Judgment :- V.K. JAIN, J. IA No.14432/2012 (under Order 39 Rule 1&2 CPC) 1. The plaintiff No.1 M/s Sancorp Confectionary Pvt. Ltd. entered into a Joint Venture Agreement (JVA) with the defendant company on 15.12.2009, for setting up a Joint Venture Company (JVC). Pursuant to the said JVA, a company named Gum Pharma Pvt. Ltd. (JV Company) was incorporated, with the defendant and the plaintiff no.1 having equal shareholding. The plaintiff no.1 and defendant provided some initial funding to the JV Company and agreed that the remaining funding would be arranged, inter alia, by issue of Compulsorily Convertible Debentures (CCDs) in favour of the party providing funding to the JV Company. Thereafter, the defendant company arranged for remaining initial funding and a Debenture Subscription Agreement(DSA) dated 21.04.2010 was executed between JV Company and the defendant whereby the JV Company agreed to allot 46,68,678 CCDs for aggregate consideration of Rs.4,66,86,760/-to the defendant. The JV Company was required to file with the Reserve Bank to India (RBI) Form FC-GPR along with a certificate of Chartered Accountant specifying, inter alia, the conversion price for such CCDs. The said filing was done by JV Company on 07.05.2010. 2. The defendant served a notice of arbitration dated 2.4.2012 upon both the plaintiffs, forwarded by Singapore International Arbitration Centre (SIAC). It was stated in the notice that JV Company had become a party to the JVA by executing a Deed of Adherence dated 19.03.2010. It was alleged in the notice that this was the obligation of the JVC as well as the plaintiff before this Court to cause the JVC to ensure that the valuation specified in the Chartered Accountant certificate was reasonable, so that the conversion rate reflected a true value of the equity shares of the JVC that the CCDs would convert to when it was due. It was alleged in the notice that the plaintiff before this Court, at the back of the defendant filed Form FC-GPR, along with a Chartered Accountant Certificate in respect of the valuation of the JVC upon conversion of CCDs into equity, in a manner which would result in the receiving only 5.7% of the equity upon conversion, instead of claimant receiving approximately 24.14% of the equity shares of the JVC upon conversion. It was further alleged that the plaintiff before this Court (respondent in the arbitration proceedings) were involved in day-to-day operation of JVC when the valuation was carried out by the Chartered Accountant and that the defendant (claimant in the arbitration proceedings) were not even informed about the valuation and were kept in dark, when FC-GPR was filed with RBI. This, according to the plaintiff, was done to deprive it of its rightful equity shareholding in the JVC upon conversion of CCDs. The defendant before this Court sought an award directing the plaintiff before this Court to cause the JVC to re-value the conversion price in transparent manner at a reasonable basis. 3. The defendant invoked the arbitration clause contained in JV Agreement mentioned in the arbitration notice sent to the plaintiff. It is alleged in the plaint that on receipt of the notice, the plaintiff sent a response objecting to invocation of the arbitration against them, inter alia, on the ground that they had no role in issuance of CCDs and valuation of shares. However, without prejudice to its rights and contentions in this regard, the plaintiffs nominated the second arbitrator in the arbitral tribunal, who has since resigned on account of conflict of interest. The plaintiffs have challenged the scope and jurisdiction of the Arbitral Tribunal, inter alia, on the ground that the purported disputes were governed by the provisions of DSA executed between the defendant and JVC and were not governed by the terms of JVA. Thus, in nutshell, the case of the plaintiffs is that the disputes with respect to the conversion price of CCDs are between the JVC and the defendant and not between the plaintiff and the defendant as to CCDs were to be issued by the JVC and were governed by the terms of DSA to which the plaintiffs were not a party. The plaintiff received communication dated 19.9.2009 and 21.6.2012 from SIAC informing them that SIAC was in the process of constituting a arbitral tribunal and the parties would be free for raising objection before the said tribunal. The plaintiff also sought appointment of a committee of the Board, as per Rule 25.1 of SIAC Rules, to decide their objections as to existence, validity and the scope of the arbitration agreement or to the jurisdiction of SIAC over the claim. The plaintiff also sought appointment of a committee of the Board, as per Rule 25.1 of SIAC Rules, to decide their objections as to existence, validity and the scope of the arbitration agreement or to the jurisdiction of SIAC over the claim. SIAC agreed to place the objections of the plaintiffs before the Committee of Board and vide communication dated 25.07.2012 informed them that the committee, on consideration of the relevant documents had come to a prima facie conclusion that the arbitration agreement under SIAC Rules may exist and asked the plaintiff to nominate their arbitrator. The copy of the decision of the Committee, however, was not provided to the plaintiffs who were informed that they may raise the said issue before the Tribunal, once it is constituted. 2. 4. The plaintiff has sought injunction restraining the defendant from continuing with the arbitration proceedings before SIAC. 3. 5. The defendant is yet to file the written statement, but has filed reply to the application of the plaintiff for grant of ad interim injunction during pendency of the suit. In its reply, the defendant has made a preliminary submission that the reply may not be deemed to be a submission to the jurisdiction of the Court and the merits of the case are to be decided exclusively by the arbitral tribunal to be constituted under SIAC Rules. The defendant has taken a preliminary objection that since the arbitration agreement contained in JVA dated 15.12.2009 expressly provided that any dispute will referred to the Arbitration in Singapore as per the Rules of Singapore International Arbitration Centre (SIAC), it is the law of Singapore and not the Arbitration & Conciliation Act, 1996 which applies to the arbitration agreement contained in JVA. Another preliminary objection taken by the defendant is that the suit itself is barred under Section 14(2) of the Specific Relief Act since there exists an arbitration agreement between the parties. It is also stated in the reply that the question as to whether the disputes and claims raised are covered by the arbitration agreement contained in JVA or DSA is also a dispute which the parties have contracted to refer to arbitration in terms of the arbitration agreement which incorporates the SIAC Rules. It is also stated in the reply that the question as to whether the disputes and claims raised are covered by the arbitration agreement contained in JVA or DSA is also a dispute which the parties have contracted to refer to arbitration in terms of the arbitration agreement which incorporates the SIAC Rules. Yet another objection taken in the reply is that the grant of injunction is barred by Section 41(h) of the Specific Relief Act since an equally efficacious relief can be obtained by approaching the arbitral tribunal. It is also alleged in the reply that the plaintiff had intentionally caused the JVC to file Form FC-GPR behind the back of the defendant along with valuation certificate in terms of which the defendant would receive only 5.7% of the equity of the JVC, on conversion of CCDs, though it ought to have received about 24.14% of the equity on conversion of CCDs if the valuation is done taking appropriate assessment into consideration. It is also submitted that the JVA itself contemplates that there would be a DSA between JVC and one or more shareholders and form of DSA was provided in Schedule F to the JVA, which the plaintiffs have deliberately suppressed from the Court. According to the defendant, the arbitration agreement contained in JVA includes in its ambit any dispute in connection with or implementation of JVA and, therefore, the disputes in respect of DSA are also arbitral under Clause 18.2 of the JVA. It is also pointed out in the reply that the defendant is a foreign company having no office or place of business in India. 