An entire-agreement clause answers the claim that a later contract springs from the mother agreement

A Bench led by Chief Justice Surya Kant appointed a former Bombay High Court Chief Justice as sole arbitrator, leaving the non-signatory subsidiary question to him.

A Korean wastewater technology company could not send its Indian joint venture partner to arbitration in Korea by arguing that the joint venture agreement had no independent life apart from the licence agreement that preceded it. A three-judge Bench of Chief Justice Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana appointed a sole arbitrator under Section 11, holding that the entire-agreement clauses in the joint venture agreement and the memorandum of understanding supersede what came before, and that an inquiry at the referral stage goes no further than the prima facie existence of an arbitration agreement. The order was authored by Justice Bagchi.

A licence, a joint venture, and a subsidiary in Pune

The first petitioner, Shubham Equipment Private Limited, is an Indian company at Thane in the business of cleaning drinking water tanks under the trade names TANCLEAN and SHUBHAM; the second petitioner is one of its main promoters. The first respondent, Rothwell Water Company Limited, is a Korean company at Gyeonggi-do holding multiple patents in the technology of the biological nutrient removal process in wastewater treatment; the second respondent is its promoter and President. The third respondent, Rothwell Business International Private Limited, is a wholly owned subsidiary of the Korean company, registered at Pune and incorporated by the second respondent along with his daughter and another person.

Three instruments matter. On 30 January 2019 the Indian company and the Korean company entered a Technical Collaboration Licence Agreement, under which the Korean company granted an exclusive, non-transferable, royalty-bearing licence over patents relating to wastewater treatment technology. On 1 October 2021 a Joint Venture and Share Holding Agreement was executed, creating a joint venture company for the supply, installation, operation and maintenance of latest-generation sewage treatment plants and related products under the ROTHWELL brand. There is also a memorandum of understanding between the parties.

The order notes what the signature clause of the joint venture agreement shows: the second petitioner signed on behalf of the Shubham group of companies, defined as the Indian Group, and the second respondent on behalf of the Korean company, defined as the South Korean Group — signifying that the companies of both groups, represented through their promoter and director signatories, were bound by it. Article 43 of that agreement provides for amicable settlement first and arbitration if thirty days of consultation fail.

Mediation first

The Court's initial step was not to decide. It referred the matter for amicable resolution through mediation. Senior counsel Mr. C. U. Singh and Mr. Sudhanshu Choudhari reported that although some progress was made, the parties could not finally reach an amicable resolution. The Bench then took the matter on merits.

Which arbitration clause governs

Neither side disputed that the arbitration agreements in the joint venture agreement and the memorandum of understanding exist, or that the disputes arise under them. The respondents' argument was that those agreements are intrinsically intertwined with the mother agreement, the licence agreement of 30 January 2019, whose dispute resolution clause provides for arbitration in Korea and would therefore govern. They pointed out that they had already issued a notice alleging breach of the exclusivity clause of the licence agreement and a notice invoking arbitration under it in Korea on 8 August 2025. They also contended that the Pune subsidiary, a non-signatory, is not bound by the arbitration clause.

For the petitioners, Mr. Singh answered that the joint venture agreement and the memorandum are independent of the licence agreement, relying on Article 25 of the former and Clause 10.8 of the latter.

That is where the point was decided. Article 25 of the joint venture agreement states that the agreement is the entire agreement between the parties on its subject matter and supersedes all prior agreements on it. Clause 10.8 of the memorandum similarly cancels and supersedes any and all prior agreements as to its subject matter. The later instruments therefore stand on their own, and the arbitration clauses within them apply.

The Bench then set the limits of its own inquiry. Section 11(6-A) of the 1996 Act prescribes the principle of minimal judicial intervention by restricting the scope of inquiry to the prima facie existence of the arbitration agreement, as explained in In re: Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899, (2024) 6 SCC 1. Once prima facie existence is shown before the referral court, it ought to appoint an arbitrator and refer the parties to arbitration. Questions about the scope and ambit of the disputes amenable to arbitration under the joint venture agreement and the memorandum cannot be a ground to refuse a reference at the threshold.

The non-signatory question goes to the arbitrator

On the Pune subsidiary the Bench declined to decide either way, and said why. The petitioners' case is that it is a wholly owned subsidiary of a signatory, that the second respondent and his daughter are its directors, and that it was incorporated in contravention of Article 24.1 of the joint venture agreement in order to compete unfairly with the joint venture company, making it a necessary party. The issue, the Bench held, is a contentious one in that situation, and needs to be relegated to the arbitrator for appropriate adjudication.

Order

Both arbitration petitions, involving the same parties and common questions of law and fact, were allowed by a common order. Justice Ramesh Deokinandan Dhanuka, former Chief Justice of the Bombay High Court, was appointed sole arbitrator, with liberty to fix his own remuneration and fees. There was no order as to costs.