2018 Supreme(SC) 444

SUPREME COURT OF INDIA
RANJAN GOGOI, R. BANUMATHI, JJ.
Ameet Lalchand Shah & Others – Appellants
Versus
Rishabh Enterprises & Another – Respondents
Civil Appeal No. 4690 of 2018 (Arising out of SLP(C) No.16789 of 2017)
Decided On : 03-05-2018

IMPORTANT POINTS
If there are more than one agreements and all are integrally interconnected, and the main agreement contains arbitration clause, to fulfill one single commercial project, all the agreements and parties may be referred to arbitration even though all parties are not signatories to the main agreement.
Reference to arbitration can be refused only where serious question of fraud is involved, it cannot be refused on mere allegation of fraud.

Headnote:(a) Arbitration and Conciliation Act, 1996 – Section 8 and 45 – Four agreement for single commercial project of operating a 2 MWp Photovoltaic Solar Plant at Dongri, Raksa, District Jhansi, Uttar Pradesh – Main agreement being the Equipment Lease Agreement – Other three agreements, namely, (i) Equipment and Material Supply Contract; (ii) Engineering, Installation and Commissioning Contract; and (iii) sale and Purchase agreement being ancillary for the project – All four agreements integrally interrelated – Held, dispute between parties to various agreements could be resolved only by referring all the four agreements and the parties thereon to arbitration even though they may not be signatory to main agreement containing arbitration clause. (Para 21, 22)

       (2013) 1 SCC 641 – Relied upon

       (2003) 5 SCC 531 – Referred

       (b) Arbitration and Conciliation Act, 1996 – Section 8 and 45 – Allegation of fraud – Reference to arbitration can be refused only where serious question of fraud is involved – Cannot be refused on mere allegation of fraud – Instantly parties consciously proceeding with the commercial transactions to commission the Photovoltaic Solar Plant – No serious allegation of fraud – Arbitrator can examine allegations of fraud. (Para 33, 34)

       (2016) 10 SCC 386 – Referred

       Facts of the case:

       The first respondent - Rishabh entered into Sale and Purchase Agreement with the second appellant company – Astonfield Renewables Private Limited for purchasing CIS Photovoltaic products to be leased to appellant No.3 – Dante Energy Pvt. Ltd. to be installed at the Solar Plant at Dongri, Raksa, District Jhansi, Uttar Pradesh. These products were valued for Rs.25,16,00,000/-. The second appellant – Astonfield received Rs.21,40,49,999/- from the respondents under various cheques issued by the Rishabh. This agreement dated 05.03.2012 does not contain the arbitration clause. According to the appellants, an amount of Rs.10,00,00,000/- by cash was paid back to the sons of Dr. A.M. Singhvi i.e. Rs.2,50,00,000/- to Mr. Avishkar Singhvi and Rs.7,50,00,000/- to Mr. Anubhav Singhvi. An Equipment Lease Agreement (ELA) dated 14.03.2012 was entered into between the Rishabh and Dante Energy whereby Dante Energy agreed to pay the Rishabh Rs.13,50,000/- as lease rent for March, 2012 and from April, 2012 onwards, the said rent payable was Rs.28,26,000/-. The Solar Plant at Jhansi has been commissioned and energized on 16.03.2012.

       Dispute arose between the parties when respondents alleged that appellant No. 3 – Dante Energy has defaulted in payment of rent and that Astonfield committed fraud by inducing the Rishabh to purchase the Photovoltaic products by investing huge amount.

       The respondents have also filed a criminal complaint before the Economic Offences Wing at Delhi against the appellants.

       The appellants have filed writ petition before the High Court of Delhi seeking quashing of the said FIR which is sub judice. There was also an enquiry by the Income Tax Authorities seeking explanation from the appellants regarding transfer of money to the sons of Dr. A.M. Singhvi i.e. Rs.2,50,00,000/- to Mr. Avishkar Singhvi and Rs.7,50,00,000/- to Mr. Anubhav Singhvi. Appellant No.1 – Ameet Lalchand Shah was summoned by the Income Tax Authorities seeking explanation with regard to transfer of the said money to the sons of Dr. A.M. Singhvi.

       Appellant No.3 – Dante Energy issued notice invoking arbitration clause and nominated Justice Sujata Manohar, former Judge, Supreme Court of India as the Arbitrator. The respondents namely the Rishabh and its sole proprietor preferred a Civil Suit (Commercial) before the High Court against all the appellants levelling various allegations including fraud and misrepresentation.

       On receipt of notice and summons in the suit, the appellants/defendants preferred application under Section 8 of the Act seeking for reference of the dispute between the parties to arbitration pertaining to all the four agreements.

       The Single Judge dismissed the application filed under Section 8 of the Act.

       The Division Bench dismissed the appeal.

       Finding of the Court:

       All the aforesaid four agreements and the parties thereon are referred to arbitration.

       Result: Appeal allowed.