6. It is not in dispute that the plaintiffs and the defendant are party to the JVA dated 15.12.2009. Clause 18.2 of the JVA, to the extent it is relevant, reads as under:- “18.2 Arbitration 18.2.1 In the event a dispute arises out of or in relation to or in connection with the interpretation or implementation of this Agreement (including the validity of this Agreement), or any Section hereof, the Parties (the “Disputing Parties”) shall attempt in the first instance to resolve such dispute through amicable consultations among the Disputing Parties. If the dispute is not resolved through such consolations within 30 (thirty) Business Days (or such longer period as Disputing Parties may, by notice in writing to the other Parties, refer the dispute to arbitration in accordance with the arbitration rules of Singapore International Arbitration Centre (SIAC) 18.2.2 The arbitration shall be conducted as follows: .(i) all claims, disputes and differences among the Disputing Parties arising out of or in connection with this Agreement shall be referred to or submitted for arbitration in Singapore; .(ii) the arbitration shall be conducted in English by an arbitration tribunal consisting of 3 (three) arbitrators (the “Arbitration Panel”). For the purposes of the arbitration, the Promoters acting together shall appoint 1 (one) arbitrator, and Gumlink shall appoint 1 (one) arbitrator. The third arbitrator shall be appointed by mutual agreement by the 2 (two) arbitrators so appointed and such third arbitrator shall act as the chairman/presiding arbitrator. In the event that the two arbitrators to be nominated as aforesaid, are unable to reach an agreement on the appointment of the chairman/presiding arbitrator within a period of 15 (fifteen) days from the date of their both being duly appointed, the aforesaid chairman/presiding arbitrator shall be appointed by SIAC in accordance with the arbitration rules of SIAC; (iii) any Party may, in the written notice to the other Parties, state the name of the person appointed by it as an arbitrator with a request to the other Party(ies) to appoint their arbitrator within 15 (fifteen) days from the receipt of the notice; .(iv) the arbitral award shall be in writing and shall state the reasons for the award. The award may include an award of costs, including reasonable attorneys; fees and disbursements. Judgment upon the award may be entered by any court having jurisdiction thereof or having jurisdiction over the relevant party or its assets; .(v) the arbitration award shall be final and binding on the Disputing Parties and the Disputing Parties agree to be bound thereby and to act accordingly. Judgment upon the award may be entered by any court having jurisdiction thereof or having jurisdiction over the relevant party or its assets; .(v) the arbitration award shall be final and binding on the Disputing Parties and the Disputing Parties agree to be bound thereby and to act accordingly. .(vi) the Arbitration Panel may award to a Disputing Party that substantially prevails on the merits; its costs and expenses (including fees of its counsel); (vii) without prejudice to and subject to the indemnification provisions in this Agreement, the Parties shall bear their respective costs incurred in the arbitration unless otherwise awarded or fixed by the Arbitration Panel; and (viii) The Disputing Parties shall co-operate in good faith to expedite, to the maximum extent practicable, the conduct of any arbitral proceedings commenced pursuant to this Agreement. 1. 18.2.3. No party or person involved in any way in the creation, coordination or operation of the arbitration of any dispute may disclose the existence, content or results of the Dispute or any arbitration conducted under this Agreement in relation to that Dispute, in each case subject to those disclosures permitted by Section XIII and save as required in order to enforce the arbitration agreement and/or any award made pursuant to this Agreement. 2. 18.2.4. The provisions contained in this Clause 18.2 are severable and shall survive the termination of this Agreement. 3. 18.2.5. The parties expressly agree that Part I of the Indian Arbitration & Conciliation Act, 1996 shall not apply to the arbitration provisions contained herein, and the aforesaid Part I is hereby expressly excluded, except that the relevant parties shall have the right to approach appropriate Courts in India for grant of interim measures of protection under Section 9 of the (Indian) Arbitration and Conciliation Act, 1996.” 4. 7. Article 25 of SIAC reads as under:- “25. Jurisdiction of the Tribunal 1. 25.1 If a party objects to the existence, validity or scope of the arbitration agreement or to the jurisdiction of the Centre over a claim or counterclaim or claim relied on the purpose of set-off before the Tribunal is appointed, a Committee of the Board shall decide, without prejudice to the admissibility or merits of a claim or claims, if it is prima facie satisfied that an arbitration agreement under the Rules may exist. The arbitral proceedings shall be terminated if the Committee of the Board is not so satisfied. 2. 25.2. The Tribunal shall have the power to rule on its own jurisdiction, including any objections with respect to the existence, termination or validity of the arbitration agreement. For the purpose, an arbitration agreement which forms part of a contract shall be treated as an agreement independent of other terms of the contract. A decision by the Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration agreement.....” 1. 8. Two questions came up for consideration in this case. The first question is as to whether this Court has jurisdiction and if so, whether it should examine whether the arbitration agreement between the parties extends to the dispute subject matter of arbitration before SIAC. The second question is as to whether these disputes are prima facie, covered by the arbitration clause contained in the JVA or not. 2. 