REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4690 OF 2018 (Arising out of SLP(C) No.16789 of 2017)

AMEET LALCHAND SHAH AND OTHERS        …Appellants

Versus

RISHABH ENTERPRISES AND ANOTHER                       ...Respondents

J U D G M E N T

R. BANUMATHI, J.

Leave granted.

2. This appeal arises out of the judgment dated 17.04.2017 passed by

the Delhi High Court in FAO(OS) (COMM) No.85 of 2017 in and by which

the Division Bench affirmed the order of the Single Judge dismissing the

application filed under Section 8 of the Arbitration and Conciliation Act,

1996 (the ‘Act’) by holding that the agreements between the parties are

not inter-connected with the principal agreement dated 05.03.2012 and

therefore, the parties cannot be referred to arbitration as per the decision

in Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya and another (2003)

5 SCC 531.

3. Brief facts which led to filing of this appeal are as follows:-

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On 01.02.2012,  the  first  respondent  –  Rishabh  Enterprises  (the

‘Rishabh’), the sole proprietorship concern of the second respondent –

Dr.  A.M.  Singhvi  entered  into  two  agreements  with  M/s  Juwi  India

Renewable Energies Pvt.  Ltd. (Juwi India) namely:- (i)  Equipment and

Material Supply Contract for purchase of power generating equipments to

the  tune  of  Rs.8,89,80,730/-;  and  (ii)  Engineering,  Installation  and

Commissioning Contract for installation and commissioning of the Solar

Plant for Rs.2,20,19,270/-.   Both these agreements contain arbitration

clause.   

4. The  first  respondent  -  Rishabh entered into  Sale  and Purchase

Agreement  dated  05.03.2012  with  the  second  appellant  company  –

Astonfield  Renewables Private Limited (Astonfield)  for  purchasing CIS

Photovoltaic products to be leased to appellant No.3 – Dante Energy Pvt.

Ltd. (Dante Energy) to be installed at the Solar Plant at Dongri, Raksa,

District  Jhansi,  Uttar  Pradesh.   As per the agreement,  these products

were valued  for  Rs.25,16,00,000/-.  The second appellant  –  Astonfield

received Rs.21,40,49,999/- from the respondents under various cheques

issued  by  the  Rishabh.   This  agreement  dated  05.03.2012  does  not

contain the arbitration clause.  According to the appellants, an amount of

Rs.10,00,00,000/- by cash was paid back to the sons of Dr. A.M. Singhvi

i.e.  Rs.2,50,00,000/-  to  Mr.  Avishkar  Singhvi  and  Rs.7,50,00,000/-  to

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Mr.  Anubhav  Singhvi.   An  Equipment  Lease  Agreement  (ELA)  dated

14.03.2012 was entered into  between the Rishabh and Dante Energy

whereby  Dante  Energy  agreed to  pay  the  Rishabh Rs.13,50,000/-  as

lease rent for March, 2012 and from April, 2012 onwards, the said rent

payable  was  Rs.28,26,000/-.   The  Solar  Plant  at  Jhansi  has  been

commissioned and energized on 16.03.2012.

5. Gist of the agreements are as under:-

S.No. DATE  OF CONTRACT

CONTRACTING PARTY

PURPOSE OF CONTRACT ARBITRATION AGREEMENT

1. 01.02.2012 Rishabh Enterprises entered into two agreements with M/s.  Juwi  India Renewable Energies  Pvt. Ltd.  

(i) Rishabh  to  purchase power  generating equipments  - Rs.8,89,80,730/-

(ii) Engineering,  Installation and  commission  of  the plant  at  Jhansi  - Rs.2,20,19,270/-

Both  agreements contain  arbitration clause -  Parties agreed  that  the  seat of arbitration shall be at Bombay

2. 05.03.2012 Rishabh entered into  agreement with  M/s.  Aston Renewables Pvt.  Ltd. (appellant no.2)

(i) Purchasing  CIS Photovoltaic  products  to be leased to Dante Energy (Appellant  no.3)  for energizing  solar  plant installed  at  Jhansi  - Rs.21,40,49,999/-

This  agreement does  not  contain arbitration clause.

3. 14.03.2012 Rishabh entered into  agreement with  M/s.  Dante Energy Pvt. Ltd. (appellant no.3)  

Dante  agreed  to  pay Rs.13,50,000/-  as lease  rent for the equipment for March, 2012  and  from  April,  2012 onwards,  Rs.28,26,000/-  per month.

This  agreement contains  arbitration clause. Parties  have agreed  that  the  seat of arbitration shall be at Bombay.

6. Dispute arose between the parties when respondents alleged that

appellant No. 3 – Dante Energy has defaulted in payment of rent and that

Astonfield  committed  fraud  by  inducing  the  Rishabh  to  purchase  the

Photovoltaic products by investing huge amount.  The respondents have

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also alleged that the appellants have committed misrepresentation and

criminal breach of trust so far as the equipments procured and leased to

Dante  Energy.   The respondents  have also  filed  a  criminal  complaint

before  the  Economic  Offences  Wing  at  Delhi  against  the  appellants,

based on which,  FIR No. 30 of  2015 was registered.  The appellants

have filed writ  petition bearing CWP No.619 of  2016 before the High

Court  of  Delhi  seeking quashing of  the said FIR which is  sub judice.

There  was  also  an  enquiry  by  the  Income  Tax  Authorities  seeking

explanation from the appellants regarding transfer of money to the sons

of  Dr.  A.M.  Singhvi  i.e.  Rs.2,50,00,000/-  to  Mr.  Avishkar  Singhvi  and

Rs.7,50,00,000/-  to  Mr.  Anubhav  Singhvi.   Appellant  No.1  –  Ameet

Lalchand Shah was summoned by the Income Tax Authorities seeking

explanation with regard to transfer of the said money to the sons of Dr.

A.M. Singhvi.

7. Owing to the dispute between the parties, appellant No.3 – Dante

Energy issued notice dated 13.02.2016 invoking arbitration clause and

nominated  Justice  Sujata  Manohar,  former  Judge,  Supreme  Court  of

India as the Arbitrator.  The respondents namely the Rishabh and its sole

proprietor preferred a Civil Suit (Commercial) No.195 of 2016 before the

High  Court  on  11.03.2016  against  all  the  appellants  levelling  various

allegations including fraud and misrepresentation.  In the suit,  multiple

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reliefs  were  claimed:-  (i)  for  a  declaration  that  Sale  and  Purchase

Agreement dated 05.03.2012; Equipment and Material Supply Contract,

Engineering,  Installation  and  Commissioning  Contract  both  dated

01.02.2012  and  Equipment  Lease  Agreement  dated  14.03.2012  are

vitiated  by  serious  fraud  committed  by  the  appellants  and  that  the

agreements  are  void;  (ii)  for  recovery  of  a  sum of  Rs.32,22,80,288/-

which  the  appellants  are  jointly  and  severely  liable  to  pay  to  the

respondents; (iii) to pay a sum of Rs.19,31,74,804/- as the interest on the

aforesaid  amount  of  Rs.32,22,80,288/-  at  the rate of  18% per  annum

from  the  date  of  the  agreement  i.e.  01.02.2012  till  the  date  of  the

realization; and (iv) to pay arrears of lease rent.

