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2000 DIGILAW 544 (MP)

Mandavi Marine Pvt. Ltd. v. Bank Of India

2000-05-12

J.G.CHITRE

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ORDER J.G. Chitre, J. 1. The dispute revolves around a short point which needs to be decided and that has given birth to an off-shoot in the midst of the arguments advanced by the counsel for the parties. 2. There was an agreement between the petitioner M/s. Mandavi Marine Pvt. Ltd. and Project and Equipment Corporation of India Ltd. in context with construction of four ships which were to be sent to Moritius. It appears that the said project was not completed. However, initial part-payment has been made in this context. It appears that there has been some dispute between these two parties i.e., the petitioner and opponent No. 2. 3. The Bank of India-opponent No. 1 has not come in picture because a bank-guarantee has been supplied by M/s. Mandavi Marine Pvt. Ltd. as security for the purpose of performance of the part of the agreement which it has to perform. Mandavi Marine Pvt. Ltd. contends that as per the terms and conditions of the said agreement, if there is a dispute between the petitioner and opponent No. 2, it has to be referred to the arbitrator. An application was moved for making a prayer to the Court to compel opponent No. 2 to produce the said agreement in the Court, and thereafter, the Court was requested to make a reference to the Arbitrator. It is pertinent to note here that the petitioner did not follow the procedure laid down by the provisions of Section 8 of the Arbitration Act, 1940 but preferred the procedure which has been indicated by the provisions of Section 20 of the Act. The Court found that the petitioner did not furnish sufficient information in the said application enabling the Court to take proper decision. Therefore, the said application was dismissed that Order has been put to challenge by this revision petition. 4. Shri Bharat Chitley, counsel appearing for opponent No. 2 submitted that in view of the provisions of Section 39 of the Arbitration Act, the petitioner is having the right to file an appeal only and therefore, this revision petition is bad in law. Smt. Chaphekar submitted that it is not so in view of the Order which is put to challenge by this revision petition. Therefore, this rider to the main controversy will have to be solved before this Court touches the core of the controversy between the parties. 5. Smt. Chaphekar submitted that it is not so in view of the Order which is put to challenge by this revision petition. Therefore, this rider to the main controversy will have to be solved before this Court touches the core of the controversy between the parties. 5. Section 39 of the Act relates to an Order which is dealing with filing or refusing to file an arbitration agreement as indicated by Sub-section (iv) of Section 39 of the Arbitration Act. The appeal is provided for challenging such an order. This petition does not stand so far as the present Order is concerned. The present Order is dealing with a composite application which is not only praying for filing of the said agreement, but is intended to make a prayer to the Court for reference to the Arbitrator. Therefore, the revision petition so far as that part of the Order is concerned, is filed. As this Order is deciding a composite application and prayer, this Court is entertaining this revision petition. 6. The Court has done nothing wrong in passing the Order which "is under challenge. For the purpose of coming to a conclusion whether a reference is to be made to the Arbitrator or not, the Court is bound to get itself satisfied. What material should be brought forth by the parties is not to be decided by the parties, but is to be decided by the Court because after all the Court has to satisfy itself. The Court would be regulating the course of the enquiry in that context. The Court would direct the parties to make necessary averments in the petition or the reply to it and when so directed the parties cannot shirk out from its legal obligation. Every such application should be neatly drafted giving informations parawise for the purpose of disclosing all facets of the dispute between the parties. Production of the agreement in that context is sufficient because it enables the Court to read as to what are the terms and conditions of the said agreement. Every such application should be neatly drafted giving informations parawise for the purpose of disclosing all facets of the dispute between the parties. Production of the agreement in that context is sufficient because it enables the Court to read as to what are the terms and conditions of the said agreement. Thereafter, if a composite application is submitted, it would be for the Court to apply its mind to the prayer made in such composite application and the Court will have to form its own independent judgment whether the dispute should be referred to the arbitrator or not and for that, the Court will have to apply its judicial mind towards the averments made in the petition as well as in the reply. I discard the submission advanced by Smt. Chaphekar when she submitted that as indicated by