Arbitration and Conciliation Act, 1996 – s.8 – Arbitrability of the dispute in question – Held: Except the principal licence agreement, none of the other agreements contained any arbitration clause, even if they related to the same property and also involved the appellant and the respondent No.1 – Even if the original licence agreement is said to be the genesis of the contractual relations of the appellant and the respondent No.1, that does not ipso facto lead to the availability of the arbitration agreement in relation to the dispute in question emanating from the tripartite agreement and which cannot be determined without reference to the said tripartite agreement and without involving all the parties thereto – Thus, no dispute resolution process, including arbitration, could be undertaken in relation to the subject-matter of the suit without reference to the terms of tripartite agreement and without involving the bank-respondent No.2 – This is apart from the fact that the other elements of dispute pertaining to the subsequent purchasers too cannot be resolved in any forum without reference to the tripartite agreement and its amended clause, which did not provide for arbitration – Thus, there is no doubt about non-existence of arbitration agreement in relation to the dispute in question – Substantive reliefs claimed in the suits fall outside the arbitration clause in the original licence agreement – Therefore, the view taken by the Commercial Court and the High Court in declining the prayer of the appellant for reference to arbitration u/s.8 cannot be faulted – Arbitration and Conciliation (Amendment) Act, 2015.
Dismissing the appeals, the Court
HELD: 1.1 Except the principal agreement dated 07.04.2005, none of the other agreements contained any arbitration clause, even if they related to the same property and also involved the appellant and the respondent No. 1. The later transactions involved other parties too like the tripartite agreement dated 06.07.2006 whereby the respondent No. 2 bank sanctioned loan to the respondent No. 1 and then, supplemental to the said tripartite agreement for dealing with the deposit of title deeds. Similarly, the other deeds of conveyance dated 23.01.2015 involve the appellant and the other defendants. The submissions made by the appellant with reference to the amendment of Section 8 of the Act of 1996 and the later decisions of this Court in interpretation of the amended Section 8 do not inure to the benefit of the appellant. This is for the simple reason that no such conjunction can be provided to the original licence agreement dated 07.04.2005 and the tripartite agreement involving the Bank dated 06.07.2006 and 23.01.2008, whereby the arbitration clause could be held applicable to the tripartite agreement too. This is apart from the fact that in the frame of the suit and various other reliefs claimed, involving subsequent purchasers too and the allegations of fraud, the dispute cannot be said to be arbitrable at all. The present one cannot be said to be a case involving any “doubt” about non-existence of arbitration agreement in relation to the dispute in question. [Paras 17, 17.1][137-F-G; 138-A-C]
1.2 There being no doubt about non-existence of arbitration agreement in relation to the entire subject-matter of the suit, and when the substantive reliefs claimed in the suits fall outside the arbitration clause in the original licence agreement, the view taken by the High Court does not appear to be suffering from any infirmity or against any principle laid down by this Court. Even if by reference to remote pedigree, the original licence agreement is said to be the genesis of the contractual relations of the appellant and the respondent No. 1, that does not ipso facto lead to the availability of the arbitration agreement in relation to the dispute in question, which emanates from the tripartite agreement and which cannot be determined without reference to the said tripartite agreement and without involving all the parties thereto. In other words, no dispute resolution process, including arbitration, could be undertaken in relation to the subject-matter of the suit without reference to the terms of tripartite agreement and without involving the bank- respondent No.2. This is apart from the fact that the other elements of dispute pertaining to the subsequent purchasers too cannot be resolved in any forum without reference to the tripartite agreement and its amended clause, which did not provide for arbitration. Thus, the ancestry of the tripartite agreement, in the facts of the present case, does not lead to the result desired by the appellant. Therefore, even on the principles enunciated in Vidya Drolia, the prayer of the present appellant for reference to arbitration under Section 8 cannot be granted. On the facts and in the circumstances of the present case and in the nature of transactions as also the nature of reliefs claimed in the suit, the view taken by the Commercial Court and the High Court in declining the prayer of the appellant for reference to arbitration cannot be faulted. [Paras 17.2, 18,
18.1 and 20][138-D-H; 140-B-C]
Vidya Drolia and Ors. v. Durga Trading Corporation (2021) 2 SCC 1; Ameet Lalchand Shah and Ors. v. Rishabh Enterprises and Anr. (2018) 15 SCC 678 : [2018] 6 SCR 1001; ONGC Ltd. v. Discovery
Enterprises (2022) 8 SCC 42; Intercontinental Hotels v. Waterline Hotels (2022) 7 SCC 662 – distinguished. Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya & Anr. (2003) 5 SCC 531 : [2003] 3 SCR 558; S. N. Prasad v. Monnet Finance Ltd. and Ors. (2011) 1 SCC 320 : [2010] 13 SCR 207; Deutsche Bank Home Finance Ltd. v. Taduri Sridhar and Anr. (2011) 11 SCC 375 : [2011]
5 SCR 674; Himangi Enterprises v. Kamaljeet Singh Ahluwalia (2017) 10 SCC 706 : [2017] 10 SCR 139 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.