Goraman Integrated Logistics Private Limited vs Gowri Shankar
- Court
- Madras High Court
CRP No. 4209 of 2026
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 18-08-2026
DELIVERED ON: 25 -08-2026
CORAM
THE HONOURABLE MR.JUSTICE P.B. BALAJI
CRP No. 4209 of 2026
and CMPNos,18367 and 18372 of 2026
1. Goraman Integrated Logistics Private
Limited
A Company Incorporated Under the
Provisions of the companies Act, 2013,
Having its Registered office at, Old No.68,
New No.137, 2nd Floor, Thambu Chetty
Street, Mannadi, George Town,
Chennai-01. Rep herein by its Authorised
Signatory D.Lingasamy. Petitioner(s)
Vs
1. Gowri Shankar
S/o. Soundappan, Res. at No.18/33, B3 4th
Street, Voltas Colony, Nanganallur,
Alandur-61.
2.Anil Kumar.B
S/o. Bathina Babu, Res. at No.48,
Angalamman Koil Street, NMTPS-VIA,
Subba Reddy Palayam, Minjur,
Respondent(s)
Tiruvallur-120.
Revision filed under Article 227 of Constitution of India against the order dated
09.06.2026 passed in I.A.No.4 of 2026 in O.S.No.116 of 2025 (impugned order) by the
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District Munsif Court, Ponneri (District Munsif), wherein allowed the application filed
by the respondents herein under Section 8 of the Arbitration and Conciliation Act, 1996
(“A&C Act”) and referred the parties to arbitration in terms of Clause 13 of the
Memorandum of Understanding dated 23.11.2023 (“MOU”).
For Petitioner(s): Mr.Sathish Parasaran
Senior Counsel
For Mr.G.Vivekanand
For Respondent(s): Mr.B.Vijay
For Mr.G.Mohammed Aseef
ORDER
The plaintiff in a suit for permanent injunction, is the revision petitioner,
aggrieved by the order passed in I.A.No.4 of 2026 in the said suit O.S.No.116 of 2025,
the said I.A.No.4 of 2026 having been filed under Section 8 of the Arbitration and
Conciliation Act, 1996 and having been allowed, thereby referring the parties to the suit
to Arbitration.
2. I have heard Mr.Sathish Parasaran, learned Senior Counsel for
Mr.G.Vivekanand, the learned counsel for the revision petitioner and Mr.B.Vijay, for
Mr.G.Mohammed Aseef, learned counsel for the respondents.
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3. The plaintiff, M/s Goraman Integrated Logistics Private Limited filed
O.S.No.116 of 2025 seeking to restrain the defendants viz., the respondents herein from
interfering with the peaceful possession and enjoyment of the plaintiff Company. Along
with the suit, the revision petitioner/plaintiff has also filed an interlocutory application in
I.A.No.2 of 2025 seeking an interim injunction to protect the petitioner’s interest
pending the suit. Admittedly, no interim injunction was granted at the first instance.
However, pending the said injunction application, the defendants, who are the
respondents herein filed I.A.No.4 of 2026 under Section 8 of the Arbitration and
Conciliation Act, 1996, seeking to refer the parties to Arbitration in terms of Clause 13
of the Memorandum of Understanding dated 23.11.2023. The said application was
resisted by the revision petitioner. However, ultimately, the trial Court allowed the said
application and referred the parties to Arbitration.
4. The submissions of Mr.Sathish Parasaran, learned Senior Counsel for the
revision petitioner are summarized herein below:-
(a) The revision petitioner was not a party to the Memorandum of
Understanding dated 23.11.2023 which contained an Arbitration Clause. The petitioner
is the owner of the suit property and in order to protect its possession against
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interference from the respondents, the suit for bare injunction was filed. The petitioner
Company is in fact the subject matter of the dispute between the rival parties viz., the
respondents herein and D.Lingasamy and Mrs.L.Dhanabakkialakshmi, who are parties
in their individual capacity to the said Memorandum of Understanding. Therefore,
adopting a common sense approach, the Company can never be presumed to be a
veritable party to the arbitration agreement or even the Memorandum of Understanding
itself.
(b) The Section 21 Notice under the Arbitration and Conciliation Act, 1996
was not issued to the Petitioner Company and even assuming such notice need not be
issued and yet, the petitioner Company can be subjected to Arbitration proceedings,
even then, the respondents in their Section 21 notice had disowned the very
Memorandum of Understanding itself. Therefore, the Arbitration clause contained in the
said Memorandum of Understanding cannot be taken advantage of by the respondents
themselves.
(c) In the Section 21 notice, the respondents referred to a loan agreement
entered into between the individual parties which also contained an arbitration clause.
The said loan agreement has not seen the light of the day, especially in the Section 8
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application or even before this Court and therefore, it cannot be contended that merely
because the parties have incorporated an arbitration clause in the loan agreement, it can
be read into or interpreted that even in respect of the petitioner Company, the arbitration
clause incorporated in the loan agreement and the Memorandum of Understanding
would survive and bind the petitioner Company.
(d) Pointing out to the impunged order, Mr.Sathish Parasaran, learned Senior
Counsel would contend that the trial Court has been carried away by the submissions
made by the learned Senior Counsel before the Hon’ble Supreme Court, which is
evident from reference to the said submissions extracted by the Hon’ble Supreme Court
in Cox & Kings Ltd vs V.Singla, reported in (2023) SCC Online 1634 and it was in fact
rejected by the Hon’ble Supreme Court in the later portion of the very same judgment.
The trial Court has therefore not even applied its mind in a proper judicious manner.
(e) The actual dispute is only with regard to which party is in control of the
petitioner Company and since highhandedly the respondents are attempting to take over
the control of the Company itself and such attempts have been thwarted by the petitioner
Company and only in order to protect its possession, the suit has been filed.
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5. Mr.Sathish Parasaran, learned Senior Counsel, in support of his
submissions, relies on the following decisions:-
(i) Rajia Begum vs Barnali Mukherjee reported in ( 2026
SCC OnLine SC 135 .