8. On  receipt  of  notice  and  summons  in  the  suit,  the

appellants/defendants preferred application I.A. No.4158 of 2016 under

Section 8 of  the Act seeking for reference of  the dispute between the

parties to arbitration pertaining to all the four agreements.  The appellants

sought  for  reference  to  arbitration  of  all  the  four  agreements  by

contending that the Sale and Purchase Agreement (05.03.2012) is the

main agreement and that other three agreements are inter-connected as

they are executed between the same parties and the obligations and the

performance  of  the  terms  of  the  agreements  are  inter-connected  viz.

commissioning of the Photovoltaic Solar Plant at Dongri, Raksa, District

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Jhansi, U.P.  The respondents Rishabh and Dr. A.M. Singhvi resisted the

application  by  contending  that  the  suit  is  for  declaration  that  the

agreements are vitiated due to fraud and misrepresentation and while so,

the matter cannot be referred to arbitration.  It was further averred that

the suit is neither concerned about the agreement dated 01.02.2012 with

Juwi  India  nor  concerned  about  Equipment  Lease  Agreement

(14.03.2012); whereas the suit is concerned about the false assurances

and fraud played by the appellants  Ameet  Lalchand Shah and Dante

Energy regarding which a criminal case has also been registered and

hence, the dispute is not referable to arbitration.   

9. The learned Single Judge by order dated 15.03.2017 dismissed the

application filed under Section 8 of the Act holding that the Equipment

Lease  Agreement  (14.03.2012)  between  Rishabh  and  Dante  Energy

cannot be treated as the mother/principal agreement and the agreements

between the respondents and Astonfield and Juwi India cannot be said to

be ancillary agreements to the same.  The learned Single Judge further

held that  not  only the respondents accuse the appellants of  fraud but

appellants  also  accuse  the  respondents  of  fraud,  concealment  and

suppression of material facts and that there was also a registration of a

criminal case based on the complaint filed by the respondents and also

the  enquiry  by  the  Income  Tax  Authorities  regarding  transfer  of

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Rs.10,00,00,000/- to the sons of Dr. A.M. Singhvi and when there are

such  serious  issues  between  the  parties,  they  cannot  be  referred  to

arbitration.    

10. Being aggrieved by the dismissal of the application, the appellants

preferred appeal before the Division Bench which came to be dismissed.

The Division Bench pointed out the difference in the language between

Section  8  and  Section  45  of  the  Act  and  after  referring  to  Chloro

Controls India Private Limited v. Severn Trent Water Purification Inc.

and others  (2013) 1 SCC 641, observed that  Sukanya Holdings was

not  overruled.  The Division  Bench further  pointed out  that  in  spite  of

amendment  brought  in  under  Section  8,  since  the  main/principal

agreement–Sale and Purchase Agreement (05.03.2012) does not contain

an arbitration clause, the matter cannot be referred to arbitration.  After

referring to  A. Ayyasamy v.  A.  Paramasivam and others (2016)  10

SCC 386, the Division Bench held that in view of serious allegations of

fraud, arbitration of such dispute is excluded.  

11. We  have  heard  Mr.  Shanti  Bhushan,  learned  senior  counsel

appearing for the appellants and Mr. Kapil Sibal, learned senior counsel

appearing  for  the  respondents.  Upon  consideration  of  the  rival

submissions, the following points arise for consideration in this appeal:-

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1. Whether  all  the  four  agreements  viz.  –  (i)  Equipment  and

Material  Supply Contract  (01.02.2012) between Rishabh and

Juwi  India;  (ii)  Engineering,  Installation  and  Commissioning

Contract  (01.02.2012)  between  Rishabh  and  Juwi  India;

(iii)  Sale  and  Purchase  Agreement  (05.03.2012)  between

Rishabh and Astonfield; and (iv) Equipment Lease Agreement

(14.03.2012)  between Rishabh  and  Dante  Energy  are  inter-

connected to refer the parties to arbitration though there is no

arbitration  clause  in  the  Sale  and  Purchase  Agreement

(05.03.2012) between Rishabh and Astonfield?

2. Whether  reference  of  the  dispute  between  the  parties  to

arbitration is to be refused on the ground of allegations of fraud

levelled against the appellants by the respondents in the plaint

or whether the agreements ought to be taken as commercial

undertaking of the parties “with a sense of business efficacy”

as held in Ayyasamy case?

12. First,  the  Rishabh  entered  into  two  agreements  with  Juwi  India

dated 01.02.2012:- (i) Equipment and Material Supply Contract; and (ii)

Engineering,  Installation  and  Commissioning  Contract.  The  first

agreement-Equipment  and  Material  Supply  Contract  (01.02.2012)

contains  arbitration  clause  (Clause  19.4).   The  second  agreement  –

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Engineering, Installation and Commissioning Contract (01.02.2012) also

contains arbitration clause (Clause 25).  Sale and Purchase Agreement

(05.03.2012) between Rishabh and Astonfield for Rs.25,16,00,000/- does

not  contain  the  arbitration  clause.  The  fourth  agreement  namely

Equipment Lease Agreement (14.03.2012) between Rishabh and Dante

Energy contains arbitration clause (Clause 29).  A careful perusal of all

the four agreements that is:- (i) Equipment and Material Supply Contract;

(ii) Engineering, Installation and Commissioning Contract; (iii) Sale and

Purchase Agreement; and (iv) Equipment Lease Agreement shows that

all  the  four  agreements  were for  the single purpose to  commission 2

MWp Photovoltaic  Solar  Plant  at  Dongri,  Raksa,  District  Jhansi,  Uttar

Pradesh  to  be purchased by  Rishabh  and  leasing the  equipments  to

Dante Energy.

