Green Edge Infrastructure Pvt. Ltd. v. Magic Eye Developers Private Limited

9. MOU-1 inter alia provides as under: a. The parties through this MOU agreed for the business arrangement of the balance unlicensed land. b. Green Edge was to make efforts for obtaining requisite licence/NOC etc. for the unlicensed land within 5 years from date of this agreement. c. 20% of the profitability from the proposed project to be constructed on the said land was to be to the benefit of Green Edge.

10. Thereafter, Green Edge and Magic Eye entered into another MOU-2 dated 09.08.2013, which inter alia provides as under: a. Magic Eye agreed to provide 36,762 sq ft of saleable area to Green Edge from its project in Sector 106, Gurgaon free of cost as per draft MOU dated 07.06.2013. b. 8,400 sq ft out of the 36,762 sq ft of the saleable area was to be provided for certain consideration which was to be later refunded by Magic Eye as facilitation charges. c. Balance 28,372 sq ft of the saleable area was to be provided by Magic Eye to Green Edge as 2X i.e. 56,724 sq ft on the condition that Green Edge in turn agrees to sell the said area to Magic Eye for selling in open market. 50% of the net revenue earned after selling the said area was to be paid to Green Edge.

11. Green Edge is aggrieved on account of purported failure of Magic Eye, RKS and Spire to fulfil their obligations arising out of and in terms of the SHA, SPA, MOU-1, MOU-2. This inter alia involves non-allotment of 56,724 sq ft of saleable area by Magic Eye and non-refund of amount paid against the allotment of 8,400 sq.ft of saleable area by Magic Eye. Disputes between the parties

12. Magic Eye is aggrieved on account of purported failure of Green Edge to pay outstanding unsecured loan taken by Green Edge from Magic Eye, as recorded in Clause 4.[1] of the SPA.

13. Magic Eye with a view to seek recovery of purported unsecured loan of Rs. 5.20/- crores owed by the Green Edge, approached this Court by way of a suit being CS(COMM) No. 1290/2018 against Green Edge, Vera Edu and Vega Schools. Vera Edu and Vega Schools were stated to be the group companies of the Green Edge. In the said suit, an application under Section Prior Litigation 8 of the A&C came to be filed by Green Edge on the basis of the arbitration agreement between the parties; the said application was allowed vide judgment/order dated 21.05.2020 and the said parties were referred to arbitration. This court inter alia directed as under:

“23. That the entire business relationship entered into between the Plaintiff company and the Defendant No.1 company was based on a series of composite transaction and documents with each other which is clearly borne out of the act that the said parties executed multiple documents

15. Thereafter, the present petitions came to be filed by respective parties. including Shareholders Agreement (‘SHA’ hereinafter), Share Purchase Agreement (‘SPA’), Memorandum of Understanding (‘MoU’ hereinafter) etc. It is submitted that a conjoint reading of the SHA dated 04.07.2012, SPA dated 24.07.2013 and the MoU (executed on stamp paper dated 24.07.2013) executed between the parties clearly lays down the rights and obligations incurred by both the said parties.”

16. Vide common order dated 25.03.2021, the petitions [ARB.P. 347/2019 and ARB.P. 753/2020] under Section 11 of the A&C Act were allowed and a common arbitrator was appointed. The petitions [O.M.P.(I) (COMM.) 114/2020 and O.M.P.(I) (COMM.) 26/2019] under Section 9 of the A&C Act were directed to be treated as applications under Section 17 of the A&C Act to be decided by the arbitrator. The interim orders dated 30.01.2019 passed in O.M.P.(I) (COMM.) 26/2019 and 01.06.2020 passed in O.M.P.(I) (COMM.) 114/2020 were continued by the court.

