Respondent's Contentions
• The respondent relied on the case of Sukanya Holdings and contended that the main agreement did not have the arbitration clause.
• It was submitted that the subject matter of the suit cannot be bifurcated between the parties to the arbitration agreement and others.
Judgement
The impugned order of the HC was set aside and the appeal was allowed with all four agreements referring to arbitration.
Relevant paragraph
The language of the amendment to Section 8 of the Act is clear that the amendment to Section 8(1) of the Act would apply notwithstanding any prayer, judgment, decree or order of the Supreme Court or any other Court. The High Court emphasized the word ".....unless it finds that prima-facie no valid agreement exists". The High Court observed that there is no arbitration agreement between Astonfield and Rishabh. After referring to Sukanya Holdings and the amended Section 8 and Section 45 of the Act, the High Court pointed out the difference in the language of Section 8 and Section 45 of the Act. The High Court distinguished between Sukanya Holdings and Chloro Controls and observed that Sukanya Holdings was not overruled by Chloro Controls.
To view / download the original copy of the judgement, Click here
