The Apex Court in Sukanya Holdings (P) Ltd. has therefore laid down the prerequisites for invocation of Section 8 of the said Act. In the instant case, admittedly the Respondent Nos. 1 and 3 are not parties to the Joint Venture Agreement. The Respondent No. 3 cannot be said to be a party who has been deliberately arrayed so as to frustrate any arbitration agreement as in fact in the present case the Development Agreement does not contain any arbitration clause. The subject matter of the Suit is also different than the subject matter of the proceeding before the Arbitrator which involves the breaches of the Joint Venture Agreement. The word "matter" in Section 8 indicates that the entire subject matter of the Suit should be the subject matter of the agreement. However, in the instant case, the Suit in question is founded on the Development Agreement and the breaches thereof have no connection with the Joint Venture Agreement. It is required to be noted that there is no provision for splitting the cause or the parties for referring the subject matter of the Suit to the Arbitrator. The Trial Court has totally glossed over the aforesaid aspects and entertained the application under Sections 8 and 21. The jurisdiction under Section 8 cannot be invoked by a long drawn out process. The Trial Court therefore has in a way exercised jurisdiction not vested in it under Section 8 by staying the Suit. If the provisions of Section 8 are applicable, the only jurisdiction the Trial Court can exercise is to refer the parties to arbitration but cannot stay the Suit.
Print Page
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.7872 of 2013
M/s Eagle AgroFarm
Private Limited )
Versus
M/s. Eagle Soraj Townships Private Ltd. )
CORAM :R.
M.SAVANT, J .
JUDGMENT PRONOUNCED ON: 24 th DECEMBER 2013
Citation: 2014(1)ABR728, 2014(4)ALLMR317, 2014(2)BomCR684, 2014(5)MhLj330
1 Rule, with the consent of the Learned Counsel for the parties
made returnable forthwith and heard.
2 The Writ Jurisdiction of this Court is invoked against the order
dated 182013
passed by the Learned Civil Judge Junior
Division,Vadgaon, Maval, by which order, the Suit in question being
Regular Civil Suit No.12 of 2011 was stayed pending the arbitration
proceedings between the Petitioner herein and the Respondent No.2.
3 The facts necessary to be cited for adjudication of the above
Petition can be stated thus:
The Petitioner herein is the owner of the properties comprised
of Survey No.77/1, 78/1, 75/2/1 in Village Warale TalMaval,
DistPune.
The Petitioner decided to develop the said properties by causing
construction thereon. The Petitioner negotiated with the Respondent No.2
herein as regards the terms and conditions of such development and
ultimately the parties entered into a Joint Venture by forming a private
limited company in the name and style of M/s. Eagle Soraj Township Pvt
Ltd., which is the Respondent No.1 herein. A Joint Venture Agreement
was entered into between the Petitioner and the
Respondent No.2 towards formation of the Joint Venture company. In the
context of the present Petition, it is required to be noted that the said
agreement contains an arbitration clause which is clause (28). The Joint
Venture Company i.e. the Respondent No.1 herein was incorporated on 1852006
and the Petitioner and the Respondent No.2 are having 50%
holding each in the Respondent No.1. Thereafter Development Agreement
dated 2352006
was entered into between the Petitioner and the
Respondent No.1 and was duly registered with the SubRegistrar
concerned together with a Power of Attorney of the same date.
4 The Petitioner terminated the said Development Agreement
and revoked the Power of Attorney by its letter dated 18122009
as
according to the Petitioner there were several terms and conditions of the
Development Agreement which were not fulfilled by the Respondent No.2.
The said Development Agreement has not been challenged by the
Respondent No.2 in any court. Since the Respondent Nos.1 and 2 had
failed to comply with the Development Agreement and the Development
Agreement being terminated, the Respondents resultantly had no right,
title and interest in the suit property. The Petitioner therefore filed the Suit
in question being Regular Civil Suit No.12 of 2011 for injunction
simplicitor against the Respondents restraining them from acting in terms
of the Development Agreement or the Power of Attorney dated 2352006.