17. The said common order dated 25.03.2021 was assailed before the Supreme Court by Magic Eye. Vide judgment dated 12.05.2023 passed in Civil Appeal No. 3634-3637 of 2023 reported as (2023) 8 SCC 50, the order dated 25.03.2021 was set aside and it was inter alia directed as under: “…The matter is remitted back to the High Court/ referral Court to decide the respective arbitration petitions afresh and in light of the observations made hereinabove and to decide the issue conclusively and finally with respect to the existence and validity of the arbitration agreement. The aforesaid exercise to be completed within a period of three months from the date of receipt of the present order. However, it is observed that we have not expressed anything on merits on the existence and validity of the arbitration agreement and on the four agreements being interconnected/interlinked. It is ultimately for the High Court/referral court to take an appropriate decision in accordance with law and on its own merits….”

18. Consequently, only the arbitration petitions are required to be decided afresh and the issue of existence and validity of the arbitration agreement is to be decided by this court. Therefore, the submissions made by the parties on the petitions filed under Section 9 of the A&C Act, are not being considered by this court hereinbelow.

19. Learned senior counsel for the Green Edge submitted that existence of an arbitration agreement between the parties is not in doubt. It is submitted that even though MOU-2 does not contain an arbitration clause, disputes arising therefrom are to be referred to arbitration in view of a broad arbitration clause contained in SHA. It is submitted that all the aforesaid Contentions of the Parties four agreements i.e. SHA, SPA, MOU-1 and MOU-2 as well as the draft MOU are intrinsically interconnected, interlinked, intertwined and interdependent and have to be read together to ascertain the entire transactions contemplated between the parties. Out of the said four agreements, the mother/principal agreement is the SHA-1 whereas the SPA, MOU-1 & MOU-2 are the supplementary agreements inasmuch as they give effect to the exit of the Green Edge from the affairs of the Magic Eye after duly obtaining necessary licenses for the combined land area. Reference is made to a chart appended along with the written submissions filed by Green Edge, detailing the parties, brief purpose of each agreement and clause-wise interlinking of the said agreements. It is further submitted that Magic Eye in its previous suit, acknowledged the need to read all agreements together to define parties’ rights and obligations, further emphasizing that their entire business relationship constituted a composite transaction.

20. It is submitted that due to the inter-linkage of the concerned agreements, all disputes should be settled through a single, composite arbitration. The absence of a dedicated arbitration clause in MOU-2, it is again submitted, does not render disputes arising under it non-arbitrable. It is submitted that that the broadly-worded arbitration clause in the SHA mandates referring all disputes “in connection” with the SHA to a single arbitrator. In this regard, reliance is placed on Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., (2013) 1 SCC 641; Ananda Bharathi Fertilizers (India) Private Limited vs. Nagarjuna Fertilisers and Chemicals Limited MANU/TL/0212/2023; B.M. Mohan Rao and Ors. Vs. Mohitsham Complexes (P) Ltd. MANU/KA/9802/2019 and Sanjay Mehra v. Sharad Mehra, 2023 SCC OnLine Del 2205.

21. Per contra, learned senior counsel for the Magic Eye submitted that the disputes under MOU-2 cannot be referred to arbitration, since it does not contain an arbitration clause, and the only remedy is for Green Edge is to file a suit. It is submitted that MOU-2 is not interlinked with the other agreements and is a standalone agreement, capable of being enforced by itself and it is incumbent upon Green Edge to seek specific performance of the same. It is submitted that MOU-2 does not even refer to the SHA, SPA or MOU-1. Although it refers to a draft MOU, but even the draft MOU does not have an arbitration clause. Given that MOU-2 is later in time, the principle of party autonomy should be upheld, respecting the parties’ conscious decision to exclude arbitration in respect of this agreement. Consequently, due to the absence of an arbitration clause and the independent nature of MOU-2, it is submitted that the arbitration petition filed by Green Edge should be dismissed since the disputes raised by Green Edge, inter-alia, arises out of MOU-2.

