Calcutta High Court
Flint Group India Private Limited vs Sujay Lodha on 20 November, 2025
Author: Aniruddha Roy
Bench: Aniruddha Roy
In The High Court at Calcutta
Ordinary Original Civil Jurisdiction
[Commercial Division]
Original Side
Present: The Hon'ble Justice Aniruddha Roy
IA NO. GA-COM/4/2024
In CS-COM/652/2024
Flint Group India Private Limited
Vs
Sujay Lodha
For defendant/petitioner: Mr. Rajarshi Dutta, Adv.
Mr. Asif Hussain, Adv.
Mr. Sarbesh Chaudhury, Adv.
Ms. Alia Gaffar, Adv.
Ms. Srijata Choudhry, Adv.
For plaintiff/respondent: Mr. Sourojit Dasgupta, Adv.
Mr. Souvik Mazumdar, Adv.
Reserved on: 12.11.2025
Judgment on: 20.11.2025
ANIRUDDHA ROY, J.:
In Re: IA NO. GA-COM/4/2024
Facts:
1. This is an application filed by the defendant/applicant under Section 8 of
the Arbitration and Conciliation Act, 1996 (for short, the Arbitration
Act), inter alia, praying for referring the subject matter of the suit for
arbitration.
2. The plaint case, as would be evident from the plaint annexure A at page 13
to the application, that the plaintiff claims the unpaid consideration on
account of goods sold and delivered to the defendant. The plaint case is that
the parties to the suit entered into negotiations and discussions, during
which terms and conditions for supply/delivery of goods and the payment of
consideration were agreed upon. The defendant was to place verbal as well
as written purchase orders on the plaintiff, the plaintiff shall cause delivery
of the ordered goods. It was further agreed upon by and between the parties
that immediately upon delivery of the goods, the plaintiff shall raise invoices
on the defendant and upon receiving the invoices, the defendant shall make
payment against the same within a period of 90 days from the date of each
invoice. In default, it was agreed upon that the outstanding amount would
be carried an interest at the rate of 18 per cent per annum.
3. The plaint states that pursuant to such agreement, the defendant placed
purchase orders upon the plaintiff from time to time, annexed to the plaint.
Upon receiving such purchase orders, the plaintiff duly supplied and
delivered the goods to defendant during the period March 2022 and May
2022. The goods were accepted by the defendant to its satisfaction and
without any demur. The defendant utilised the goods and consumed it. The
plaintiff then raised invoices on the defendant for the goods supplied. Along
with the invoices the plaintiff made over the e-way bills and delivery notes
demonstrating due delivery of all goods to the defendant. Invoices and
related documents/delivery notes are annexed to the plaint.
4. The defendant made part payment from time to time and requested to make
further supplies, assuring that due payment would be made forthwith.
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Relying upon the assurances and repeated representations of the defendant,
the plaintiff further supplied goods from time to time. The parties
maintained a running and continuous account between them. Despite
written assurance by the defendant, it has failed and neglected to make
payment towards the price of the goods payable to the plaintiff.
5. Further plaint case is that by a letter dated November 30, 2022, the plaintiff
called upon the defendant to make payment for a sum of Rs.83,54,375/- as
on November 30, 2022, including interest. In respect thereto, by a letter
issued by the learned Advocate for the defendant and in clear reference to
the said letter of demand dated November 30, 2022, the defendant
acknowledged its debt to the extent of Rs.67,43,755/-. The defendant has
also raised frivolous and unsustainable allegation against the plaintiff with
the purpose to deny the legitimate claim of the plaintiff. By an e-mail dated
January 31, 2023, the defendant acknowledged its liability to the extent of
Rs.64,93,755.68/-.
6. In view of the above, the plaintiff has claimed a total sum of
Rs.1,07,74,375/- consisting of principal and interest.
7. The defendant has failed and neglected to file its written statement within
the mandatory period of 120 days as provided under the amended
provisions of Order VIII Rule 1 of the Code of Civil Procedure, 1908 (for short
the CPC). The defendant has fortified its right to file written statement.
8. In the above backdrop, the instant application has been taken out by the
defendant.
