Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4998 of 2007

SHIN-ETSU CHEMICAL CO.LTD.

....... Appellant

Vs.

VINDHYA TELELINKS LTD. & ORS.

....... Respondents

J U D G M E N T

R.V. Raveendran J.,

These appeals by special leave are filed against the order dated

30.11.2006 passed by the IV Additional District Judge, Rewa, Madhya

Pradesh, aggrieved by the remand, while allowing in part Civil Appeal

Nos.24 and 25 of 2006 filed by the appellant, with a direction to reconsider

the applications of the appellant under Section 45 of the Arbitration and

Conciliation Act, 1996 (‘Act’ for short) in terms of the Judgment of this

Court in Shin-Etsu Chemical Co.Ltd. v. Aksh Optifibre Ltd. & Anr. 2005(7)

SCC 234.

2.

Vindhya Telelinks Ltd. and Optic Fibre Goa Ltd. - respondents 1 & 2

in the first of the two appeals filed Civil Suit Nos. 31-A of 2002

(renumbered as Civil Suit No.38A of 2004) on the file of the Civil Judge,

Class-I, Rewa, Madhya Pradesh for a declaration that the Long Term Sale

and Purchase Agreement entered between appellants and them, was null and

void and for a permanent injunction restraining the appellant (first

defendant in the suit) from relying upon/invoking/giving effect to any term

of the said agreement. Similarly, Birla Ericsson Optical Ltd. and Optic Fibre

Goa Ltd – respondents 1 & 2 in the second of these appeals, filed Civil Suit

No.30A of 2002 (renumbered as Civil Suit No.39A of 2004) in the said

court for similar reliefs.

3.

On entering appearance, the appellant filed applications under order 7

Rule 11 of Code of Civil Procedure read with Sections 5 and 8 of the Act

seeking dismissal of the suits and a direction for referring the parties to

arbitration (in terms of the arbitration agreement contained in the Long

Term Sale & Purchase Agreements dated 23^rd and 24^th January, 2001). The

said applications were dismissed by the trial court on 14.07.2003. The

revision petitions filed by the appellants were dismissed by the Madhya

Pradesh High Court on 26.08.2003. On further appeals, this court in Civil

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Appeal Nos.6210-6211 of 2004, by order dated 7.12.2005, set aside the

orders of the trial court and High Court and remanded the matters to the trial

court to decide the matters afresh treating the applications filed by the

appellant herein (under Order 7 Rule 11 CPC read with sections 5 and 8 of

the Act) as applications under Section 45 of the Act and dispose them in

terms of the decision in Aksh Optifibre Ltd.(supra). In pursuance of it, the

trial court considered the applications filed by the appellant as applications

under Section 45 of the Act and passed a common order dated 31.3.2006

thereon, holding that the arbitration clause on the basis of which the

appellant had filed an application under Section 45 of the Act was prima

facie inoperative and in such a situation, the parties cannot be referred to

arbitration and the matter should be proceeded with and decided on merits

by the court.

4.

The said order of the trial court was challenged by the appellant

before the IV Additional District Judge, Rewa who by the impugned orders

dated 30.11.2006 allowed the appeals, set aside the order of the trial court,

and remitted the matters to the trial court with a direction to consider the

applications of the appellant under section 45 of the Act, in accordance with

the procedure and principles laid down in Para 111 of the decision in Aksh

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Optifibre Ltd. (supra). The said orders of the Additional District Judge are

challenged in these appeals by special leave under Article 136 of the

Constitution of India. The appellant contends that as neither the trial court

nor the appellate court recorded a finding that the arbitration agreement was

null, void, inoperative or incapable of being performed, the appellate

court ought to have merely allowed the appeals, and ought not to have

remanded the matters to the trial