13. The averments in the plaint also  prima facie indicate that all the

four agreements are inter-connected and that appellant  No.1 – Ameet

Lalchand Shah is stated to be the promoter and controlling man of both

Astonfield as well as Dante Energy.  We may usefully refer to the relevant

averments in the plaint which read as under:-

“Defendant No.1, Mr. Ameet Lalchand Shah, is the Promoter of the Defendant Nos.  2  and 3 Companies.   Through his other group  companies,  Defendant  No.1  is  also  the  controlling shareholder  of  Defendant  Nos.  2  and  3.   He  is  involved  in running the day to day affairs of the said companies and it is

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on  his  instructions  and  directions  and  under  his  overall control and dictation that the said companies are run.  He is the co-founder and the co-chairman of the “Astonfield Group” consisting of various companies incorporated both outside of and in India (www.astonfield.com).  Defendant No.1 is the main brain behind the serious fraud that has been perpetuated upon the Plaintiffs  and the  prima donna,  mind,  body,  soul  and  controlling entity of all  other defendants to this suit.   If  the corporate veil  is lifted by this Hon’ble Court  (and,  this  is an appropriate case for lifting  of  the  corporate  veil),  it  will  be  found  that  it  is,  in  fact, Defendant  No.1  only  who  is  the  real  entity  behind all  the  other defendants and it is on his directions that the others have made, played  their  respective  roles  in  and/or  participated  in  the transactions in  question…….  Further,  Defendant  No.1  has also been corresponding with the plaintiffs on behalf of Defendant Nos. 2 and 3. ……… The said Defendant No.1 is also responsible for running the day to day affairs of this Company which is run on his directions and under his control.  Defendant No.2 entered into a Sale  and Purchase Agreement  with the Plaintiffs,  the transaction under which is vitiated by serious fraud. ……”

Though there  are  two agreements,  individual  parties  to  the  Sale  and

Purchase Agreement (05.03.2012) and the Equipment Lease Agreement

(Dante Energy) are one and the same,.  Though Juwi India is not the

defendant, as discussed infra, Equipment and Material Supply Contract

and Engineering, Installation and Commissioning Contract with Juwi India

itself were for the purpose of commissioning Photovoltaic Solar Plant at

Dongri, Raksa, District Jhansi, Uttar Pradesh.

14. The  clauses  in  the  Equipment  and  Material  Supply  Contract

(01.02.2012) between Rishabh and Juwi India clearly indicate that  the

Rishabh has entered into Lease Agreement with Dante Energy and that

the Rishabh proposes to source Photovoltaic products/panels etc. and

similar  Solar  Power generating equipments for  onward lease of  those

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goods to Dante Energy.  The following clauses in the said Equipment and

Material  Supply Contract  would clearly establish the link of Equipment

and Material Supply Contract with the main Lease Agreement with Dante

Energy:-

“This Equipment and Material Supply contract is between

M/s Rishabh Enterprises………….. (the ‘Client’)  AND Juwi  India  Renewable  Energies  Private  Limited  ……..(the ‘Supplier’)

Whereas:-  A. The Client  (Rishabh)  is  entering into Lease Agreement

with  M/s  Dante  Energy  Pvt.  Ltd.  (‘Lessee’)  and  the Lessee (Dante Energy) has necessary authorizations to develop,  own,  operate  and  commercially  exploit  a  2 MWp thin-film photovoltaic solar plant at Dongri, Raksa, District-Jhansi,  UP  (Plant  Site), transmission  line  from power plant to the Grid Substation, bay extension work at the  Grid  Substation,  including  all  of  the  infrastructure and relevant  installations  required  to  connect  the  electricity- producing equipment to the distribution/transmission grid at the Grid Substation in UP, India (the ‘Facility’).

B. The  Client  (Rishabh)  proposes  to  source  Photovoltaic Products/Panels,  Inverters,  Transformers  and  similar solar  power  generating  equipments,  etc.  for  sale  of goods to the Client  (Rishabh)  and the Client  (Rishabh) will onward lease these goods to M/s Dante Energy Pvt. Ltd. (Lessee).

C. The Client (Rishabh) wishes to engage the Supplier (Juwi India)  for  supply  of  Equipment  (as  defined  below)  and materials with respect to the development of the Solar Park.

D. The M/s Dante Energy Private Limited (Lessee) will have the right to inspect the respective goods to be sourced by the Client (Rishabh) and based on the confirmation from the M/s Dante Energy Private Limited (Lessee), the respective goods will be purchased by the Client (Rishabh) for onward sale to M/s  Dante  Energy  Private  Limited  (Lessee)  and  will  be consigned to the project site.

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E. The  Supplier  (Juwi  India)  is  aggregable  to  supply  the Equipment  and  Materials  to  the  Client  (Rishabh)  in accordance with the terms of this Contract.”

15. Likewise,  clauses  in  the  agreement  for  Engineering,  Installation

and  Commissioning  Contract  between  Rishabh  and  Juwi  India

(01.02.2012) also clearly indicate that the agreement was entered into for

the purpose of commissioning Photovoltaic Solar Plant at Dongri, Raksa,

District  Jhansi,  Uttar  Pradesh.   Clause (A)  of  the agreement  that  the

Rishabh has entered into Equipment Lease Agreement with M/s Dante

Energy (Lessee) reiterates that the second agreement with Juwi India for

engineering, installation and commissioning is integrally connected with

Equipment Lease Agreement (14.03.2012).  The relevant clauses in the

agreement read as under:-

“This  Engineering,  Installation  and  Commissioning  Contract Agreement is between  

M/s Rishabh Enterprises……….. (the ‘Client’)

AND

Juwi India Renewable Energies Pvt. Ltd………(the ‘Contractor’)

Whereas:-  A. The Client (Rishabh) is the owner of certain Photovoltaic

products/Panels,  Inverters,  Transformers  and  similar solar power generating equipments etc. and is entering into  an  Equipment  Lease  Agreement  with  M/s  Dante Energy Pvt. Ltd. (Lessee).

B. The Lessee (Dante Energy) has necessary authorizations to develop, own, operate and commercially exploit a 2 MWp thin-film photovoltaic solar plant at Dongri, Raksa, District-Jhansi,  UP  (Plant  Site),  transmission  line  from

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power plant to the Grid Substation, bay extension work at the  Grid  Substation,  including  all  of  the  infrastructure and relevant  installations  required  to  connect  the  electricity- producing equipment to the distribution/transmission grid at the Grid Substation in UP, India (the ‘Facility’).

C. The  Client  (Rishabh)  proposes  to  purchase  the  Client’s Equipment  as  required  by  the  Lessee (Dante  Energy)  for onward lease to the Lessee (Dante Energy).

