3.1. Defendant no. 1 is a long term lessee in respect of premises
no. 6, Jawaharlal Nehru Road, Kolkata - 700 013 (for short
the property). Defendant nos. 8 to 19 were the shareholders
of the defendant no. 1. Defendant nos. 4, 6 and 8 to 19 are
ostensibly still the shareholders of the defendant no. 1.
3.2. Defendant nos. 2, 4 and 6 are companies within the
meaning of the Companies Act, 2013. The defendant nos. 3,
5 and 7 are the principal officers Directors and/or persons
in control and were responsible and liable for the
transaction which forms the subject matter of the instant
suit. The defendant no. 5 is also the Managing Director of
the defendant no. 1 and is in control of the defendant no. 1.
3.3. Sometime in January, 2012 the defendant no 3 on behalf of
the defendant no. 2, defendant nos. 5 and 7 approached
one Rajib Agarwal, Director of the plaintiff. It was
represented that the defendant no. 1 was the lessee of the
property is entitled to construct and sub-lease the new
constructed spaces under the lease deed dated December
21, 2000. Defendant no. 2 along with defendant no. 4 and 6
whose directors were the defendant nos. 3, 5 and 7 had
entered into a Share Purchase Agreement dated March 24,
2011 (for short SPA) with defendant no. 8 to 19 to acquire
all the shares of and in defendant no. 1 for a sum of Rs. 82
IA No.GA-COM/2/2025,
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crores out of which Rs.20 crores was to be paid as
consideration for the aggregate number of 36278 shares of
and in the defendant no. 1 held by the defendant nos. 8 to
19 and the balance sum of Rs.62 crores (Rupees Sixty-Two
crores only) was to be provided as loan to defendant no. 1.
Apart from this, an additional sum of Rs.5,00,00,000/-
(Rupees Five crores) would be paid as premium to the
outgoing shareholders on the successful completion of
transaction. Defendant nos. 2, 4 and 6 had entered into an
understanding dated August 4, 2011 wherein it was agreed
by the parties that the shares of the defendant no. 1 would
be purchased in the ratio of 36% to be acquired by the
defendant no. 2, 46% to be acquired by the defendant no. 4
and the remaining 18% by the defendant no. 6. The
purpose of acquiring shares of the defendant no. 1 was to
exploit the lease hold right of the defendant no. 1 by
constructing a new building at the said premises and
subletting the same. The defendant no. 2 did not have the
funds to make of his portion of the consideration under the
SPA for acquiring 36% shares of and in the defendant no. 1.
Defendant no. 2 would sell and transfer 18% of the shares
of and in the defendant no. 1 to the plaintiff out of the said
36% which would be allotted to it under the SPA.
3.4. Relying on the representations made by the defendant nos.
3, 5 and 7 on behalf of the defendant nos.2, 4 and 6 to the
plaintiff's Director, the plaintiff agreed to purchase and/or
acquire 18% of the total issued, subscribed and paid up
equity shares of the defendant no. 1 for the consideration of
Rs.14.72 crores and on the terms and conditions mutually
agreed between the parties sometime in January 2012. It
was further agreed that the agreement arrived at by and
between the parties would be recorded in a memorandum of
understanding.
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In CS-COM/70/2025
A.R.,J.
3.5. Pursuant to the agreement between the plaintiff and the
defendant nos. 2, 4 and 6, the plaintiff remitted a sum of
Rs.1,20,00,000/- (Rupees One Crore Twenty Lakh Only) to
defendant no.1 and Rs.80,00,000/-(Rupees Eighty Lakhs
Only) to defendant no. 2 on January 17, 2012 through
RTGS.
3.6. The plaintiff paid Rs.18,00,000 (Rupees Eighteen Crores
Only) by cheque to defendant no. 1 on June 7, 2012.
3.7. Between January 17, 2012 to May 30, 2012, the plaintiff
paid an aggregate amount of RS. 4,66,88,582.94 (Rupees
Four Crores Sixty-Six Lacs Eighty-Eight Thousand Five
Hundred and Eight-Two only) to defendant no. 2.
3.8. Pursuant to the agreement of January. 2012 the plaintiff
and the defendant nos. 2, 4 and 6 executed a
Memorandum, of understanding dated June, 21, 2012
(hereinafter referred to as the said MOU) in terms whereof,
the defendant no. 2 agreed to assign and/or sell and
transfer 18% of the total issued, subscribed and paid up
shares capital of the defendant no. 1 being 50% of the total
equity shares of and in the defendant no. 1 to be acquired
by the defendant no.2. The mode of payment was
mentioned in the MOU.
