The entire subject matter of the suit must be the subject matter of arbitration, and serious fraud allegations may render a dispute non-arbitrable.

S. RAVINDRA BHAT, J.

1. This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’) is directed against an order of the learned single Judge declining an application under Section 8 (of the Act) to refer the subject matter of the suit filed by the respondent/plaintiffs to arbitration.

2. The brief facts are that on 01.02.2012, M/s Juwi India Renewable Energies P. Ltd. (hereinafter referred to as ‘the Juwi’) entered into two agreements with the first respondent (hereinafter referred to as ‘the Rishabh’), the sole proprietorship concern of the second plaintiff i.e. Dr. A.M. Singhvi. The two agreements entered into on 01.02.2012 were, one, for the purchase of power generating equipments to the tune of Rs. 8,89,80,730/- and the other for installation and commissioner of the plant for Rs. 2,20,19,270/-. Both these agreements contained arbitration clause.

3. On 05.03.2012, the plaintiff entered into Sale and Purchase Agreement dated 5th March, 2012 with the second defendant company (Astonfield) for purchasing CIS Photovoltaic Products to be leased to defendant No.3 company (Dante) and installed at the said power plant at Jhansi, Uttar Pradesh; these products were valued at Rs. 25,16,00,000/-, the second appellant i.e. Astonfield received Rs. 21,40,49,999/-. This agreement (hereinafter referred to as „the third agreement) did not contain an arbitration clause.

4. Another agreement dated 14.03.2012, the fourth agreement was entered into between Dante and Rishabh whereby Dante agreed to pay the latter Rs. 13,50,000/- as lease rent for March, 2012 and from April, 2012 onwards, the said rent was Rs. 28,26,000/-.

5. Disputes arose between the parties i.e. Rishabh and Dante. This was sought to referred to arbitration. Rishabh and its sole proprietor - Dr.A.M. Singhvi preferred a suit being CS(Comm.)No.195/2016 before this Court, leveling various allegations against all the appellants who were arrayed as defendants in the suit.

6. It may be stated, at the outset, that the first, fourth and fifth defendants (also arrayed as appellant nos. 1, 4 and 5) were not parties to any of the agreements. In the suit, multiple reliefs were claimed including a declaration that all transactions between the parties such as execution of the four agreements were vitiated by serious fraud; the suit further claimed a money decree of Rs. 32,22,80,288/- towards refund of the principal amount; it also claimed Rs. 19,31,74,804/- towards damages by way of interest @ 18% per annum. The alternative relief claimed was a money decree for Rs. 13,97,51,418/- and a decree of mandatory injunction against Dante directing it to pay further lease rental and contractual interest @12% per annum.

7. Upon being served with notice and summons in the suit the appellants/defendants preferred an application being IA No. 4158/2016 under Section 8 of the Act highlighting that firstly, all agreements had to be treated as part of one transaction and therefore, were arbitrable in accordance with the express provisions contained in the three agreements. Secondly, the appellants/defendants denied the plea of fraud and argued that in any case, on 13.02.2016, an arbitrator had been nominated. The respondents/plaintiffs resisted the application contending that the suit was based upon allegations of serious fraud committed jointly and severally by the appellants/defendants and the said issues were not arbitrable but rather have to be decided by the civil Courts.

8. It was further stated by the respondents/plaintiffs that existence of an arbitration clause in some of the agreements could not per se drag the dispute arising out of the principal agreement into arbitration when no such stipulation was agreed to by the parties.

9. In any case, the respondents/plaintiffs contended that the cause of action could not be split so as to refer the dispute that could be treated from those that could not and that the relief claimed in the suit against th