D. The Lessee (Dante Energy) requires the services for design, engineering,  construction,  erection,  testing,  commissioning and handing over of the Facility to the Client (Rishabh) and accordingly the Client (Rishabh) has agreed to identity the competent  Contractor  (Juwi  India)  for  undertaking  the above work.

E. The Contractor  (Juwi  India)  has represented to  the Client (Rishabh)  and  the  Lessee  (Dante  Energy)  that  the Contractor  (Juwi  India)  has  the  requisite  experience, expertise,  resources  and  skills  for  undertaking  and performing all the activities and services required for design engineering,  construction,  erection,  testing,  commissioning and handing over of the Facility and has submitted an offer to  the  Client  (Rishabh)  in  response  to  the  Technical Specifications as set out by the Client (Rishabh).

F. Based on the offer submitted by the Contractor (Juwi India) and  relying  on  the  Contractor’s  representations  and warranties herein, and on the concurrence and approval of the Lessee (Dante Energy), the Client (Rishabh) wishes to appoint  the  Contractor  (Juwi  India)  to   undertake  the Services  and  (except  for  purchase  of  the  Client’s Equipments)  to  perform all  the activities  and services required for design, engineering, construction, erecting, testing, commissioning and handing over of the Facility and  the  Contractor  (Juwi  India)  has  agreed  to  such appointment  and  to  undertake  such  other  duties  and obligations as mentioned in this Contract.”

The above clauses in the very commencement of  the agreement with

Juwi India dated 01.02.2012 clearly state that the agreement itself was

for  the  purpose  of  commissioning  Photovoltaic  Solar  Plant  at  Dongri,

Raksa, District Jhansi, Uttar Pradesh for which Dante Energy (Lessee)

has  necessary  authorizations.   The  above  quoted  clauses  in  the

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Engineering,  Installation  and  Commissioning  Contract  (01.02.2012)

establish that this agreement is inter-connected with Equipment Lease

Agreement (14.03.2012) with Dante Energy.  

16. Equally, the Sale and Purchase Agreement (05.03.2012) between

M/s Astonfield and Rishabh is also for the purpose of onward leasing of

goods to Dante Energy as seen from the following clauses:-

“Sale and Purchase Agreement

Astonfiled  Renewable  Pvt.  Ltd.  ………..  (Seller)   AND  Rishabh Enterprises……..  (Buyer)  agree  to  sell  and  to  purchase  the following products, which are required for onwards leasing of goods by the Buyer (Rishabh) to Dante Energy Private Limited.…………… (Lessee)  under  the  terms  and  conditions  stated  below (Transaction),  effective  as  of  the  date  of  last  signature  below (Effective Date):-

1. Buyer:Rishabh Enterprises 2. Seller: Astonfield Renewables Private Limited 3. Transaction: The parties agree that this Transaction shall be

governed  by  this  Sale  and  Purchase  Agreement  and  its apendices. The products under this Agreement shall be used for the 2

MWp grid connected solar PV power project being set up by the Lessee  (Dante  Energy)  at  Dongri,  Raksa,  District-Jhansi,  Uttar Pradesh (Plant Site)

The Buyer (Rishabh) is purchasing the above goods for onward supply/lease to lessee (Dante Energy).  Lessee (Dante Energy) will have the right to inspect the respective goods and based on the confirmation from the Lessee (Dante Energy), the respective goods will be purchased by the Buyer (Rishabh) for onward sale to Lessee (Dante Energy) and will be consigned to the Project Site.”

Though the Sale and Purchase Agreement (05.03.2012) does not have

any arbitration clause, by the above clauses, it is clearly linked with the

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main agreement - Equipment Lease Agreement (14.03.2012).  Sale and

Purchase Agreement was entered into between Astonfield and Rishabh

only for the purpose of onward transmission of leasing of the goods by

Rishabh to Dante Energy.  There is no merit in the contention that the

Sale  and  Purchase  Agreement  is  not  connected  with  the  Equipment

Lease Agreement with Dante Energy.

17. Equipment Lease Agreement (14.03.2012) between Rishabh and

Dante Energy is only a follow-up of all the above three agreements as is

clear from the various clauses in the Equipment Lease Agreement.  The

relevant  clauses  of  Equipment  Lease  Agreement  (14.03.2012)  are  as

under:-

“Equipment Lease Agreement

M/s  Rishabh  Enterprises……….  (Lessor)  AND  M/s  Dante Energy Pvt.  Ltd……….. (Lessee) is  setting up a 2 MWp grid connected solar PV power project at Dongri, Raksa, District- Jhansi, Uttar Pradesh (Plant Site)……

Whereas  the  Lessor  (Rishabh)  is  the  owner  of  certain Photovoltaic  products/Panels,  Inverters,  Transformers  and similar  solar  power  generating  equipments  etc.  (herein referred to as “Equipments”),  more particularly described in the First Schedule hereunder written.

And  whereas  the  Lessee  (Dante  Energy)  has  necessary authorizations to develop, own, operate and commercially exploit a 2 MWp thin-film photovoltaic solar plant on the Site (“SPY Power Plant”), transmission line from power plant to the Grid Substation, bay  extension  work  at  the  Grid  Substation,  including  all  of  the

15

infrastructure  and  relevant  installations  required  to  connect  the electricity-producing equipment to the distribution/transmission grid at the Grid Substation in Jhansi, Uttar Pradesh, India as specified in the Second Schedule (“Facility”) and for this purpose, they are in requirement of the Equipments as mentioned in the First Schedule hereunder written.

And  whereas  the  Lessee  (Dante  Energy)  being  desirous  of obtaining from the Lessor (Rishabh) on lease the specified nature of  Equipments  more  particularly  described in  the  First  Schedule hereunder written, has approached the Lessor (Rishabh) and has requested the Lessor (Rishabh) to lease out the Equipments to the Lessee  (Dante  Energy)  on  the  terms,  covenants  and  conditions herein contained/specified. ………… Article 4 Delivery, Commencement and disbursement: (i) It is expressly understood by the Lessee (Dante Energy) and

Lessor  (Rishabh)  that  in  the  present  case,  the  respective Equipments  are  being  sourced from the  supplier  of  Solar Photovoltaic Modular-located in the State of Maharashtra i.e. Astonfield Renewables Private Limited and supplier of other solar  power  generating  equipments  like  inverters, transformers, etc. in the State of Karnataka i.e. Juwi India Renewable  Energies  Private  Limited.   These  goods  have been inspected by the Lessee (Dante Energy) and are found suitable for its commercial use of the same.

