ORAL JUDGMENT :- Defendant Nos. 1 and 2 have taken out this Notice of Motion for an order under section 45 of the Arbitration and Conciliation Act, 1996, referring the disputes raised in the plaint to arbitration in accordance with the arbitration agreement contained in an Agreement to Invest dated 16-12-1994, a Shareholder's Agreement dated 16-12-1994 and a Foreign Collaboration Agreement dated 4-4-1995.

2. The disputes arise under the said agreements as also under a buy back agreement dated 1-6-1996 as amended/modified by an agreement dated 6-12-2000. The buy back agreements do not contain an arbitration clause. The question is whether in the facts and circumstances of the case the arbitration agreements in the other agreements apply to the disputes and differences under the buy back agreement.

3. Mr. Sen opposed the Notice of Motion on the following grounds :

I. The provisions of section 45 are not applicable in the present case as Defendant Nos. 1 and 2 do not belong to contracting states as contemplated in the Act and the First Schedule thereto.

II. There is no arbitration agreement between the parties in respect of the disputes and differences raised in the plaint.

While considering the second submission it will be necessary first to decide whether a derivative action can be referred to arbitration. I have answered this question in the affirmative. I have rejected both the grounds of challenge and allowed the Notice of Motion.

4. Defendant No.4 is the Plaintiff's husband. Plaintiff Nos. 2, 3 and 4 are the daughters of Plaintiff No. 1 and Defendant No.4. Defendant No. 1 is a company incorporated under the laws of Denmark. It was previously known as Bloch and Behrens ApS. It is referred to in the agreements by its previous name. Defendant No.2, GTM (Asia) Investment Holding Ltd. is a company incorporated under the laws of the British Virgin Islands. Defendant No.3 Global Wool Alliance Pvt. Ltd., (previously known as Mehra Wool Alliance Pvt. Ltd.) is incorporated under the Companies Act, 1956. The Plaintiffs and Defendant Nos. 1 and 2 are shareholders of Defendant No.3. Defendant Nos. 4 to 7 are/were the Directors of Defendant No.3.

5. The suit is filed as a derivative action in respect and on behalf of Defendant No. 3 as well as for the Plaintiffs personal reliefs. The derivative action is on the basis that Defendant Nos. 1 and 2 are in control of Defendant No. 3, who have mala-fide not taken any action to enforce the rights of Defendant No.3, inter-alia, including to claim compensation. The cause of action regarding the personal reliefs is based on the allegation that Defendant Nos. 1 and 2 induced the Plaintiff to inter-alia enter into contracts to reduce their shareholding and to expand the capacity of Defendant No.3 by misrepresentation and fraud with the intention of gaining control of Defendant No.3.

Re : SUBMISSION I:

The provisions of section 45 are not applicable in the present case as Defendant Nos. 1 and 2 do not belong to contracting states as contemplated in the Act and the First Schedule thereto.

6. This submission is based on the presumption that there exists a valid arbitration clause in respect of the subject-matter of the suit. The arbitration clauses in the three agreements are as under :-

(i). Clause 15 of the Agreement to Invest:

"15. ARBITRATION

Any dispute or difference arising out of or in relation to this Agreement or any 5 obligation set out herein, which cannot be settled by mutual negotiations, shall be resolved by arbitration. The arbitration shall be conducted in accordance with the Rules of Arbitration of the International Chamber of Commerce, Paris. The arbitration shall be held in London, England. This arbitration agreement and the arbitration proceedings shall be governed by English Law. For the removal of doubt, it is clarified that such arbitration shall not be regarded as an arbitration under the Indian Arbitration Act, 1940."

(ii). Clause 17 of the Shareholders Agreement:

"17. ARBITRAT

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