9. In Oval Investment P. Ltd. & Ors v. Indiabulls Financial Services Ltd. & Ors. 2009 (4) Arbitration Law Reporter, 284, the plaintiff/appellant had not disputed the arbitration agreement between the parties. The plea taken by the plaintiff/appellant was that notice invoking arbitration clause had not been served upon it and non-service of the notice had the consequence of rendering arbitral proceedings void ab initio in view of the provisions contained in Section 24 of Arbitration & Conciliation Act. One of the contentions raised before the Division Bench was that since the plaintiff/appellant had alleged fraud on the part of the respondent/claimant, it was impermissible to dismiss the suit under Order 7 Rule 11 of CPC. The Division Bench, however, was of the view that once one arrives at the conclusion that it is within the competence of the Arbitral Tribunal to rule on its own jurisdiction, then the appropriate forum for adjudication as to whether a fraud had been perpetrated by the Claimant on the respondent by issuing notice to the respondent at the wrong address, would lie before the Arbitral Tribunal. Rejecting the appeal filed by the plaintiff/appellant, the Division Bench, inter alia, held as under:- “4. Rejecting the appeal filed by the plaintiff/appellant, the Division Bench, inter alia, held as under:- “4. Before the learned Single Judge the submission of the Respondent was that the existence of an arbitration clause was not in doubt; that if the Plaintiff had objection as to the legal propriety of the arbitral proceedings, these objections should have been ventilated before the Arbitral Tribunal itself, on a conjoint reading of Section 16 and Section 5 of the A&C Act. According to the Respondent, the only exception to the general rule that Civil Courts possessed no jurisdiction over arbitral proceedings was the power conferred by the statute under Section 9 of the A&C Act to pass interim measures. Therefore, the suit was not maintainable. 13. We are also satisfied that the learned Single Judge has rightly concluded that the suit is barred under Section 34 of the Specific Relief Act, 1963. It has noted that the consequential relief that would flow from the first prayer, viz. for the declaration that the letter dated 17.7.2009 invoking arbitration proceedings was invalid, would be that proceedings based thereon would also be invalid. Such a relief could not be granted as that would tantamount to restraint of arbitral proceedings, which is precisely what should be assiduously avoided where the existence of an arbitration clause is not in dispute.” In National Insurance Company Ltd. vs. Boghara Polyfab Private Limited (2009) 1 SCC 267 ¸ Supreme Court, inter alia, held as under:- “22. Where the intervention of the court is sought for appointment of an Arbitral Tribunal under Section 11, the duty of the Chief Justice or his designate is defined in SBP & Co. This Court identified and segregated the preliminary issues that may arise for consideration in an application under Section 11 of the Act into three categories, that is .(i) issues which the Chief Justice or his designate is bound to decide; (ii) issues which he can also decide, that is, issues which he may choose to decide; and (iii) issues which should be left to the Arbitral Tribunal to decide. .22.1) The issues (first category) which Chief Justice/his designate will have to decide are: .(a) Whether the party making the application has approached the appropriate High Court. .(b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement. .22.1) The issues (first category) which Chief Justice/his designate will have to decide are: .(a) Whether the party making the application has approached the appropriate High Court. .(b) Whether there is an arbitration agreement and whether the party who has applied under Section 11 of the Act, is a party to such an agreement. .22.2) The issues (second category) which the Chief Justice/his designate may choose to decide (or leave them to the decision of the Arbitral Tribunal) are: .(a) Whether the claim is a dead (long barred) claim or a live claim. .(b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection. 22.3) The issues (third category) which the Chief Justice/his designate should leave exclusively to the arbitral tribunal are: .(i) Whether a claim made falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration). .(ii) Merits of any claim involved in the arbitration.” (Emphasis added) In Kvaerner Cementation India Ltd. V. Bajranglal Agarwal (2001) 6 SCC 265, Supreme Court, inter alia, observed and held as under:- “2. Mr Dave, the learned senior counsel appearing for the petitioner contends that the jurisdiction of the Civil Court need not be inferentially held to be ousted unless any statute on the face of it excludes the same and judged from that angle when a party assails the existence of an arbitration agreement, which would confer jurisdiction on an arbitral Tribunal, the Court committed error in not granting an order of jurisdiction. There cannot be any dispute that in the absence of any arbitration clause in the agreement, no dispute could be referred for arbitration to an arbitral Tribunal. But, bearing in mind the very object with which the Arbitration and Conciliation Act, 1996 has been enacted and the provisions thereof contained in Section 16 conferring the power on the arbitral Tribunal to rule on its own jurisdiction including ruling on any objection with respect to existence or validity of the arbitration agreement, we have no doubt in our mind that the Civil Court cannot have jurisdiction to go into that question. A bare reading of Section 16 makes it explicitly clear that the arbitral Tribunal has the power to rule on its own jurisdiction even when any objection with respect to existence or validity of the arbitration agreement is raised and a conjoint reading of sub sections (2), (4) and (6) of Section 16 would make it clear that such a decision would be amenable to be assailed within the ambit of Section 34 of the Act. In this view of the matter, we see no infirmity with the impugned order so as to be interfered with by this Court...” 10. In Mr.Devinder Kumar Gupta vs Realogy Corporation & Anr. 2011(125) DRJ 129, the appellant before the Court, Shri Devinder Kumar Gupta, alleged that he was not a party to the arbitration agreement. The appellant/plaintiff in his capacity as the Managing Director of defendant No.2 in the suit, however, had entered into an agreement with defendant No.1 in the suit. He had also executed a guarantee and indemnification agreement in favour of defendant No.1. The agreement between defendant No.1 and defendant 2 carried an arbitration clause. Defendant No.1 invoked arbitration not only against defendant No.2 but also against the plaintiff Devinder Kumar Gupta. He filed a civil suit claiming that there was no arbitration clause in the guarantee and indemnification agreement to which he was a party and he was not a party to the agreement between defendants No.1 and 2 which contained the arbitration clause. He sought a declaration that the notice for arbitration sent by defendant No.1 was null and void and also sought an injunction restraining defendant No.1 from taking any step in relation to the notice seeking arbitration. The view taken by the Single Judge was that the existence or validity of an arbitration agreement could not be agitated by filing a civil suit and this was a question which could be raised only in arbitration proceedings and not by filing a civil suit. Setting aside the order of the single Judge, the Division Bench, inter alia, held as under:- “3. Be that as it