3.9. Payments made prior to execution of the said MOU were
treated as payments made in terms of the said MOU and
were recorded in the MOU, save and except payment of
Rs.1,88,582.94 (Rupees One Crore Eighty-Eight Lakhs Five
Hundred and Eighty-Two Only) which was paid to the
defendant no. 2 by cheque dated April 24, 2012.
3.10 Subsequently, the defendant no. 2 represented to the
plaintiff that it had duly remitted monies received from the
plaintiff prior to the execution of the said MOU to the
defendant no. 1. The defendant no. 2 requested the plaintiff
to henceforth make payments directly to the defendant no.
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1 and the outgoing shareholders, whose shares would be
acquired.
3.11 Between November 2012 and March 31, 2014, the plaintiff
paid a total sum of Rs. 1,08,00,000/- (One Crore Eight
Lakhs Only) to defendant no. 1, particulars are mentioned
in "Annexure- E" to the plaint. On May 2, 2014 and March
31, 2015, the plaintiff paid a further amount of Rs.
25,00,000/- (Rupees Twenty-Five Lakhs Only) on account
of loan to the defendant no. 1 through RTGS.
3.12 Sometime after March, 2014, defendant nos. 3. 5 and 7
informed the plaintiff's Director that although the original
plan was that the new building would be constructed by the
defendant no.1, they had decided to engage a developer to
carry out the construction. The plaintiff was informed that
the defendant nos. 3, 5 and 7 representing defendant nos.
2, 4 and 6 had negotiated with one Siddha Real Estate
Development Private Limited (for short SIDDHA) for
development of the said premises in terms of which,
defendant no. 1 would be entitled to 7 nos. of floors along
with corresponding car parking spaces and Sidddha would
receive the rest 9 nos. of floors along with corresponding car
parking spaces. It was further represented to the plaintiff
that induction of Siddha, the liability of the defendant nos.
2, 4 and 6 under the SPA would be reduced to enure to the
benefit of the plaintiff. It was further made clear that on
the induction of Siddha, the entitlement of plaintiff and the
defendant nos. 2, 4 and 6 to the share of profits of the
defendant no. 1 would be limited to the revenue generated
from 7 number of floors and the corresponding car parking
spaces. The plaintiff agreed with the proposal mooted by
the defendant nos. 2, 4 and 6.
3.13 Subsequently, the plaintiff was informed by defendant nos.
3, 5 and 7 that the defendant no. 5 had executed a
IA No.GA-COM/2/2025,
In CS-COM/70/2025
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development agreement as director of defendant no. 1, on
September, 8 2014 with Siddha (for short agreement with
Siddha). Accordingly, the revised consideration payable
under the SPA) reduced to Rs. 10,24,85,350/- as lump sum
consideration for purchase of shares instead of Rs.
20,00,00,000/- crores and a sum of Rs. 37,39,89,152 as
loan instead of Rs. 62,00,00,000/- crores.
3.14 The plaintiff was required by defendant nos. 3, 5 and 7 to
make and duly made payment of Rs. 1,84,47,250/- (Rupees
One Crore Eighty-Four Lakhs Forty-Seven Thousand two
hundred and fifty Only) on account of consideration for
purchase of 18% shares of and in the defendant no. 1. The
sum of Rs.1,84,47,250/- (Rupees One Crore Eighty-Four
Lakhs Forty-Seven Thousand two hundred and fifty Only)
was made by the plaintiff to the defendant nos.8 to 19 of
the defendant no. 1 and particulars is available at annexure
'F' to the plaint.
3.15 From time to time, defendant nos. 3, 5 and 7 required the
plaintiff to make further payments on account of its share
of payment of loan to defendant no. 1. In good faith and
trust, the plaintiff has made payment of an aggregate sum
of Rs. 4, 73, 43,000/-(Rupees Four Crore Seventy Lakhs
Forty-Three Thousand Only) to the defendant no. 1 on
account of loan. Defendant no. 1 has acknowledged the
same in its audited balance-sheet as on March 31, 2017.
3.16 Upon making payment of total sum of Rs.11,24,78,832.94,
(Rupees Eleven Crore Twenty-Four Lakhs Seventy-Eight
Thousand Eighty Hundred and Thirty-Two Only) it was
represented to the plaintiff by defendant nos. 3, 5 and 7 on
behalf of the defendant nos. 2, 4 and 6 that it was not
required to make any further payment to the defendant no.
1 or its outgoing shareholders being defendant nos. 8 to 19.