For the sake of convenience, the main substantive prayer sought in the Suit
is reproduced herein under:
Defendants and/or the persons claiming through the
defendants including the family members of the
defendant no.2 i.e. his brothers etc., and/or any other
persons including staff, security servants, agencies,
contractors, affiliates, architects, etc., of the
defendants may please be permanently restrained
from entering into the suit property and/or disturbing
vacant, peaceful and physical possession of the
plaintiff and/or carrying out any activities on the suit
property and/or in respect of the FSI/TDR/flats units,
tenements, etc., in pursuance thereof and/or
otherwise acting as the representative/s of the
plaintiff etc and/or doing any acts, matters, deed,
things as the case may be in respect of the suit
property and/or any part thereof and/or in pursuance
of the said development agreement/or of attorney
dated 23rd of May 2006 and/or any other document/s
as the case may be.
The Respondents appeared in the Suit and also filed their
Written Statement sometime in February 2011. Pertinently, in the said
Written Statement, the Respondent No.2 has not objected to the Suit being
filed nor did he file an application for referring the Suit to arbitration. The
Petitioner in the said Suit filed an application for temporary injunction
which is numbered as Exhibit 5. The Respondents filed an application
under Section 9A of the Civil Procedure Code on 822011
challenging the
pecuniary jurisdiction of the Trial Court. The said application came to be
rejected by the Trial Court. Against the said order, the Respondents filed
Civil Revision Application No.122 of 2012 in this Court which came to be
dismissed by this Court by order dated 2112012.
The Respondents
thereafter filed an application questioning the valuation of the Suit and
seeking a direction that inquiry under Section 8 of the Bombay Court Fees
Act, 1959 be conducted. The Respondents thereafter filed an application
under Order 26 Rule 9 of the Civil Procedure Code for appointment of the
Court Commissioner to visit the suit property and report to the Trial Court.
The Petitioner objected to the said application being filed under Order 26
Rule 9 of Civil Procedure Code on the ground that the said application has
been filed merely to prolong the hearing of the application for interim
injunction filed by the Petitioner and therefore prayed that the said
application be rejected.
5 The Respondent No.2 addressed a notice on 2452012
to the
Petitioner invoking the arbitration clause in the Joint Venture agreement
dated 352006.
The said notice was replied to by the Petitioner by letter
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dated 2162012
and it was denied that there was any ground for invoking
the arbitration clause. The Respondent No.2 thereafter filed Arbitration
Application No.28 of 2012 invoking Section 11 of the Arbitration and
Conciliation Act 1996 (for brevity's sake “the said Act”) The said
application was considered by a Learned Single Judge of this Court and by
order dated 20102012
the Hon’ble Justice J.N.Patel former Chief Justice
of the Calcutta High Court was appointed as an Arbitrator to decide the
disputes between the Respondent No.2 and the Petitioner arising under the
said Joint Venture Agreement. Before the Arbitrator, the Respondent No.2
has filed a statement of claim and in the said statement of claim sought to
also raise disputes relating to the Development Agreement.
6 The Respondent No.2 thereafter filed an application in the
instant Suit invoking Section 8 and 21 of the Arbitration and Conciliation
Act, 1996. The said application was founded on the fact that the disputes
between the Petitioner and the Respondent No.2 were pending in
arbitration before Justice J. N. Patel who had been appointed as an
Arbitrator. It was further stated that the arbitral proceedings have
commenced and since the present Suit is a dispute between the Petitioner
who is one of the parties to the Joint Venture agreement and the
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Respondent No.2, the Suit therefore be stayed.
The Petitioner filed its reply to the said application filed by the
Respondent No.2. The Petitioner inter alia took a stand that the application
was misconceived and misfounded and therefore was liable to be rejected
with exemplary and compensatory costs. The Petitioner averred that the
Joint Venture Agreement dated 952006
was between the Petitioner and
the Respondent No.2 whereby a new company i.e. Respondent No.1 had
been formed. It was further averred that the Joint Venture Agreement was
only for the purpose of forming a new company and that the cause of
action for filing the Suit was the breach of the Development Agreement
which was an independent agreement entered into between the Petitioner
and the Respondent No.1 on 2352006.
The Petitioner further averred that
there was no arbitration clause in the said Development Agreement dated
2352006.
The Petitioner further averred that there was no mention of any
arbitration agreement or otherwise in the Written Statement which was
filed by the Respondents in the said Regular Civil Suit No.12 of 2011.