may, none of the provisions of Section 11 of the A&C Act empower the Chief Justice of India to appoint an arbitrator on behalf of a third party, such as the Plaintiff/Appellant. This could only mean that Section 11 would have no application to cases such as the one before us. Be that as it may, none of the provisions of Section 11 of the A&C Act empower the Chief Justice of India to appoint an arbitrator on behalf of a third party, such as the Plaintiff/Appellant. This could only mean that Section 11 would have no application to cases such as the one before us. But the Plaintiff/Appellant cannot be left without legal remedy, which can either be by way of filing a civil suit or, if he has received a notice from the Arbitral Tribunal, to immediately object to its jurisdiction on the ground that he is not a necessary or proper party to those proceedings. Obviously and reasonably, the Plaintiff/Appellant can contend that the Arbitration Agreement is null and void, inoperative or incapable of performance vis-à-vis him. We may also clarify that Section 8, the gravamen or intendment of which is obviously apposite, does not come to the rescue of a party, such as the Plaintiff/Appellant, whose assertion is that he has not agreed to an adjudication of disputes through arbitration. 5. Notwithstanding the non obstante words employed in Section 5, if the dispute raised in the suit is not covered by the Arbitration Clause, it must be considered on its merits, regardless of whether the Arbitration Proceedings are impeded in the process. 1. 13. The learned Single Judge was statutorily bound to return a finding with regard to whether or not the action or suit was the subject matter of an arbitration agreement.” The dismissal of the Suit or the rejection of the application for interim relief under Order XXXIX Rules 1 and 2of the Code of Civil Procedure, 1908 (CPC) has the effect of referring the parties to arbitration. By sagaciously not making a statement under Section 8 of the A&C Act, the Defendant has achieved indirectly what he could not have achieved directly, namely, making it inevitable for the Plaintiff to join arbitral proceedings without any consideration or adjudication of its plea that no arbitration agreement exists between the parties. It is for this reason that it seems to us essential that the Court should have proceeded under Section 8 or Section 45 of the A&C Act, as the case may be and with a view to return a finding on the existence of an arbitration agreement between the parties. It is for this reason that it seems to us essential that the Court should have proceeded under Section 8 or Section 45 of the A&C Act, as the case may be and with a view to return a finding on the existence of an arbitration agreement between the parties. If the prima facie finding is in favour of the existence of an arbitration agreement, the Court would rightly leave it to the Arbitral Tribunal to go into and determine the details and the minute objections raised by the Plaintiff. The Court ought not to skirt this issue, as it would tantamount to running counter to the decisions of the Supreme Court in Kvaerner, SBP and Sukanya.” 2. 15. However, in an international arbitration where the venue is outside India and costs are indeed prohibitive, it is our opinion, predicated on pronouncements of the Supreme Court, that the responsibility to return at least a prima facie finding on the existence of an arbitration agreement and is operative and capable of being performed, cannot be diverted by the Court to the Arbitral Tribunal. 3. 17. A perusal of Section 45 of the A&C Act makes it palpably clear that the Court must refer the parties to the arbitration if it finds that an efficacious, operative and performable agreement for arbitration exists. Since we are of the unequivocal opinion that an Arbitration Agreement did not come about vis-a-vis the Petitioner, we must accept the Appeal and in exercise of powers under Section 45 of the A&C Act restrain Realogy Corporation, Respondent No.1, from preferring or prosecuting any claim against the Plaintiff/Appellant in proceedings under the aegis of the American Arbitration Association.” Thus, the proposition of law laid down by the Division Bench in the above referred case is that when the plaintiff before a civil court claims that there is no arbitration agreement between him and the party seeking arbitration, it is obligatory for the civil court to examine the matter and record a prima facie finding as to whether there is such an agreement or not. The issue as per the Division Bench cannot be left to be decided by the arbitrator, without taking a prima facie view on the merits of an assertion disputing existence of an arbitration agreement between the parties. 11. In Bharat Aluminium Co. The issue as per the Division Bench cannot be left to be decided by the arbitrator, without taking a prima facie view on the merits of an assertion disputing existence of an arbitration agreement between the parties. 11. In Bharat Aluminium Co. VERSUS Kaiser Aluminium Technical Service, 2012 (8) SCALE 333, Supreme Court held that its decision in Bhatia International vs Bulk Trading S. A. & Anr 2002 (4) SCC 104 with respect to applicability of Part 1 of Arbitration and Conciliation Act to international arbitrations would apply prospectively i.e. to the agreements executed after the decision in Balco(supra), since the agreement containing arbitration clause invoked in the case before this Court was executed after Balco (supra) Part I of the Act does not apply and it is Section 45 of the Act which needs to be applied in the matter. It would be seen from a perusal of Section 45 of the Act that if there is an arbitration agreement between the parties, the Court, on the request of one of the parties is required to refer the matter for arbitration unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. However, this Section pre-supposes existence of an arbitration agreement between the parties and in view of the decision of Division Bench of this court in Devinder Kumar Gupta(supra), it is obligatory for the civil court even while dealing with international arbitrations, to return a prima facie finding with respect to existence of an arbitration agreement, in a case where the existence of such an agreement is disputed before the Court. In Yogi Agarwal ….. 2009(1) SSC 372, Supreme Court, inter alia, held as under:- “9. When a defendant invokes section 8 of the Act by alleging existence of an arbitration agreement, he should establish that such arbitration agreement related to, or is applicable to, the suit transaction/contract. The parties may enter into different contracts at different points of time or may enter into a series of unrelated transactions. It is possible that in regard to some, they may provide for arbitration and in regard to others, may not provide for arbitration. The parties may enter into different contracts at different points of time or may enter into a series of unrelated transactions. It is possible that in regard to some, they may provide for arbitration and in regard to others, may not provide for arbitration. Obviously, the existence of an arbitration agreement with reference to some other transaction/contract to which plaintiff was or is a party, unconnected with the transactions or contracts to which a suit relates, cannot be considered as existence of an „arbitration agreement' in regard to the suit transactions/contracts. 