9. Pursuant to the direction of this Court the parties have filed and exchanged
their respective affidavits.
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In CS-COM/652/2024
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Submissions:
10. Mr. Rajarshi Dutta, learned counsel appearing for the defendant/applicant
submits that Flint Netherlands (for short FN) is the holding company of the
plaintiff. The distributorship agreement (for short the said distributor ship
agreement) was entered into by and between the said FN and the defendant
which was concluded in 2019. Whereunder, the defendant was appointed as
distributor of the products of the said FN and its group. The said agreement
contains an arbitration clause. The agreement is available at page 29 to the
affidavit-in-opposition. Article 12 is the arbitration clause therein at page 39
to the affidavit-in-opposition. The agreement was initially executed manually
in 2019. The plaintiff later requested the digital signing. Despite repeated
delays on the plaintiff's part in providing the finalized agreement, the
defendant digitally signed the agreement on May 30, 2020.
11. Learned counsel Mr. Rajarshi Dutta submits that the plaintiff has
deliberately suppressed the fact that the dispute and subject matter of the
present suit filed by the plaintiff are governed by the said arbitration clause
under the distributorship agreement. The intention of the plaintiff is to
circumvent the arbitration process by undermining the contractual terms
agreed by and between the parties. The plaintiff has failed to disclose that it
has directly engaged the consumers of the defendant in violation of the
distributorship agreement and caused irreparable harm to the business and
reputation of the defendant. Referring to multiple correspondences
exchanged by and between the parties from time to time which are annexed
to the affidavit-in-opposition, inter alia, dated August 9, 2019, September 8,
2019, April 20 and 21, 2020, April 22, 2020, April 28, 2020, May 15, 2020,
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April 23,2020, April 28, 2020, May 19, 2020, May 30, 2020, learned counsel
for the defendant submits that all these correspondences would
demonstrate that the distributorship agreement with its arbitration clause
would apply relating to the subject matter in the plaint and would be
corroborated as such. The said correspondence would unequivocally
establish the existences and enforceability of the said distributorship
agreement with its arbitration clause.
12. Mr. Rajarshi Dutta, learned counsel appearing for the defendant then refers
to various pleadings from its affidavit-in-opposition and specifically from
paragraph 15 thereto, he submits that the Flink Ink Mauritius Limited holds
the controlling interest in the plaintiff company. Therefore, the subject
transaction in the plaint is inter-linked with the said distributorship
agreement where a valid arbitration clause exists.
13. Mr. Mr. Rajarshi Dutta, learned counsel then submits that plaintiff being a
part of a group of companies where its holding company has a valid
agreement with the defendant for distributorship, the goods alleged to have
been sold by the plaintiff which is a subsidiary of FN is a related transaction
having a direct nexus with the said distributorship agreement. The
phenomenon of group of companies is a modern reality of economic life and
business organization. Group of companies are a set of separate firms linked
together in formal or informal structures under the control of a parent
company. A group of company involving the parent and subsidiary
companies is created for myriad purposes such as legal liability of the
parent corporation, facilitating international trade, entering into business
ventures with investors, establishing domestic corporate residence and
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avoiding tax liability. The single economic entity or the single economic
entity theory imposes one enterprise liability on the corporate group. An
arbitration agreement is the commercial understanding of business entities
as regards to the mode and manner of settlement of dispute that may arise
between them in respect of their legal relationship. In most situations, the
language of the contract is only subjective of the intention of the signatories
to such contract and not the non-signatories. However, there may arise
situations where a person or entity may not sign an arbitration agreement,
as the plaintiff in the instant case, yet giving appearance being a veritable
party to such arbitration agreement due to their legal relationship with the
signatory parties, FN in the instant case and involvement in the
performance of the underlying contract. Specifically in case involving
complex transactions involving multiple parties and contracts, a non-
signatory may be substantially involved in the negotiation or performance of
the contractual obligations, as the plaintiff in the instant case, without
formally consenting to be binding by the ensuing burdens including
arbitration.
