It is true that the Arbitration and Conciliation Act, 1996 does not provide for splitting up of the causes of action and reference of the split up causes of action which is capable of resolution through the mechanism of arbitration, to the arbitrator, but the Court's power to split up the causes of action for convenience of trial of the suit is well-recognized under Order 2 Rule 6 of the Civil Procedure Court and as such the Court can split up the causes of action and retain only that part of the causes of action which can be resolved by the Court and by releasing the other part of the causes of action which is not triable by the Civil Court so that, that part of the dispute between the parties can be resolved by different forum competent to decide the dispute in accordance with law.
Calcutta High Court (Appellete Side)
Lafarge India Pvt. Ltd vs Emami Realty Ltd. & Anr on 15 September, 2016
Present: The Hon'ble Justice Jyotirmay Bhattacharya AND The Hon'ble Justice Ishan Chandra Das Citation:AIR 2017 (NOC) 92 Cal
In a suit for recovery of damages, declaration and injunction filed by the plaintiff/appellant against the defendant/respondent, the plaintiff/appellant prayed for anti-arbitration injunction, which having been rejected by the learned Trial Judge at the ad interim stage, the instant First Miscellaneous Appeal has been filed by the plaintiff/appellant before this Court.
Let us now consider as to how far the learned Trial Judge was justified in refusing to grant ad interim injunction in favour of the plaintiff/appellant in the suit.
Since we are considering the legality and/or propriety of an order of refusal to grant ad interim injunction in favour of the plaintiff/appellant, we will restrict our consideration with reference to the pleading of the plaintiff/appellant made out in its plaint as well as in the injunction application and the annexures made therein.
In this context we like to refer to the pleading of the plaintiff made out in the plaint as well as in the temporary injunction proceeding. The plaintiff is engaged in the business of manufacture and sale of Ready Mix Concrete (hereinafter referred to as "RMC"). The defendant No.1 is a company engaged in the business of carrying out and executing real estate projects having its registered office within the territorial jurisdiction of the Trial Court. The defendant No. 2 is a company engaged in the business of architectural engineering and construction.
In or about September, 2011, the defendant No.1 entered into an agreement with the plaintiff for supply of RMC at the project sites of the defendant No.1 including that at 2 Jessore Road, Kolkata-700 028. The defendant No.1 had issued a letter of intent dated 17th September, 2011 on the plaintiff for supply of RMC of M-25 (piling) grade. The letter of intent (hereinafter referred to as "LOC") contained several terms and conditions relating to plant required to be mobilized by the plaintiff at the site of the defendant No.1 at National Institute of Biomedic Genome, Kalyani. Those plants include a batching plant of CP-18 specification. To fulfill the condition of LOI relating to supply of batching plant of CP-18 specification, the plaintiff entered into a hiring agreement with the defendant No.2 on 30th January, 2012, wherein the defendant No.2 agreed to give on rent batching plant model CP-18 to the plaintiff for the purpose of plaintiff's use on various conditions, some of which with whom we are concerned are mentioned hereunder.
1. The tenure of hire would be 12 months from the date of commissioning of the plaint at the site and the period of hire would be extended for a further period upon mutually agreed terms and conditions.
2. The site of commissioning of the plant was to be National Institute of Biomedic Genome, Kalyani.
3. The plaintiff would pay a sum of Rs.1.65 lakhs plus service tax towards monthly rent in such regard and such rent would become due to the defendant No.2 from the date, the plant will be handed over to the plaintiff or on and from 1st February, 2012 whichever is earlier.
4. In the event, rent for two successive months was not paid by the plaintiff, the agreement would stand automatically terminated and the plant will be repossessed by the defendant No.2 and all the expenses for shifting and transportation of the same would be borne by the plaintiff.
5. The said agreement dated 30th January, 2012 also contained an arbitration clause.
Subsequently on the very next day i.e. on 31st January, 2012 a supplementary contract was entered into between the plaintiff and the defendant No.2 by which "site" was modified to be the project site of the defendant No.1 i.e. Emami City, Jessore Road, West Bengal.
Pursuant to the said agreement with the plaintiff, the defendant No.2 arranged for the plant to be shifted to the site of the defendant at Emami City, Jessore Road, Kolkata, West Bengal. This was done on or about 30th May, 2012.