22. It is further submitted that even if some level of interconnection exists between MOU-2 and the other agreements, the absence of a specifically incorporated arbitration clause within MOU-2 precludes arbitration in respect of disputes arising thereunder. It is submitted that Section 7 of the A&C Act, mandates that an arbitration agreement must be “contained in” the main agreement. The only exception, outlined in sub-section (5), allows the incorporation of an arbitration clause into the main agreement if, and only if, there is a specific incorporation by reference of the arbitration clause, and the reference is such that there is intention to incorporate the arbitration clause. No such reference is stated to be found in MOU-2, regarding either the earlier agreements or an arbitration clause, and as such, the fundamental prerequisite for referring disputes under this particular agreement to arbitration is not met. In this regard, reliance has been placed on M.R. Engineers & Contractors (P) Ltd. vs. SomDatt Builders Ltd., (2009) 7 SCC 696 and Duro Felguera, S.A. vs. Gangavaram Port Ltd.,

23. It further submitted that in the arbitration petition filed by Magic Eye, apart from Green Edge who is signatory to the SPA, Vera Edu and Vega Schools, being group companies of the Green Edge, are also liable to be referred to arbitration in view of the judgment/order dated 21.05.2020 passed in CS(COMM) No. 1290/2018. It is submitted that in the said suit, the application filed by Green Edge under Section 8 of the A&C Act was allowed, and the said parties were referred to arbitration. It is submitted that the said issue is res judicata between the parties and the principles of issue estoppel will preclude Vera Edu and Vega Schools from invoking separate corporate personality for any purpose in these proceedings.

24. Notably, in the arbitration petition filed by Magic Eye no reply has been filed by either Green Edge or Vera Edu or Vega Schools opposing the said petition.

25. On the contentions raised, issues arise for consideration are (i) Whether there exists an arbitration agreement between the parties?, (ii) Whether MOU-2 is interlinked/inter-twined with SHA, SPA, MOU-1?, (iii) Whether in absence of an arbitration clause in MOU-2, disputes arising thereunder can be referred to arbitration? and (iv)Who all are the parties to the arbitration agreement and/ or bound by the same? Analysis and Finding Whether there exists an arbitration agreement between the parties?

26. Admittedly, SHA, SPA and MOU-1 contain an arbitration clause. The issue that arises for consideration is whether in absence of an arbitration clause in MOU-2, disputes arising thereunder can be referred to arbitration. Determination of the said issue will be dependent upon whether MOU-2 is interconnected and interlinked with prior agreements executed between the parties, which admittedly contain an arbitration clause. Whether MOU-2 is interlinked/inter-twined with SHA, SPA, MOU-1?

27. The assertion by learned senior counsel appearing for Magic Eye that MOU-2 is independent of SHA, SPA, and MOU-1, ex-facie lacks merit. Mere non-reference of the said agreements in the MOU-2 cannot lead to conclusion that the agreements are not interlinked. In fact, in the suit filed by the Magic Eye, it was the Magic Eye’s own case that the entire business relationship entered into between Magic Eye and the Green Edge was based on a series of “composite transactions”. It is not open for Magic Eye to contend otherwise. Regardless, there is no manner of doubt that the SHA, SPA, draft MOU, MOU-1, MOU-2 are interconnected, interlinked and intertwined, and form part of a composite transaction. The said agreements have to be read together to ascertain the entire transaction between the parties.

28. A bare reading of MOU-2 shows that the same has been executed in furtherance of and for the purpose of achieving the objectives of the SHA. Under the SHA, the rights of Green Edge in respect of the land/ development in question, was expressly recognised. In terms thereof, Green Edge was entitled to certain built-up area in the Project in exchange for providing its services. MOU-2 cannot be construed in isolation of the previous agreements. It is undoubtedly in furtherance of the understanding effectuated through previous agreements, and prescribes the mechanism through which the saleable area was to be allocated to the Green Edge by Magic Eye. The figure of 36,762 sq. ft. of saleable area to be allocated to Green Edge, as mentioned in the MOU-2, is evidently not an arbitrary figure, but is in furtherance of the understanding arrived at vide previous agreement/s, taking into account the mutual rights and obligations created thereunder. This calculation is detailed in the draft MOU as under: “This area allocation has been worked as per details below: Total Land owned by MEDPL in Sector 106, Gurgaon-12.076 Acres, out of which 5.51 Lac sft of FSI generated from the project on 7.7285 Acres, which has been valued @ Rs.2,200/Sq ft amounting to 121.23 Cr.