(ii) Pursuant  to  this  lease  agreement,  the  respective Equipments, will be purchased by the Lessor (Rishabh) from the respective Supplier and accordingly, the Equipments will be consigned directly to the project site in the State of Uttar Pradesh.  Accordingly, in the present case, the delivery of respective Equipments will  be effected by Endorsement of the  consignment  Note  in  the  favour  of  Lessee  (Dante Energy) by the Lessor (Rishabh). ………

(v) Irrespective  of  how  and  by  whom  the  delivery  is effected, it is hereby agreed that the entire risk, cost or any  outgoing  pertaining  to  the  said  delivery  and installation shall be at the cost and risk of the Lessor (Rishabh).”  

The  above  extracted  clauses  clearly  demonstrate  that  all  the  four

agreements are inter-connected.  Clause (v) in Article 4 in the Equipment

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Lease Agreement that delivery and installation shall be at the cost and

risk of Rishabh (Lessor) is clearly linked with the Engineering, Installation

and Commissioning Contract between Rishabh and Juwi India.

18. The  High  Court  placed  reliance  upon  Sukanya  Holdings for

dismissal of the application filed under Section 8 of the Act.  In Sukanya

Holdings,  the suit  was filed for dissolution of the partnership firm and

accounts and inter alia challenged the conveyance deed executed by the

partnership  firm in  favour  of  M/s  West  End Gymkhana Limited.    An

application filed under Section 8 of the Act was opposed by respondent

No.1 thereon by contending that the subject matter of the suit was not

between the contracting parties and that the reliefs claimed are not only

against respondents No. 1 and 2 who are the contracting parties but are

claimed  against  the  remaining  twenty-three  parties  who  are  the

purchasers/tenants of disputed flats.  This Court held that if all the parties

to the suit are not parties to the agreement then the matter cannot be

referred to  arbitration since there  is  no  provision  in  the  Act  for  partly

referring the dispute to arbitration.  This Court noted that the buyers were

not  parties  to  the  arbitration  agreement  and  that  the  non-signatories

cannot be referred to arbitration.  In Sukanya Holdings in paras (15) and

(16), this Court held as under:-

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“15. The relevant language used in Section 8 is: “in a matter which is the subject of an arbitration agreement”. The court is required to refer  the  parties  to  arbitration.  Therefore,  the  suit  should  be  in respect of “a matter” which the parties have agreed to refer and which  comes  within  the  ambit  of  arbitration  agreement.  Where, however, a suit is commenced — “as to a matter” which lies outside the arbitration agreement and is also between some of the parties who  are  not  parties  to  the  arbitration  agreement,  there  is  no question of application of Section 8. The words “a matter” indicate that  the  entire  subject-matter  of  the  suit  should  be  subject  to arbitration agreement. 16. The next question which requires consideration is — even if there is no provision for partly referring the dispute to arbitration, whether such a course is possible under Section 8 of the Act. In our view, it would be difficult to give an interpretation to Section 8 under which bifurcation of the cause of action, that is to say, the subject- matter of the suit or in some cases bifurcation of the suit between parties who are parties to the arbitration agreement and others is possible. This would be laying down a totally new procedure not contemplated under the Act. If bifurcation of the subject-matter of a suit was contemplated, the legislature would have used appropriate language to permit such a course. Since there is no such indication in the language, it follows that bifurcation of the subject-matter of an action brought before a judicial authority is not allowed.”

19. Mr.  Sibal,  learned senior  counsel  for  the respondents  submitted

that the High Court rightly relied upon Sukanya Holdings as it relates to

Part-I of the Act that the parties who are not signatories to the arbitration

agreement (in this case, Astonfield under Sale and Purchase Agreement)

cannot be referred to arbitration.  It was further submitted that  Chloro

Controls arises under Part-II of the Act and was rightly distinguished by

the High Court  and  Sukanya Holdings was not  overruled by  Chloro

Controls and hence, the appellants cannot rely upon Chloro Controls.

It  was contended that the Sale and Purchase Agreement (05.03.2012)

under which huge money was parted with, is the main agreement having

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no arbitration clause cannot be referred to arbitration.  It was submitted

that  the  subject  matter  of  the  suit  cannot  be  bifurcated  between  the

parties to arbitration agreement and others.   

20. In  Chloro Controls,  this  Court  was dealing with the scope and

interpretation of  Section 45 of  the Act  -  Part-II  of  the Act  and in  that

context, discussed the scope of relevant principles on the basis of which

a non-signatory party also could be bound by the arbitration agreement.

Under Section 45 of the Act, an applicant seeking reference of disputes

to arbitration can either be a party to the arbitration agreement or any

person  claiming  through  or  under  such  party.   Section  45  uses  the

expression “….at the request of one of the parties or any person claiming

through  or  under  him…..”  includes  non-signatory  parties  who  can  be

referred  to  arbitration  provided  they  satisfy  the  requirements  of

Sections 44 and 45 read with Schedule I  of  the Act.   In para (73) of

Chloro Controls, this Court held as under:-

“73. A non-signatory or third party could be subjected to arbitration without their prior consent,  but this would only be in exceptional cases. The court will examine these exceptions from the touchstone of  direct  relationship  to  the  party  signatory  to  the  arbitration agreement,  direct  commonality  of  the  subject-matter  and  the agreement between the parties being a composite transaction. The transaction should be of a composite nature where performance of the mother agreement may not be feasible without aid, execution and performance of the supplementary or ancillary agreements, for achieving the common object and collectively having bearing on the dispute. Besides all this, the court would have to examine whether a  composite  reference of  such  parties  would  serve  the  ends of

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justice. Once this exercise is completed and the court answers the same in the affirmative, the reference of even non-signatory parties would  fall  within  the  exception  afore-discussed.”  (Underlining added)

21. In  a  case  like  the  present  one,  though  there  are  different

agreements involving several parties, as discussed above, it is a single

commercial project namely operating a 2 MWp Photovoltaic Solar Plant

at Dongri, Raksa, District Jhansi, Uttar Pradesh.  Commissioning of the

Solar Plant, which is the commercial understanding between the parties

and it has been effected through several agreements.  The agreement –

Equipment  Lease  Agreement  (14.03.2012)  for  commissioning  of  the

Solar  Plant  is  the  principal/main  agreement.   The two agreements  of

Rishabh with  Juwi  India:-  (i)  Equipment  and Material  Supply  Contract

(01.02.2012);  and  (ii)  Engineering,  Installation  and  Commissioning

Contract (01.02.2012) and the Rishabh’s Sale and Purchase Agreement

with Astonfield (05.03.2012) are ancillary agreements which led to the

main purpose of commissioning the Photovoltaic Solar Plant at Dongri,

Raksa, District Jhansi, Uttar Pradesh by Dante Energy (Lessee).  Even

though,  the  Sale  and  Purchase  Agreement  (05.03.2012)  between

Rishabh and Astonfield does not contain arbitration clause, it is integrally

connected with the commissioning of the Solar Plant at Dongri, Raksa,

District  Jhansi,  U.P. by Dante Energy.  Juwi India, even though, not a

party to the suit and even though, Astonfield and appellant No.1 – Ameet

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Lalchand Shah are not signatories to the main agreement viz. Equipment