(ii)S.P. Chengalvaraya Naidu (Dead) by Lrs vs Jagannath
(Dead) by Lrs and Others (1994) 1 SCC 1.
(iii)Booz Allen and Hamilton Inc. vs SBI Home Finance
Limited and Others – (2011) 5 SCC 532
(iv) Khatri Hotels Private Limited and another vs Union of
India and another (2011) 9 SCC 126.
(v) Himangni Enterprises vs Kamaljeet Singh Ahluwalia
(2017) 10 SCC 706
(vi) Anil Mahindra vs Surender Kumar Makkar and another
(2017) SCC Online Del 11532
(vii) Rashid Raza vs Sadaf Akhtar – (2019) 8 SCC 710.
(viii) Vidya Drolia and others vs Durga Trading
Corporation (2021) 2 SCC Cases 1.
(ix) Chloro Controls India Pvt Ltd vs Severn Trent Water
Purification Inc and Others – (2013) 1 SCC 641
(x) Today Homes and Infrastructure Pvt Ltd vs Ludhiana
Improvement Trust and another - (2014) 5 SCC 68.
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(xi) M/s Sundaram Finance Ltd and another vs T.Thankam –
CDJ 2015 SC 145
(xii) Anantesh Bhakta represented by Mother Usha and
Others vs Nayana S.Bhakta and Others (2017) 5 SCC 185.
(xiii) Cox & Kings Ltd vs Sap India Private Limited and
another – (2024) 4 SCC 1
(xiv) ASF Buildtech Private Limited vs Shapoorji Pallonji
and Company Private Limited – (2025) 9 SCC 76.
(xv) Ms/Techtix Engineers vs Megastone Logipark Pvt Ltd –
Special Civil Application No.6878 of 2023.
(xvi) Bacha F.Guzdar vs Commissioner of Income Tax,
Bombay (1954) 2 SCC 563
6. Mr.Sathish Parasaran, learned Senior Counsel, therefore prays for the
revision being allowed.
7. Refuting the submissions of Mr.Sathish Parasaran, learned Senior Counsel,
Mr.B.Vijay, appearing for Mr.G.Mohammed Aseef, counsel for the respondents would
submit that the issue that arises for consideration is as to whether the petitioner
Company is a veritable party or not and according to the learned counsel, the petitioner
Company is not only a veritable party, but also a beneficiary under the Memorandum
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of Understanding and therefore, it would certainly fall within the meaning of “veritable
party”. The arguments of Mr.B.Vijay, are summarised herein below:-
(a) The petitioner is a veritable party to the Memorandum of Understanding
dated 23.11.2023.
(b) Though in the Section 21 Notice, the respondents had alleged fraud, it
would not amount to repudiation of the Arbitration Clause, especially when the revision
petitioner, as plaintiff has not only referred, but has also admitted the Memorandum of
Understanding dated 23.11.2023, which contains an arbitration clause.
(c) The scope of enquiry of the reference Court under Section 8 of the
Arbitration and Conciliation Act is very limited and cannot be extended to conduct an
enquiry as to the validity of the Arbitration clause.
(d) The reference Court, on finding that an arbitration clause exists, should
ordinarily refer the parties to arbitration, by allowing the Section 8 application, leaving it
open to the parties to raise all objections before the Arbitrator under Section 16,
including the objections with regard to the jurisdiction of the Arbitrator.
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(e) As regards the Section 21 notice, Mr.B.Vijay, would contend that no
doubt the notice has not been happily worded, but, when the petitioner Company has not
disputed the said Memorandum of Understanding and on the contrary, claims benefit
under the said Memorandum of Understating, even if the contract is repudiated by the
respondents, even then, the Arbitration Clause would survive, being an independent
agreement.
(f) As regards the extract of the submissions of the learned Senior Counsel
before the Hon’ble Supreme Court in Cox & Kings Ltd vs V.Singla reported in (2023)
SCC Online 1634 , Mr.B.Vijay, learned counsel would fairly concede that the trial Court
has committed a mistake in referring to the paragraphs which dealt with the submissions
of the learned Senior Counsel, but, however, it is his contention that ultimately, the
Hon’ble Supreme Court accepted the said arguments and therefore, nothing really turns
on the incorrect reference of relevant paragraphs in Cox & Kings Ltd vs V.Singla , by
the trial Court. In support of his submission, Mr.B.Vijay has also heavily relied on Cox
& Kings Ltd vs V.Singla, reported in (2023) SCC Online 1634 and ASF Buildtech
Private Limited vs Shapoorji Pallonji and Company Private Limited, reported in (2025)
9 SCC 76, as well as the following judgments:-
(i) Sundaram Brake Linings Ltd vs Kotak Mahindra Bank
Ltd and Ors, reported in Manu/TN/0938/2008
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(ii) Branch Manager, Magma Leasing and Finance Ltd and
another vs Potluri Madhavilata and another reported in
(2009) 10 SCC 103
(iii) Deccan Paper Mills Company Ltd vs Regency Mahavir
Properties and Ors reported in (2021) 4 SCC 786
(iv) Sushma Shivakumar Daga and Anr vs Madhurkumar
Ramakrishnaji Balaji an Ors reported in 2023 LiveLaw (SC)
984.
(v) Ajay Madhusudan Patel and Ors vs Jyotrindra S.Patel
and Ors reported in (2025) 2 SCC 147.
(vi) KKH Finvest Pvt.Ltd and Ors vs Jonas Haggard and Ors
reported in Manu/DE/7326/2024
(vii)Adavya Projects Pvt Ltd vs Vishal Structurals Pvt Ltd
and Ors reported in (2025) 9 SCC 686
and
(viii) KKH Finvest Pvt Ltd and another vs Ashiesh Shukla
and Ors reported in 2026 SCC Online SC 1498
(ix) Swiss Timingn Limited vs Commonwealth Games 2010
Organising Committee (2014) 6 SCC 677
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(x) Salson Liquors Private Limited vs United Spirits Limited
2026 SCC Online SC 335
(xi) United Spirits Limited vs Salson Liquors Private Limited
in AP/117/2021 dated 11.02.2025 passed by Commercial
Division, High Court of Calcutta.