IA No.GA-COM/2/2025,
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3.17 Accordingly, the plaintiff did not make any further payment
nor was it called upon to do so at any time by the defendant
nos. 3, 5 and 7, the defendant no. 1 or the outgoing
shareholders being defendant no. 8 to 19. In fact, on taking
accounts, it now transpires that the plaintiff paid of sum of
Rs. 2, 39, 88, 582.94/- (Rupees Two Crore Thirty -Nine
Lakhs Eighty-Eight Thousand Five Hundred Eighty-Two
Only) in excess of its share of payment of loan of Rs. 7, 00,
43, 000/- (Rupees Seven Crore and Forty-Three thousand
only).
3.18 The plaintiff enquired of the defendant nos. 1, 3, 5 and 7
about the issuance of shares of and in the defendant no. 1
in its favour and the distribution of profits on account of
construction of the new building which was nearing
completion. The defendant nos. 1, 3, 5 and 7 assured the
plaintiff that the shares would be allotted to it in terms of
the said MOU and it would receive share of profits in the
form of dividend proportionate with its shareholder of 18%
in the defendant once sub lease of all units had been
completed. The plaintiff bona fide believed and relied on
such assurance.
3.19 Sometime in July, 2024, the plaintiff was surprised to
receive a notice from the Ld. Mediation Centre for mediation
of a commercial dispute filed by defendant nos. 1, 8 and 9
against the plaintiff and the defendant nos. 2, 4 and 6.
3.20 On receipt of the notice from the Mediation Centre, the
plaintiff was represented in the Mediation Centre but none
appeared for the defendants.
3.21 As no further notice was received from the Mediation
Centre, the plaintiff instructed its Advocates to update its
status and whether any suit has been filed against the
plaintiff. Upon inquires, the plaintiff was made aware of an
order dated August 4, 2024 passed in AP no. 388 of 2024
IA No.GA-COM/2/2025,
In CS-COM/70/2025
A.R.,J.
and A.P. 389 of 2024 filed by the defendants for setting
aside an arbitral award made in connection with the said
SPA.
3.22 On perusal of the order dated August 4, 2024, the plaintiff
came to know for the first time of the arbitral proceedings
were initiated by the defendants in connection with the
SPA. No notice was served though parties to the award
know that 18% of the total shares in the defendant no. 1
were assigned to the plaintiff. The plaintiff addressed an e-
mail dated September 11, 2024 to the defendant nos. 2, 4
and 6.
3.23 The defendant no. 4 by its letter dated September 18,2024
replied to the plaintiffs e-mail dated September 11, 2024
and forwarded a copy of an applications being AP(COM) 764
of 2024. Copy of the award dated June29, 2023 was
annexed to the arbitration petition.
3.24 From the cause papers in CS (COM) 764 of 2024 & AP
(COM) 388 of 2024, the plaintiff had not paid the full
payment of the consideration for 18% shares of and in the
defendant no. 1.
3.25 The plaintiff contends although the payment made by the
plaintiff and the defendant no. 2 have been admitted by the
defendants, it is falsely alleged that only defendant nos. 4
and 6 have paid the full consideration under the SPA. The
defendants and each of them derived benefit from the
payment made by the plaintiff. The defendants and each of
them owe a duty and obligation to transfer 18% of the
shares of and in the defendant no. 1 to the plaintiff. The
defendants and each of them have acted in breach of such
duty and obligation.
3.26 The plaintiff has also pleaded fraud with particulars, as
stated in paragraph 28 to the plaint.
IA No.GA-COM/2/2025,
In CS-COM/70/2025
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3.27 The plaintiff in the plaint specifically stated that defendant
no. 1 was the alter ego of defendant no. 8 to 19. Defendant
nos. 8 to 19 are the mastermind behind the fraud practiced
by the defendant no. 1 and/or defendants against the
plaintiff. It is further stated in the plaint that defendant no.
2 is the alter ego of defendant no. 3. The defendant no. 3 is
the mastermind to practice fraud behind defendant no. 2.
The defendant no. 4 is the alter ego of defendant no. 5. The
defendant no. 6 is the alter ego of defendant no. 7.
3.28 The defendants instituted arbitral proceeding behind the
back of the plaintiff although each of them knew that 18%
of the total share-holding of and in the defendant no. 1 had
already been assigned in favour of the plaintiff and the
plaintiff had duly paid for the same. The plaintiff claims an
independent right in respect of said 18% shares of and in
the defendant no. 1.
