Foreign arbitration agreement upheld as company-law dispute was referred to arbitration despite parallel proceedings and fraud allegations.

A judicial authority must refer parties to arbitration under section 45 where a foreign arbitration agreement exists, a reference is sought, and the agreement is not clearly shown to be null and void, inoperative or incapable of being performed. The share subscription and shareholders agreements contained a continuing arbitration clause, and the rescission notice did not extinguish it because the clause was preserved pending an arbitral award on termination. Filing a company petition did not amount to waiver or abandonment of arbitration rights on these facts, especially after arbitration had already been invoked and the tribunal constituted. Allegations of fraud and misrepresentation were left to the arbitral tribunal, and the dispute was referred to arbitration.

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Issues: Whether the parties were required to be referred to arbitration under section 45 of the Arbitration and Conciliation Act, 1996; whether the arbitration agreement had become null and void, inoperative or incapable of being performed by reason of the company petition and the parties' conduct; and whether the disputes raised in the company petition were covered by the agreed contractual arbitration mechanism.

Analysis: Section 45 required the judicial authority to refer the parties to arbitration where there existed a foreign arbitration agreement, a request for reference had been made, and the agreement was not shown to be null and void, inoperative or incapable of being performed. The dispute arose from alleged breach of representations, warranties and contractual arrangements under the share subscription and shareholders agreements, both of which contained a continuing arbitration clause. The rescission notice itself preserved the dispute resolution clause, and the agreement provided that it would remain in force pending an arbitral award determining termination. The filing of a company petition by one side did not, on the facts, amount to an unequivocal waiver or abandonment of the right to arbitrate, especially where arbitration had already been invoked, the tribunal had been constituted, and both sides had participated in arbitral proceedings. The allegations of fraud and misrepresentation were held to be matters for the arbitral tribunal and not for summary adjudication in company-law proceedings.

Conclusion: The conditions of section 45 were satisfied, the arbitration agreement remained operative, and the parties were required to be referred to arbitration.

Final Conclusion: The company petition was held to fall within the agreed foreign arbitration mechanism, and the Board declined to decide the merits of the contractual dispute under the company-law jurisdiction.

Ratio Decidendi: Where parties to a foreign arbitration agreement have contractually provided that the agreement continues until the arbitral award determines termination, a judicial authority must refer the dispute to arbitration under section 45 unless the agreement is clearly shown to be null and void, inoperative or incapable of being performed; mere institution of parallel company proceedings does not by itself constitute abandonment of the arbitration right.

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