8. Mr.B.Vijay therefore states that the trial Court has not committed any error,
warranting interference in the revision and prays for dismissal of the revision petition.
9. I have carefully considered the submissions advanced by the learned
counsel on either side.
10. The brief facts that may be necessary for adjudicating the revision are as
under:-
The petitioner Company, M/s Goraman Integrated Logistics Private Limited
was originally incorporated in October 2020 by the respondents 1 and 2, along with one
Mr.Ramesh Munnuswamy and within a period of four months, the said Mr.Ramesh
Munnuswamy resigned from Directorship. The respondents 1 and 2, with an intention to
expand the business of the Company, purchased a property measuring 9 acres and 67
cents at Vallur Village, Ponneri Taluk under private treaty, in a sale brought about under
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the provisions of the SARFAESI Act by M/s Pridhvi Asset Reconstruction and
Securitization Company Limited. The sale consideration was fixed at Rs.12,50,00,000/-
(Rupees Twelve Crores Fifty Lakhs Only). The pre-condition viz., deposit of 25% of the
sale consideration amounting to Rs.3,12,50,000/- was deposited by the petitioner
Company, represented by respondents 1 and 2. The respondents 1 and 2 thereafter, by
letters dated 06.09.2023, 10.10.2023 and 10.11.2023 sought for extension of time to pay
the balance Rs.9,37,50,000/-(Rupees Nine Crores Thirty Seven Lakhs Fifty Thousand
Only). M/s Pridhvi Asset Reconstruction and Securitization Company Limited granted
time to the respondents upto 24.11.2023. Despite diligent efforts taken by the
respondents 1 and 2 to muster the said Rs.9,37,50,000/-, they were able to arrange only
Rs.5,38,64,685/-. In order to meet the deficit, the respondents got in touch with
Lingasamy, who was the Chairman of DBL Finance. According to the respondents, the
said Lingasamy agreed to grant a short term loan of Rs.5,00,00,000/-(Rupees Five
Crores Only) to the petitioner Company, repayable together interest at 2% per month.
11. It is the case of the respondents that the said Mr.Lingasamy and
Mrs.Dhanabakkialakshmi demanded the respondents to induct them as Directors in the
petitioner Company and also transfer the shares as security, until such time the loan was
repaid, assuring the respondents that they would resign from the Board on repayment of
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the entire loan. According to the respondents, left with no other option, as the clock was
ticking fast against them, they accepted to the demands of Mr.Lingasamy and
Mrs.Dhanabakkialakshmi and on 23.11.2023, a Memorandum of Understanding was
entered into at the eleventh hour, since the balance amount of Rs.9,37,50,000/- had to be
paid on the next date i.e., on 24.11.2023. Further, according to the respondents, they
were ready to repay the amount borrowed from Mr.Lingasamy and
Mrs.Dhanabakkialakshmi and requested the loan amount to be received and consequent
resignation of Mr.Lingasamy and Mrs.Dhanabakkialakshmi from Directorship.
However, to their shock, the said request was rejected and the said Mr.Lingasamy and
Mrs.Dhanabakkialakshmi took a stand that the amount was paid only for purchase of the
Company.
12. It is at this juncture that O.S.No.116 of 2025 came to be filed by the
petitioner Company represented by Mr.Lingasamy, seeking to restrain the respondents
herein from trespassing into the Company’s immovable property at Vallur Village.
13. Pending the suit, the respondents moved this Court and filed a writ petition
in W.P (Crl.) No.1138 of 2025. This Court disposed of the writ petition on the ground
that police cannot interfere in civil disputes unless and until a criminal offence is
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committed. Mr.Lingasamy, representing the petitioner Company filed a Review
Application in Review Application (Crl) No.3 of 2025, where also, this Court reiterated
that it was a civil dispute and the parties could agitate the matter only before the Civil
Court. Thereafter, Mr.Lingasamy, representing the petitioner Company, preferred W.P.
(Crl.)No1753 of 2025, seeking police protection to protect the possession of the suit
property. In the said writ petition, the police authorities filed a Status Report, which,
according the respondents was concocted and not giving the real picture. Taking into
account the said Status Report, this Court, by order dated 23.11.2025, directed the police
authorities to ensure that there is no law and order problem and gave liberty to the police
authorities to proceed in accordance with law.
14. The respondents, aggrieved by the said order, approached the Hon’ble
Supreme Court in SLP (Crl.)No.2372 of 2026. The said Special Leave Petition has been
posted for final arguments and it is pending before the Hon’ble Supreme Court. It is at
this stage that the respondents filed I.A.No.4 of 2026, invoking Section 8 of the
Arbitration and Conciliation Act, 1996 and the trial Court has allowed the said
application which has necessitated the present revision, at the instance of the plaintiff.
15. The most relevant document that would have to be seen is the
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Memorandum of Understanding dated 23.11.2023. Admittedly, the petitioner Company
is not a party to the said MOU dated 23.11.2023. However, I have to examine as to
whether the petitioner Company can be found to be a veritable party to the said MOU
and thereby, the arbitration clause at Clause 13 of the said MOU would bind the
petitioner Company as well. The MOU dated 23.11.2023 has been entered into between
the respondents as parties of the first part and Mr.Lingasamy and his wife
Mrs.L.Dhanabakkialakshmi, as parties of the second part.