4. In the premises above, the plaintiff has filed the instant suit with the
following reliefs:
The plaintiff prays for leave under Clause 12 of the Letters
patent, 1865, dispensation with compliance of Section 12A of
the Commercial Courts Act, 2015 and leave under Order II Rule
2 of the Code of Civil Procedure, 1908 and claims
a) Declaration that the Award dated 29th June, 2023 made in the
arbitral reference between the defendants is not binding on
and does not affect the right, title and interest of the plaintiff in
respect of 18% shares of and in the Defendant no. 1;"
b) Decree for Rs. 26,92,84,668/- (Rupees Twenty six Crores
Ninety-Two lakhs Eighty four thousand six hundred and sixty-
eight only) as stated in paragraph 32 above against the
defendants and each of t hem jointly and severally;
c) Decree for Rs. 25,05,00,000/- (Rupees Twenty-Five Crore and
Five Lakhs only) as stated in paragraph 32 above against the
defendants and each of t hem jointly and severally;
d) Alternatively, enquiry into damages and decree for such sum
as may be found upon enquiry;
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e) Perpetual injunction restraining the defendants from
withdrawing any amount deposited with the Registrar Original
Side of this Hon'ble Court pursuant to the orders made in AP
no. 664 of 2024 without making payment of the plaintiff's
claims as stated in paragraph 32 and 34 above;
f) The amount deposited with the Registrar Original Side of this
Hon'ble Court pursuant to orders made in AP no. 664 of 2024
be made over to the plaintiff in pro tanto satisfaction of its
claims;
g) Pendente lite interest and interest on judgment at 12% pa till
realization;
h) Receiver;
i) Injunction;
j) Attachment;
k) Cost;
l) Further of other reliefs.
5. In the above facts and circumstance the defendant nos. 2 and
3/applicants have filed the instant application.
6. Parties have filed and exchanged their affidavits.
7. Parties have also filed their respective written notes.
Submissions :
8. Mr. Ratnanko Banerji, learned Senior Advocate appearing for the
applicants submits that the plaintiff had filed the present suit solely
based on the MOU which contains a clear and valid Arbitration Clause.
The entire suit has been craftily drafted to surpass the Arbitration
Clause to which the plaintiff and the applicants had agreed upon. The
Arbitration Clause is in-existence. The reliefs claimed in the plaint are
principally money claim as against the defendant no. 2.
9. Referring to various paragraphs averred in the plaint, learned senior
advocate, Mr. Ratnanko Banerjee appearing for the applicants submits
that sometime on May 24, 2011, the defendant nos. 2, 4 and 6 had
IA No.GA-COM/2/2025,
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entered into the said SPA with the defendant nos. 8 to 18. For the
purpose of acquiring share of and in the defendant no. 1 with the idea
of development of the leasehold suit property by the defendant no.1.
10. Learned Senior Advocate Mr. Banerjee then submits that subsequent to
the said SPA having been executed, the plaintiff approached the
defendant no. 3 that they were interested to join in the said
development venture in respect of the property and they were willing to
invest in the project. Accordingly, the MOU was executed which is in the
nature of an agreement to assign under which it was agreed that the
defendant no. 2 shall transfer 50% of its 36% shares of and in the
defendant no. 1, as and when the shares are transferred to defendant
no. 2 by the defendant nos. 8 to 18. Referring to the contract, learned
senior advocate submits that the defendant no. 2 had agreed to assign
and transfer its rights and benefits of its contract with the present
shareholder i.e. defendant nos. 8 to 18 under the SPA to the plaintiff to
the extent and to the effect that the plaintiff shall acquire out of the
proposed allocated shareholding of the defendant nos. 2 being 18% of
the total equity shares of defendant no.1 held by defendant nos. 8 to 18
and the plaintiff had agreed to acquire the same at and for a
consideration of Rs.14.76 crores.
11. He further submits that the plaintiff out of the said sum had paid a
sum of Rs.11,24,78,832.94/- (Rupees Eleven Crore Twenty-Four Lakhs
Seventy-Eight Thousand Eight Hundred and Thirty Two Only) either to
defendant no. 2 or directly to the defendant nos. 1 and 8 to 18 for and
on behalf of defendant no. 2 in terms of clause 3.3 of MOU. He then
IA No.GA-COM/2/2025,
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submits that in case due to any reason the said SPA is cancelled or
terminated, the plaintiff shall be entitled to refund of the entire money
until then paid by the plaintiff to the defendant no. 2 immediately upon
the transfer as receiving the same from the existing shareholders
and/or defendant no. 1, as the case may be.
