In Brief
Gujarat Composite Limited entered into licence agreements with A Infrastructure Limited to operate manufacturing units with an arbitration clause. Later, disputes arose over the licence term, and a separate tripartite agreement involving a bank was executed for mortgage security, which lacked an arbitration clause. When sued, Gujarat Composite sought to refer the dispute to arbitration. The courts below held that because the suit involved multiple transactions (some without arbitration clauses), multiple parties (including the bank, not party to any arbitration agreement), and interconnected reliefs, bifurcation was impossible and the entire dispute was non-arbitrable. The Supreme Court upheld this, holding that an arbitration clause in one agreement cannot extend to separate independent transactions, and disputes cannot be arbitrated when essential third parties are not bound by the arbitration agreement. The appeals were dismissed.
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