16. Mr.B.Vijay, learned counsel has placed strong reliance on the preamble as
well as the covenants in the said MOU, to drive home his submissions that the petitioner
Company is very much a veritable party to the MOU, and also a beneficiary. The
following clauses in the said Memorandum of Understanding assume significance:-
Clause – II
WHEREAS the First Party on behalf of the Company
participated in the auction conducted by M/s Pridhvi Asset
Reconstruction and Securitisation Company Limited ( Pridhvi
ARC) for purchase of land admeasuring 9.67 Acres along with
the shed comprised in varied survey numbers, situated at
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Vallur Villge, Ponneri Taluk, Tiruvallur District which is
morefully described in the Schedule hereunder and hereinafter
referred to as the “Schedule Property”.
IV.
WHEREAS the First Party is desirous of assigning its rights in
the auction, was offering to sell the rights, interest and shares
of the First Party in the Company, pursuant to which the First
Party had offered the same to the Second Party.
Clause – II
WHEREAS the First Party on behalf of the Company
participated in the auction conducted by M/s Pridhvi Asset
Reconstruction and Securitisation Company Limited ( Pridhvi
ARC) for purchase of land admeasuring 9.67 Acres along with
the shed comprised in varied survey numbers, situated at
Vallur Villge, Ponneri Taluk, Tiruvallur District which is
morefully described in the Schedule hereunder and hereinafter
referred to as the “Schedule Property”.
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2. CONSIDERATION
2.1 The Total Consideration for the sale of shares shall be
Rs.14,00,000/- (Rupees Fourteen Lakhs Only), which the
Second Party agrees to pay equally to the First Party.
3.2
Post payment of the consideration in terms of the Clause 2
hereinabove the First Party shall not have any right interest or
claim against the assets of the Company and on receipt of the
Consideration all the rights of the First Party in the assets of
the Company shall stand discharged.
4.4
On successful completion of the transaction with Pridhvi ARC,
the Second Party shall reimburse all the costs and payments
incurred by the First Party as mutually agreed between the
Parties, for which the First Party shall acknowledge under
valid receipt such reimbursements made by the Second Party.
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13. ARBITRATION AGREEMENT
13.1. Any dispute arising amongst the Parties hereto
during the subsistence of this Agreement or
thereafter, in connection with the validity,
interpretation, implementation or alleged breach of
any provision of this Agreement, the Parties shall
endeavour to settle such dispute amicably.
13.2. In the case of failure by the Parties to resolve the
dispute in the manner set out above within 30 days
from the date when the dispute arose, the dispute
shall be referred to a sole arbitrator mutually
appointed by both Parties. The place of the
arbitration shall be at Chennai. The arbitration
proceedings shall be governed by the Arbitration
and Conciliation Act, 1996, as amended up to date
by which the Parties in dispute agree to be so bound
and shall be conducted in the English language.
17. On a conjoint reading of the extracted portions of the preamble as well as
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the relevant clauses, I find that the said MOU has been entered into between two sets of
individuals, the party of the first part being the then Directors of the Petitioner Company
and the party of the second part, being assignees of the auction rights as well as all
rights, interest and shares of the parties as first part, in the petitioner Company.
18. The preamble portion IV clearly indicates the intention of the respondents
to transfer all their rights and shares in favour of the parties of the second part, for
consideration. In fact, Clause-2 of the MOU clearly records that the total sale
consideration for sale of the shares if Rs.14,00,000/-(Rupees Fourteen Lakhs Only).
Therefore, it is clear from a reading of the above that the respondents contemplated
transfer of all their shares and interest in the petitioner Company to Mr.D.Lingasamy
and his wife Mrs.Dhanabakkialakshmi. The consideration has also been fixed for sale of
the shares of the respondents.
19. Coming to the Arbitration Clause – 13.1 of 13, which is extracted herein
above, it provides for any dispute arising amongst the parties to be settled amicably.
However, in default, Clause-13.2 kicks in. In terms of Clause 13.2, the parties have
agreed that disputes not being settled amicably within thirty days from the date on which
disputes arose, then, such disputes shall be referred to the sole Arbitrator mutually
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appointed by both parties and the place of Arbitration would be at Chennai and the
arbitration proceedings shall be governed by the provisions of Arbitration and
Conciliation Act, 1996, as amended to date.
20. It is now to be seen whether the petitioner Company is a veritable party to
this Arbitration clause/MOU and consequently bound by the arbitration agreement. If
the answer is in the affirmative, then the trial court is not in error in allowing the Section
8 application, by referring the parties to arbitration. However, if the answer is in the
negative, then, the suit has to be tried only before the smae Court and the parties cannot
be referred to arbitration.
21. The very purpose and object of entering into MOU was only to transfer
the shareholding of the respondents 1 and 2 in the petitioner Company, in favour of
Mr.Lingasamy and Mrs.L.Dhanabakkialakshmi. I am unable to see how the petitioner
Company has any role in the said MOU. In fact, as rightly contended by Mr.Sathish
Parasaran, learned Senior Counsel, the Company itself is the subject matter of the MOU
and the negotiations between the parties was with regard to the sale and purchase of the
shares of the petitioner Company. It should be borne in mind that the petitioner
Company is a separate legal entity and it is a juristic person by itself.
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22. Cases have been relied upon by either side with regard to the question
whether a non-signatory to an arbitration agreement can also be bound by the arbitration
agreement and forced to go for arbitration.
23. In fact, Mr.Sathish Parasaran, learned Senior Counsel also fairly
conceded that he does not dispute the issue as to arbitrability of a relief of permanent
injunction. Law is now well settled on this point and the Hon’ble Supreme Court has
held that even a relief of specific performance can be subject matter of arbitration. The
only exceptions would be where the right sought to be declared in a civil Court is a right
in rem which cannot be referred to Arbitration. Insofar as all other disputes which
relate to rights i n personam , certainly, the disputes are arbitrable. In such view of the
matter, I do not see any necessity to delve any further with regard to this issue.
24. Also, I also do not find it is necessary to discuss the various criminal
proceedings that have been initiated by either party to the revision petition, as they all
relate to the physical possession of the suit property. However, the question that falls for
consideration in this revision is only whether the petitioner’s suit claim needs to be
referred to Arbitration or not.