The project of the defendant No.1 at Jessore Road was completed within the stipulated period. All the terms and conditions which the plaintiff was required to fulfill under the LOI issued by the defendant No.1 were duly performed by the plaintiff. However, the defendant No. 1 failed, refused and neglected to perform its obligation including payment of its dues towards supply of RMC amounting to Rs.18,97,304/- to the plaintiff within the stipulated time.
By a letter dated 2nd May, 2013, the plaintiff intimated the defendant No.2 that the hiring agreement entered into between themselves would expire on 31st May, 2013. since such intimation was given to the defendant No.2 , the said defendant was required to repossess the batching plant from the project site at Jessore Road but the defendant No.2 failed, refused and neglected to do so. The defendant No.1 started creating hindrances in releasing the plant to the defendant No.2, despite having knowledge of the fact that the plaintiff hired the said plant from the defendant No.2. Instead of, exercising its right to repossess the plant by the defendant No.2 from its installation site at Jessore Road, the defendant No.2 wrongly insisted upon the plaintiff to arrange for release of the plant from the site of the defendant No.1. After long persuasion, the defendant No.1 issued gate-pass to the plaintiff and ultimately possession of those plants could be recovered from the project site of the defendant No.1.
Since the rent and/or damages was not paid by the plaintiff on account of hiring charges of the said plant as per the agreement for the period subsequent to the expiration of the contract till its return, the defendant No.2 initiated an arbitration proceeding against the plaintiff through the intervention of the Hon'ble Chief Justice of Guwahati High Court in a proceeding under Section 11 of the Arbitration and Conciliation Act, 1976.
The appointed arbitrator has already entered upon the reference and the pleadings of the respective parties, are all complete before the learned arbitrator.
The plaintiff set up its defence in the said proceeding stating that since the batching plant could not be delivered to the defendant No.2 due to wrongful detention thereof by the defendant No.1 and further since the defendant No.2 failed to repossess the batching plant from the plaintiff after the expiration of the contractual period, as per the contract, the plaintiff is not liable to pay the rent and/or damages on account of hiring charges of the said batching plant and/or damages for the post contract period as claimed by the defendant No.2 in the said arbitration proceeding.
The plaintiff thus, claimed that if the defendant No.2 at all is found to be entitled to recover rent and/or damages of the said batching plant for the post contractual period, the defendant No.1 which wrongfully detained the batching plant at its project site even beyond the contractual period, is liable to pay such rent and/or damages on account of wrongful detention of the said batching plant of defendant No. 2 and the plaintiff is neither responsible for such wrongful detention of the batching plant of the defendant No.2 nor it is liable to pay any rent and/or damages on account of hiring charges of the said batching plant to the defendant No.2 after the expiry of the contractual period.
In this background the plaintiff filed the instant suit praying for a money decree for a sum of Rs.3 crores against the defendant No.1 alternatively an enquiry to be made for ascertaining actual loss and damages suffered by the plaintiff and for passing a decree, accordingly upon such enquiry together with interest.
The plaintiff has also prayed for a declaration that the defendant No.2 is not entitled to claim any sum whatsoever from the plaintiff in respect of the agreement which the plaintiff entered into with the defendant No.2 for commission of batching plant at the project site of the defendant No.1 at Jessore Road. Perpetual injunction was also sought for restraining the defendant No.2 from proceeding any further or taking any step or further steps in connection with arbitration proceeding pending before Hon'ble Justice H.N. Sharma (retired) after ARBREF No.02/2015. Certain other incidental reliefs were also claimed in the said suit.
In such a suit, the plaintiff filed an inter locutory application praying for stay of the said arbitration proceeding till the disposal of the suit or in the alternative, the defendant/respondent No.2 be restrained from proceeding any further or taking any steps or further steps in connection with the said arbitration proceeding till the disposal of the suit. Ad interim order in similar term was also prayed for by the plaintiff/appellant in the said application which having been rejected by the learned Trial Judge, the instant appeal was filed by the plaintiff/appellant.
The learned Trial Judge held that no such urgency is involved in such proceeding for which the Court is required to pass any ad interim injunction without hearing the opposite party.
Accordingly the plaintiff's prayer for ad interim injunction was refused.
The defendants were directed to show cause as to why temporary injunction will not be granted in favour of the plaintiff.