Lease Agreement (14.03.2012), it is a commercial transaction integrally

connected  with  commissioning  of  Photovoltaic  Solar  Plant  at  Dongri,

Raksa, District  Jhansi,  U.P.  Be it  noted, as per clause(v) of Article 4,

parties  have  agreed  that  the  entire  risk,  cost  of  the  delivery  and

installation shall be at the cost of the Rishabh (Lessor).  Here again, we

may recapitulate that engineering and installation is to be done by Juwi

India.  What is evident from the facts and intention of the parties is to

facilitate procurement of equipments, sale and purchase of equipments,

installation and leasing out the equipments to Dante Energy.  The dispute

between the parties to various agreements could be resolved only by

referring all the four agreements and the parties thereon to arbitration.

22. Parties  to  the  agreements  namely  Rishabh  and  Juwi  India:-  (i)

Equipment  and  Material  Supply  Agreement;  and  (ii)  Engineering,

Installation  and  Commissioning  Contract  and  the  parties  to  Sale  and

Purchase Agreement between Rishabh and Astonfield are one and the

same as that of the parties in the main agreement namely Equipment

Lease  Agreement  (14.03.2012).   All  the  four  agreements  are  inter-

connected.  This is a case where several parties are involved in a single

commercial  project  (Solar  Plant  at  Dongri)  executed  through  several

agreements/contracts.  In such a case, all the parties can be covered by

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the  arbitration  clause  in  the  main  agreement  i.e.  Equipment  Lease

Agreement (14.03.2012).  

23. Since  all  the  three  agreements  of  Rishabh  with  Juwi  India  and

Astonfield had the purpose of commissioning the Photovoltaic Solar Plant

project at Dongri, Raksa, District Jhansi, Uttar Pradesh, the High Court

was  not  right  in  saying  that  the  Sale  and  Purchase  Agreement

(05.03.2012) is the main agreement.  The High Court, in our view, erred

in not keeping in view the various clauses in all the three agreements

which make them as an integral part of the principal agreement namely

Equipment Lease Agreement (14.03.2012) and the impugned order of the

High Court cannot be sustained.

Amendment to Section 8 of the Arbitration and Conciliation Act, 1996

24. Arbitration and Conciliation (Amendment) Act, 2015 has brought in

amendment to Section 8 to make it in line with Section 45 of the Act. In

view of the observation made in  Sukanya Holdings, Law Commission

has  made  recommendation  for  amendment  to  Section  8  of  the  Act.

Consequent to 2015 Amendment Act, Section 8 is amended as under:-

“8.  Power  to  refer  parties  to  arbitration  where  there  is  an arbitration agreement. - (1) A judicial  authority before which an action is brought in a matter which is the subject of an arbitration agreement  shall,  if  a  party  to  the  arbitration  agreement  or  any person claiming through or  under  him,  so  applies not  later  than when the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of

22

the  Supreme  Court  or  any  court refer  the  parties  to  arbitration unless it finds that   prima facie   no valid arbitration agreement exists.

(2) The application referred to  in  sub-section (1)  shall  not  be entertained  unless  it  is  accompanied  by  the  original  arbitration agreement or a duly certified copy thereof

Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration  under  sub-section  (1),  and  the  said  agreement  or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.  

(3) Notwithstanding that  an application has been made under sub-section  (1)  and that  the  issue is  pending before  the  judicial authority, an arbitration may be commenced or continued and an arbitral award made.

25. “Principally four amendments to Section 8(1) have been introduced

by the 2015 Amendments - (i) the relevant "party" that is entitled to apply

seeking  reference  to  arbitration  has  been  clarified/amplified  to  include

persons  claiming  "through  or  under"  such  a  party  to  the  arbitration

agreement; (ii) scope of examination by the judicial authority is restricted

to a finding whether "no valid arbitration agreement exists" and the nature

of examination by the judicial authority is clarified to be on a "prima facie"

basis; (iii) the cut-off date by which an application under Section 8 is to be

presented has been defined to mean "the date of"  submitting the first

statement on the substance of the dispute; and (iv) the amendments are

expressed  to  apply  notwithstanding  any  prior  judicial  precedent.  The

proviso to Section 8(2) has been added to allow a party that does not

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possess  the  original  or  certified  copy  of  the  arbitration  agreement  on

account  of  it  being  retained  by  the  other  party,  to  nevertheless  apply

under  Section  8  seeking  reference,  and  call  upon  the  other  party  to

produce the same.”  (Ref: Justice R.S. Bachawat’s Law of Arbitration

and Conciliation, Sixth Edition, Vol. I (Sections 1 to 34) at page 695

published by LexisNexis).

26. Amendment to Section 8 by the Act, 2015 are to be seen in the

background  of  the  recommendations  set  out  in  the  246th Law

Commission  Report.  In  its  246th Report,  Law  Commission,  while

recommending  the  amendment  to  Section  8,  made  the  following

observation/comment:-

“LC Comment: The words “such of the parties…. to the arbitration agreement” and proviso (i) of the amendment have been proposed in the context of  the decision of the Supreme Court  in  Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya and Anr. (2003) 5 SCC 531, - in cases where all the parties to the dispute are not parties to the arbitration agreement, the reference is to be rejected only where such parties are necessary parties to the action – and not if they are  only  proper  parties,  or  are  otherwise  legal  strangers  to  the action  and  have  been  added  only  to  circumvent  the  arbitration agreement. Proviso (ii) of the amendment contemplates a two-step process to be adopted by a judicial authority when considering an application seeking the reference of a pending action to arbitration. The amendment envisages that the judicial authority shall not refer the parties to arbitration only if it finds that there does not exist an arbitration  agreement  or  that  it  is  null  and  void.  If  the  judicial authority is of the opinion that prima facie the arbitration agreement exists, then it shall refer the dispute to arbitration, and leave the existence of the arbitration agreement to be finally determined by the arbitral tribunal. However, if the judicial authority concludes that the agreement does not exist, then the conclusion will be final and not prima facie. The amendment also envisages that there shall be

24

a conclusive determination as to whether the arbitration agreement is null and void.