12. Mr. Ratnanko Banerji, learned Senior Advocate for the applicants then
refers to Clause 11 from the MOU being the existing arbitration clause
and submits that all disputes arising out of or in connection with the
MOU between the transferor with the transferee shall be referred for
arbitration. He then submits that on a plain and meaningful reading of
the statements made in the plain, it would be evident that, the subject
matter of the suit is actually the disputes raised by the plaintiff against
the defendant no. 2 for which the plaintiff purported to have claimed
refund of money allegedly paid by plaintiff along with other
consequential relief. The real cause of action, as submitted by the
learned senior advocate, Mr. Banerjee in the plaint, is in relation to the
return of money paid to defendant no. 2 or to defendant no. 1 and
defendant nos. 8 to 18 for and on behalf of the defendant no. 2 in terms
of the MOU dated June 21, 2012. The said MOU being covered by an
arbitration clause, this cause of action can only be decided in
Arbitration.
13. Mr. Ratnanko Banerjee, learned Senior Advocate then submits that
despite defendant no. 2 having made payment in terms of the said SPA
dated March 24, 2011, the shares were not transferred by defendant
nos. 8 to 18 from the escrow who was holding the shares in terms of the
IA No.GA-COM/2/2025,
In CS-COM/70/2025
A.R.,J.
escrow agreement. As there were disputes between the parties,
defendant no. 2 initiated arbitration proceeding which ultimately
culminated into an award dated June 29, 2023 where by the Arbitration
Tribunal directed return of all sum received by defendant nos. 1, 8 to 18
in favour of the defendant no. 2, at page 136 to the plaint.
14. Mr. Banerjee, learned Senior Advocate submits that the instant suit has
been filed by the plaintiff suppressing the facts that though the plaintiff
was not a party to the SPA and the arbitration proceeding in which the
award was passed on June 29, 2023 (for short the award) but was well
aware of the entire proceeding that defendant nos. 1 and 8 to 18 had
challenged the award. The challenge went before the Hon'ble Supreme
Court, after challenges to the award were dismissed by the High Court.
The Hon'ble Supreme Court by its order dated May 9, 2025 had limited
the scope of appeal and remitted by directing the return of interest only
on the principal sum of Rs.19,92,30,500/- (Rupees Nineteen Crore
Ninety-Two Lakhs Thirty Thousand and Five Hundred only) paid to the
defendant no. 2.
15. It is further submitted that the plaintiff has deliberately made false,
frivolous and vexatious claim by misjoinder of parties and cause of
action.
16. Mr. Ratnanko Banerjee, learned Senior Advocate appearing for the
applicants submits that when a Section 8 application is under
consideration, the Court must keep a hands off as opposed to a face-off
with the arbitration process and give a decisive push to the arbitration
process once the Court is satisfied, prima facie, that a valid Arbitration
IA No.GA-COM/2/2025,
In CS-COM/70/2025
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agreement exists in a matter which is arbitrable. The Court's enquiry
should be limited only to this and no more. In support, reliance has
been placed In the matter of: Lindsay International Private Limited
and Others vs. Laxmi Niwas Mittal and Others reported at (2022)
1 High court Cases (Cal) 23: 2022 SCC OnLine Cal 170.
17. He then submits that an arbitration agreement means an agreement
which is enforceable in law and the jurisdiction of the arbitration is on
the basis of an Arbitration Clause contained therein. Mere allegation of
fraud is not a ground to nullify the effect of Arbitration Agreement. The
parties can be relegated to arbitration where merely simple allegation of
fraud touched upon internal affairs of parties is levelled. Reliance has
been placed In the matter of: Ameet Lalchand Shah and Others vs.
Rishabh Enterprises and Another reported in (2018) 15 Supreme
Court Cases 678.
18. Mr. Ratnanko Banerjee, learned Senior Advocate appearing for the
applicants further submits that the law is well settled that when an
application filed under Section 8 of the Arbitration Act, is taken for
consideration, the primary consideration 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
demonstrate 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. Reliance has been placed on a judgment of this Court dated
November 20, 2025, In the matter of: Flint Group India Private
IA No.GA-COM/2/2025,
In CS-COM/70/2025
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Limited vs. Sujay Lodha rendered in GA-COM/4/2024 in CS-
COM/652/2024.
19. Learned Senior Advocate further submits that while analyzing a case
under Section 8, the court may choose to identify the issues which
require adjudication pertaining to the validity of the Arbitration
Agreement. If the court cannot rule on the in validity of the Arbitration
Agreement on a prima facie basis, then the Court should stop any
further analysis and simply refer all the issue for arbitration. Reference
has been placed In the matter of: Vidya Drolia and Others vs Durga
Trading Corporation reported at (2021) 2 Supreme Court Cases 1.
