Arbitration clause in share purchase dispute covers the entire suit; validity objections go to the arbitral tribunal under Section 16.

Where a civil suit is founded entirely on rights and liabilities created by a share purchase agreement and related memorandum containing an arbitration clause, the whole dispute must be referred to arbitration under Section 8. Objections that a later agreement had superseded the earlier contract, that the arbitration clause had ceased to operate, or that prior participation barred reference were treated as issues going to the existence, validity, or subsistence of the arbitration agreement, which are for the arbitral tribunal under Section 16. The suit could not be split when its entire subject-matter fell within the arbitration clause, and reference to arbitration was therefore mandatory.

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Issues: Whether the suit, founded on the share purchase agreement and related memorandum, was required to be referred to arbitration under the arbitration clause, and whether the objections based on supersession of the earlier agreement, validity of the arbitration clause, and alleged prior participation in the proceedings prevented reference under Section 8.

Analysis: The agreement contained a clause referring disputes arising out of or in connection with it to arbitration. The reliefs in the suit were all rooted in the rights and liabilities created by that agreement and the related memorandum, so the entire subject-matter of the suit fell within the arbitration clause. The objections that a later agreement had abrogated the earlier contract, or that the arbitration clause had perished, were treated as matters going to the existence or validity of the arbitration agreement and the arbitrator's jurisdiction. Those questions were held to be for the arbitral tribunal under Section 16, not for decision at the stage of Section 8. The Court also held that the suit could not be split and partly referred if the whole dispute was covered by the arbitration agreement.

Conclusion: The dispute was held referable to arbitration, and the application under Section 8 was allowed.

Final Conclusion: The civil suit was directed to be resolved through arbitration, with the sole arbitrator appointed in terms of the parties' agreement.

Ratio Decidendi: Where the entire subject-matter of a civil action is covered by an arbitration agreement and the procedural requirements of Section 8 are met, reference to arbitration is mandatory, while objections to the existence, validity, or continued subsistence of the arbitration agreement are for the arbitral tribunal under Section 16.

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