Mere factual nexus between contracts cannot incorporate an arbitration clause absent clear, specific intent under Section 7(5).

The Petitioner filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim measures to restrain the Respondent from creating third-party interests in the ground floor of property E-96, Saket, New Delhi

The parties had originally entered into a Special Power of Attorney (SPA) dated 09.11.2021 regarding the first floor of the property, which contained an arbitration clause (Clause 19)

Following the sale of the first floor, the parties executed a Memorandum of Understanding (MoU) on 05.03.2024 to regulate financial liabilities and rights concerning the ground floor

The Petitioner alleged that the MoU was an extension of the SPA and thus governed by its arbitration clause

The Respondent contested maintainability, arguing the MoU was a fresh, independent contract without an arbitration clause

1. Whether the arbitration agreement contained in the SPA dated 09.11.2021 can be invoked for disputes arising out of the subsequent MoU dated 05.03.2024

2. Whether the MoU fulfills the requirements of Section 7(5) of the Arbitration and Conciliation Act, 1996, for the incorporation of an arbitration clause by reference

Section 7(5) of the Arbitration and Conciliation Act, 1996, which stipulates that a reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement only if the reference is such as to make that clause part of the contract

A general reference to another document is insufficient; there must be a "conscious and specific intention" to incorporate the arbitration agreement itself into the subsequent contract, especially when the documents govern different scopes of work or subjects (M.R. Engineers & Contractors Pvt. Ltd. v. Som Datt Builders Ltd.)

The Court observed that the SPA’s scope was strictly limited to the first floor of the Subject Property and that the arbitration clause (Clause 19) must be construed within that specific context

Upon perusal of the MoU, the Court found it to be a "fresh and independent arrangement" governing the ground floor and distinct financial liabilities

Applying Section 7(5), the Court noted that the MoU lacked any express or implied incorporation of the SPA’s dispute resolution mechanism

The Court rejected the Petitioner's "factual nexus" argument, stating that mere historical dealings or incidental references do not result in a composite transaction for arbitration purposes

Since the MoU operated in a "distinct contractual field" and lacked a specific reference to the arbitration clause, the Court determined it could not import the clause from the exhausted SPA

Consequently, the petition under Section 9 of the Act was held not maintainable and was dismissed. The parties were granted liberty to pursue other available legal remedies