When Multiple Agreements Are Not Interconnected, Arbitration Clause In Any One Agreement Can't Justify Referring All Disputes To Arbitration: Telangana HC

The Telangana High Court bench of Chief Justice Alok Aradhe and Justice Sreenivas Rao, affirmed that where multiple agreements are interconnected and form part of a single commercial transaction then only the presence of an arbitration clause in one or more agreements can justify referring all disputes, involving all agreements and parties, to arbitration. The plaintiff filed C.O.S.No.31 of 2021 seeking a direction to the defendants to jointly and severally pay an amount of Rs.10,93,05,243/- in respect of the Lease Agreement dated 16.10.2019 along with future interest @ 13% per annum from the date of suit till realisation and sought another relief directing defendant No.1 to pay an amount of Rs.33,41,069/- being amounts refundable by them towards initial capital investment and other expenses in respect of the joint venture agreement dated 21.02.2020 Defendant No.1 filed an application in I.A.No.73 of 2022 under Section 8 of the Arbitration and Conciliation Act, 1996 read with Order VII Rule 11 and of C.P.C. Per contra, Plaintiff/the respondent submitted that the operational lease agreement dated 16.10.2019 and the joint venture agreement dated 21.02.2020 are not interconnected and both are different agreements and that the operational lease agreement dated 16.10.2019 was executed between the plaintiff and defendant No.1, whereunder the plaintiff leased out 30 Volvo Tippers to defendant No.1 for a period of 34 months. Court's Analysis The court noted that in pursuance of arbitration clause contained in the joint venture agreement defendant No.1 has filed Arbitration Application No.419 of 2022 before the High Court of Delhi and the same was allowed on 25.03.2022 referring the dispute arose out of a joint venture agreement dated 21.02.2020 to the arbitrator and The court also noted that the Delhi High Court also held that there is “no connect” between the subject matter of the operational lease agreement read with MOU and joint venture agreement and the said order has become final It is pertinent to mention that the plaintiff filed suit for recovery of an amount of Rs.10,93,05,243/- against the defendants basing upon the operational lease agreement dated 16.10.2019 and MOU dated 05.01.2020 and the said documents do not contain arbitration clause and basing upon the arbitration clause enumerated in the joint venture agreement dated 21.02.2020, defendant No.1 is not entitled to seek rejection of the plaint, especially the operational lease agreement, MOU and joint venture agreement are not interconnected and they are different, the court noted. Based on the above, the court observed that operational lease agreement dated 16.01.2019 and joint venture agreement dated 21.02.2020 are not interconnected.