121.23 Cr. (Agreed value of 5.51 Lac Sq ft of FSI) -33.476 Cr. (Less expenses of CLU) 87.754 Cr. (Total Return in MEDPL)

17.55 Cr. (GEI’s Share, ie 20%) -8.00 Cr.

29. It is also pertinent to note that in response to communication dated 29.10.2018 addressed by Green Edge to Magic Eye seeking allotment of saleable area as mentioned in the MOU-2, it was stated by Magic Eye, vide communication dated 21.11.2018 that “you [Green Edge] have failed to provide proof of services having been provided along with relevant documentary proof and costs incurred”. This clearly suggests that the (Less already pad to GEI)

9.55 Cr. (Net payable) Agreed Cost a Sq ft of Saleable Area= Rs[3],920/ Sqft Area to be allotted (9.55 Cr./3920) = 24,362 sq ft Additional Area against Facilitation Charges = 12,400 sq ft Total FOC Area to be allotted = 36,762 sq ft” saleable area/units [referred to in MOU-2] were to be allotted to Green Edge in lieu of providing license facilitation services, as contemplated under Clause 7 of SHA dated 04.07.2012. Thus, the stand taken by Magic Eye itself, is demonstrative of the inter-connection of the concerned agreements.

30. Clearly also, the SHA has to be construed in light of the stipulations contained in the other agreements, namely SPA, MOU-1 and MOU-2. The said agreements were evidently executed in furtherance of the understanding and to fulfil the overarching objectives of SHA. All these agreements together form inseparable part/s of the composite transaction between the parties. Whether in absence of an arbitration clause in MOU-2, disputes arising thereunder can be referred to arbitration?

31. The argument advanced by learned senior counsel appearing for Magic Eye that arbitration should be precluded in respect of disputes arising under MOU-2 due to non-inclusion of an arbitration clause therein, even in the face of the said MOU-2 being inextricably interlinked with previous agreements, holds no merit.

32. The SHA is the principal agreement between the parties, it contains a broad arbitration clause, which provides that “any disputes arising out of or in connection with this agreement” are to be referred to arbitration. The phrase “in connection with this agreement” is broad enough to extend coverage in respect of disputes arising from supplementary agreements executed in furtherance of the principal agreement i.e. the SHA. Evidently, MOU-2 is one such supplementary agreement that has been executed in furtherance of SHA. Therefore, disputes arising from MOU-2 can be referred to arbitration even in absence of a separate arbitration clause in MOU-2. Even assuming there is a controversy as to whether MOU-2 has been executed in furtherance of the SHA or not, the same can be resolved by taking recourse to the arbitration clause in the SHA.

33. In Chloro Controls (supra), three out of the six agreements did not contain any arbitration clause. The Supreme Court found the said agreements to be intrinsically interconnected and observed that the arbitration clause contained in the principal agreement is widely worded and comprehensive enough to encompass disputes that had raised under the agreements; in reaching this conclusion the Supreme Court took note of the overarching width of the arbitration clause in the principal agreement, which subsumed all disputes “under and in connection with” the said agreement. Relevant extracts of the said decision are as under:

81. The Court held as under: (Meena Vijay Khetan case, SCC pp. 667-68, para 30) “30. If there is a situation where there are disputes and differences in connection with the main agreement and also disputes in regard to ‘other matters’ ‘connected’ with the subject-matter of the main agreement then in such a situation, in our view, we are governed by the general arbitration Clause 39 of the main agreement under which disputes under the main agreement and disputes connected therewith can be referred to the same Arbitral Tribunal. This Clause 39 no doubt does not refer to any named arbitrators. So far as Clause 5 of the Interior Design Agreement is concerned, it refers to disputes and differences arising from that agreement which can be referred to named arbitrators and the said Clause 5, in our opinion, comes into play only in a situation where there are no disputes and differences in relation to the main agreement and the disputes and differences are solely confined to the Interior Design Agreement. That, in our view, is the true intention of the parties and that is the only way by which the general arbitration provision in Clause 39 of the main agreement and the arbitration provision for a named arbitrator contained in Clause 5 of the Interior Design Agreement can be harmonised or reconciled. Therefore, in a case like the present where the disputes and differences cover the main agreement as well as the Interior Design Agreement,—(that there are disputes arising under the main agreement and the Interior Design Agreement is not in dispute)—it is the general arbitration Clause 39 in the main agreement that governs because the questions arise also in regard to disputes relating to the overlapping items in the schedule to the main agreement and the Interior Design Agreement, as detailed earlier. There cannot be conflicting awards in regard to items which overlap in the two agreements. Such a situation was never contemplated by the parties. The intention of the parties when they incorporated Clause 39 in the main agreement and Clause 5 in the Interior Design Agreement was that the former clause was to apply to situations when there were disputes arising under both agreements and the latter was to apply to a situation where there were no disputes or differences arising under the main contract but the disputes and differences were confined only to the Interior Design Agreement. A case containing two agreements with arbitration clauses arose before this Court in Agarwal Engg. Co. v. Technoimpex Hungarian Machine Industries Foreign Trade Co. There were arbitration clauses in two contracts, one for sale of two machines to the appellant and the other appointing the appellant as sales representative. On the facts of the case, it was held that both the clauses operated separately and this conclusion was based on the specific clause in the sale contract that it was the ‘sole repository’ of the sale transaction of the two machines. Krishna Iyer, J. held that if that were so, then there was no jurisdiction for travelling beyond the sale contract. The language of the other agreement appointing the appellant as sales representative was prospective and related to a sales agency and ‘later purchases’, other than the purchases of these two machines. There was therefore no overlapping. The case before us and the above case exemplify contrary situations. In one case the disputes are connected and in the other they are distinct and not connected. Thus, in the present case, Clause 39 of the main agreement applies. Points 1 and 2 are decided accordingly in favour of the respondents.”

36. A Constitution Bench of the Supreme Court in Cox & Kings Ltd. v. SAP India (P) Ltd., 2023 SCC OnLine SC 1634, has held as under:

37. The judgement of Duro Felguera (supra) relied upon by the Magic Eye, is clearly distinguishable in as much as the said case is not a case of interlinked agreements and/or principal-supplementary agreements. The judgment of Choro Controls (supra) was distinguished in the said decision as under:

38. Reliance placed on behalf of Magic Eye on the judgment of M.R. Engineers (supra), to contend that in absence of specific incorporation (by reference), of the arbitration clause in MOU-2, the disputes arising therefrom are non-arbitrable, is misconceived. The crux of Green Edge’s argument does not hinge upon a direct incorporation of the arbitration clause found within SHA into MOU-2, as would be contemplated under Section 7(5) of the A&C Act. Instead, Green Edge posits that the expansively worded arbitration clause in the SHA, coupled with the fact that MOU-2 was executed specifically to further the objectives of SHA, necessitates that any disputes arising from MOU-2 be adjudicated through the arbitration mechanism stipulated in the SHA. In essence, Green Edge asserts that the arbitration clause in SHA, due to its broad scope and the interconnected nature of the agreements, implicitly extends its reach to encompass disputes in respect of MOU-2, even in the absence of an explicit arbitration clause within MOU-2 itself. There is merit in this argument of the Green Edge. As discussed earlier, all five different packages as well as the Corporate Guarantee have separate arbitration clauses and they do not depend on the terms and conditions of the Original Package No. 4 TD nor on the MoU, which is intended to have clarity in execution of the work.”