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25. The two aspects that have to be adjudicated in my considered opinion are
–(i) whether the petitioner Company can be termed as a veritable party to bind the
petitioner to the arbitration agreement between the respondents 1 and 2 and
Mr.Lingasamy and his wife Mrs.Dhanabakkiyalakshmi, including the aspect whether
such veritable party, if found to be one as claimed by the respondents has benefited
under the MOU, and (ii) whether when the MOU has been disowned by the respondents
themselves, whether they can fall back on the arbitration clause incorporated in the said
MOU.
26. In order to contend that the petitioner Company is a veritable party,
Mr.B.Vijay has taken me through the plaint averments, where the plaintiff has
categorically admitted to the MOU dated 23.11.2023. It is therefore his contention that
when the petitioner/plaintiff relies on the Memorandum of Understanding, it implies that
they are bound by the arbitration agreement. He would also invite my attention to
Pharagraphs No.11 to 14 of the said plaint filed by the petitioner, where there is a clear
and unequivocal admission of the MOU dated 23.11.2023. Thereafter, inviting my
attention to Paragraph No.15, Mr.Vijay would contend that when the plaintiff states at
Paragraph No.15 that, “ in pursuance to the aforesaid, the plaintiff has become the sole
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and absolute owner of the suit properties”, the phrase “to the aforesaid” would refer to
Paragraphs 12 and 13 alone and therefore, when the right claimed by the petitioner is
arising under the MOU dated 23.11.2023 and the petitioner, having taken benefit under
the said MOU, is certainly a veritable party to the agreement and the arbitration clause
contained therein would bind the petitioner. I am unable to countenance the said line of
arguments of Mr.B.Vijay for the simple reason that the phrase “to the aforesaid” can
only refer to Paragraph No.14 and not to Paragraph Nos.12 and 13. In paragraph No.14
of the plaint, the petitioner has stated that Pridhvi ARC sold the suit property in favour
of the plaintiff for a sale consideration of Rs.12,50,00,000/- and handed over physical
possession of the suit property to the plaintiff, vide Sale Certificate dated 24.11.2023,
registered as Document No.10133 fo 2023, registered in Book-I, in the Office of Sub
Registrar, Thiruvottriyur. Therefore, the plaintiff at Paragraph No.15 only claims
absolute right, title and interest over the suit property, only on the strength of the Sale
Certificate issued by Pridhvi ARC in their favour, for valuable sale consideration of
Rs.12,50,00,000/- and not under the MOU. Merely because there is a reference in
paragraphs Nos.11 to 13, to the MOU, it cannot by any stretch of imagination make the
petitioner a veritable party to the agreement or the arbitration clause contained therein.
27. As already discussed and pointed out above, the subject matter of the
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dispute between two private sets of individuals is pertaining to the control of the
petitioner Company. In other words, the petitioner Company is the subject matter of the
very dispute.
28. A “veritable party” in the legal parlance means a person who is in
substance and reality a party to the proceedings, rather than a formal party connected to
the proceedings. The substantive rights of such party should be directly involved in the
lis for such party to be styled as “ veritable party”. In the present case, the Company
being the subject matter of the dispute, can certainly not be a necessary or affected or
benefited party as projected by Mr.B.Vijay. At the risk of repetition, it was only the
control of the plaintiff Company that was the subject matter of the MOU, containing the
arbitration clause. The Company admittedly, could not have been a party to the said
MOU in the first place. Further, the MOU has been acted upon and Pridhvi ARC has
also executed a Sale Certificate in favour of the petitioner Company. Thus, the petitioner
Company, having a separate legal entity and a juristic person by itself, has become the
sole and absolute owner of the suit property. It is only in order to protect its possession
that the suit came to be filed alleging that the erstwhile Directors viz., the respondents
are attempting to take over the control of the Company by interfering with its
possession. In fact, the Constitution Bench of Hon’ble Supreme Court in Bacha
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F.Guzdar’s case referred herein above has held that unlike a partnership which is
merely an association of persons for carrying on business or partnership, a Company
stands on a different footing being a separate juristic entity, distinct from its
shareholders.
29. In such circumstances, I am unable to agree with the arguments advanced
by Mr.B.Vijay that the petitioner Company is a veritable party and therefore, bound by
the arbitration agreement.
30. I will discuss the case law a little later. Coming to the second issue
whether having disowned the MOU, it is open to the respondents to invoke Section 8 of
the Arbitration and Conciliation Agreement. In the section 21 Notice issued by the
respondents on 19.12.2025 to Mr.Lingasamy and his wife, the respondents at Paragraph
Nos.12 and 13 have stated as follows:-
“12. My clients state that you have filed O.S.No.11 6 of 2025
before the District Munsif Court, Ponneri seeking a permanent
injunction. My clients have entered an appearance in that suit.
After receiving copies of the documents filed therein, my clients
were shocked to see Document NO.22, an alleged
Memorandum of Understanding dated 23.11.2023, which you
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have created by misusing the blank stamp papers obtained
from them. In the said alleged document, you have falsely
stated that my clients agreed to sell their shares for
Rs.14,00,000/- and that you would take over the liabilities of
the company. My clients categorically deny the said document
as fabricated and void.
13. My clients state that the original Loan Agreement executed
earlier contains an arbitration clause. In the fabricated
document also, you have also inserted an arbitration clause as
Clause No.13. My clients reject all the fabricated contents of
the alleged MOU except the existence of the arbitration clause,
which is consistent with the arbitration clause in the original
Loan agreement signedby them.
31. Specifically referring to the MOU dated 23.11.2023, the respondents have
taken a definite and categorical stand that the said MOU has not been signed by them,
but has been created by misusing blank stamp papers obtained from them. The
respondents also alleged that they never agreed to sell their shares for Rs.14,00,000/-on
the promise made by two individuals Mr.Lingasamy and his wife that they would take
over the liabilities of the petitioner Company. In the last sentence of Paragraph No.12,
the respondents themselves have denied the said MOU dated 23.11.2023 as fabricated
and void. At Paragraph No.13, the respondents have referred to the loan agreement
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containing an arbitration clause and since an arbitration clause has been incorporated at
Clause -13 in the fabricated MOU dated 23.11.2023, the respondents, though rejecting
the contents of the alleged MOU, are falling back on the existence of the arbitration
clause alone, which according to them, is consistent with the arbitration clause in the
loan agreement signed by them.