Mr. Mitra, learned Senior Counsel appearing for the appellant criticized the said impugned order, as the impugned order was passed without considering the merit of the plaintiff's prayer for ad interim injunction. He contended that unless the arbitration proceeding which has already been set into motion is stayed, the relief which the appellant has claimed in its injunction application will become infractuous. He also submitted that Civil Court's power to pass anti-arbitration injunction is well-recognized by the judgment of this Hon'ble Court delivered on 29th September, 2014 in G.A No. 1997 of 2014 in the case of Board of Trustees of the Port of Kolkata Vs. Louis Dreyfus Armatures SAS & Ors.
He has also relied upon the decision of the Hon'ble Supreme Court in the case of Sukanya Holdings (p) Ltd. Vs. Jayesh H. Pandya & Anr. reported in (2003)5 SCC 531, wherein it was held that there is no provision in the Arbitration and Conciliation Act, 1996, for splitting up the causes or the parties and referring the part of the subject matter of the suit relating to the arbitration agreement to the arbitrator when the subject matter of the suit includes both matters relating to arbitration agreement as well as other dispute which is capable of resolution by the Civil Court in the Civil Suit.
By referring to the pleadings made out in the plaint, as a whole, Mr. Mitra, learned Senior Counsel tried to convince us that the suit which was filed by his client before the Civil Court is a comprehensive suit where the party i.e. the plaintiff and/or the defendant No.1, who is actually liable to pay rent and/or damages towards detention charges of the batching plants beyond the contractual period, can only be ascertained.
Mr. Mitra further contended that since the defendant No. 1 is not a party to the arbitration contract, the defendant No.1 even cannot be joined as a party in the arbitration proceeding and as such determination of its liability to pay rent or damages on account of unauthorized detention of the batching plant of the defendant No.2 at the project site of the defendant No.1 beyond the contractual period, cannot be ascertained by the learned arbitrator in the said arbitration proceeding.
Mr. Mitra further contended that if both the suit and the arbitration proceeding are allowed to be continued simultaneously then possibility of conflict of decisions on common issue involved in the suit as well as in the arbitration proceeding, cannot be avoided.
He thus, contended that for avoiding conflict of decision, either the proceeding before the learned arbitrator should be stayed or the defendant/respondent No.2 should be restrained from proceeding with the arbitration proceeding before the learned Arbitrator during the pendency of the suit, keeping in mind that the suit is a comprehensive one where the triangular disputes pending before the parties can be decided finally and once for all.
Mr. Mitra further submitted that the present suit which was filed in the nature of an action in detinue, is well-maintainable as a tortious claim. To support such submission he has also relied upon one passage on the topic of detention of G.P Singh's law on torts, wherein it was mentioned that detention is the adverse withholding of the goods of another. It was also mentioned therein that the remedy in English Law is an action in detinue and it lies for specific recovery of chattels wrongfully detained from the person entitled to the possession of them, and also for the damages occasioned by the wrongful detainer. It was also mentioned therein that the injury complained of is not the taking, not the misuse and appropriation of the goods, but only the detention. Relying upon the said passage from Mr. G.P. Singh's Laws on Torts Mr. Mitra, learned Senior Counsel, contended that the present suit being an action in detinue is well maintainable in law, and as such the learned Trial Judge ought to have passed an ad interim order of injunction not only for avoiding multiplicity of proceedings but also for avoiding conflict of decisions between two competent adjudicatory forums.
He thus, invited us to pass ad interim injunction for restraining the respondent No.2 from proceeding with the arbitration proceeding pending before the learned arbitrator till the disposal of the plaintiff's application for temporary injunction. Mr. Mitra, however, very candidly submitted before this Court that his client presently in the injunction proceeding does not claim any relief against the defendant/respondent No.1.
In view of such submission made by Mr. Mitra, learned Senior Counsel of the plaintiff/appellant, Mr. Chatterjee, learned advocate appearing for the defendant/respondent No.1 submitted that practically his client is not required to elaborate its submission relating to its defence in the said injunction proceeding, at this stage before this Court.
Mr. Das, learned Advocate appearing for the defendant/respondent No.2 refuted the submission of Mr. Mitra by submitting that anti- arbitration injunction, as prayed for by the plaintiff/appellant, cannot be granted in the present suit in view of the provisions contained in Section 5 of the Arbitration and Conciliation Act, 1996 read with Section 8, sub- Section 3 thereof.