Therefore arbitration notice dated 2452012
was an after thought with a
view to delay the proceedings in so far as the hearing of the application
Exhibit 5 for injunction is concerned. It was also averred that there was no
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power to stay the Suit in a proceeding filed under Section 8 of the said Act.
The Trial Court considered the said application filed by the Respondent
No.2 invoking Section 8 and 21 of the said Act and by the impugned order
has allowed the same in as much as it has stayed the Suit in question. The
gist of the reasoning of the Trial Court as can be found from the impugned
order is that the Joint Venture Agreement is still in existence and therefore
the arbitration clause is invokable by the parties. The contention of the
Petitioner that the Joint Venture Agreement has been superseded by the
Development Agreement was rejected by the Trial Court. The Trial Court
however observed that both the agreements cannot be separated. This
observation was made on the basis that such an observation was made by
the learned Single Judge of this Court in the order dated 28102012
passed in the Section 11 application. As indicated above, it is the said order
which is taken exception to by way of the above Petition.
7 Heard the Learned Counsel for the parties i.e. Ms Chandana
Salgaonkar for the Petitioner and the Learned Senior Counsel Shri
S.G.Aney for the Respondents
Submissions of the Learned Counsel Ms Chandana
Salgaonkar for the Petitioner.
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8 The principal contention of the Learned Counsel for the
Petitioner is that the prerequisites for invoking Section 8 of the said Act
have not been satisfied in the present case.
(i) It is the contention of the Learned Counsel for the Petitioner
that there is no arbitration clause in so far as the Development Agreement
is concerned.
(ii) That the Defendant Nos.1 and 3 are not parties to the Joint
Venture Agreement and therefore the Trial Court had erred in entertaining
the application. Reliance was placed on the Judgment of the Apex Court
reported in (2003) 5 SCC 531 in the matter of Sukanya Holdings (P) Ltd.
Vs. Jayesh. H. Pandya & Anr.
(iii) That the Trial Court has misread and misinterpreted the order
dated 28102012
passed by the Learned Single Judge of this Court in the
application under Section 11 filed by the Respondent No.2. Nowhere the
Learned Single Judge has observed that both the Agreements i.e. the Joint
Venture Agreement and the Development Agreement cannot be separated.
The observations reproduced by the Trial Court in paragraph 5 of the
impugned order are with regard to the submissions made by the Learned
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Counsel for the Petitioner that the Joint Venture Agreement was
superseded by the Development Agreement, which submission the Learned
Single Judge has rejected.
(iv) That the Trial Court had erred in staying the Suit when no
such powers can be exercised under Section 8 of the said Act wherein the
parties can only be referred to arbitration.
(v) That the Respondents had submitted to the jurisdiction of the
Civil Court by submitting their Written Statement on merits of the claim in
the Suit and in fact had claimed a right to file counter claim and had never
questioned the maintainability of the Suit on the ground of their being an
arbitration agreement between the parties.
9 Submissions of the Learned Senior Counsel Mr. Aney
appearing for on behalf of the Respondent Nos.1 to 3
(i) That though the Respondent Nos.1 and 3 to the above Petition
are not parties to the Development Agreement if the veil is lifted it would
show that the Joint Venture Agreement which contains the arbitration
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clause involves the same parties i.e the Respondent No.1 is the Joint
Venture Company of the Petitioner and the Respondent No.2. The
Respondent No.2 is the Managing Director of the Respondent No.1 and the
Petitioner of the Respondent No.3, the Respondents are therefore entitled
to invoke Section 8 of the said Act.
(ii) That even if the relief of stay of the Suit could not be granted
in a proceeding under Section 8 of the said Act nevertheless the Civil Court
was within its powers to grant the said relief by having recourse to Section
151 of the Civil Procedure Code considering the fact that the parties were
before the Arbitrator in so far as the disputes under the Joint Venture
Agreement is concerned. In support of the said contention, the Learned
Senior Counsel placed reliance on the following Judgments :
(a) AIR 1962 Supreme Court 527 in the matter of Manohar Lal
Chopra Vs. Raibahadur Rao Raja Seth Hiralal
(b) Judgment of the Apex Court reported 2011(11) SC 275 in
the matter of K.K. Velusamy Vs. N. Palanisamy
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(c) Judgment of the Division Bench of Calcutta High Court
reported in AIR 1960 Calcutta 47 in the matter of Serajuddin and Co. Vs.
