AMEET LALCHAND SHAH AND OTHERS versus RISHABH ENTERPRISES AND ANOTHER

Citation: [2018] 6 S.C.R. 1001 · Decided: 03-05-2018 · Supreme Court of India · Bench: RANJAN GOGOI · Disposal: Appeal(s) allowed

Cited by 9 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

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1001
AMEET LALCHAND SHAH AND OTHERS
v.
RISHABH ENTERPRISES AND ANOTHER
(Civil Appeal No. 4690 of 2018)
MAY 03, 2018
[RANJAN GOGOI AND R. BANUMATHI, JJ.]
Arbitration and Conciliation Act, 1996 – ss.8 and 45 – First
Respondent entered into four agreements in regard to commission
of a Photovoltaic Solar Plant – Two agreements dated 01.02.2012
were with M/s. ‘JI’; one agreement dated 05.03.2012 with appellant
no.2 and another agreement dated 14.03.2012 with appellant no.3
– All the agreements contained arbitration clause except agreement
dated 05.03.2012 – Dispute arose between the parties – First
respondent alleged that appellant no.3 defaulted in payment of rent
and appellant no.2 committed fraud by inducing first respondent to
purchase the Photovoltaic products by investing huge amount –
Appellants sought for reference to arbitration u/s.8 of all four
agreements as they were inter-connected – Single Judge of High
Court dismissed the application u/s.8 and held that agreement dated
14.03.2012 cannot be treated as mother/principal agreement and
other agreements as ancillary agreements and further that since
there was criminal complaint against the appellants, they cannot be
referred to arbitration – Division Bench of High Court held that
main agreement dated 05.03.2012 did not contain an arbitration
clause, thus the matter cannot be referred to arbitration – On appeal,
held: All the four agreements were inter-connected – It was a case
where several parties were involved in a commercial project executed
through several agreements/contracts – In such a case, all parties
can be covered by the arbitration clause in the main agreement
dated 14.03.2012 – Insofar as allegations of fraud are concerned,
it is only where serious questions of fraud are involved, the
arbitration can be refused – In instant case, the allegations cannot
be said to be so serious to refuse to refer the parties to arbitration
– Arbitrator appointed can examine the allegations regarding fraud
– All the four agreements and the parties thereon referred to
arbitration.
[2016] 6 S.C.R. 1001
1001
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1002
SUPREME COURT REPORTS
[2018] 6 S.C.R.
Allowing the appeal, the Court
HELD: 1.  In a case like the present one, though there are
different agreements involving several parties, it is a single
commercial project namely operating a 2 MWp Photovoltaic Solar
Plant.  Commissioning of the Solar Plant, which is the commercial
understanding between the parties and it has been effected
through several agreements.  The agreement – Equipment Lease
Agreement (14.03.2012) for commissioning of the Solar Plant is
the principal/main agreement.  The two agreements of First
respondent with ‘JI’ (i) Equipment and Material Supply Contract
(01.02.2012); and (ii) Engineering, Installation and
Commissioning Contract (01.02.2012) and the First Respondent
Sale and Purchase Agreement with appellant no.2 (05.03.2012)
are ancillary agreements which led to the main purpose of
commissioning the Photovoltaic Solar Plant by Appellant No.3
(Lessee).  Even though, the Sale and Purchase Agreement
(05.03.2012) between First Respondent and appellant no.2 does
not contain arbitration clause, it is integrally connected with the
commissioning of the Solar Plant by appellant no.3.  ‘JI’, even
though, not a party to the suit and even though, appellant no.2
and appellant No.1 are not signatories to the main agreement
viz. Equipment Lease Agreement (14.03.2012), it is a commercial
transaction integrally connected with commissioning of
Photovoltaic Solar Plant.  Be it noted, as per clause(v) of Article
4, parties have agreed that the entire risk, cost of the delivery
and installation shall be at the cost of the first respondent
(Lessor).  What is evident from the facts and intention of the
parties is to facilitate procurement of equipments, sale and
purchase of equipments, installation and leasing out the
equipments to Dante Energy. The dispute between the parties
to various agreements could be resolved only by referring all the
four agreements and the parties thereon to arbitration. [Para
21][1019-E-H; 1020-A-C]
2. All the four agreements are inter-connected.  This is a
case where several parties are involved in a single commercial
project (Solar Plant at Dongri) executed through several
agreements/contracts.  In such a case, all the parties can be
covered by the arbitration clause in the main agreement i.e.
Equipment Lease Agreement (14.03.2012). [Para 22][1020-D-E]
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