He contended that the extent of judicial intervention with an arbitration proceeding is very limited under Section 5 of the said Act, which starts with a non obstante clause saying that notwithstanding anything contained in any other law for the time being in force, in matters governed by part one of the said Act, no judicial authority shall intervene except where so provided in this part. Grant of injunction by Civil Court for stalling the arbitration proceeding in such circumstances is not warranted under part-I of the said Act.
He further contended that even sub-Section 3 of Section 8 of the said Act makes it clear that notwithstanding that an application has been made under sub-Section 1 of Section 8 and that the issue is pending before the judicial authority, still then, an arbitration agreement may be commenced or continued and an arbitral award may be made.
According to him, in view of the scheme framed under the Arbitration & Conciliation Act, intervention of the Civil Court with the arbitration proceeding is impermissible save and except in the manner as provided in Part-I of the said Act.
He submitted that pursuant to the arbitration agreement entered between the plaintiff and his client, viz. the defendant/respondent No.2, his client has already initiated an arbitration proceeding through the intervention of the Hon'ble Chief Justice of Guwahati High Court in a proceeding under Section 11 of the Arbitration and Conciliation Act, 1996 and the plaintiff/appellant has already appeared in the said proceeding and delivered its defence before the learned arbitrator and the arbitration proceeding has also progressed substantially and it is only at this stage when the evidence of his client was being recorded, the plaintiff filed such an application for injunction in a suit filed by it, subsequent to the initiation of the arbitration proceeding.
By referring to the pleadings made out by the plaintiff in the plaint as well as in the injunction application, he contended that the plaintiff claimed separate reliefs against two different defendants by uniting two distinctly different causes of action concerning each of the defendants independently.
He submitted that the relief which the plaintiff has claimed against the defendant No.1 in the suit is based on one set of causes of action arising out of a contract entered into between the plaintiff and the defendant No.1 to which the defendant No.2 is not a party.
He further pointed out that relief which is claimed against the defendant No.2 in the suit is based on the cause of action arising out of a distinctly different contract entered into between the plaintiff and the defendant No.2 in which the defendant No.1 is not a party. The said contract contains an arbitration agreement for referring any dispute between the plaintiff and the respondent No.2, to the arbitrator for resolution of their dispute through arbitration. He pointed that the defendant No.1 is neither a party to the said arbitration agreement nor a party to the arbitration proceeding.
According to him, the plaintiff cannot be permitted to claim any relief against the defendant/respondent No.2 in the suit arising out of a dispute covered by the said arbitration agreement entered between the plaintiff and the respondent No.2. As such, that part of the causes of action relating to the dispute between the plaintiff and the respondent No.2, ought not to have been joined with the cause of action which is the foundation of the plaintiff's claim against the defendant No.l in the suit, particularly when the rights of the parties in the triangular fight emanates from two different contracts to which the parties are not common.
He thus, contended that even if two sets of distinctly different causes of action were united in one suit, the learned Trial Court in view of the provision contained in Section 5 read with Section 8 of the Arbitration and Conciliation Act, 1996 cannot pass any anti-arbitration injunction in the suit rather the proper course in such a situation was to stay its own proceeding so far as it relates to the dispute between the plaintiff and the respondent No.2 which is pending for consideration before the learned arbitrator in the pending arbitration proceeding. He further contended that when trial of such a suit wherein two sets of different causes of action were united, is found to be inconvenient, the Civil Court can direct for splitting up those two sets of causes of action as per the provision contained in Order 2 rule 6 of the Civil Procedure Code for convenient trial of those two different types of disputes by two different forms. In support of such contention he has also relied upon a decision of the Hon'ble High Court of Kerala in the case of the Aerens Gold Souk International Ltd. & Ors. Vs. Parthas Textiles reported in 2012 (1) KHC 437.
By relying upon a decision of the Supreme Court in the case of Chatterjee Petrochem Co. & Anr. Vs. Haldia Petrochemicals Ltd. & Ors. Reported in (2014)1 Calcutta Law Times 83 (SC), he contended that when an arbitration proceeding had already been initiated by a party to the arbitration agreement, the parties to the arbitration proceeding may be directed to continue with the arbitration proceeding inasmuch as non- signatory party to arbitration agreement does not jeopardize arbitration clause in any manner and the suit filed for permanent injunction against arbitration proceeding is not sustainable in law.
