Arbitration Act | Section 8 Application Not Maintainable Without Written Arbitration Agreement: Calcutta High Court

The Calcutta High Court has dismissed an application filed under Section 8 of the Arbitration and Conciliation Act, 1996, seeking reference of a commercial suit to arbitration. Justice Aniruddha Roy held that since no written arbitration agreement exists between Flint Group India Pvt. Ltd. (plaintiff) and Sujay Lodha (defendant), the mandatory requirement under Section 7 of the Act is not satisfied, and therefore the suit cannot be referred to arbitration.

The defendant relied on a 2019 distributorship agreement executed between Flint Netherlands (the plaintiff's holding company) and the defendant, which contained an arbitration clause. It was argued that the transactions forming the subject matter of the suit—sale and delivery of goods by the plaintiff—were intrinsically linked to that agreement, and that the “group of companies” doctrine, as recognised in Cox and Kings Ltd. v. SAP India (2024), should bind the plaintiff to the arbitration clause.

The Court, however, rejected this contention, observing that the plaint discloses no written contract between the plaintiff and the defendant, much less one containing an arbitration clause. The case pleaded is of an independent commercial arrangement where goods were supplied, payments were partly made, and a balance remained outstanding. The plaint nowhere connects the transaction to the distributorship agreement with Flint Netherlands.

Emphasising that for a Section 8 application, the averments in the plaint must be taken as sacrosanct, the Court noted that the defendant cannot rely on an agreement to which the plaintiff is not a signatory—particularly when the plaint does not show any intention to be bound by the distributorship agreement or its arbitration clause.

The Court also noted that the defendant had already forfeited its right to file a written statement, the statutory period of 120 days having expired.

Citing the requirement under Section 7 that an arbitration agreement must be in writing, Justice Roy held that “no arbitration agreement exists between the parties as disclosed in the plaint,” making Section 8 inapplicable. The group of companies doctrine, the Court added, could not be invoked in the absence of any demonstrated nexus between the suit transaction and the distributorship agreement.

Finding the application “devoid of merit,” the Court dismissed it with costs of ₹10,000, payable to the West Bengal State Legal Services Authority within two weeks.

Case: Flint Group India Pvt. Ltd. v. Sujay Lodha

IA No.: GA-COM/4/2024 in CS-COM/652/2024

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