JUDGMENT :

DINESH MAHESHWARI, J.

Leave granted.

2. These appeals have been preferred against the common judgment and order dated 23.04.2018 passed by the High Court of Gujarat whereby, the High Court has dismissed First Appeal Nos. 588 of 2018 and 587 of 2018 filed by the appellant against the order passed by the Commercial Court, Ahmedabad dismissing the applications under Section 8 of the Arbitration and Conciliation Act, 1996¹[Hereinafter also referred to as ‘Act of 1996’ or simply ‘the Act’.] in Commercial Civil Suit Nos. 90 of 2017 and 91 of 2017 respectively. Both these appeals, involving common questions concerning arbitrability of the dispute, have been heard together and are being taken up for disposal by this common judgment.

3. It would be apposite to take note of the factual and background aspects to the extent relevant for the points arising for determination in the present appeals. Given the commonalities of the factual chronology, it would be proper to accord primacy to facts of the lead matter i.e., the appeal arising from SLP (C) No. 16932 of 2018 [relating to First Appeal No. 588 of 2018 in the High Court, arising from the order passed in Commercial Civil Suit No. 90 of 2017], apart from noticing a few facts that may be of relevance in the cognate appeal.

3.1. On 07.04.2005, the appellant herein entered into two licence agreements with respondent No. 1 and the sister concern of respondent No. 1²[Hereinafter referred to as ‘sister concern’] (against whom the cognate appeal is filed). The first agreement with respondent No. 1 was for licensing the operation of two manufacturing units of the appellant, being A.C. Sheet and Cement Grinding, with the licensing fee per quarter set at Rs. 5,00,000/-(Rupees Five Lakh) for the combined use of land and building as well as factory machinery and equipment. The second agreement with the sister concern of respondent No. 1 was for licensing the operation of another manufacturing unit of the appellant, being A.C. Pressure Pipe, with the cumulative licensing fee per quarter set at Rs. 2,00,000/-(Rupees Two Lakh). Both agreements were of the same nature and were executed for a term of 7 years (84 months). The relevant clauses of the agreement entered into between the appellant and respondent No. 1 could be usefully reproduced as under: -

“3. The duration of the Licence for manufacture will be for a period of 84 months, extendable to a further period of 84 months on mutual consent from the date on which the LICENSEE takes over production and manufacturing facilities after completion of the necessary inspection and the compilation of inventories as stipulated herein. The said takeover would be fully and duly evidenced by acknowledgement of both the parties in writing, and will constitute a pan of this Licence Agreement.

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8. LICENSEE shall pay quarterly licence fee of Rs.1,00,000 (Rupees One lakh only) per quarter towards the use of land and building including office building and Rs.4,00,000 (Rupees Four lakhs only) per quarter towards the use of factory machinery & equipments. The Licence fee shall, be paid within 21 days of end of the quarter.

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12. LICENSEE shall not be entitled to mortgage, assign, licence or sublet the said Unit. However, LICENSEE shall be at liberty to mortgage/ charge, Raw Material stock, Finished Goods book debts and equipment brought in and belonging to LICENSEE under this arrangement which shall be kept separately identified and insured.

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15. The LICENSOR will be entitled to a Bonus, in addition to licence fee payable under Clause 8, in consideration of the use of its manufacturing facilities, licence, brand goodwill etc, as worked out below:

i. 14% of the profit earned will be the retained profit in this arrangement and balance 86% shall be distributable as under:

a) The Bonus payable by LICENSEE to LICENSOR under this Clause