He also contended that the plaintiff cannot escape from its liability to pay rent and/or damages to the defendant No.2 for not delivering the batching plant to the defendant No.2 after expiry of the contractual period in view of the provision contained in Section 160 of the Indian Contract Act, 1872, which provides that it is the duty of the bailee to return, or deliver according to the bailor's directions, the goods bailed, without demand, as soon as the time for which they were bailed has expired, or the purpose for which they were bailed has been accomplished.
He thus, contended that when under the contract right of re- possession was given to the defendant No.2 in case of default in payment of rent for two consecutive months during the contractual period, the bailee's duty to return and/or deliver the batching plant to the defendant No.2 after expiry of the contractual period, cannot be overlooked in view of the provision contained in Section 160 of the Contract Act.
Ultimately he contended that even if two causes of actions are split up and the suit and the arbitration proceeding are allowed to be proceeded with simultaneously, plaintiff will not be made remediless as even in case an award is passed against it in the arbitration proceeding, holding it liable to pay any rent and/or damages on account of unlawful detention of the batching plant of the defendant No.2 after the expiry of the contractual period, still then it can very well realize the said amount from the defendant No.1 in the present suit, provided it can establish that the defendant No.1 is responsible for such unlawful detention of the batching plant of the defendant No.2 at its project site at Jessore Road, Calcutta.
Mr. Das also contended that no part of the causes of action relating to the relief claimed against the defendant/respondent No.2, has arisen within the territorial jurisdiction of the learned Trial Court as the hiring agreement as well as the supplementary agreement for letting out the batching plant to the plaintiff was entered into between the plaintiff and the defendant No.2 at Guwahati beyond the territorial jurisdiction of this Court. He further pointed out that batching plant was delivered to the plaintiff by the defendant No.2 pursuant to the said agreements executed at Guwahati which is beyond the territorial jurisdiction of the Court and even the batching plant was commissioned at Jessore road and detention thereof was caused at Jessore Road which is also beyond the territorial jurisdiction of Alipore Court. He further pointed out that since the defendant company has its registered office at Guwahati and the arbitration reference was made through the intervention of the Hon'ble Chief Justice of Guwahati High Court under Section 11 of the Arbitration and Conciliation Act, 1976, the jurisdiction of the Civil Court at Alipore cannot be invoked to try an issue relating to any dispute between he plaintiff and the defendant No.2 arising out of the said contract, because of lack of territorial jurisdiction of the Civil Court at Alipore.
He thus, contended that since no part of the causes of action, so far as it relates to the relief claimed against the defendant No.2, arose within the territorial jurisdiction of Alipore Court, the Alipore Court cannot pass any interim order of injunction against the defendant No.2 in the present suit.
Mr. Das, thus, prayed for rejection of plaintiff's application for temporary injunction.
Let us now consider the acceptability of the contentions raised by the learned Counsel of the respective parties in the facts of the instant case.
We have already indicated above that two distinctly different identifiable reliefs were claimed by the plaintiff against each of the two defendants based on two different sets of causes of action joining them together in one suit. On apparent look, these two sets of causes of action are not related to each other. However, by using of a magnifying glass, remote connection between two causes of action may be visible simply with reference to commissioning of this batching plant at the project site of the defendant No.1 at Jessore Road and detention thereof beyond the contractual period at the said project site of the defendant No.1, but the said project also does not fall within the territorial jurisdiction of Alipore Court.
However, since the issue regarding lack of territorial jurisdiction of the Court to try a suit being a disputed question of facts, we, for the time being, refrain ourselves from deciding such dispute, while assessing the correctness of the impugned order.
On perusal of the pleadings made out by the plaintiff in the plaint as well as in the injunction application, we find that two different contracts were executed between the parties to which plaintiff is common but the other contracting parties are different. Under one contract executed between the plaintiff and the defendant No.1, the plaintiff was required to supply RMC to the defendant No.1 at its project site Jessore Road for construction of building therein. Under the said contract, the plaintiff is also required to supply various plants and machineries including batching plant.
Since the plaintiff did not own any batching plant, it entered into an agreement with the defendant No.2 for hiring batching plant for its installation at the project site of the defendant No.1.
