Ruling that disputes under the Joint Venture Agreement and MoU must be referred to arbitration in Mumbai under Indian law, the Supreme Court has relegated questions on overlap with a parallel Korean-seated arbitration and on binding a non-signatory subsidiary to the Arbitrator. The Court held that the Licence Agreement (governing patent licences), the JVA (creating the Indian joint venture RWIPL), and the MoU (governing liaison services for the Mumbai project) operate in distinct fields and are not subservient to the Licence Agreement.
The Apex Court said that Article 25 of the JVA and Clause 10.8 of the MoU, which declare each agreement as the entire agreement on its subject matter and supersede prior agreements, fortified the conclusion that the Mumbai-seated arbitration clauses in the JVA and MoU govern disputes arising under them. The Court held that the respondents’ argument that disputes under the JVA and MoU overlap with claims already raised under the Licence Agreement in a parallel Seoul-seated arbitration cannot be a ground to refuse reference at the threshold. Such overlap falls within the Arbitrator’s jurisdiction to determine the scope of arbitration.
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Briefly, the dispute arises out of a series of commercial arrangements between an Indian company, Shubham Equipment Private Limited (SEPL), and a South Korean company, Rothwell Water Company Limited (RWCL). On 30 January 2019, SEPL and RWCL entered into a Technical Collaboration Licence Agreement (Licence Agreement) under which RWCL granted SEPL an exclusive, non-transferable, royalty-bearing licence for patents relating to wastewater treatment technology. Subsequently, on 1 October 2021, a Joint Venture Agreement and Share Holding Agreement (JVA) was executed between the promoters of SEPL and RWCL, creating a joint venture company, Rothwell Water (India) Private Limited (RWIPL), to carry on business in sewage treatment plants under the brand name ‘ROTHWELL’.
Later, on 1 February 2023, a Memorandum of Understanding (MoU) was executed between SEPL and RWCL, under which SEPL agreed to render liaison, customs clearance, logistical, and related services to RWCL in connection with a project of the Municipal Corporation of Greater Mumbai being executed through JWIL Infra Ltd. (JWIL). Disputes emerged when RWCL allegedly incorporated a wholly-owned subsidiary, Rothwell Business International Private Limited (RBIPL), in Pune in breach of the non-compete covenant under Article 24.1 of the JVA.
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On 11 October 2024, SEPL issued a notice of termination of the JVA to RWCL and RBIPL, citing, inter alia, the incorporation of RBIPL as a competing entity, business loss caused by rejection of projects on grounds of technical incompetence, inordinate delay by RWCL in providing technological inputs, and outstanding receivables of Rs. 4.24 crores towards costs incurred by SEPL on behalf of RWCL under the MoU. SEPL called upon RWCL to pay Rs. 20 crores towards business loss and Rs. 4.24 crores under the MoU.
RWCL disputed the termination and contended that the disputes were intrinsically connected to the Licence Agreement dated 30 January 2019, and that the arbitration clause in the Licence Agreement, which provided for arbitration in Seoul under Korean law, would prevail. RWCL further issued a notice of arbitration dated 8 August 2025 under the Licence Agreement for arbitration in Korea. SEPL, in turn, issued notices of arbitration under Article 43 of the JVA and Clause 9 of the MoU, both of which provided for arbitration in Mumbai under Indian law. SEPL thereafter filed Arbitration Petition under Section 11 of the Arbitration and Conciliation Act, seeking appointment of an arbitrator.
A Larger Bench comprising the Chief Justice of India Surya Kant, Justice Joymalya Bagchi, and Justice V. Mohana noted that the existence of the arbitration agreements under the JVA and the MoU was not in dispute between the parties. The Court observed that the Licence Agreement dealt with the grant of multiple patents and licences by RWCL to SEPL, the JVA created a joint venture company in India (RWIPL) for carrying on business in sewage treatment plants, and the MoU was an arrangement under which SEPL would render liaison and other services to RWCL in connection with the JWIL/Municipal Corporation of Greater Mumbai project. The Court therefore prima facie found that the three agreements operated in different fields.
The Court further observed that Article 25 of the JVA and Clause 10.8 of the MoU expressly provided that each of those agreements was an entire agreement between the parties in respect of its subject matter and superseded all prior agreements between them. The Court also noted that Section 11(6-A) of the 1996 Act restricts the scope of judicial inquiry at the referral stage to the prima facie existence of an arbitration agreement, and once such existence is established, the court is bound to appoint an arbitrator and refer the parties to arbitration.
On the respondents’ argument that the disputes under the JVA and MoU could not be adjudicated in isolation because they overlapped with claims under the Licence Agreement (in respect of which RWCL had already initiated arbitration in Korea), the Court observed that such overlap would fall within the jurisdiction of the arbitrator to determine the scope and ambit of disputes amenable to arbitration under the JVA and MoU, and could not constitute a ground to refuse a reference at the threshold. On the plea that RBIPL was an independent non-signatory entity not bound by the arbitration agreement, the Court noted that RBIPL was a wholly-owned subsidiary of RWCL (a signatory) and was alleged to have been incorporated in derogation of the JVA, and observed that this contentious issue needed to be relegated to the arbitrator for appropriate adjudication.