(2)  The  application  referred  to  in  sub-section  (1)  shall  not  be entertained  unless  it  is  accompanied  by  the  original  arbitration agreement or a duly certified copy thereof or a copy accompanied by an affidavit calling upon the other party to produce the original arbitration  agreement  or  duly  certified  thereof  in  circumstances where the original  arbitration agreement or  duly certified copy is retained only by the other party.

LC Comment: In many transactions involving Government bodies and smaller market players, the original/duly certified copy of the arbitration  agreement  is  only  retained  by  the  former.  This amendment would ensure that the latter class is not prejudiced in any manner by virtue of the same”  (Ref: 246th Law Commission Report, Government of India)

27. The language of amendment to Section 8 of the Act is clear that

the amendment to Section 8(1) of the Act would apply notwithstanding

any prayer, judgment, decree or order of the Supreme Court or any other

Court. The High Court laid emphasis upon the word  ".....unless it finds

that prima-facie no valid agreement exists". The High Court  observed

that there is no arbitration agreement between Astonfield and Rishabh.

After referring to  Sukanya Holdings  and the amended Section 8 and

Section  45  of  the  Act,  the  High  Court  pointed  out  the  difference  in

language  of  Section  8  and  Section  45  of  the  Act.  The  High  Court

distinguished between  Sukanya Holdings  and Chloro Controls, and

observed  that  Sukanya  Holdings  was  not  overruled  by  Chloro

Controls.  In para (23) of the impugned judgment, it was held as under:-

"23. ......The change in Section 8 is that the Court is to - in cases where arbitration agreements are relied on- to refer the disputes in the suit,  to  arbitration,  "notwithstanding any judgment,  decree or

25

order  of  the  Supreme  Court  or  any  Court,  refer  the  parties  to arbitration  unless  it  finds  that  prima  facie no  valid  arbitration agreement exists". The Court is of opinion that Sukanya is not per se  overruled,  because  the  exercise  of  whether  an  arbitration agreement exists between the parties, in relation to the disputes that are the subject matter of the suit, has to be carried out. If there are causes of action that cannot be subjected to arbitration, or the suit involves adjudication of the role played by parties who are not signatories to the arbitration agreement, it has to continue because "prima facie no valid arbitration agreement exists"  between such non parties and others, who are parties."

28. Re: contention: allegations of fraud disable an arbitration:- Yet

another  ground based on which  the  High Court  declined to  refer  the

parties  to  arbitration  is  the  allegations  of  fraud  levelled  by

respondents/plaintiffs in their plaint against Astonfield and appellant no.1.

The High Court held that the respondents levelled allegations of fraud

against  the appellants  which  raise  serious  triable  issues of  fraud and

hence, the matter cannot be referred to arbitration.  

29. According  to  the  respondents,  it  is  not  a  case  where  “fraud  is

alleged  merely  to  disable  an  arbitration”.  Mr.  Sibal,  learned  senior

counsel  for  respondents  contended  that  the  plaint  is  based  on  the

averments that from inception, the intention of appellants/defendants was

to cheat the respondents and the respondents were made to part with

large sums of money on the basis of the misrepresentation made by the

appellants. It was submitted that alternative prayer in the plaint will not

convert the fraud suit to a regulatory suit because of alternative prayer

since alternative prayer –  ‘lease rental’ has been projected only as an

26

alternative remedy. Placing reliance upon Arundhati Mishra (Smt) v. Sri

Ram Charitra  Pandey (1994)  2  SCC 29,  it  was  submitted  that  it  is

settled law that it  is  open to the parties to raise mutually inconsistent

pleas and the relief could be granted on the alternative plea so raised.

30. Refuting  the  above  contentions,  Mr.  Shanti  Bhushan,  learned

senior counsel for the appellants placed reliance upon Ayyasamy case

to contend that there are no serious allegations in the plaint to decline

reference  of  the  matter  to  arbitration.  It  was  submitted  that  mere

allegations of fraud were not sufficient to detract from the performance of

the  obligation  of  the  parties  in  terms of  the  agreement  and  refer  the

matter to arbitration.  

31. Under  the  Act,  an  arbitration  agreement  means  an  agreement

which is enforceable in law and the jurisdiction of the arbitrator is on the

basis  of  an  arbitration  clause  contained  in  the  arbitration  agreement.

However,  in  a  case  where  the  parties  alleged  that  the  arbitration

agreement is vitiated on account of fraud, the Court may refuse to refer

the parties to arbitration.  In Ayyasamy case, this Court held that mere

allegation  of  fraud  is  not  a  ground  to  nullify  the  effect  of  arbitration

agreement  between  the  parties  and  arbitration  clause  need  not  be

avoided and parties can be relegated to arbitration where merely simple

allegations of fraud touched upon internal affairs of parties is levelled.

27

Justice A.K. Sikri observed that it is only in those cases where the Court

finds that there are serious allegations of fraud which make a virtual case

of criminal offence and where there are complicated allegations of fraud

then it becomes necessary that such complex issues can be decided only

by  the  civil  court  on  the  appreciation  of  evidence  that  needs  to  be

produced. In para (25) of  Ayyasamy case, Justice Sikri held as under:-

“25…..Therefore,  the  inquiry  of  the  Court,  while  dealing  with  an application under Section 8 of the Act, should be on the aforesaid aspect viz. whether the nature of dispute is such that it cannot be referred  to  arbitration,  even  if  there  is  an  arbitration  agreement between the parties. When the case of fraud is set up by one of the parties and on that basis that party  wants to wriggle out  of  that arbitration  agreement,  a  strict  and  meticulous  inquiry  into  the allegations of fraud is needed and only when the Court is satisfied that the allegations are of serious and complicated nature that it would be more appropriate for the Court to deal with the subject- matter rather than relegating the parties to arbitration, then alone such an application under Section 8 should be rejected.”

