An application for leave to defend in a summary suit constitutes the 'first statement on the substance of the dispute' under the Arbitration and Conciliation Act. Participating in court proceedings by filing such an application waives the right to subsequently invoke Section 8 to refer the matter to arbitration.

JUDGMENT

P.Velmurugan J.

1.The instant appeal is directed against the order dated 29.09.2023 made in A.No.5041 of 2022 in C.S.(Comm.Div.) No.70 of 2022.

2. The appellant is the defendant in the suit, C.S.(Comm.Div.)No.70 of2022 filed by the respondent for recovery of a sum of USD 19,005,310.00 (USD Nineteen Million Five Thousand Three Hundred and Ten) from the appellant along with interest at the rate of 6% per annum from the date of filing of the suit till the date of realisation along with costs.

3. The facts leading to the filing of the present appeal are as follows:-

(a) The appellant company is engaged in the business of manufacturing, marketing and supplying of air-conditioners in India. The respondent company is duly organised under the relevant laws of Thailand and is a wholly owned subsidiary of the Principal/Parent Company, viz. Fujitsu General Limited. Fujitsu General Limited [FGL] is a company duly organised and administered under the relevant laws of Japan. Fujitsu General (Asia) Pte.Ltd. [FGA] is a company duly organised and administered under the relevant laws of Singapore. Fujitsu General (India) Pvt.Ltd. [FGI] is a company duly incorporated and administered under the Companies Act, 2013 (India), hereinafter referred to as the FGL Group Companies. The respondent, Fujitsu General (Asia) Pte. Ltd. [FGA], Fujitsu General (India) Pvt. Ltd. [FGI] are the associate/wholly owned subsidiary/group companies of Fujitsu General Limited [FGL], which is the parent/holding company. The said FGL Group Companies including Fujitsu General (Thailand) Company Limited are engaged in the business of chillers, air-conditioners, refrigerators etc., under the brand of "GENERAL" in the relevant geographical places, where they are registered and operating their businesses of manufacturing, distribution, marketing and sales of various products under the brand "GENERAL".

(b) Fujitsu General Limited [FGL], Fujitsu General (Asia) Pte. Ltd [FGA], with an intention to expand their business in the Indian territory, approached and entered into Master Technical License and Distribution Agreement dated 22.12.1999 (the License Agreement) duly executed between Fujitsu General Limited (FGL), Fujitsu General (Asia) Pte. Ltd. with the appellant (ETA General Private Limited), pursuant to which the appellant had been manufacturing, marketing and supplying air conditioners in India. The said license agreement contains an arbitration clause. Though the appellant had closed the manufacturing unit of “General” brands which was situated in Pondicherry, however, under the above said agreement, the respondent continued to supply air-conditioners to the appellant, who have been distributing, marketing and selling "General" Brand air conditioners in India. The appellant continued to settle the accounts with the respondent and its above-named associate, principal/group companies on a regular basis without any delay for more than 21 years.

(c) In view of the business arrangement, the appellant and the parent company of the respondent, Fujitsu General Limited [FGL] and Fujitsu General (Asia) Pte. Ltd. [FGA] together with Fujitsu General Group entered into a Share Holders Agreement dated 31.10.2000, which was amended by an amended Shareholders Agreement dated 31.10.2010. The said Shareholder Agreement contains an arbitration clause. Fujitsu General Limited [FGL], the parent company FGL Group established its subsidiary in India, in and around December 2018 under the name and style "Fujitsu General (India) Private Limited" [FGI]. The entire business transactions with the respondent were purely on the basis of the Master Technical License Distribution Agreement dated 22.12.1999, Shareholders Agreement dated 31.10.2000 and Amended Shareholders Agreement executed by the parent company of the respondent viz., Fujitsu General Limited [FGL], Japan and its wholly owned subsidiary company of Fujitsu General (Asia) PTE. Ltd [FGA], Singapore. In terms of the said agreement, both the a