39. In Sanjay Mehra v. Sharad Mehra, (supra) the plaintiff filed a suit alleging breach of terms of the Memorandum of Family Settlement (MOFS) and the covenants of the sale deed, executed between the parties. While the MOFS incorporated an arbitration clause, the sale deed notably lacked such a clause. In response to the suit, the defendants filed an application seeking a referral of the parties to arbitration, based upon the arbitration clause contained within the MOFS. The plaintiff objected to this application on the ground that the sale deed is a self-contained agreement, makes no reference to MOFS, superseded all prior agreements between the parties, and therefore the disputes arising therefrom cannot be referred to arbitration. However, the court rejected the plaintiff's objections, arriving at the conclusion that the sale deed had been executed in furtherance of and inextricably linked to the MOFS, and referred the parties to arbitration. The relevant extract of the said decision is as under: “55. Reliance was also placed on the judgment of the Supreme Court in M.R Engineers & Contractors Pvt. Ltd. (supra), to argue that Section 7(5) of the 1996 Act stipulates that there has to be a conscious acceptance of the arbitration clause from another document, by the parties, as part of their contract, to bind the parties. Learned Senior Counsels for the Plaintiff further argued that as the Sale Deed does not make any reference to the MOFS and there has been no attempt made by the parties to incorporate the arbitration clause in the Sale Deed, the subject matter is within the jurisdiction of this Court and not arbitrable in nature. This argument, in my view, is liable to be rejected in view of the findings in the earlier part of the judgment that the Sale Deed was executed in furtherance of the MOFS and as envisioned in it and both being linked and inseparable, arbitration was the intended and consciously chosen forum for dispute resolution between the parties, pertaining to alleged breach of the covenants of MOFS

40. The Kerela High Court in B.M. Mohan Rao and Ors. v. Mohitsham Complexes (P) Ltd. (supra), has held as under:.”

42. To summarise, prima facie, the broad and expansive arbitration agreement incorporated in the SHA, can be invoked to adjudicate disputes arising under MOU-2, which was evidently executed as part of the same composite transaction. In any event, the issue as to whether MOU-2 is in furtherance of the previous agreement/s between the parties, and consequent adjudication of disputes thereunder, is itself liable to be resolved by taking recourse to the arbitration clause contained in the SHA i.e. the parent agreement. In this regard reference may be made to decision of Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re, 2023 SCC OnLine SC 1666, where a seven-judge bench of the Supreme Court has held as under: The above clause makes it amply clear that the parties by including the words 'in connection with this agreement' had intended to give a comprehensive meaning to the word dispute. Therefore, the contention of the Respondent that disputes arising under the Supply Agreement dated 19.12.2014 in absence of a separate arbitration clause are not arbitrable cannot be accepted.

162. The legislature confined the scope of reference under Section 11(6A) to the examination of the existence of an arbitration agreement. The use of the term “examination” in itself connotes that the scope of the power is limited to a prima facie determination. Since the Arbitration Act is a self-contained code, the requirement of “existence” of an arbitration agreement draws effect from Section 7 of the Arbitration Act. In DuroFelguera (supra), this Court held that the referral courts only need to consider one aspect to determine the existence of an arbitration agreement - whether the underlying contract contains an arbitration agreement which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement. Therefore, the scope of examination under Section 11(6A) should be confined to the existence of an arbitration agreement on the basis of Section 7. Similarly, the validity of an arbitration agreement, in view of Section 7, should be restricted to the requirement of formal validity such as the requirement that the agreement be in writing. This interpretation also gives true effect to the doctrine of competence-competence by leaving the issue of substantive existence and validity of an arbitration agreement to be decided by arbitral tribunal under Section 16. We accordingly clarify the position of law laid down in Vidya Drolia (supra) in the context of Section 8 and Section 11 of the Arbitration Act.