Michael Golodetz & Ors.
(iii) That the relief of stay of the Suit could have also been granted
by having recourse to Section 10 of the Civil Procedure Code read with
Section 151 as the parties were already before the Arbitrator in so far as
the disputes under the Joint Venture Agreement are concerned. In support
of the said contention the Learned Senior Counsel relied upon the
following Judgments :
(a) AIR 1954 Bombay 176 Rambahadur Thakur & Co. Vs.
Devidayal (Sales) Ltd.
(b) AIR (35) 1948 Nagpur 297 The Laxmi Bank Ltd Akola &
Ors. Vs. Harikisan & Ors.
(c) Judgment of a Learned Single Judge Calcutta High Court
reported in AIR 1941 Calcutta 670 in the matter of Bhagat Singh Bugga
Vs. Dewan Jagbir Sawhney
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(iv) That merely a mention of a wrong provision in the application
would not vitiate the order if otherwise the Civil Court was within its
powers to stay the Suit under Section 151 of the Civil Procedure Code. In
support of the said contention the Learned Senior Counsel relied upon the
following Judgments
(a) AIR 2008 Supreme Court 2010, T. Nagappa Vs. Y. R.
Muralidhar
(b) 1973 Mh. L.J. 925, Kashiprasad Vs. Usman Khan
(v) That this Court would not exercise its Writ Jurisdiction merely
because the Trial Court has committed an error of law or fact. In support of
the said contention reliance was placed on the Judgment of the Apex Court
reported in 1969(3) Supreme Court Cases 675 in the matter of Bhutnath
Chatterjee Vs. State of West Bengal & Ors.
CONSIDERATION
10 Having heard the Learned Counsel for the parties, I have
bestowed my anxious consideration to the rival contentions. In the context
of the fact that the application filed by the Respondents was one invoking
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Sections 8 and 21 of the said Act. It would therefore be relevant to
consider whether the prerequisites for the invocation of Section 8 of the
said Act were present in the instant case. For the said purpose it wold
apposite to reproduce Section 8 of the said Act.
8. Power to refer parties to arbitration where there
is an arbitration agreement :(
1) A judicial
authority before which an action is brought in a
matter which is the subject of an arbitration
agreement shall, if a party so applied not later than
when submitting his first statement on the substance
of the dispute, refer the parties to arbitration.
(2) The application referred to in subsection
(1) shall
not be entertained unless it is accompanied by the
original arbitration agreement or a duly certified copy
thereof.
(3) Notwithstanding that an application has been
made under subsection
(1) and that the issue is
pending before the judicial authority, an arbitration
may be commenced or continued and an arbitral
award made.
The application in question does not mention that the subject
matter of the Suit and the subject matter of the arbitration is the same. The
application also does not mention that the parties to the arbitration and
the parties to the Suit are the same. As indicated above, the Suit in
question has been filed by the Plaintiff for a permanent injunction against
the Respondent Nos.1 to 3. The Respondent No.1 is the Joint Venture
Company. The Respondent No.2 is the Managing Director of the
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Respondent No.1 and the Respondent firm comprises of Respondent No.2
and his brother. The cause of action for filing the Suit was that though
possession of the suit property is with the Plaintiff, the Respondents and
persons claiming through them including their family members may
obstruct or create hindrance to the Petitioner and therefore the Suit for
injunction. It is required to be noted that the Respondent Nos.1 to 3 filed a
common Written Statement. Pertinently in the said Written Statement
there is no mention of the Joint Venture Agreement dated 952006
or the
arbitration clause contained therein. Thereafter various applications were
filed by the Respondents namely (i) application challenging the pecuniary
jurisdiction, (ii) application challenging the valuation of the Suit and (iii)
application under Section 9A of the Civil Procedure Code. In none of the
applications the factum of the Joint Venture Agreement was pleaded. In
terms of Section 8 of the said Act an application for referring the matter to
arbitration has to be made not later than when submitting the first
statement on the substance of the dispute. In the instant case, the
application in question has been filed much after the Written Statement
was filed by the Defendants as also the various applications were filed by
them in the Suit and after a period of about 1 year and 10 months of the
filing of the Suit. Hence the very essential jurisdictional fact was absent in
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the present case and therefore the application could not have been
entertained.