14. With reference to the subject matter of the plaint, learned counsel Mr.
Rajarshi Dutta submits that the goods allegedly supplied by the plaintiff to
the defendant is actually a fall out and consequential to the said
distributorship agreement between FN and the defendant. Thus, even if the
plaintiff is not a party to the said arbitration agreement, is bound by it. The
intention of the plaintiff to be bound by the said arbitration agreement can
be gauged from the circumstances that surrounded the participation of the
plaintiff as non-signatory party in the arbitration agreement, performance
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In CS-COM/652/2024
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underlying the distributorship agreement. As the underlying performance of
the distributorship agreement is clearly ascertained from the subject matter
of the instant plaint when the plaintiff claims it allegedly sold and supplied
goods to the defendant and the defendant has consumed it, the arbitration
agreement would govern the said subject matter and the provisions under
Sections 5 and 8 of the Arbitration Act squarely apply. In support, he has
relied upon a decision of the Hon'ble Supreme Court In the matter of : Cox
and Kings Limited vs. SAP India Private Limited and Another reported
at (2024) 4 SCC 1.
15. In the light of the above, the defendant prays that the parties to the instant
suit should be referred to arbitration.
16. Mr. Sourojit Dasgupta, learned counsel appearing for the plaintiff at the
threshold refers to Article 7 of the distributorship agreement from page 147
to the application and submits that the said distributorship agreement
provides for sell of products to the defendant. The terms and conditions of
the said distributorship agreement shall also apply to the purchase
agreements concluded under the said distributorship agreement. In any
event, admittedly, the plaintiff is not a party to the said distributorship
agreement. The said distributorship agreement is binding only on FN and
the defendant, who are parties thereto. Therefore, the arbitration clause
embodied in the said distributorship agreement shall not bind the plaintiff.
Therefore, the arbitration clause under the said distributorship agreement
would have no effect and application in the subject matter of the instant
suit.
IA No.GA-COM/4/2024
In CS-COM/652/2024
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17. Mr. Sourojit Dasgupta, learned counsel appearing for the plaintiff submits
that Section 8 of the Arbitration Act, inter alia, provides that an application
under Section 8 can be filed not later than the date of submitting the first
statement by the defendant on the substance of the dispute, which is the
outer limit for filing the application. In the instant case, the mandatory time
frame for filing the written statement of 120 days in a commercial suit as
provided under amended Order VIII Rule 1 of Code of Civil Procedure, had
expired and the right of the defendant to file written statement in the instant
suit stands forfeited. Thus, the application having been filed by the
defendant after the said date of submitting his first statement on the
substance of the dispute is not maintainable.
18. Mr. Sourojit Dasgupta then submits that if the defendant/applicant relies
upon the said distributorship agreement executed with FN then, the
provisions under Section 8 of the Act would not apply as the said
distributorship agreement relates to foreign arbitration where Section 45 of
the Arbitration Act would have been the proper recourse. He has made this
submission that without the prejudice to the rights and contentions of the
defendant that the said distributorship agreement has got nothing to do
with the subject matter of the instant suit and the same would have no
effect on it. He then submits that provisions under sub-Section (2) of Section
8 of the Arbitration Act, inter alia, provides while applying, the application
must be accompanied by the original arbitration agreement or a duly
certified copy thereof. In the instant case, neither the original agreement nor
the duly certified copy thereof is accompanied with the original application.
Hence, the Court should not entertain the said application at all. In support,
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he has relied upon a decision of the Hon'ble Supreme Court In the matter
of : N. Radhakrishnan vs. Maestro Engineers & Others reported at
(2010) 1 SCC 72.
19. To distinguish the decision of the Hon'ble Supreme Court In the matter of :
Cox and Kings Limited (supra), learned counsel Mr. Sourojit Dasgupta
submits that the commonality principle would not apply in the facts of this
case. Since neither the plaintiff is a party to the said distributorship
agreement nor there is any written arbitration agreement pleaded in the
plaint. The application of law as provided under Section 8 of the Arbitration
Act would have to be tested at the threshold, only on the basis of the
averments made in the plaint. There is no averment in the plaint that any
written arbitration agreement or any arbitration agreement in any manner
was executed by and between the parties which governs the subject matter
of the instant suit. Just because FN is the holding company of the plaintiff,
would not bind the plaintiff by the said distributorship agreement when
under an independent agreement for sale, as pleaded in the plaint, the
parties to the instant suit have entered into a commercial transaction and
accepted the transaction held between the parties.