20. Thus, Mr. Ratnanko Banerjee learned Senior Advocate submits in the
present facts of the case it is a fit case to refer the subject matter of the
instant suit to arbitration.
21. Mr. Krishna Raj Thaker, learned Senior Advocate appearing for the
plaintiff has placed various paragraphs and the reliefs claimed in the
plaint and submits that the MOU provides for assignment and transfer
of rights and benefits of the defendant no. 2 under the SPA to the
plaintiff against a valuable consideration. The MOU was executed
between the plaintiff and the defendant no. 2. Defendant nos. 4 and 6
were signatories as confirming parties and were not parties to the
Arbitration Agreement. He, inter alia, has placed Clauses 1, 2, 5, 7, 8,
10, 12 and 13 from the MOU. He submits that even before execution of
MOU a sum of Rs.1,38,00,000/- (Rupees one crore thirty-eight lakhs
only) was paid by the plaintiff to the defendant no.1 which has been
recorded in the MOU. The defendant no. 2 requested the plaintiff to
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make payments directly to the defendant no. 1 and defendant nos. 8 to
19. The plaintiff stopped making payment to defendant no. 2 after
signing the MOU and since after signing the MOU all payments were
made to defendant no. 1 and defendant nos. 8 to 19 directly. In this
regard, Mr. Thaker has placed reliance; inter alia, on paragraphs 5, 6, 7
and 9 from the plaint. Defendant no.1 and 8 to 19 are not parties to
MOU and/or the Arbitration Agreement. The payments made by the
plaintiff to defendant no.1 are reflected in the books on account of
defendant no. 1. The defendant no. 1 has acknowledged the payment
received by it as loan in its balance-sheet.
22. Refuting the contentions of the applicants that the payments were being
made by the plaintiff on account of the defendant no.2 is baseless, as
then in the books of the defendant no.1 the creditor would have been
defendant no. 2 and not the plaintiff. Specific reliance has been made
by Mr. Thaker, learned Senior Advocate on paragraphs 9 to 16 of the
plaint.
23. While dealing with the primary contention of the defendant no. 2 that it
is solely liable for the claims of the plaintiff and the other defendants
are not interested in the same and have been impleaded by the plaintiff
only to circumvent of the Arbitration Clause in the MOU, learned Senior
Advocate Mr. Thaker appearing for the plaintiff submits that such
contention of the applicants are not only illegal and baseless but
frivolous and contrary to record. The instant application has been filed
with an oblique motive and ulterior intent of delaying, if possible, the
interlocutory application filed by the plaintiff for attachment before
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judgment and other reliefs. He submits that on a meaningful reading of
the plaint it would be evident that, a composite cause of action against
of all the defendants most of whom were not parties to the MOU, who
have received payments on behalf of the defendant no. 2. In the event,
the instant suit stands for trial, then all such defendants who have
received payments for the plaintiff would be required for witness again
to depose that they have received payment from the plaintiff on behalf of
the defendant no. 2 and/or the applicants. Therefore, the cause of
action and the reliefs in the plaint cannot be dissected. The subject
matter of the suit, pleaded in the plaint, has inter-linked between the
plaintiff and all the defendants and the defendants other than
applicants were not parties to Arbitration Agreement. Thus, the subject
matter of the suit is not covered by the Arbitration Clause in the MOU.
Apart from the defendant no. 2 none of the defendants including
defendant no. 3 is a party to the Arbitration Agreement recorded in the
MOU. The plaintiff has, inter alia, sought declaration that the
arbitration award made in the reference, inter se, the defendants is not
binding on it. This relief is essential as the award upheld the
contentions of the other defendants that full payment of consideration
was not made and therefore specific performance was declined.
24. Mr. Thaker, learned Senior Advocate appearing for the plaintiff then
submits that if the plaintiff is able to establish at the trial that the other
defendants have received the full payment on account of 18% shares
from the plaintiff, the plaintiff will be entitled to damages in lieu of the
shares. This dispute is also not covered under the Arbitration
IA No.GA-COM/2/2025,
In CS-COM/70/2025
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Agreement. Bifurcation of relief in a plaint, where cause of action has
been pleaded connecting all the defendants of which some are parties to
an Arbitration Agreement and some are not, not possible and also not
permissible in law. In such situation, the subject matter of the suit
cannot be referred for arbitration. In support, reliance has been placed
In the matter of: Gujrat Composite Limited vs. A Infrastructure
Limited and others reported at (2023) 7 Supreme Court Cases 193.