10. When sections 7 and 8 of the Act refer to the existence of an arbitration agreement between the parties, they necessarily refer to an arbitration agreement in regard to the current dispute between the parties or the subject matter of the suit. It is fundamental that a provision for arbitration, to constitute an arbitration agreement for the purposes of sections 7 and 8 of the Act, should satisfy two conditions. Firstly, it should be between the parties to the dispute. Secondly, it should relate to or applicable to the dispute.” 6 Referring to its decision in Yogi Agarwal (supra), Supreme Court in SMS Tea Estate Pvt. Ltd.v Chandmari Tea Company Pvt. Ltd.[2011 (7) SCALE 747 held that if the parties had entered into two agreements and the arbitration clause is found only in the first agreement and not in the second agreement, the arbitrator can be appointed only in regard to dispute relating to the first agreement and not in regard to any dispute relating to the second agreement. Therefore, the Court has to examine two questions in a matter of this nature. The first question to be examined by the Court, if disputed is as to whether there is an arbitration agreement between the parties and the second question falling for consideration of the court would be as to whether the disputes which have been referred or which are sought to be referred to arbitration are covered by that arbitration agreement or not. 12. In a recent decision, Chloro Controls (I) Pvt. Ltd. v. SEVERN Trent Water Purification 2012 (9) Scale 595, the appellant before Supreme court filed a suit seeking declaration that the Joint Venture Agreement and supplementary collaboration agreements entered into between some of the parties were valid, subsisting and binding. 12. In a recent decision, Chloro Controls (I) Pvt. Ltd. v. SEVERN Trent Water Purification 2012 (9) Scale 595, the appellant before Supreme court filed a suit seeking declaration that the Joint Venture Agreement and supplementary collaboration agreements entered into between some of the parties were valid, subsisting and binding. It also sought a direction with respect to the scope of the business of the Joint Venture Company. In two notices of motion taken out by the parties, the principal question for consideration before the High Court was with respect to the scope of the Joint Venture Agreement. The applicant had sought an injunction restraining respondents their foreign collaborators from acting upon the notice indicating termination of the Joint Venture Agreements and supplementary collaboration agreement. The defendant in the suit took out another motion under Section 8 read with Section 5 of Arbitration and Conciliation Act, 1996 seeking reference to an Arbitral Tribunal and stay of proceedings till final award was made by the Arbitral Tribunal. The plea taken by the defendants was that arbitration clause in some of the agreements covered all the Joint Venture Agreements and, therefore, the suit should be referred to an Arbitral Tribunal. The seven agreements executed between different companies, were inter-dependent for their performance. All the agreements were found to be a part of composite transaction to facilitate implementation of the principal agreement. Out of the seven relevant agreements, only three contained arbitration clause. The arbitration clause in two of these agreements required reference to the disputes to arbitration in London as per ICC rules. Both the notices of motion taken out by the plaintiff in the suit were dismissed by the Division Bench by the High Court. The notice of motion taken out by the defendant was dismissed by the Single Judge, but allowed by the Division Bench. Both the judgments of the Division Benches were assailed before the Supreme Court. Rejecting the appeals, the Supreme Court held that the disputes arising from multi party agreement were capable of being referred to Arbitral Tribunal and even a non-signatory party could be subjected to arbitration. During the course of the judgment, Supreme Court, inter alia, observed and held as under:- “69. Rejecting the appeals, the Supreme Court held that the disputes arising from multi party agreement were capable of being referred to Arbitral Tribunal and even a non-signatory party could be subjected to arbitration. During the course of the judgment, Supreme Court, inter alia, observed and held as under:- “69. In a case like the present one, where origin and end of all is with the Mother or the Principal Agreement, the fact that a party was non-signatory to one or other agreement may not be of much significance. The performance of any one of such agreements may be quite irrelevant without the performance and fulfillment of the Principal or the Mother Agreement. Besides designing the corporate management to successfully complete the joint ventures, where the parties execute different agreements but all with one primary object in mind, the Court would normally hold the parties to the bargain of arbitration and not encourage its avoidance. In cases involving execution of such multiple agreements, two essential features exist; firstly, all ancillary agreements are relatable to the mother agreement and secondly, performance of one is so intrinsically inter-linked with the other agreements that they are incapable of being beneficially performed without performance of the others or severed from the rest. The intention of the parties to refer all the disputes between all the parties to the arbitral tribunal is one of the determinative factor. “77. The issue of whether the courts are empowered to review the existence and validity of the arbitration agreement prior to reference is more controversial. A majority of the countries admit to the positive effect of kompetenz kompetenz principle, which requires that the arbitral tribunal must exercise jurisdiction over the dispute under the arbitration agreement. Thus, challenge to the existence or validity of the arbitration agreement will not prevent the arbitral tribunal from proceeding with hearing and ruling upon its jurisdiction. If it retains jurisdiction, making of an award on the substance of the dispute would be permissible without waiting for the outcome of any court action aimed at deciding the issue of the jurisdiction. The negative effect of the kompetenz kompetenz principle is that arbitrators are entitled to be the first to determine their jurisdiction which is later reviewable by the court, when there is action to enforce or set aside the arbitral award. The negative effect of the kompetenz kompetenz principle is that arbitrators are entitled to be the first to determine their jurisdiction which is later reviewable by the court, when there is action to enforce or set aside the arbitral award. Where the dispute is not before an arbitral tribunal, the Court must also decline jurisdiction unless the arbitration agreement is patently void, inoperative or incapable of being performed. 