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Issues Involved:
1. Validity of the arbitration agreement. 2. Whether the subsequent agreement superseded the original agreement. 3. Right to refer the dispute to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996. 4. Whether the defendants waived their right to arbitration. 5. Whether the defendants submitted to the jurisdiction of the court by disclosing their defense on merits. Issue-wise Detailed Analysis: 1. Validity of the arbitration agreement: The defendants filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, arguing that the disputes arising from the share purchase agreement dated 29.3.2001 should be referred to arbitration as per the arbitration clause contained within that agreement. The plaintiff contested this application, arguing that the subject matter of the suit was not covered by any valid arbitration agreement and that the defendants had waived or abandoned the arbitration agreement by their conduct. The court noted that the arbitration clause in the agreement mandated that all disputes arising out of or in connection with the agreement should be referred to arbitration. 2. Whether the subsequent agreement superseded the original agreement: The plaintiff argued that the share purchase agreement dated 29.3.2001 was superseded by a subsequent agreement dated 12.7.2001, which did not contain an arbitration clause. The court held that the issue of whether the subsequent agreement abrogated the original agreement and its arbitration clause should be decided by the arbitrator under Section 16 of the Arbitration and Conciliation Act, which allows the arbitrator to rule on their own jurisdiction, including objections regarding the existence or validity of the arbitration agreement. 3. Right to refer the dispute to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996: The court emphasized that Section 8 of the Arbitration and Conciliation Act is mandatory and pre-emptory. It mandates that if there is an arbitration agreement and a party applies for reference to arbitration before submitting their first statement on the substance of the dispute, the judicial authority must refer the parties to arbitration. The court found that the defendants had filed the application under Section 8 before submitting their written statement, fulfilling the requirement of Section 8. 4. Whether the defendants waived their right to arbitration: The plaintiff argued that the defendants had waived their right to arbitration by filing a caveat and participating in the court proceedings without immediately invoking the arbitration clause. The court rejected this argument, noting that the defendants had consistently raised the issue of arbitration and had not submitted their defense on the substance of the dispute before filing the application under Section 8. 5. Whether the defendants submitted to the jurisdiction of the court by disclosing their defense on merits: The plaintiff contended that the defendants had disclosed their defense on merits in their appeal against an interim injunction order, thus submitting to the court's jurisdiction. The court found that the defendants had raised the issue of arbitration in their appeal and had not disclosed their defense on the substance of the dispute before filing the application under Section 8. Therefore, the defendants had not waived their right to arbitration. Conclusion: The court concluded that the subject matter of the suit was covered by the arbitration agreement contained in the share purchase agreement dated 29.3.2001. It referred the dispute to arbitration, appointing a retired judge as the sole arbitrator to resolve the issues. The application under Section 8 was allowed, and the parties were directed to appear before the arbitrator and submit their claims and counter-claims. The arbitrator was instructed to make and publish the award in accordance with the law.
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