32. While  concurring  with  Justice  Sikri,  Justice  D.Y.  Chandrachud

pointed out that the duty of the Court is to impart  “sense of business

efficacy” to  the  commercial  transactions  pointing  out  that  mere

allegations of fraud were not sufficient to decline to refer the parties to

arbitration.  In para (48) of  Ayyasamy case, Justice D.Y. Chandrachud

held as under:-

“48. The  basic  principle  which  must  guide  judicial  decision- making is that arbitration is essentially a voluntary assumption of an  obligation  by  contracting  parties  to  resolve  their  disputes through a private tribunal. The intent of the parties is expressed in the  terms  of  their  agreement.  Where  commercial  entities  and persons of business enter into such dealings, they do so with a

28

knowledge  of  the  efficacy  of  the  arbitral  process.  The commercial  understanding is  reflected in  the  terms of  the agreement between the parties. The duty of the court is to impart to that commercial understanding a sense of business efficacy.”  (Underlining added)

33. When we apply the aforesaid principles to the facts of the present

case, as discussed earlier, both parties have consciously proceeded with

the commercial transactions to commission the Photovoltaic Solar Plant

at Dongri, Raksa, District Jhansi, U.P. The first respondent has proceeded

to  procure  the  materials,  entered  into  agreement  with  Juwi  India  for

engineering, installation and commissioning and the sale and purchase

agreement  with  Astonfield,  were  all  the  conscious  steps  taken  in  the

commercial  understanding  to  commission  the  Solar  Plant  at  Dongri,

Raksa, District Jhansi, U.P. Even though Juwi India and Astonfield are not

parties  to  the  main  agreement  -  Equipment  Lease  Agreement

(14.03.2012),  all  the  agreements/contracts  contain  clauses referring to

the main agreement. It is the duty of the Court to impart the commercial

understanding with a “sense of business efficacy” and not by the mere

averments made in the plaint. The High Court was not right in refusing to

refer the parties on the ground of the allegations of fraud levelled in the

plaint.

34. It  is  only  where  serious  questions  of  fraud  are  involved,  the

arbitration can be refused. In this case, as contended by the appellants

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there were no serious allegations of fraud; the allegations levelled against

Astonfield is that appellant no.1 - Ameet Lalchand Shah misrepresented

by inducing the respondents to pay higher price for the purchase of the

equipments. There is, of course, a criminal case registered against the

appellants in FIR No.30 of 2015 dated 05.03.2015 before the Economic

Offences Wing, Delhi.  The appellant no.1 – Ameet Lalchand Shah has

filed Criminal Writ Petition No.619 of 2016 before the High Court of Delhi

for quashing the said FIR. The said writ petition is stated to be pending

and therefore, we do not propose to express any views in this regard,

lest,  it  would  prejudice  the  parties.  Suffice  to  say  that  the  allegations

cannot be said to be so serious to refuse to refer the parties to arbitration.

In  any  event,  the  Arbitrator  appointed  can  very  well  examine  the

allegations regarding fraud.

35. Main agreement  -  Equipment  Lease Agreement  (14.03.2012)  for

leasing  and  commissioning  of  Solar  Plant  at  Dongri,  Raksa,  District

Jhansi,  Uttar  Pradesh  contains  arbitration  clause  (Clause  29).   As

discussed  earlier,  other  three  agreements  -  two  agreements  between

Rishabh and Juwi India (01.02.2012) and Sale and Purchase Agreement

(05.03.2012) between Rishabh and Astonfield are integrally connected

with the commercial understanding of commissioning the Solar Project at

Dongri, Raksa, District Jhansi, Uttar Pradesh and to resolve the dispute

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between the parties, they are to be referred to arbitration. The order of

the  High  Court  declining  to  refer  the  parties  to  arbitration  cannot  be

sustained and is liable to be set aside. The four agreements namely:- (i)

Equipment and Material Supply Contract (01.02.2012) between Rishabh

and Juwi India; (ii)  Engineering, Installation and Commissioning Contract

(01.02.2012) between Rishabh and Juwi India; (iii) Sale and Purchase

Agreement  (05.03.2012)  between  Rishabh  and  Astonfield;  and  (iv)

Equipment Lease Agreement (14.03.2012) between Rishabh and Dante

Energy and the parties thereon are referred to arbitration.  

36. As  per  the  terms  of  Equipment  Lease  Agreement  (14.03.2012),

appellant No.3 - Dante Energy has to pay lease rentals of Rs.13,67,500/-

for  the month of  March,  2012 and with effect  from April,  2012 to pay

lease rentals of Rs.28,26,000/- per month for a period of fifteen years.

Learned Senior Counsel for respondents, Mr. Sibal has submitted that

appellant No.3 - Dante Energy has not paid the rentals as per the terms

and conditions of Equipment Lease Agreement. Mr. Sibal has also drawn

our  attention that  Astonfield  Solar  Rajasthan Pvt.  Ltd.  has  transferred

99.99% of its shares to ARRL (Mauritius) Ltd. (Holding Company) and

Ameet Lalchand Shah has only one share (0.01%). Our attention was

also  drawn  to  Astonfield  Solar  Gujarat  Pvt.  Ltd.,  which  has  also

transferred  99.99%  of  its  shares  to  ARRL  (Mauritius)  Ltd.  (Holding

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Company) and that Ameet Lalchand Shah has only one share (0.01%). It

was also submitted that the appellant No.1 - Ameet Lalchand Shah was

subsequently removed from the Board of  Directors of  Astonfield Solar

Gujarat Pvt. Ltd. by the shareholders by EGM dated 17.12.2016.  We do

not propose to go into the merits of this contention; however, keeping in

view that Astonfield has transferred its shareholdings qua Rajasthan and

Gujarat Solar Power units, in our view, the interest of the respondents is

to be protected till the matter is resolved by the arbitrator by directing the

appellants to pay the arrears of  lease rent and also to pay the future

lease rent for the equipments at the rate of Rs.28,26,000/- per month.

37. The impugned order of the High Court is set aside and this appeal

is allowed. All the aforesaid four agreements and the parties thereon are

referred  to  arbitration.  By  notice  dated  13.02.2016,  appellants  have

nominated Justice Sujata Manohar, former Judge of the Supreme Court

of  India  as  their  Arbitrator.  We leave it  open to  the  parties  as  to  the

choice of the Arbitrator.  If  the parties are not in a position to arrive at

consensus as to the Arbitrator, the parties shall approach the appropriate

High Court for appointment of the Arbitrator.  Appellants are jointly and

severely liable to pay the arrears of lease rent and also to pay the future

lease rent for the equipments of  the PV Solar Power Plant at  Dongri,

Raksa, District Jhansi, Uttar Pradesh at the rate of Rs.28,26,000/- per

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month till  the disposal of the arbitration proceedings. Such payment of

lease rent shall be without prejudice to the contentions of both parties

and  shall  be  subject  to  the  final  outcome  of  arbitration  proceedings.

Since parties are referred to arbitration, commercial Suit No.85 of 2017

filed  by  the  respondents  on  the  file  of  Delhi  High  Court  shall  stand

disposed of.  No cost.

.…….…………...………J.        [RANJAN GOGOI]

…………….……………J.        [R. BANUMATHI]

New Delhi; May 03, 2018

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