104. Normally, the parties to the arbitration agreement calling for arbitral reference should be the same as those to the an action. But this general concept is subject to exceptions which are that when a third party, i.e. non-signatory party, is claiming or is sued as being directly affected through a party to the arbitration agreement and there are principal and subsidiary agreements, and such third party is signatory to a subsidiary agreement and not to the mother or principal agreement which contains the arbitration clause, then depending upon the facts and circumstances of the given case, it may be possible to say that even such third party can be referred to arbitration. 130. This policy has found a favourable mention with reference to the New York Convention in some of the countries. This is one aspect. The more important aspect as far as Chapter I of Part II of the 1996 Act is concerned, is the absence of any provision like Section 16 appearing in Part I of the same Act. Section 16 contemplates that the arbitrator may determine its own jurisdiction. Absence of such a provision in Part II, Chapter I is suggestive of the requirement for the Court to determine the ingredients of Section 45, at the threshold itself. It is expected of the Court to answer the question of validity of the arbitration agreement, if a plea is raised that the agreement containing the arbitration clause or the arbitration clause itself is null and void, inoperative or incapable of being performed. Such determination by the Court in accordance with law would certainly attain finality and would not be open to question by the arbitral tribunal, even as per the principle of prudence. It will prevent multiplicity to litigation and re-agitating of same issues over and over again. The underlining principle of finality in Section 11(7) would be applicable with equal force while dealing with the interpretation of Sections 8 and 45. It will prevent multiplicity to litigation and re-agitating of same issues over and over again. The underlining principle of finality in Section 11(7) would be applicable with equal force while dealing with the interpretation of Sections 8 and 45. Further, it may be noted that even the judgment of this Court in SBP & Co. (supra) takes a view in favour of finality of determination by the Court despite the language of Section 16 in Part I of the 1996 Act. Thus, there could hardly be any possibility for the Court to take any other view in relation to an application under Section 45 of the 1996 Act. Since, the categorization referred to by this Court in the case of National Insurance Company Ltd. (supra) is founded on the decision by the larger Bench of the Court in the case of SBP & Co. (supra), we see no reason to express any different view. The categorization falling under para 22.1 of the National Insurance Company case (supra) would certainly be answered by the Court before it makes a reference while under para 22.2 of that case, the Court may exercise its discretion and decide the dispute itself or refer the dispute to the arbitral tribunal. Still, under the cases falling under para 22.3, the Court is expected to leave the determination of such dispute upon the arbitral tribunal itself. But wherever the Court decides in terms of categories mentioned in paras 22.1 and 22.2, the decision of the Court is unreviewable by the arbitral tribunal. With respect to challenge envisaged in Section 45 of the Act, the Court was of the view that it has to be serious challenge to the substantive contract and in the absence of such challenge, it has to be found that the agreement was valid, operative and capable of being performed and the disputes would be referred to arbitration. 13. Both the plaintiffs before this Court are party to the JVA dated 15.12.2009. A perusal of the JVA would show that plaintiff No. 2 Sanjay Kumar Gupta holds 51% of the equity of plaintiff No. 1-company. It further shows that the defendant had agreed to form a JVC with plaintiff No.1-company, on the explicit understanding that plaintiff No. 2 would cause plaintiff No. 1 to comply with its obligations arising under the said agreement and accordingly he had become a confirming party to the agreement. It further shows that the defendant had agreed to form a JVC with plaintiff No.1-company, on the explicit understanding that plaintiff No. 2 would cause plaintiff No. 1 to comply with its obligations arising under the said agreement and accordingly he had become a confirming party to the agreement. Under Clause 2.2.1 of the JVA, plaintiff No. 1 and the defendant agreed to use their best effort to promote the success of the JVC which they were seeking to form and to contribute to any issue of securities made by the JVC in accordance with the agreement. Under clause 2.2.2 (ii), they undertook that every person representing them in their capacity as shareholders and every person appointed as a director in terms of the agreement would exercise any power to vote or cause the power to vote to be exercised so as to enable the approval of any and every resolution necessary or desirable to procure that the affairs of JVC are conducted in accordance and otherwise to give full effect to the said agreement and to ensure that no resolution was passed which would in accordance with such provisions. This clause implies agreement between the parties that the JVC which they were seeking to form would act in a manner which would ensure full compliance of the provisions contained in the JVA. Under clause 2.2.3 of the JVA, plaintiff No. 1 and defendant also agreed that if any director nominated by them was not exercising his discretion in accordance with the terms of the JVA, they shall forthwith remove/replace such director. It would be pertinent to note here that the case of the defendant is that the representative of the plaintiffs in JVC conducted themselves in a manner which was not in conformity with the provisions of JVA when they approved the valuation on the basis of which the CCD were to be converted into equity. Under clause 2.2.6, it was confirmed that the defendant had entered into the JVA and shall form a JVC with plaintiff No. 1 on the explicit understanding that plaintiff No. 2 would unequivocally and without any failure cause plaintiff No. 1-company to comply with all its obligations arising under JVA. Under clause 2.2.6, it was confirmed that the defendant had entered into the JVA and shall form a JVC with plaintiff No. 1 on the explicit understanding that plaintiff No. 2 would unequivocally and without any failure cause plaintiff No. 1-company to comply with all its obligations arising under JVA. Clause 2.3.1 of the agreement shows that the parties had agreed to an approved business plan prior to execution of the agreement and they had also agreed that the JVC shall adhere to the said business plan and undertake all commercially responsibly efforts to achieve the objections laid down in the said business plan. That plan was to be the business plan and annual budget for the first six financial years of the JVC. Under clause 2.3.3 they agreed that all the proceeds of the JVC whether by way of debt or equity or from operations, shall be utilized in the manner set out in the approved business plan and the JVC would undertake the business in accordance with that plan. They also agreed to funding of the JVC as per the approved business plan. A perusal of clause 3.3 of the agreement would show that plaintiff No. 1 and the defendant were to hold 50% share each in the JVC. Clause 3.4.1(i) required the JVC to become a party to the agreement by executing a Deed of