11 At this stage, it would be apposite to refer to the Judgment in
Sukanya Holdings (P) Ltd. (supra) the relevant paragraphs of the said
Judgment are paragraphs 15, 16 and 17 which are reproduced herein
under:
15. The relevant language used in Section 8 is "in a
matter which is the subject matter of an arbitration
agreement", Court is required to refer the parties to arbitration.
Therefore, the suit should be in respect of 'a
matter' which the parties have agreed to refer and
which comes within the ambit of arbitration agreement.
Where, however, a suit is commenced "
as to a
matter" which lies outside the arbitration agreement
and is also between some of the parties who are not
parties to the arbitration agreement, there is no question
of application of Section 8. The words 'a matter'
indicates entire subject matter of the suit should be
subject to arbitration agreement.
16. The next question which requires consideration is
even if there is no provision for partly referring the dispute
to arbitration, whether such a course is possible
under Section 8 of the Act? In our view, it would be
difficult to give an interpretation to Section 8 under
which bifurcation of the cause of action that is to say
the subject matter of the suit or in some cases bifurcation
of the suit between parties who are parties to the
arbitration agreement and others is possible. This
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templated under the Act. If bifurcation of the subject
matter of a suit was contemplated, the legislature
would have used appropriate language to permit such
a course. Since there is no such indication in the language,
it follows that bifurcation of the subject matter
of an action brought before a judicial authority is not
allowed.
17. Secondly, such bifurcation of suit in two parts, one
to be decided by the arbitral tribunal and other to be
decided by the civil court would inevitably delay the
proceedings. The whole purpose of speedy disposal of
dispute and decreasing the cost of litigation would be
frustrated by such procedure. It would also increase
the cost of litigation and harassment to the parties and
on occasions there is possibility of conflicting judgments
and orders by two different forums.
12 The Apex Court in Sukanya Holdings (P) Ltd has therefore
laid down the prerequisites for invocation of Section 8 o the said Act. In
the instant case, admittedly the Respondent Nos.1 and 3 are not parties to
the Joint Venture Agreement. The Respondent No.3 cannot be said to be a
party who has been deliberately arrayed so as to frustrate any arbitration
agreement as in fact in the present case the Development Agreement does
not contain any arbitration clause. The subject matter of the Suit is also
different than the subject matter of the proceeding before the Arbitrator
which involves the breaches of the Joint Venture Agreement. The word
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“matter” in Section 8 indicates that the entire subject matter of the Suit
should be the subject matter of the agreement. However, in the instant
case, the Suit in question is founded on the Development Agreement and
the breaches thereof have no connection with the Joint Venture
Agreement. It is required to be noted that there is no provision for splitting
the cause or the parties for referring the subject matter of the Suit to the
Arbitrator. The Trial Court has totally glossed over the aforesaid aspects
and entertained the application under Sections 8 and 21. The jurisdiction
under Section 8 cannot be invoked by a long drawn out process. The Trial
Court therefore has in a way exercised jurisdiction not vested in it under
Section 8 by staying the Suit. If the provisions of Section 8 are applicable,
the only jurisdiction the Trial Court can exercise is to refer the parties to
arbitration but cannot stay the Suit.
13 Confronted with a situation where the very maintainability of
the Section 8 application was in question. The Learned Senior Counsel
appearing for the Respondents sought to extricate the Respondents from
the said situation and sought to take a different path and contended that
though the application was filed invoking Section 8, the Trial Court was
well within its powers to grant the relief which it has granted by having
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recourse to Section 151 of the Civil Procedure Code. In so far as the said
contention is concerned, the application exfacie does not contain even a
hint or suggestion that the Respondent No.3 was seeking to invoke the
inherent powers of the Civil Court under Section 151 of the CPC. The
application was proceeded on the basis that it is one under Section 8 of the
said Act and submissions were advanced on the said basis. In fact reliance
was sought to be placed on the observations made by a Learned Single
Judge of this Court in the order passed on the Section 11 application.
