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 arbitrationproceeding 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
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
APPELLATE SIDE
Present:
The Hon’ble Justice Jyotirmay Bhattacharya
AND
The Hon’ble Justice Ishan Chandra Das
F.M.A.T. 626 of 2016
(CAN 6019 Of 2016)
Lafarge India Pvt. Ltd.
V
Emami Realty Ltd. & Anr.
Judgement on : 15th September, 2016.
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, theplaintiff/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 thedefendant 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 thedefendant 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, theplaintiff 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 thedefendant 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 agreementas 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 thedefendant/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 multiplicityof 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 antiarbitration
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, subSection
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 proceedingand 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 thedefendant 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 forsplitting 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 nonsignatory
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, withoutdemand, 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 repossession
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 hiringagreement 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 contractswere 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 intobetween 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 notliable 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 thearbitration 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 isinstrumental 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 anorder 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 upthe 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 arbitrationproceeding 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.
Print Page
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 arbitrationproceeding 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
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
APPELLATE SIDE
Present:
The Hon’ble Justice Jyotirmay Bhattacharya
AND
The Hon’ble Justice Ishan Chandra Das
F.M.A.T. 626 of 2016
(CAN 6019 Of 2016)
Lafarge India Pvt. Ltd.
V
Emami Realty Ltd. & Anr.
Judgement on : 15th September, 2016.
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, theplaintiff/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 thedefendant 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 thedefendant 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, theplaintiff 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 thedefendant 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 agreementas 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 thedefendant/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 multiplicityof 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 antiarbitration
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, subSection
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 proceedingand 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 thedefendant 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 forsplitting 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 nonsignatory
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, withoutdemand, 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 repossession
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 hiringagreement 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 contractswere 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 intobetween 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 notliable 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 thearbitration 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 isinstrumental 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 anorder 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 upthe 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 arbitrationproceeding 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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