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All parties working together in a single project covered by arbitration clause of main agreement

In AMEET LALCHAND SHAH vs RISHABH ENTERPRISES, the Supreme Court while deciding the appeal moved by Ameet Lalchand Shah and Rishab Enterprises revolving around commissioning of a photovoltaic solar plant in Uttar Pradesh held that only in cases where serious questions of fraud are involved, can the arbitration be refused, the Supreme Court on Thursday held while observing that where several parties are involved in a single commercial project executed through several agreements/contracts, all parties can be covered by the arbitration clause in the main agreement even as the other subsequent contracts do not have arbitration clause.

Observing that “It is the duty of the Court to impart the commercial understanding with a “sense of business efficacy”, a bench of Justice Ranjan Gogoi and Justice R Banumathi held that where there is a principal agreement towards a single commercial project executed through several contracts between different parties, the other contracts are an integral part of the principal agreement and parties can be referred to arbitration.

The bench said the parties to the different contracts took conscious steps with commercial understanding to commission the solar plant.

 Article referred: http://www.livelaw.in/parties-working-towards-single-commercial-project-through-several-agreements-referable-to-arbitration-only-cases-of-serious-fraud-out-of-purview-of-arbitration-sc-read-judgment/

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