These two contracts are independent of each other. Neither the defendant No.2 is a party to the contract executed between the plaintiff and the defendant No.1 nor the defendant No.1 is a party to the contract executed between the plaintiff and the defendant No.2 which contains arbitration clause. Thus, when there is any breach of the contract entered into between the plaintiff and the defendant No.1, the party which caused such breach is liable to pay damages to the other party which suffered losses due to such breach caused to have been done by the other party to the contract.
On perusal of the plaint, we find that the plaintiff complained that the defendant No.1 breached the terms of the contract entered into between the plaintiff and the defendant No.1 and as such the defendant No.1 is liable to compensate the loss which the plaintiff has suffered on account of breach of contract alleged to have been done by the defendant No.1. This part of the plaintiff's claim is capable of resolution in Civil Suit before the Civil Court as this contract does not contain any arbitration clause.
The causes of action pleaded in the plaint on which the plaintiff founded its claim against the defendant No.2 arising out of the contract between the plaintiff and the defendant No.2, in our prima facie view, ought not to have been joined in the suit as the parties to the said agreement decided to get their disputes arising out of that contract resolved through arbitration and the Civil Court will feel inconvenience in trying the said suit because of joinder of different sets of causes of action which are remotely connected with each other and the forum of adjudication of these disputes are different from each other.
We also find from the plaint that the defendant/respondent No.2 has already initiated an arbitration proceeding for realization of the rent and/or damages from the plaintiff for unlawful detention of the batching plant beyond the contractual period. The said arbitration proceeding has progressed substantially with the participation of the plaintiff/appellant herein. The appellant raised a plea in his defence therein that it is not liable to pay any damages and/or rent for delay in delivery of batching plant to the defendant No.2 after expiry of the contractual period as it is the defendant No.1 who according to the plaintiff, was responsible for withholding the delivery of the batching plant after expiry of the contractual period. The plaintiff further claimed that the defendant No.2 is also a defaulter as it did not exercise its right of re-possession of the batching plant immediately after the contractual period was over, despite notice was given to it by the plaintiff intimating about the expiry of the contractual period. According to the plaintiff/appellant, the defendant No.2 having committed default in re-possessing the said batching plant as per the contract, is not entitled to recover rent and/or damages from the plaintiff.
In fact, the defence which was set up by the plaintiff/appellant in the arbitration proceeding in support of its plea that it is not liable to pay any damages to the defendant No.2 for the alleged withholding of delivery of the batching plant by the defendant No.1 after the expiry of the contractual period is identical with the plea which set up as the foundation of its claim for the relief against the defendant No.2 in the Civil Suit.
Though we agree with Mr. Mitra, learned Senior Counsel of the appellant that since the defendant No.1, is not a party to the arbitration agreement, the said defendant cannot be impleaded as a party to the arbitration proceeding and no award can be passed against the said defendant in the arbitration proceeding, but we cannot agree with the submission of Mr. Mitra, that even in the absence of the defendant No.1, the plaintiff/appellant is unable to establish its said defence in the arbitration proceeding that the plaintiff is, in no way responsible, for detention of the batching plant at the project site of the defendant No.1 and delivery of the batching plant was delayed due to the failure of the defendant No.2 in exercising its right of re-possession as per the contract. Those pleas, set up by the appellant in the arbitration proceeding, in our view, can be established by the appellant not only by giving evidence by the plaintiff/appellant itself but also by summoning the defendant No.1 for giving evidence.
If ultimately the plaintiff/appellant herein succeeds in proving that it is not instrumental to the commission of breach of the contract entered into between the plaintiff/appellant and the defendant/respondent No.2 and is not responsible for delay in delivery of the batching plant beyond the contract period then no award will be passed against the plaintiff/appellant herein by the learned arbitrator in the said arbitration proceeding.
At the same time it is also equally true that in the event it is found in the arbitration proceeding, that the defendant/respondent No.1 is instrumental to the delay in delivery of the batching plant installed at the project site of the defendant No.1, then the learned arbitrator will not be able to pass an award against the defendant/respondent No.1 in the said arbitration proceeding as the said defendant is not a party to the said proceeding. In such cases the defendant/respondent No.2 herein will have to find out the ways and means for realization of damages against the defendant No.1. On the contrary if in the arbitration proceeding it is found that the plaintiff/appellant is responsible for the breach of contract due to delay in delivery of the batching plant to the defendant/respondents No.2 after the expiry of the contractual period then certainly an award will be passed by the learned arbitrator against the appellant herein in the said arbitration proceeding and in that event it can not claim reimbursement of the awarded amount from the defendant No.1 in the present suit.
