In Brief
Zenith Drugs was appointed as a clearing and forwarding agent for Rhone Poulenc India Limited (RPIL) under an agreement containing an arbitration clause. When RPIL merged with Nicholas Piramal India Ltd (respondent), the agreement was terminated. The parties compromised the dispute by decree in 2001, under which Zenith was instead appointed as a stockist. When the respondent later breached the stockist appointment, Zenith filed a suit for compensation, including for loss of goodwill. The respondent sought arbitration under the original agreement's arbitration clause. The High Court referred the matter to arbitration, but the Supreme Court allowed Zenith's appeal, holding that: (1) the compromise created a new arrangement with different terms, so the original arbitration clause did not apply; (2) claims relating to events after the compromise (stockist breach, loss of goodwill) were not covered by the original agreement; and (3) allegations of fraud vitiated the compromise and required civil court determination.
The lawyer headnote and full judgment text are available to registered users.