32. As rightly pointed out by Mr.Sathish Parasaran, the learned Senior
Counsel, the said loan agreement dated 23.11.2023 has not been filed along with the
Section 8 application, though there is a reference to the same in Section 21 notice as
well as in the Section 8 application. The said loan agreement is not produced by the
respondents even before this Court, in the present revision petition.
33. Be that as it may, the loan agreement and the arbitration clause contained
therein between two sets of private parties cannot by no stretch of imagination imply
that the said arbitration clause has been consciously and consistently incorporated in the
MOU dated 23.11.2023 and therefore would bind the petitioner Company. I do not see
this argument leading the respondents anywhere.
34. Firstly, the loan agreement alleged by the respondents admittedly does not
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have anything to do with the petitioner Company. Secondly, merely because the loan
agreement contains an arbitration clause, the arbitration clause in the MOU cannot be
relied upon by the respondents on the ground that it is consistent with the loan
agreement arbitration clause, when the very execution of the MOU has been
emphatically denied by the respondents themselves. It is the specific case of the
respondents that they signed blank papers which have been misused by the two
individuals viz., Mr.Lingasamy and his wife to bring about the alleged MOU dated
23.11.2023.
35. I am therefore unable to accept the very innovative and mischievous stand
taken in the Section 21 notice or the forceful arguments of Mr.B.Vijay that even though
the respondents disown the MOU dated 23.11.2023, the arbitration clause would
survive. It is significant to note that the respondents have not admitted the execution of
the MOU, though it has been argued so. The respondents only admit that they had left
signed blank papers with Mr.Lingisamy and his wife, which have been misused and
fabricated to bring about a void MOU dated 23.11.2023.
36. Mr.B.Vijay, learned counsel has relied on the recent pronouncement of
Hon’ble Supreme Court in Salson Liquors Private Limited vs United Spirits Limited
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reported in 2026 SCC Online 335, arising out of the judgment of Calcutta High Court
(Commercial Division) in AP/117/2021 dated 11.02.2025 and also the judgment of the
Hon’ble Supreme Court in Swiss Timing Limited vs Commonwealth Games 2010
Organising Committee reported in (2014) 6 SCC 677 . Relying on the said decisions,
Mr.B.Vijay contended that the Hon’ble Supreme Court in Salson Liquors Private
Limited case, finding that the primary contention on behalf of the petitioner revolved
around alleged forgery/genuineness of the agreements containing the arbitration clause
and the High Court of Calcutta had held that the issue can be taken up as a preliminary
issue before the Arbitrator and also being put on notice that arbitration proceedings are
already commenced, it was left open to the petitioner to agitate the issue of genuineness
of the agreement as a preliminary issue. In Swiss Timing Limited case , the Hon’ble
Supreme Court held that where a Court can come to a conclusion that the contract is
void without receiving any evidence, it would be justified in declining reference to
arbitration, but, however, when it is not possible to shut out arbitration, even in cases
where defence taken is that the contract is voidable, even then, the parties will have to be
referred to arbitration, as otherwise, it would defeat the very purpose for which the
parties entered into arbitration.
37. Based on the decisions, Mr.B.Vijay would therefore contend that this
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issue whether the MOU was genuine or not can also be gone into by the Arbitrator and
cannot be agitated, that too, in a Section 8 application. I am unable to see how these
decisions can be applied to the facts of the present case. In fact, in Swiss Timing
Limited case, the defence of the party against whom an application under Section 8 of
the Arbitration Act was filed was that the Arbitration agreement is forged and therefore,
the parties cannot be referred to arbitration. In the very same case, the Hon’ble Supreme
Court noticed that the defence of contract being void, is being taken routinely, only in
order to avoid/delay reference to arbitration and therefore, rejected the contention of the
respondents in the Section 8 application and left it open to the Arbitral Tribunal to
decide the plea of fraud raised by the respondents.
38. Similarly, in Salson Liquors Private Limited case also, the plea of
forgery, attacking the genuineness of the agreement containing the arbitration clause was
taken by the respondent and in such circumstances, the Commercial Division of Calcutta
High Court appointed an arbitrator and when the matter was taken up for final hearing
before the Hon’ble Supreme Court, noticing that the arbitration proceedings had already
commenced, liberty was given to the petitioner before the Hon’ble Supreme Court to
raise the issue of forgery/genuineness of the agreements before the arbitrator as a
preliminary issue.
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39. These decisions are authorities for the proposition laid down on the given
facts and circumstances. In both these cases, it was the opposite party who wanted to
avoid arbitration taking up the plea of forgery and genuineness of the agreement
containing the arbitration clause.
40. In my considered opinion, a converse case like the one on hand stands on
an entirety different footing and cannot be treated on par with the cases where the
respondent in a Sectioin 8 application pleads forgery or fabrication of the agreement
itself and thereby justifies the filing of the suit.
41. As already discussed in detail, in the present case, the plea of fabrication
of document and forgery of MOU is taken by the respondents themselves who sought to
invoke Section 8 of the Arbitration and Conciliation Act before the civil Court.
Therefore, it is a classic case where the respondents are attempting to have the cake and
eat it to. On the one hand, they disown the agreement in entirety by contending that
blank sign papers have been fabricated to bring about the MOU and on the other hand,
they want to take shelter under the arbitration clause alone. Hence, I do not see how
these decisions and the ratio thereunder can be applied to the facts of the present case.