Adherence by passing necessary Board and Shareholder Resolution. A perusal of clause 3.4.1 (j) would show that the JVC was required to execute agreements mentioned therein, including supplementary agreement with the defendant. As per clause 5.2.1, it was agreed that there shall be six directors on the Board out of which three would be nominated by plaintiff No. 1 and the remaining three by the defendant and as long as the shareholding of plaintiff No. 1 and the defendant in the JVC was in equal ratio, they would have right to nominate equal number of directors on the Board. As per clause 5.10, it was agreed that till such time plaintiff No. 1 and the defendant held 50% each of the equity of the JVC, a decision on any of the Affirmative Vote Matters at a meeting of the Boards shall require the affirmative vote of at least one director each from both the companies. As per clause 5.10, it was agreed that till such time plaintiff No. 1 and the defendant held 50% each of the equity of the JVC, a decision on any of the Affirmative Vote Matters at a meeting of the Boards shall require the affirmative vote of at least one director each from both the companies. As per clause 6.2, so long as plaintiff No. 1 and the defendant hold 50% each of the equity of the JVC, a quorum for the meeting of the shareholders is to be at least one authorized representative each of both the companies. Clause 6.4.1 provides that a resolution by shareholders in respect of an Affirmative Vote Matter cannot be passed without affirmative vote of at least one authorized representative each of the defendant and plaintiff No. 1 appointed to vote on their behalf. Under clause 6.4.2 both the parties agreed to exercise voting rights as shareholders to fully and effectually implement the spirit intent and specific provisions of the JVA. Under clause 6.4.3, it was agreed that each shareholder shall exercise its rights in such manner which would ensure that there is no breach, by JVC of any of its obligations under the JVA. As per clause 7.1 of the JVA, the parties are required to ensure that no action with respect to any of the matters specified therein is taken without affirmative vote of at least one authorized representative each of plaintiff No. 1 and the defendant, appointed to vote on their behalf. As many as 32 such matters have been specified in clause 7.1 of the JVA. Clause 9.1 of the JVA requires the JVC to share the information specified therein with the plaintiff and defendant No. 1. Under clause 9.4.2, the parties agreed to have an exclusive and unqualified right to appoint special auditors to investigate and inspect the books of accounts of the JVC. Such special auditors were to have rights similar to those available to the auditors of the JVC. Under clause 10.1.4, the parties agreed that if they failed to provide the required portion of the remaining initial funding requirement in the manner stipulated in clause 10.1.203, they shall have option to subscribe to the CCD in equal proportions. Such special auditors were to have rights similar to those available to the auditors of the JVC. Under clause 10.1.4, the parties agreed that if they failed to provide the required portion of the remaining initial funding requirement in the manner stipulated in clause 10.1.203, they shall have option to subscribe to the CCD in equal proportions. Under clause 10.1.5, they agreed that in the event they did not subscribe to CCD as stipulated in clause 10.1.4, one of them might subscribe to the CCD and in that case the other party which did not subscribe to the CCD shall, at the time of conversion, in accordance with the DSA have the right to purchase from the subscriber 50% of the outstanding CCD or purchase 50% of the shares issued to the subscriber on conversion of the CCD or subscribe to such number of shares as may be necessary to prevent any dilution of the shareholding of the non-subscribing party in the JVC on account of conversion of CCD. Under clause 11.1, it was agreed that the party shall not transfer any share/security or voting interest, except as required or permitted under the JVA and/or DSA. Any transfer of share/security/voting rights in violation of the JVA is to be treated null and void and neither the Board of JVC nor the parties to the agreement have to approve or ratify such transfers which would contravene the provisions of the JVA. Clause 12.4 of the JVA requires a third party to sign a Deed of Adherence agreeing to be bound by the terms of JVA before such a party is registered a holder of any share. Such a third party is to be bound by all the obligations under the JVA. The approved business plan agreed between the parties is Ex.A to the JVA. The Affiliate Deed of Adherence is schedule „A?to the DSA, whereas the Deed of Adherence is Schedule-B to this document. 14. It is an admitted position that the form of DSA formed part of the JVA being Schedule-F to the document. A perusal of the DSA dated 21.04.2010 would show that it expressly refers the clause 10 of the JVA which provides for initial funding of the JVC. It also shows that the funding by way of CCD was provided by the defendant in terms of its obligations under the JVA. A perusal of the DSA dated 21.04.2010 would show that it expressly refers the clause 10 of the JVA which provides for initial funding of the JVC. It also shows that the funding by way of CCD was provided by the defendant in terms of its obligations under the JVA. A careful analysis of the JVA and DSA form of which was annexed to JVA as Schedule-„F?and the Deed of Adherence executed between the parties to the suit and the JVC clearly show that the JVA was the principal agreement between the parties and the DSA was an offshoot of this principal agreement, having been executed towards fulfilment of the obligations contained in the JVA. The JVC was set up only in furtherance of the JVA executed between the parties on 15.12.2009. It is not as if the JVC could have acted as an independent company not bound by the terms of the JVA. The rights of the JVC were substantially circumscribed by the terms contained in the JVA and it was obliged in law to adhere to all its terms and conditions. The JVC actually undertook to remain bound by the terms and conditions of the JVA by executing the Deed of Adherence dated 19.03.2010. JVC has thus become a party to the JVA by executing the said Deed of Adherence. The functioning of the JVC was intrinsically linked to the terms contained in the JVA and it could not have acted in a manner which would be in derogation of those terms. Neither the Board of Directors nor the shareholders of the JVC could have acted in a manner contrary to the terms of the JVA. Not only is the JVC required to share important information with the parties to the JVA, its powers in respect of a number of important matters have been restricted by the provisions contained in the JVA such as clause 7.1 of the JVA. The business plan of the JVC was also decided by the parties to the JVA. No transfer of shares/securities of the JVC is permissible, if it is in violation of the JVA. The JVC is required to abide by the JVA, in letter as well as spirit. The business plan of the JVC was also decided by the parties to the JVA. No transfer of shares/securities of the JVC is permissible, if it is in violation of the JVA. The JVC is required to abide