In these set of facts we cannot agree with the submission of Mr. Mitra that the arbitration proceeding should be stalled. In our view Section 5 read with Section 8 of the Arbitration Act makes it abundantly clear that arbitration proceeding cannot be stalled by way of any judicial interference by the Civil Court in the absence of any demonstrable injustice or harassment being caused by reason of initiation of arbitration proceeding or participation in such proceeding and having regard to the fact that the agreement is not in dispute, in our view, the plaintiff is not entitled to an order of injunction. When the parties by a consent agreed to resolve their disputes through alternate dispute resolution, meaning thereby they agreed to avoid the regular process of disposal of controversy through Court of law, it is expected that they would resolve their disputes through arbitration in terms of the procedure laid down in the Act. In this set of facts, we fail to appreciate as to how suit filed by the appellant for resolution of the dispute arising out of the contract between the plaintiff and the defendant No.2 which contains an arbitration clause, is maintainable. The principle which the Court is required to keep in mind is that if there is a valid arbitration agreement between the parties, there is no escape from arbitration and the parties shall be referred to arbitration and resolve their dispute through the mechanism of arbitration. It is only in exceptional circumstances anti-arbitration injunction can be granted by the Court of law where its satisfy the condition as contained in Section 5 of the Arbitration and Conciliation Act, 1996.
It is true that the Arbitration and Conciliation Act, 1996 does not provide for splitting up of the causes of action and reference of the split up causes of action which is capable of resolution through the mechanism of arbitration, to the arbitrator, but the Court's power to split up the causes of action for convenience of trial of the suit is well-recognized under Order 2 Rule 6 of the Civil Procedure Court and as such the Court can split up the causes of action and retain only that part of the causes of action which can be resolved by the Court and by releasing the other part of the causes of action which is not triable by the Civil Court so that, that part of the dispute between the parties can be resolved by different forum competent to decide the dispute in accordance with law. In any case, if the Civil court has to decide the issue which is required to be decided by the arbitration, then the Civil Court will be permitted to encroach upon the jurisdiction of the Arbitrator by defeating the object of the Arbitration and Conciliation Act, 1996.
We, however, agree with the contention of Mr. Mitra that there may be a chance of conflict of decisions as in case the learned arbitrator holds that the plaintiff/appellant is liable to pay rent and/or damages to the defendant/respondent No.2 and the Court holds otherwise i.e. by fixing the liability upon the defendant/respondent No.1 holding it responsible for delay in delivery of the batching plant to the defendant/respondent No.2 after the expiry of the contractual period or the vice versa and to obviate such difficulty we feel that justice will be subserved and the object of the Arbitration and Conciliation Act, 1996, will be fulfilled if instead of staying the arbitration proceeding which has progressed substantially, the further proceedings of the suit so far as it relates to the dispute pending before the learned arbitrator, ares stayed till the disposal of the arbitration proceeding as the decision on the common issue to be arrived at by the learned arbitrator in the arbitration proceeding will be binding upon the Court on the common issues involved in the suit.
We thus, find no justifiable reason to interfere with the impugned order. It is however, made clear that the observations made by this Court in this order are all tentative findings which will not operate as res judicata either at the time of hearing of the plaintiff's application for temporary injunction or at the trial of the suit. As such the learned Trial Judge is absolutely free to decide the plaintiff's application for temporary injunction as well as the suit according to his own wisdom and in accordance with law, without being influenced by any of the observations made hereinabove.
Leave is granted to the defendant to file objection to the plaintiff's application for temporary injunction within two weeks from the date, reply, if any, be filed by the plaintiff/appellant within one week after the reopening of the Court, after the ensuing puja vacation.
The learned Trial Judge is requested to dispose of the plaintiff's application for temporary injunction preferably by the end of November.
The appeal and the application are thus, disposed of.
Urgent Photostat certified copy of this order, if applied for, be supplied to the Learned advocates for the parties immediately.
(Jyotirmay Bhattacharya, J) I agree (Ishan Chandra Das, J) sm.
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