20. FN and plaintiff are two separate and independent juristic entities. FN is a
foreign company. The plaint case does not show that the plaintiff is willing
to be bound by the underlying contract under the said distributorship
agreement in any manner whatsoever. Therefore, the arbitration clause in
the said distributorship agreement would not apply or prevail upon the
subject matter of the instant suit.
IA No.GA-COM/4/2024
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21. Mr. Sourojit Dasgupta then after referring to the various portions from the
decision In the matter of : Cox and Kings Limited (supra), submits that a
non-party to an agreement who claims a right under that agreement
through one party thereto, can apply before the Court under Section 8 of the
Arbitration Act and not otherwise, if that particular agreement which
governs the subject matter of the suit. Admittedly the plaint case is that no
written agreement was executed by and between the parties and whatever
agreement has been pleaded in the plaint, it is between the plaintiff and the
defendant without having any arbitration clause.
22. In the light of the above submissions, Mr. Sourojit Dasgupta, learned
counsel appearing for the plaintiff/respondent submits that, the instant
application is not maintainable and devoid of any merit and the same
should be dismissed in limini.
Decision:
23. Upon hearing the rival contentions of the parties and on perusal of the
materials on record, this Court is of the firm view and the law is also well
settled that when an application filed under Section 8 of the Arbitration Act,
is taken for consideration the primary obligation of the Court is to read the
averments in the plaint as true and correct and to be taken the same as
sacrosanct. If a plain reading of the averments in the plaint clearly
demonstrates that the subject matter of the plaint is governed under an
arbitration agreement, and the defendant applies for reference to arbitration,
then it is mandatory for the Court to refer the parties to arbitration.
Therefore, at the outset the averments in the plaint are read by the Court.
IA No.GA-COM/4/2024
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24. Admittedly, the averments made in the instant plaint does not speak for any
written contract/agreement by and between the parties. The plaint case is
that by virtue of an agreement and a concluded contract entered into by and
between the parties, which is not pleaded to be a written one, the
commercial transaction by and between the parties took place as described
in the plaint. The specific plaint case is that the plaintiff sold and delivered
goods to the defendant and the defendant failed to pay the consideration of
the goods along with interest. Whether the plaint case will succeed or not on
the basis of the averments made in the plaint is not the lookout of this
Court while adjudicating a Section 8 application. The Court should consider
the averments in the plaint and then to come to a finding whether the
subject matter of the plaint is covered by any arbitration agreement between
the parties.
25. Both the provisions defining the arbitration agreement and the provisions
under Section 8 are only the relevant provisions to be looked into at the
threshold. Accordingly, the provisions are quoted below :-
"Section 2(b) - "arbitration agreement" means an agreement
referred to Section 7."
* * * * *
* * * * *
* * * * *
Section 7. Arbitration agreement - (1) In this part, "arbitration
agreement" means an agreement by the parties to submit to
arbitration all or certain disputes which have arisen or which
may arise between them in respect of a defined legal relationship,
whether contractual or not.
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(2) An arbitration agreement may be in the form of an arbitration
clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
* * * * *
* * * * *
* * * * *
Section 8. Power to refer parties to arbitration where there
is an arbitration agreement.--1[(1) A judicial authority, before
which an action is brought in a matter which is the subject of an
arbitration agreement shall, if a party to the arbitration
agreement or any person claiming through or under him, so
applies not later than the date of submitting his first statement on
the substance of the dispute, then, notwithstanding any
judgment, decree or order of the Supreme Court or any Court,
refer the parties to arbitration unless it finds that prima facie no
valid arbitration agreement exists.]
(2) The application referred to in sub-section (1) shall not be
entertained unless it is accompanied by the original arbitration
agreement or a duly certified copy thereof: 2 [Provided that where
the original arbitration agreement or a certified copy thereof is not
available with the party applying for reference to arbitration
under sub-section (1), and the said agreement or certified copy is
retained by the other party to that agreement, then, the party so
applying shall file such application along with a copy of the
arbitration agreement and a petition praying the Court to call
upon the other party to produce the original arbitration agreement
or its duly certified copy before that Court.]