25. On interpretation the provisions laid down under Section 8 of the
Arbitration Act, Mr. Thaker has further placed reliance on a judgment of
a Coordinate Bench dated March 6, 2019 In the matter of: Good
Earth Minmet Pvt. Ltd. vs. Sri Chandra Mohan Gupta rendered in
GA 137 of 2016 in CS 11 of 2016.
26. Mr. Thaker then submits that 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 defendants 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. Whether the plaint case will succeed or not
on the basis of the averments made in the plaint is not the lookout of
the Court while adjudicating 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. In support, reliance has been placed on
a judgment dated November 20, 2025 delivered by this Court In the
matter of: Flint Group India Private Limited (supra).
IA No.GA-COM/2/2025,
In CS-COM/70/2025
A.R.,J.
27. While distinguishing the judgment In the matter of: Lindsay
International Private Limited and Others (supra), Mr. Thaker
learned Senior Advocate appearing for the plaintiff, inter alia, submits:
A. That suit involved two distinct causes of actions and the
reliefs claimed are entirely distinct. The disputes arose
out of two different agreements between two sets of
parties and no common reliefs were sought against the
same set of parties. (Ref. Para 3, 20 and 23 Lindsay).
However, in the present case, the reliefs are convergent as
the disputes cannot be adjudicated in the absence of
either the SPA or the MOU and cannot be adjudicated
without all the Defendants as reliefs are claimed jointly
and severally.
B. Prior arbitration proceedings were pending between the
plaintiff and the defendants who invoked section 8. The
disputes between the plaintiff and those defendants were
pending adjudication in the arbitration. The suit for the s
elf-same disputes was subsequently filed. (Ref. Para 5 of
Lindsay).
C. Since the reliefs claimed against two sets of defendants
were distinct, separate and independent of each other the
same could be bifurcated. (Ref. Para 25 of Lindsay).
However, in the present case the reliefs are claimed jointly
and severally against all defendants.
D. The Hon'ble Court has decided the application in Lindsay
on the particular facts of that case. The Plaint in that case
itself contained an averment that the parties are distinct
and separate. The Hon'ble Judge arrived at finding that
the parties have no relation to each other and there were
no allegation or particulars of fraud against all the
defendants jointly in the plaint filed in that suit. (Ref.
Para 49 of Lindsay). In the present case, there is specific
IA No.GA-COM/2/2025,
In CS-COM/70/2025
A.R.,J.
allegation of fraud being perpetrated by all the defendants
jointly against the plaintiff with complete particulars in
paragraph 28 of the plaint. Further, in the present case,
the reliefs are claimed jointly and severally as a sequitur
of the statements made in the plaint.
28. In the light of the above, the plaintiff submits that the instant
application filed under Section 8 of the Arbitration Act should be
dismissed.
Decision :
29. 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 statements made in the plaint as true and correct
and to be taken the same as sacrosanct. If a plain reading of the
statements 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 threshold,
the statements in the plaint are read by the court.
30. The case made out in the instant plaint along with the reliefs have
already been narrated hereinabove. The said narration shows existing of
the MOU with its Arbitration Clause which was entered into by and
between the plaintiff and the defendant no. 2/applicants herein. The
Arbitration Agreement has been admitted by the plaintiff and the
applicants. The specific plaint case is that for the purpose of acquiring
IA No.GA-COM/2/2025,
In CS-COM/70/2025
A.R.,J.
18% shares of and in defendant no. 1 from the defendant no. 2 plaintiff
has paid money. It is also pleaded in the plaint that money was paid by
the plaintiff to numerous defendants even other than the applicants
herein, who were not parties to the MOU/Arbitration Agreement.
Further plaint case is that defendant no. 2 failed to transfer the said
18% shares in favour of the plaintiff. Though consideration has been
paid for the same by the plaintiff to defendant no. 1 and some other
defendants who are not parties to the Arbitration Agreement but had
received/accepted the sale consideration on behalf of the defendant no.
2. Amongst other relief the plaintiff claims return of money paid by it.
31. The defense made out by the applicants against the claim of the plaintiff
in the instant application is that the money was effectively paid by the
plaintiff on account of the defendant no. 2 and if any breach has taken
place on the part of the defendant no.2, it is the cause of action of the
plaintiff for the instant suit against the defendant no. 2 only and not
against any other defendants. The crafty drafting of plaint will not lose
sight of the actual cause of action in the plaint, as contended on behalf
of the applicants.
