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        Companies Law

        2008 (12) TMI 790 - SC - Companies Law

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        Arbitration clause survives later agreement absent clear novation, rescission, or supersession, enabling appointment of a sole arbitrator. A separately executed services agreement containing an arbitration clause remained enforceable because neither the later tripartite share purchase ...
                      Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
                        Provisions expressly mentioned in the judgment/order text.

                            Arbitration clause survives later agreement absent clear novation, rescission, or supersession, enabling appointment of a sole arbitrator.

                            A separately executed services agreement containing an arbitration clause remained enforceable because neither the later tripartite share purchase agreement nor the letter of intent clearly established novation, rescission, or supersession. The termination of the share purchase agreement did not extinguish the earlier contractual arrangement, and the letter of intent was only an agreement to enter into another agreement. The dispute under the services agreement was therefore live and arbitrable, and the applicant was entitled to invoke the arbitration clause and seek appointment of a sole arbitrator under Section 11(6).




                            Issues: Whether the Services Agreement dated July 15, 2006 survived the subsequent Tripartite Share Purchase Agreement and Letter of Intent, and whether the applicant was entitled to invoke the arbitration clause and seek appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

                            Analysis: The Services Agreement was separately executed and was not shown to have been dependent on completion of the Tripartite Share Purchase Agreement. The termination of the Tripartite Share Purchase Agreement did not extinguish the earlier Services Agreement. The Letter of Intent was only an agreement to enter into another agreement and did not amount to novation, rescission, or revocation of the existing contractual arrangements. The dispute arising out of the Services Agreement was therefore live, arbitrable, and within time.

                            Conclusion: The applicant was entitled to invoke the arbitration clause, and the request for appointment of a sole arbitrator was allowed.

                            Final Conclusion: The proceeding succeeded, the Services Agreement was held to remain operative for arbitration purposes, and a sole arbitrator was appointed to resolve the disputes.

                            Ratio Decidendi: A separately executed agreement containing an arbitration clause is not displaced by a later agreement or letter of intent unless novation, rescission, or supersession is clearly established; in the absence of such proof, the arbitration clause remains enforceable.


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                            ActsIncome Tax
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