163. The burden of proving the existence of arbitration agreement generally lies on the party seeking to rely on such agreement. In jurisdictions such as India, which accept the doctrine of competencecompetence, only prima facie proof of the existence of an arbitration agreement must be adduced before the referral court. The referral court is not the appropriate forum to conduct a mini-trial by allowing the parties to adduce the evidence in regard to the existence or validity of an arbitration agreement.

164. Section 11(6A) uses the expression “examination of the existence of an arbitration agreement.” The purport of using the word “examination” connotes that the legislature intends that the referral court has to inspect or scrutinize the dealings between the parties for the existence of an arbitration agreement. The determination of the existence and validity of an arbitration agreement on the basis of evidence ought to be left to the arbitral tribunal. This position of law can also be gauged from the plain language of the statute. Moreover, the expression “examination” does not connote or imply a laborious or contested inquiry.On the other hand, Section 16 provides that the arbitral tribunal can “rule” on its jurisdiction, including the existence and validity of an arbitration agreement. A “ruling” connotes adjudication of disputes after admitting evidence from the parties. Therefore, it is evident that the referral court is only required to examine the existence of arbitration agreements, whereas the arbitral tribunal ought to rule on its jurisdiction, including the issues pertaining to the existence and validity of an arbitration agreement. A similar view was adopted by this Court in Shin-Etsu Chemical Co. Ltd. v. AkshOptifibre Ltd. 165…

166. When the referral court renders a prima facie opinion, neither the arbitral tribunal, nor the court enforcing the arbitral award will be bound by such a prima facie view. If a prima facie view as to the existence of an arbitration agreement is taken by the referral court, it still allows the arbitral tribunal to examine the issue in-depth

43. In ARB.P. 347/2019, Green Edge has invoked the arbitration clause contained in SHA; the signatories to SHA are Green Edge, Magic Eye, RKS and Spire. Therefore, these parties are liable to be referred to arbitration. Notably, the signatories to supplementary agreements are the same parties.. Such a legal approach will help the referral court in weeding out prima facie non-existent arbitration agreements. It will also protect the jurisdictional competence of the arbitral tribunals to decide on issues pertaining to the existence and validity of an arbitration agreement.” Who all are the parties to the arbitration agreement and/ or bound by the same?

44. In ARB.P. 753/2020, Magic Eye has invoked the arbitration clause contained in SPA; the signatories to SPA are Green Edge, Magic Eye and RKS. Therefore, these parties are liable to be referred to arbitration. However, apart from these parties Vera Edu and Vega Schools are also liable to be referred to arbitration in view of the judgment/order dated 21.05.2020 passed in CS(COMM) No. 1290/2018. By the said judgment dated 21.05.2020, the application filed by Green Edge under Section 8 of the A&C Act seeking dismissal of the suit filed by Magic Eye against Green Edge, Vera Edu and Vega Schools, was allowed on the ground that there exists a valid arbitration agreement between the Magic Eye and Green Edge, and Vera Edu and Vega Schools, adjudged to be the group companies of the Green Edge, had shown intent to be bound by the said arbitration agreement. Relevant extract of the said judgment dated 21.05.2020 is as under: “26. Considering the fact that there are valid agreements between the plaintiff and defendant No. 1 containing clauses for reference of disputes to arbitration and defendant Nos.[2] and 3 being group companies of defendant No.1, from the intent of the parties as noticed from the agreements as also the averments in the plaint it is evident that not only would defendant No. 1 but also the defendant Nos. 2 and 3 companies be amenable to the jurisdiction of the arbitrator as per the arbitration clauses is the SHA, SPA and MOU.