by the JVA, in letter as well as spirit. In fact, issue of CCD by JVC formed part of a composite transaction envisaged by the parties under the JVA dated 15.12.2009 and the JVA could not have been implemented without aid and execution of the documents such as DSA and the Deed of Adherence. It appears to me that the intention of the parties was clearly to abide by not only the provisions of JVA, but also of the DSA, format of which had been approved by them and annexed as Annexure „F?to the document. In fact, the issue of CCD and consequent execution of DSA could not have been successfully executed without formation of the JVC, raising of funding by it and functioning of the JVC in a manner envisaged by the JVA dated 15.12.2009. If we separate the JVA from the subsequent documents, they would be referred ineffective for the simple reasons that the JVC was required to confirm to the provisions of the JVA and could not have acted in their contravention. JVC is nothing but a joint venture of plaintiff no.1 and the defendant. The plaintiff no.2 owns more than half of the equity of plaintiff no.1 company. The disputes with respect to conversion price of CCDs issued by JVC to the defendant is nothing but a dispute between the plaintiffs and the defendant, the JVC being only an alter ego of the parties to the suit. It is the conduct of JVC through the representative of the plaintiffs on its Board of Directors which has given rise to the dispute which the defendant wants to be adjudicated by the Arbitrator. It is, therefore, not be possible to keep the plaintiff out of the disputes which are subject matter of the arbitration initiated by the defendant. In the case of Chloro Controls (I) Pvt. Ltd. (supra), Supreme Court found that the intention of the parties was that all the agreements were to form parts of a composite transaction and the principal of agreements with an agreement could be safely applied. Same is the position in the case before this Court. In the case of Chloro Controls (I) Pvt. Ltd. (supra), Supreme Court found that the intention of the parties was that all the agreements were to form parts of a composite transaction and the principal of agreements with an agreement could be safely applied. Same is the position in the case before this Court. It is the JVC dated 15.12.2009 which is the core agreement and which governed the other document, including the DSA dated 21.04.2010. It would be, therefore, difficult to say that the disputes relating to conversion price of the CCD issued by the JVC to the defendant would be outside the scope of the arbitration agreement contained in the JVA dated 15.12.2009. The interim relief sought by the plaintiffs before this Court is an injunction restraining the defendant from continuing with the arbitration proceedings before SIAC. If such an interim relief is granted, it would amount to almost decreeing the suit since it will not be possible for the defendant to continue with the arbitration proceedings already initiated before SIAC. It would be unrealistic to assume that this suit would be decided in a short span permitting resumption of arbitration in the event of the suit being ultimately decided on merits. On the other hand, it is also equally true that refusal of injunction would amount to frustrating the relief sought by the plaintiffs in the absence of injunction from this Court, the Arbitrator may go ahead with the proceedings above the award, thereby giving the full fait accompli to the plaintiffs. Referring to such a situation, Supreme Court in the Deoraj V. State of Maharashtra (2004) 4 SCC 697, inter alia, held as under:- “12. Situations emerge where the granting of an interim relief would tantamount to granting the final relief itself. And then there may be converse cases where withholding of an interim relief would tantamount to dismissal of main petition itself; for, by the time the main matter comes up for hearing there would be nothing left to be allowed as relief to the petitioner though all the findings may be in his favour. And then there may be converse cases where withholding of an interim relief would tantamount to dismissal of main petition itself; for, by the time the main matter comes up for hearing there would be nothing left to be allowed as relief to the petitioner though all the findings may be in his favour. In such cases the availability of a very strong prima facie case — of a standard much higher than just prima facie case, the considerations of balance of convenience and irreparable injury forcefully tilting the balance of case totally in favour of the applicant may persuade the Court to grant an interim relief though it amounts to granting the final relief itself. Of course, such would be rare and exceptional cases. The Court would grant such an interim relief only if satisfied that withholding of it would prick the conscience of the Court and do violence to the sense of justice, resulting in injustice being perpetuated throughout the hearing, and at the end the Court would not be able to vindicate the cause of justice. Obviously such would be rare cases accompanied by compelling circumstances, where the injury complained of is immediate and pressing and would cause extreme hardship. The conduct of the parties shall also have to be seen and the Court may put the parties on such terms as may be prudent.” In my view, the plaintiffs before this Court have not been able to make out a strong prima facie case. The Board Committee of SIAC has considered the objection of the plaintiffs with respect to the scope of the arbitration agreement and has opined that an arbitration agreement does exist between the parties. The opinion formed by the Committee is in conformity with the prima facie view formed by this Court. In fact, prima facie it appears to me that the scope of the arbitration agreement contained in the JVA extends to the current disputes between the parties. No irreparable loss would be caused to the plaintiffs in case the defendant is not restrained from continuing with the arbitration to inasmuch they have an opportunity to establish before the Arbitrator that the current disputes between the parties are beyond the scope of the arbitration clause contained in the JVA. No irreparable loss would be caused to the plaintiffs in case the defendant is not restrained from continuing with the arbitration to inasmuch they have an opportunity to establish before the Arbitrator that the current disputes between the parties are beyond the scope of the arbitration clause contained in the JVA. In case their plea is not accepted by the Arbitrator, they would be entitled to raise plea when execution of the award which may be passed against them, is sought. I, therefore, find no reasonable ground to restrain the defendant from proceeding with the arbitration proceedings invoked by it. The application is accordingly dismissed. The interim order dated 9.8.2012 is hereby vacated. The observations made in this order being tentative and prima facie would affect the decision of the suit on merits. CS(OS) 2400/2012 Written statement be filed within four weeks. Replication can be filed within two weeks thereafter. The parties to appear before the Joint Registrar for admission/denial of documents on 19.12.2012. The matter be listed before the Court for framing of issues on 18.04.2013