The main legal principle established in the judgment is the legislative intent to promote arbitration, the limited power of prima facie review at the reference stage, and the rejection of the Law Commission's recommendation in the Note to section 8 with regard to Sukanya Holdings.

ORDER :

Moushumi Bhattacharya, J.

The issue in these applications for reference of the disputes to arbitration, is whether the dictum of the Supreme Court in Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya; (2003) 5 SCC 531 - non-permissibility of bifurcation of subject-matter or causes of action in the suit - should be considered by a court in an application under section 8 of The Arbitration and Conciliation Act, 1996, as amended in 2016.

2. The applicants, IFGL Refractories Limited, have filed two applications for reference of claims, disputes and differences made by the first plaintiff against the applicants to arbitration. The applicants are the defendant nos. 41 and 42 in the suit filed by Lindsay International Private Limited (plaintiff no.1) and its majority shareholders and directors.

3. Both the applications are being considered and disposed of by this judgment.

4. Lindsay has filed the suit for a decree for specific performance of a pre-incorporation agreement against the defendant nos. 1-38 and for specific performance of a non-competition agreement against the defendant nos. 39-42 and for declaration and injunction. The applicants IFGL Refractories - the defendant nos. 41 and 42 in the suit - want all claims, disputes and differences made by the plaintiff no.1 Lindsay against IFGL which are the subject matter of the suit to be referred to arbitration in terms of the arbitration agreement contained in Purchase Orders issued by Lindsay upon IFGL. The applicants also pray for stay of all further proceedings in the suit as against the applicants IFGL. The arbitration clause refers to IFGL as the 'Seller' and Lindsay as the 'Buyer' and covers any dispute, controversy or interpretation of any terms or claims arising out of or in connection with the Purchase Orders.

5. Mr. Anindya Mitra, learned Senior Counsel appearing for the applicants IFGL, argues that the arbitration clause has not been disputed and is identical in all the Purchase Orders executed between the plaintiff Company and IFGL. Counsel submits that arbitration proceedings are pending between the parties pursuant to a successful application filed by IFGL under section 11 of the Act. Counsel relies on the amendment to section 8 as being evident from the section itself and the Law Commission Report read with the relevant case-law on the subject.

6. Mr. S.N. Mookherjee, learned Senior Counsel appearing for the plaintiffs, opposes the reference on the ground that the disputes against the different defendants are inextricably interlinked and are incapable of piecemeal adjudication. Counsel submits that the reliefs prayed for by IFGL are geared to bifurcate composite causes of action and split necessary and proper parties. It is submitted that the disputes forming the subject matter of the suit are not covered by the arbitration agreement and do not arise out of the limited scope of the Purchase Orders to which the arbitration agreement relates. Counsel places reliance on Sukanya Holdings and the recent pronouncement of the Supreme Court in Vidya Drolia v. Durga Trading Corporation; (2021) 2 SCC 1 in support of these contentions.

7. Upon considering the submissions made on behalf of the parties and the relevant material on the question to be answered, this Court proposes to structure the judgment in the following manner:

A. The import of section 8, post-amendment.

B. The case made in the plaint against the applicants/defendant nos. 41-42.

C. Whether the cause of action can be bifurcated.

D. The relevance of Sukanya Holdings at the stage of reference.

A. The legislative intent apparent in the amendment to section 8 of the 1996 Act

8. The overall import of section 8, as amended with effect from 23.10.2015, would best be assessed from a plain reading of the section itself together with the Law Commission Report and the Arbitration and Conciliation (Amendment) Bill, 2015 which w