45. Notably, this judgment was not assailed by any party, rendering it final. Consequently, any attempt by Vera Edu and Vega Schools to resist impleadment in the proposed arbitration proceedings, claiming nonsignatory status, is legally untenable. In any case, in terms of the judgement of Supreme Court in Cox & Kings (supra), the referral court should leave it for the arbitral tribunal to take a final view as to whether Vera Edu and Vega Schools can be brought within the fold of the proposed arbitration, and/or whether any relief/s can be claimed therefrom. For the purpose of the present proceedings, in view of the findings in the aforementioned judgment dated 21.05.2020, and in view of the prima facie findings rendered hereinabove, this Court is inclined to accept the plea of Magic Eye in ARB.P. 753/2020, seeking constitution of an arbitral tribunal qua disputes sought to be raised against Green Edge, Vera Edu and Vega Schools. Consequently, the present application is disposed of holding that the present suit is not maintainable and the disputes between the parties are required to be referred to the arbitration”

46. In view of the aforesaid, there is no impediment in constituting an arbitral tribunal to adjudicate the disputes between the parties which are subject of the ARB.P 347/2019 & ARB.P. 753/2020.

47. In the circumstances, both ARB.P. 347/2019 and ARB.P. 753/2020, are allowed. Mr. Justice (Retd.) D. K. Jain, former judge, Supreme Court of India, (Mob. No.: 9999922288) is appointed as the sole arbitrator to adjudicate the disputes set out thereunder.

48. It is clarified that reference to arbitration in both ARB.

P. NO. 347/2019 and ARB. P. 753/2020 shall be independent of each other, although the learned sole arbitrator shall be entitled to hold common hearings for sake of convenience.

49. It is clarified that this court has scrutinized the transaction/s between the parties only for the purpose of arriving at a conclusion as regards existence of an arbitration agreement for the purpose of these proceedings, as mandated in terms of the judgment dated 12.05.2023 passed by the Supreme Court in Civil Appeal No. 3634-3637 of 2023, whereby the petitions under Section 11 were remitted back to this court “to decide the issue conclusively and finally with respect to the existence and validity of the arbitration agreement”.

50. It is further clarified that in terms of the judgement of the Supreme Court in Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re, (supra) the findings rendered herein shall not preclude the Arbitral Tribunal to conduct a further in depth examination and to decide jurisdictional objections in accordance with law; it has been specifically held in the said judgment as under:- “166. When the referral court renders a prima facie opinion, neither the arbitral tribunal, nor the court enforcing the arbitral award will be bound by such a prima facie view. If a prima facie view as to the existence of an arbitration agreement is taken by the referral court, it still allows the arbitral tribunal to examine the issue in-depth. Such a legal approach will help the referral court in weeding out prima facie non-existent arbitration agreements. It will also protect the jurisdictional competence of the arbitral tribunals to decide on issues pertaining to the existence and validity of an arbitration agreement.”

51. The learned Sole Arbitrator may proceed with the arbitration proceedings subject to furnishing to the parties requisite disclosures as required under Section 12 of the A&C Act.

52. The learned Sole Arbitrator shall fix his fee in consultation with the parties.

53. Parties shall share the arbitrator’s fee and arbitral costs, equally.

54. All rights and contentions of the parties in relation to the claims/counter-claims are kept open, to be decided by the learned Arbitrator on their merits, in accordance with law.

55. O.M.P.(I) (COMM.) 26/2019 and O.M.P.(I) (COMM.) 114/2020 i.e. the petitions under Section 9 of the A&C Act filed by Green Edge and Magic Eye respectively, are directed to be treated as applications under Section 17 of the A&C Act to be decided by learned sole arbitrator, in accordance with law. The interim orders dated 30.01.2019 passed in O.M.P.(I) (COMM.) 26/2019 and 01.06.2020 passed in OMP (I) (COMM) 114/2020 shall continue to operate till the matter is first considered by the learned sole arbitrator.

56. Needless to say, nothing in this order shall be construed as an expression of this court on the merits of the case.

57. The present petitions stand disposed of in the above terms.

MARCH 04, 2024/hg SACHIN DATTA, J