Though reliance was also sought to be placed by the Respondents on the
pursis dated 1872013
as also the pursis dated 2572013
the same do not
take the case of the Respondents any further, in so far as the said aspect is
concerned. In fact the said pursis in a way militates against the case of the
Respondents that the application is referable to the invocation of the
inherent powers of the Court under Section 151 of the CPC. It is pertinent
to note that by the said pursis, the Respondents applied to the Court to
refer the Suit to arbitration and there is nothing in both the pursis to
indicate that the inherent powers of the Court are sough to be invoked.
The Trial Court as can be seen from the impugned order has also
proceeded on the basis that the said application was under Section 8 of the
said Act. The Trial Court also treated the said application under Section 8
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and did not treat it as an application seeking to invoke its inherent powers.
14 Now coming to the judgments cited on behalf of the
Respondents to support the theory of invocation of the inherent powers, in
the case of Manoharlal (supra), it has been held by the Apex Court that
the inherent powers of the court under Section 151 are in addition to the
powers specifically conferred on the Court by the Code and that they are
complementary to those powers and therefore it must be held that the
court is free to exercise them for the purposes mentioned in Section 151 of
the Code. However the Apex Court has also issued a note of caution by
observing that the said powers are to be exercised in a manner so that
they are in no way in conflict with what has been expressly provided in the
Code or against the intentions of the Legislature.
15 In so far as the Judgment in Serajuddin's case (Supra) is
concerned, the Division bench had justified the exercise of powers under
Section 151 to stay the Suit as Section 34 in the Arbitration and
Conciliation Act 1940, did not apply to Foreign Arbitration. It is in the said
context that the Division bench upheld the exercise of the inherent powers.
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In K.K.Velusamy's case (supra) the Apex Court was concerned
with a case wherein one of the parties had applied for reopening of
evidence or recalling witness. It is in the said context that the Apex Court
held that exercise of powers under Code was not warranted as the power
under Section 151 could not be used in a routine manner and merely for
the asking. In the context of Section 151 and its invocation, it would also
be apposite to refer to the Judgment of the Apex Court cited by the
Learned Counsel for the Petitioner reported in 2008(2) SCC 488 in the
matter of State of U.P. Vs. Roshan Singh wherein the Apex Court has held
that the object of Section 151 of the CPC is to supplement the provisions of
the Code and not to override or evade other express provisions of the Code
or other statutes. The Apex Court further held that where the Civil
Procedure Code deals expressly with a particular matter, the said
provisions should be normally recorded as exhaustive and Section 151
cannot be called in aid for nullification of the provisions of the Code. The
Apex Court in the said Judgment found that Section 8 having not been
found applicable, it was open to the High Court to bye pass the same and
invoke section 151 of the CPC. Hence the proposition laid down by the
Apex Court is that powers under Section 151 of the CPC cannot be
exercised in a routine manner so as to override the other provisions of the
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Code wherein the provision is made for particular matters. In the instant
case as can be seen the Respondents had invoked the specific provisions of
the said Act and the parties were litigating on the said basis. The
Respondents therefore cannot now be allowed to contend that the
impugned order can be justified on the touch stone of Section 151 of the
CPC. The contention of the Learned Senior Counsel cannot be accepted for
another reason, as it is well settled by the judgment of the Apex Court that
if there is a specific provision in the CPC then the inherent powers cannot
be invoked. The instant case is a case where a specific provision in another
statute i.e. the Arbitration and Conciliation Act 1996 was invoked and the
order therefore cannot be justified on the basis of the exercise of the
inherent powers of the court under the CPC.
