The mandatory duty of the court to refer disputes to arbitration when an arbitration clause exists.

VINOD K..SHARMA, J.

1. The plaintiff/defendant No.1 has filed this application under Order XIV, Rule 8 of the O.S. Rules read with section 8 of Arbitration and Conciliation Act, 1996, to refer the dispute raised by the respondent No.1/plaintiff under the Power Supply Agreement, dt.10.11.2005 for adjudication by arbitration under Article 10 of the Power Supply Agreement, dated 10.11.2005.

2. M/s. Tidel Park Limited, company registered under the Companies Act, has filed the suit for declaration that M/s.Arkay Energy (Rameswaram) Limited has defaulted in the supply of contracted demand of power and is liable to pay a sum of Rs.4,85,32,773/-(Rupees four crores eighty five lakhs thirty two thousand seven hundred and seventy three only) for the quantity of power not supplied under the Power Supply Agreement, dt.10.11.2005.

3. The plaintiff/non applicant also prayed for recovery of interest on this amount. The plaintiff/non applicant has also prayed for interest @ 16% p.a. on the investment of Rs.90,00,000/- (Rupees ninety lakhs only) from 5.12.2005 with consequential direction for payment of Rs.77,79,945/- (Rupees seventy seven lakhs seventy nine thousand nine hundred and forty five only) as interest payable till 29.4.2011.

4. The plaintiff/non applicant has further prayed for Preliminary decree, that the second defendant is liable to purchase the whole of the shares of the first defendant company, i.e. applicant herein, held by the plaintiff/non applicant in terms of the Shareholders' Agreement, dated 10.11.2005.

5. It is submitted that the plaintiff/non applicant has filed the suit based on the claims falling under two separate agreements, both dt.10.11.2005 i.e. Power Supply Agreement entered into between the applicant/defendant No.1 and the plaintiff/non applicant and Tripartite Shareholders Agreement entered into between the plaintiff and the defendants.

6. It is submitted that in the Power Supply Agreement, there are only two parties, i.e. Plaintiff and the defendant No.1, whereas Shareholders' Agreement is tripartite Agreement.

7. It is also the case of the applicant/defendant No.1 that rights and obligations of the parties under these agreements are distinct and separate.

8. It is also the submission that as per the Power Supply Agreement, dated 10.11.2005, any dispute or differences arisen between the parties, is agreed to be resolved through arbitration i.e. to say that there is an arbitration clause, whereas there is no arbitration clause in the tripartite Shareholders' agreement.

9. It is submitted that under Order II Rule 3 of the Code of Civil Procedure, joinder of cause of action is permissible only if the lis between a plaintiff against the same defendant or same defendants jointly, which is not the case here.

10. That dispute under Power Supply Agreement is covered by Power Supply Agreement, dated 10.11.2005 which provides for settlement of dispute by arbitration, therefore parties should settle the dispute in accordance with the said article through arbitration.

11. On the pleading referred to above, it is prayed that the dispute raised by the plaintiff/non applicant under the Power Supply Agreement, dated 10.11.2005 be referred to arbitration in terms of Article 10 of Power Supply Agreement, dated 10.11.2005.

12. This application is opposed by the plaintiff/non applicant by pleading that M/s. Kanumuri Holdings Private Limited, defendant No.2 had requested the plaintiff to participate as one of the captive consumers in the Power plant of the applicant/defendant No.1, accordingly, the non applicant along with the applicant and the second respondent executed a Shareholders Agreement, dated 10.11.2005, thereby plaintiff has become a captive power consumer of the applicant.

13. In the Shareholders' Agreement, the defendant No.2 was described as Promoter Company and the defendant No.1 as the Implementing Company. At the relevant time, the second respondent held more than 74% of the shares in the applica