32. The intention of the plaintiff concerned is to be gathered primarily from
the tenor and terms of the averments taken as a whole from the plaint.
At the same time, it should be borne in mind that no pedantic approach
should be adopted to defeat justice on hairsplitting technicalities.
33. The cause of action for filing a suit would consist of bundle of facts.
The assertion in the instant plaint made by the plaintiff that the
amount was paid by the plaintiff on account of defendant no. 2 to
IA No.GA-COM/2/2025,
In CS-COM/70/2025
A.R.,J.
various other defendants, who are not parties to the said Arbitration
Agreement. The cause of action pleaded in the instant plaint is such
that to prove its case at the trial, the plaintiff may require to prove the
case made out by it in the plaint as against those defendants who are
not parties to the Arbitration Agreement. The cause of action pleaded in
the instant plaint cannot be bifurcated or segregated. The statements
from the plaint would show that the cause of action pleaded are
intertwined amongst the defendants who are not parties to the
Arbitration Agreement.
34. In the matter of: Lindsay International Private Limited and Others
(supra), co-ordinate bench had specifically held that the cause of action
pleaded in the relevant plaint was such that the reliefs could be
bifurcated against defendants and were distinct, separate and
independent of each other, which is not in the instant case as would be
evident from the averments made in the plaint, as already stated above.
Therefore, the ratio laid down by the Co-ordinate Bench In the matter
of: Lindsay International Private Limited and Others (supra),
would not apply in the facts and circumstances in the instant case and
on the basis of averments made in the instant plaint.
35. In the instant plaint, the allegation of fraud pleaded in the plaint is not
restricted amongst the plaintiff and the applicants but it includes the
other defendants who were not parties to the Arbitration Agreement.
Therefore, the ratio laid down In the matter of: Ameet Lalchand
Shah and Others (supra) would have no application in the facts and
circumstances of the instant case.
IA No.GA-COM/2/2025,
In CS-COM/70/2025
A.R.,J.
36. In the matter of: Flint Group India Private Limited (supra) while
rejecting Section 8 application, this court had held that there was no
Arbitration Agreement between the parties within the meaning of
Section 7 of the Arbitration Act. In the instant case, as already
discussed above, the plaint case is such that the cause of action in the
plaint against all those defendants are also pleaded, who are not parties
to the Arbitration Agreement. Therefore, the finding In the matter of:
Flint Group India Private Limited (supra) in support of rejection of
Section 8 plea would apply in the facts of the case, to a limited extent,
that there had been no Arbitration Agreement between the plaintiff and
all the defendants. The Arbitration Agreement is restricted only
between the plaintiff and the defendant no. 2 and/or the applicants.
However, statements made in the plaint would show that the plaintiff
has pleaded a case against all the defendants together, in such a
fashion where neither the cause of action nor the reliefs can be
bifurcated. The plaint case ultimately may succeed or may fail at the
time of trial but the trial has to be proceeded with against all the
defendants in the plaint on the basis of the statements made in the
plaint, as the plaint stands in its present form.
37. The ratio laid down In the matter of: Vidya Drolia and Others
(supra) would not apply in the facts of the instant case. The validity of
the Arbitration Agreement in the instant case is not under challenge.
This Court, on a meaningful reading of the plaint finds that the plaintiff
has stated and raised its claim collectively against all the defendants
and large number of defendants are not parties to the Arbitration
IA No.GA-COM/2/2025,
In CS-COM/70/2025
A.R.,J.
Agreement. At the time of trial the plaint in its present form may
succeed or fail but that should not be the consideration while
adjudicating the instant Section 8 application. At this stage, the Court
should restrict itself as to whether the subject matter of the suit
between the parties is such that it is governed by the Arbitration
Agreement.
38. The plaintiff when files a suit against several defendants and the cause
of action and reliefs pleaded in the plaint show they are so inter-
connected and intertwined that neither the cause of action nor the
reliefs can be bifurcated or segregated, for such a plaint even if there is
an existing and valid arbitration clause between the plaintiff and some
of the defendants or any defendant, the subject matter of the suit is not
permitted to be and cannot be referred to for arbitration.
39. In view of the foregoing discussions and reasons, this Court is of the
firm and considered view that the subject matter of the instant suit
cannot and should not be referred for arbitration in terms of the
Arbitration Clause embodied in the said MOU.
40. Resultantly, the instant application I.A. No.GA-COM/2/2025 stands
dismissed without any order as to costs.
(Aniruddha Roy, J.)
IA No.GA-COM/2/2025,
In CS-COM/70/2025
A.R.,J.