16 Now coming to the judgment cited on behalf of the
Respondents based on Section 10 of the CPC, the Division Bench in
Rambahadur Thakur's case (supra) held that to avoid an abuse of
process of the court the recourse may have to be taken to Section 151 of
the CPC instead of Section 10 to stay the Suit, by an injunction preventing
the Defendants from proceeding with the earlier Suit on the ground that to
allow that Suit to go on would constitute an abuse of the process of the
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Court. In so far as the Judgment in Laxmi Bank Ltd. (Supra) is concerned,
the same principle has been laid down by a Learned Single Judge of this
Court wherein he has held that even if Section 10 of the CPC does not as
such apply in the circumstances of the case before the Learned Single
Judge, the interest of justice and the balance of convenience justify the
staying of the entire suit as against all the defendants and therefore the
invocation of Section 151 i.e. inherent powers was upheld. In so far as
Bhagat Singh's case (supra) is concerned, a Learned Single Judge of the
Calcutta High Court held that the Code is not exhaustive, there are cases
which are not provided for in it and in such cases Section 151 is invokable
to act ex debito justitae. In my view the aforesaid judgments would have
no application mainly for the reason that the proceedings before the
learned arbitrator cannot be said to be proceedings before the Court and
therefore Section 10 could not be invoked. The provisions of Section 151
also cannot be invoked as the application has been specifically filed under
Section 8 of the said Act wherein the power is only for referring the
disputes to arbitration and no order staying the Suit can be passed.
17 Now coming to the contention that merely because of a wrong
provision is referred to in the application, the same would not vitiate the
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order, in support of which contention reliance is placed on Judgment of T.
Nagappa's case (supra). In my view the said contention has no merit in
view of the fact that this is not a case where a wrong provision in the same
act has been referred to. This is the case where the substantive provision of
the Arbitration and Conciliation Act, was invoked and now a plea is sought
to be taken that the order is referable to the inherent powers under Section
151 of the code, it would have been another matter if the impugned order
was justifiable under another provision of the said Act but such is not the
case. Hence the Judgment in T. Nagappa's case (supra) wherein a wrong
provision in the evidence Act was referred to in respect of an application to
call for expert opinion, would not in any way aid the Respondents.
18 As a last straw on the camel's back it was sought to be
contended on behalf of the Respondents that even if there is an error of
law or fact this Court would not exercise its Writ Jurisdiction. In my view,
it is not possible to accept the said contention in view of the fact that the
Trial Court has exercised jurisdiction under Section 8 of the said Act when
the application itself was not maintainable. Moreover the Trial Court has
exceeded its jurisdiction assuming it had one by granting relief of stay of
the Suit which is a relief not contemplated under Section 8 of the said Act.
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The Judgment of the Apex Court in Bhutnath Chatterjee's case (supra)
therefore would have no application in the facts and circumstances of the
present case. Incidentally the Apex Court in the said case was concerned
with the aspect of compensation to the deprived land holders under the
Land Acquisition Act and it is in the said context the Apex Court held that
the High Court could not exercise Writ Jurisdiction merely because there is
an error of law or fact.
19 In so far as the Trial Court is concerned, it has proceeded on the
basis that the Learned Single Judge in the order passed on the application
invoking Section 11 has held that the two agreements i.e. Joint Venture
Agreement and Development Agreement cannot be separated, in my view,
the said observation made by the Trial Court is erroneous as no such
observation has been made by the Learned Single Judge of this court in the
order passed on the application filed under Section 11 of the said Act.
What the learned Single Judge has done is that he has rejected the
contentions of the Petitioner herein that the Joint Venture Agreement has
come to an end on the formation of the Respondent No.1 Joint Venture
Company and therefore the said Joint Venture Agreement had exhausted
itself, and that the Joint Venture Agreement being superseded by the
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Development Agreement, the parties therefore could not be referred to
arbitration. The Trial Court has also relied upon the Judgment reported in
P. Anand Gajapathi Raju Vs. V. G. Raju reported in 2000 AIR Supreme
Court 1886. In my view, the reliance placed on the said Judgment by the
Trial Court is totally misplaced in as much in the instant case there is no
agreement between the Petitioner and the Respondents in the pending Suit
to refer the matter to arbitration. In the said case the facts were that the
parties had agreed to refer the disputes to arbitration, hence the Judgment
in P. Anand's case (supra) has no application. For the reasons afore stated
the impugned order of the Trial Court is unsustainable and is required to
be quashed and set aside and is accordingly quashed and set aside. The
result would be that the staying of the Suit would stand set aside and the
Suit would proceed.
20 Rule is accordingly made absolute in the aforesaid terms with parties
to bear their respective costs of the Petition.
(R M SAVANT, J)
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