(3) Notwithstanding that an application has been made under
sub-section (1) and that the issue is pending before the judicial
authority, an arbitration may be commenced or continued and an
arbitral award made."
26. On reading of the said provisions from the statute, it appears to this Court,
firstly, an arbitration agreement shall be in writing. Admittedly, the plaint
case shows that there is no agreement in writing between the parties to the
instant suit. The plaintiff has denied the averments in the Section 8
application and the defendant has not produced and disclosed any written
agreement by and between the parties to the instant suit. It is not a case of
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the plaintiff that there has been any written agreement between the parties
governing the subject matter of the suit.
27. Section 8 of the Arbitration Act postulates that a judicial authority, before
which an action is brought in a matter which is the subject matter of an
arbitration agreement shall, if a party to the arbitration agreement or any
person claiming through or under him, so applies within the time frame
mentioned therein, then, the judicial authority shall refer the parties to the
suit to arbitration, if it finds that, prima facie, a valid arbitration agreement
exists. The plaint case clearly shows that there is no arbitration agreement
exists within the meaning of Section 7 of the Arbitration Act, as there is no
written agreement. The plaint case is that the plaintiff and defendant has
entered into an understanding and/or a contract which governs the subject
matter of the plaint. Therefore, when the defendant is a party to the instant
suit the question of claiming any right through or under anybody in the
subject agreement does not and cannot arise and the defendant cannot raise
such plea. Therefore, the defendant not being a party to any arbitration
agreement with the plaintiff, within the meaning of Section 7 of the
Arbitration Act and since there is no arbitration agreement at all within the
meaning of Section 7 of the Arbitration Act which governs the subject matter
of the instant suit, as would be evident from the averments made in the
plaint, the defendant has no right to apply under Section 8 of the Arbitration
Act.
28. In the matter of: Cox and Kings Limited (supra), the principle of
commonality is described and elaborated. It is said that an arbitration
agreement encapsulate the commercial understanding of business entities
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as regards to the modes and manners of the settlement of dispute that may
arise between them in respect of their legal relationship. In most situations,
the language of the contract is only suggestive of the intention of the
signatories to the contract and not the non-signatories. However, there may
arise situations where a person or entity may not sign an arbitration
agreement, yet give the appearance of being a veritable party to such
arbitration agreement and due to their legal relationship with the signatory
parties and involvement in the performance of the underlying contract.
Applying the said principle laid down by the Hon'ble Supreme Court, in the
facts of the instant case, the primary qualification should be that the subject
matter of the instant suit to be demonstrated as a fall out or a consequence
of the said distributorship agreement which was executed by FN and the
defendant where FN is the holding company of the plaintiff. The plaint case
shows an independent contract or understanding entered into by and
between the plaintiff and the defendant arising whereof the commercial
transaction took place and the defendant defaulted in paying the purchase
consideration, hence, the subject matter of the instant suit. The plaint case
no way relates the subject matter of the suit with the said distributorship
agreement or shows any nexus between the two.
29. The plaintiff ultimately may not succeed in the suit with its existing plaint
case after trial on the merit of the suit and the defendant may dislodge the
claim of the plaintiff at the final hearing of the suit on the basis of the
existing record but that should not be the guiding principle or consideration
for this Court whiling adjudicating a Section 8 application.
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30. In view of the foregoing reasons and discussions, this Court is of the firm
and considered view that, the application filed by the defendant under
Section 8 of the Arbitration Act is devoid of any merit and substance.
31. It is made clear that this Court has not expressed any opinion on the rival
contentions of the parties on the merit of the suit.
32. Accordingly, the instant application being IA NO. GA-COM/4/2024 stands
dismissed with cost assed at Rs.10,000/- to be paid by the defendant in
favour of the West Bengal State Legal Services Authority within two
weeks from date and the defendant shall produce a copy of the money
receipt to the learned Advocate-on-record for the plaintiff.
(Aniruddha Roy, J.)
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