Decision marks another step widening the arbitration net

In Ameet Lalchand Shah & Ors v Rishabh Enterprises & Anr, the Supreme Court has taken one more step to widen the net of arbitration and avoid litigation.

The transaction in dispute involved a solar power plant to be set up in Uttar Pradesh. Respondent No.1 (Rishabh), under two agreements, both dated 1 February 2012, agreed to purchase power generating equipment from Juwi India Renewable Energies, and Juwi agreed to provide installation and commissioning for the power plant. Rishabh also purchased photovoltaic equipment for use in the project from appellant No. 2 (Aston) under an agreement dated 5 March 2012. Rishabh leased the photovoltaic equipment to Dante under an agreement dated 14 March 2012.

The two agreements between Rishabh and Juwi and the lease agreement between Rishabh and Dante provided for arbitration with the seat at Mumbai. The agreement with Aston did not contain an arbitration stipulation. Appellant No.1 (Shah) was the promoter of Aston and Dante. Aston received ₹214 million (US$3.1 million) from Rishabh towards the price of ₹251.6 million. Aston also paid ₹100 million in cash to the sons of Rishabh’s sole proprietor. The solar plant was commissioned in March 2012 but Dante failed to pay lease rental to Rishabh from March 2012.

Karthik Somasundram is a partner and Shreya Gupta is a senior associate at Bharucha & Partners.