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42. In such circumstances, when the respondents themselves disown the
entire contents of the MOU, they cannot conveniently, to suit their interest, rely on the
arbitration clause alone and contend that it will survive independently, even though the
MOU is repudiated on the ground of fraud, misrepresentation and voidness.
43. Yet another significant circumstance is that in pursuance of the MOU, the
individual persons viz., Mr.Lingasamy and Mrs.Dhanabakkialakshmi have paid the
amount as promised to Pridhvi Asset Reconstruction Company and to evidence
possession being given to them, handing over control of the affairs of the Company as
well, a photograph has also been exhibited. Once a Sale Certificate has been issued and
registered and till date, the same has not been challenged by any one, including the
respondents, the ownership of the suit properties at the hands of the petitioner Company
cannot be called in question. Therefore, when the petitioner intended to protect its
possession and filed a suit for permanent injunction, the arbitration clause in the MOU,
though admitted by Mr.Lingasamy, one of the present Directors of the petitioner
Company, cannot be invoked to contend that the petitioner company is a veritable party
and therefore, the parties to the suit have to be referred to arbitration, under Section 8 of
the Arbitration and Conciliation Act.
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44. Though several judgments have been cited before me, I will only refer to
the most relevant ones which would be sufficient to adjudicate the issues that arise for
consideration in the present revision petition. In Cox & Kings Ltd vs V.Singla, reported
in (2023) SCC Online 1634, the Constitution Bench of the Hon’ble Supreme Court has
held that even a non-signatory to an arbitration agreement can be bound by the
arbitration clause found in the agreement. In Paragraph No.86 of the said judgment, the
Hon’ble Supreme Curt has held that Courts and Tribunals have been applying traditional
contractual and commercial doctrines to determine the consent of the non-signatory
parties to be bound by the arbitration agreement, which includes consent based theories
such as agency, novation, assignment operation of law by merger and succession and
third party beneficiaries. The Hon’ble Supreme Court also took note of exceptional
circumstances where non-consensual theories such as piercing the corporate veil or alter
ego and estoppel have also been applied to bind a non-signatory party to an arbitration
agreement.
45. At Paragraph No.96, the Constitution Bench of Hon’ble Supreme Court
has held that an arbitration agreement encapsulates the commercial understanding of
business entities as regards to the mode and manner of settlement of disputes that may
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arise between them and finding that in most situations, the language of the contract is
only suggestive of the intention of the signatories to such contract and not the non-
signatories. Yet, the Hon’ble Supreme Court recognised that there may be situations
where a person or entity may not be a signatory to the arbitration agreement, but yet,
give the appearance of being a veritable party to such arbitration agreement due to their
legal relationship with the signatory parties and involvement in the performance of the
underlying contract.
46. Mr.B.Vijay, learned counsel for the respondents places heavy reliance on
this paragraph of the Constitution Judgment. I have absolutely no quarrel with regard to
the fact that now the law is now fairly well settled that even a non-signatory to an
arbitration agreement can be compelled to go for arbitration and have his or her or its
disputes resolved, whether he consents or not. However, for this, twin conditions have
to be satisfied. The non-signatory party should be a veritable party to the arbitration
agreement and to determine whether the non-signatory is a veritable party, the
involvement of the non-signatory party in negotiations, performance or termination of
the contract would be relevant factors. The conduct of the non-signatory party should be
found to be in harmony with the conduct of the other members of the group, including
the other party, to legitimately believe that the non-signatory party was in fact a
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veritable party to the contract. Also, the other party should have legitimate reasons to
rely on the appearance created by non-signatory party so as to bind it to the arbitration
agreement. The second condition is that such a veritable party should have benefited out
of the agreement under the MOU, it is only private individual signatories who stand
benefited and certainly not the petitioner Company. Therefore, I do not see any merit in
this regard as well.
47. Even applying these tests to the facts on hand, I am unable to see how any
of these conditions stand satisfied to infer that the petitioner is even a veritable party to
the agreement. As already discussed in detail, the petitioner Company is the very entity
whose affairs are regulated by the MOU in question and in such circumstances, by no
stretch of imagination, it can be successfully contended that the Company, though, being
a non-signatory party is a veritable party and that the Company being the subject matter
of the MOU, benefit has accrued to the company. At best, I find the arguments of
Mr.B.Vijay to be rhetorically attractive, but legally imprecise and unimpressive.
48. Further, the consent of the non-signatory party also viz., the petitioner
does not even arise for consideration in the present case since the petitioner Company
was the subject matter of MOU itself and the signatories to the agreement were two
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private sets of individuals in flesh and blood, one party viz., the respondents
transferring their entire shares and interest and the second party viz., Mr.Lingasamy and
Mrs. Dhanabakkialakshmi coming forward to take over such shares and interest of the
parties of the first part.
49. Mr.Vijay, learned counsel has also relied on the concluding portions on
the Constitution Bench of judgment in the case of Cox & Kings Ltd case where the
Hon’ble Supreme Court has held that the scope of enquiry before the Reference Court is
very microscopic and that at the reference stage, the Reference Court should leave it to
the Arbitral Tribunal to decide whether the non-signatory is bound by the arbitration
agreement.
50. The ratio laid down in Cox & Kings Ltd vs V.Singla has in fact been
subsequently applied in ASF Buildtech Private Limited vs Shapoorji Pallonji and
Company Private Limited – (2025) 9 SCC 76 as well, and in KKH Finvest Pvt.Ltd
and Ors vs Jonas Haggard and Ors, reported in Manu/DE/7326/2024. However,
uniformly, the ratio laid down in all these cases is that a non-signatory can be referred
to arbitration, only if the twin conditions have been satisfied.
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51. As discussed herein above, both the conditions do not stand satisfied. I
have already found that the petitioner cannot be styled as a veritable party to the MOU
dated 23.11.2023 and no benefit has been accrued to the petitioner company, as
contended by Mr.B.Vijay. The Company has become the sole and absolute owner of the
suit properties pursuant to the Sale Certificate executed by Pridhvi ARC and not in
terms of the MOU dated 23.11.2023, which was only a share transfer between the
erstwhile Directors and the new Directors.
52. In such view of the matter, the trial Court has failed to appreciate the
correct legal principles and erroneously allowed the Section 8 application and the same
warrants interference in this revision.
53. Before concluding, the other submission with regard to the reliance placed
on by the trial Court, on the submissions of the learned Senior Counsel in Cox & Kings
Ltd vs V.Singla and not the principles laid by the Hon’ble Supreme Court is concerned,
there is no dispute that the trial Court has extracted Paragraph No.9.3 from the judgment
in the case of Cox & Kings Ltd vs V.Singla. Paragraph No.9 at 9.3 is nothing but the
summary of the arguments of the Senior counsel who appeared for the intervenor before
the Hon’ble Supreme Court. Unfortunately, the trial Court has referred to the said
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arguments, as if they were the observations of the Hon’ble Supreme Court and has
placed strong reliance upon the same.
54. It has been strongly contended by Mr.Sathish Parasaran, learned Senior
Counsel that in fact the arguments of the learned Senior Counsel found at Paragraph 9.3
were rejected by the Hon’ble Supreme Court. Per contra, Mr.B.Vijay, learned counsel
would contend that the said arguments that have been referred to at Paragraph 6.7 of the
order of the trial Court were in fact upheld by the Hon’ble Supreme Court, referring to
Paragraph No.86 of Cox & Kings Ltd vs V.Singla. As already referred to, the Hon’ble
Supreme Court has only observed that in exceptional cases even non-consensual theories
such as piercing the corporate veil or alter ego and estoppel have also been applied to
bind the non-signatory party to an arbitration agreement and that the group of
companies doctrine is one such consent-based doctrine which has been applied, albeit
controversially for identifying the real intention of the parties to bind a non-signatory to
an arbitration agreement. However, in the concluding portion “H” of the judgment in
Cox & Kings Ltd vs V.Singla, a t Paragraph No.170, the Hon’ble Supreme Court has
held that under the Arbitration Act, the concept of a “party” is distinct and different
from the concept of “persons claiming through or under” a party to the arbitration
agreement and that the principle of alter ego or piercing the corporate veil cannot be the
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basis for the application of the Group of Companies doctrine. In view of the above, the
argument of the learned Senior Counsel before the Hon’ble Supreme Court were in fact
rejected, merits acceptance.
55. In my considered view , the argument of Mr.Sathish Parasaran, learned
Senior Counsel that the trial Court, by committing such an error, only exposes its faulty
approach cannot be lightly discarded since such error committed by the trial Court
clearly referring to the arguments of the learned Senior Counsel before the Apex Court
and relying upon it as an observation of the Hon’ble Supreme Court only exposes the
non-application of judicial mind.
56. Though Mr.B.Vijay also strongly relied on the decisions in ASF
Buildtech Private Limited and the recent pronouncement of the Hon’ble Supreme
Court in KKH Finvest Pvt.Ltd and Ajay Madhusudan Patel and Ors cases, even in
ASF Buildtech Private Limited case, the Hon’ble Supreme Court has held that though
the scope of enquiry before the Referral Court under Section 8 is limited to the existence
of an arbitration clause, the Hon’ble Supreme Court still applied the ratio in the case of
Ajay Madhusudan Patel and Ors vs Jyotrindra S.Patel and Ors and held that the
enquiry should concern whether prima facie, a case has been made out as to whether the
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non-signatory to the arbitration agreement is a veritable party or not. In the recent
judgment in KKH Finvest Pvt.Ltd and Ors vs Jonas Haggard and Ors , which has also
been strongly relied on by Mr.B.Vijay contending that the facts before the Hon’ble
Supreme Court in the said case are almost identical to the facts in the present case, I
find that no doubt, the disputes that arose between the parties and was subject matter of
the decision before the Hon’ble Supreme Court was pertaining to a share purchase
agreement. However, the Hon’ble Supreme Court only found private individuals who
had also signed identical share purchase agreements to be veritable parties and there was
no real point of distinction between the individuals concerned. That was not a case
where the Company itself was alleged to be a veritable party. Therefore, I do not see this
decision also being applied in favour of the respondents, in the peculiar facts of this
case.
57. For all the above reasons, the revision petitioner is entitled to succeed. The
order passed in I.A.No.4 of 2026 in O.S.No.116 of 2025 is set aside and the parties shall
go before the Civil Court and have their disputes resolved in accordance with law.
58. At the time of admission, I had granted an interim injunction to restrain the
respondents from interfering with the peaceful possession and enjoyment of the
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petitioner Company. The said interim order has been subsequently extended and
continues to remain in force. In fact, the said order was challenged before the Hon’ble
Supreme Court and the Hon’ble Supreme Court dismissed the Special Leave Petition
and directed expeditious disposal of the revision petition itself.
59. In fact, in an interlocutory application seeking an interim injunction has
already been filed by the petitioner before the trial Court. However, the same has not
been enquired into on account of the Section 8 application being filed and given
preference. In the light of the Section 8 application now being dismissed, the trial Court
shall decide the interlocutory application filed for interim injunction in I.A.No.2 of
2025 expeditiously, after affording a fair opportunity to both parties to put forth their
respective contentions, with regard to the factum of possession.
60. Considering that the petitioner had the benefit of the interim injunction
from 21.07.2026, the said interim injunction shall continue to remain in force till such
time I.A.No.2 of 2025 is decided on merits. The trial Court, however, is requested to
dispose of I.A.No.2 of 2025, on merits and in accordance with law, within a period of
thirty days from the date of receipt of a copy of this order.
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61. In the result, the civil revision petition is allowed. No costs. Consequently,
connected miscellaneous petitions are closed.
25.08.2026
sr
Index:yes
Website:Yes
Speaking Order
To
The Principal District Munsif, Ponneri
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P.B.BALAJI.,J
sr
Pre-Delivery Order in CRP No.4209 of 2026
25.08.2026
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