Sub-section (4) of Section 20 of the aforesaid Act, the Court is bound to make a reference to the Arbitrator by pointing the sentence "where no sufficient cause is shown, the Court shall Order the agreement to be filed, and shall make an Order of reference to the Arbitrator appointed by the parties". The simple reason is that the words "and shall make", ahead of it clearly disects the first portion of the said sentence which is coupled with the word "shall" from the other portion of the sentence which is also coupled with the word "shall". By the phraseology used in Sub-section by using "," the legislature has made its intention clear that the Court has to think of these two actions, one directing the concerned party to file the agreement in the Court and after that is done, to take a decision whether the reference to the Arbitrator should be made or not. Here again, the word used in Sub-section (4) will have to be read neatly. This reference to the Arbitrator which the Court may make, he is connected with seven words "to the arbitrator appointed by the parties" (emphasis provided on words appointed by the parties). The parties are bound to follow the procedure which is indicated for the purpose of going for appointment of the arbitrator. For that purpose a party intending to have the arbitrator appointed, has to issue a notice as indicated by Sections 4, 8, 9 and 10 of the Act. The parties are bound to follow the procedure which is indicated for the purpose of going for appointment of the arbitrator. For that purpose a party intending to have the arbitrator appointed, has to issue a notice as indicated by Sections 4, 8, 9 and 10 of the Act. If one party intends to get the arbitrator appointed and the other party is not ready for that, then the question would arise whether to make a reference by the Court. Before making a prayer to the Court for the purpose of referring the dispute to the arbitrator the party should make an attempt to agree between themselves for the purpose of appointment of one or more than one arbitrators as provided by the agreement. It appears that this exercise has not been done by the petitioner. The Arbitration Act, 1940 has been enacted for the purpose of encouraging the parties to solve their dispute by referring it to the arbitrators which are agreed by them. This is for the purpose of avoiding the citizens to rush to the Court for every dispute. Therefore, while entertaining an application under Section 30 of the Arbitration Act, the Court would be fully justified to expect that the parties should themselves make sufficient efforts for the purpose of agreeing to refer the dispute to an arbitrator agreed by them. If a litigant directly files an application in the Court without exercising due efforts as indicated by the provisions of the Arbitration Act, 1940, the Court may refrain from entertaining such application and passing the Order as prayed by the said party. If sufficient details are not given, the Court may also refrain from passing any Order as prayed by such party. One who seeks relief from the Court has to be equipped with all necessary and relevant informations and has to submit it before the Court for the purpose of enabling the Court to take a lawful and just decision. Every dispute should not be brought to the Court without exercising due diligence and efforts by the party which is seeking a relief from the Court in view of Section 20 of the Arbitration Act. 7. In the present case, the Court has rightly refused to pass such Order which has been prayed for by the petitioner. Every dispute should not be brought to the Court without exercising due diligence and efforts by the party which is seeking a relief from the Court in view of Section 20 of the Arbitration Act. 7. In the present case, the Court has rightly refused to pass such Order which has been prayed for by the petitioner. It seems that the petitioner is harbouring a wrong impression in the mind which prompts him to think that he is not obliged to furnish detailed information to the Court in the said petition. Therefore, the petitioner is hereby directed to file fresh application with all necessary details. If the Court finds that some details and information are to be sought from the parties, the Court is at liberty to give such direction to the parties. Such an application may be filed within six months, but before that, attempt should be made to see that by agreeing themselves whether arbitrator can be appointed in view of the agreement which has been entered into between the contesting parties. This Order does not mean that the parties are bound to accept the arbitration Clause or acceptance of the appointment of the arbitrator. The parties are entitled to interpret the agreement as they may think. For this purpose, exchange of notices is also permitted, desired and expected. That would give the idea to the Court correctly whether the parties have agreed for appointment of a particular arbitrator or arbitrators. The Court would be also knowing the reasons for this agreement and the interpretations putforth by the contesting parties in respect of the said arbitration Clause in the agreement. 8. Thus, this revision petition is hereby disposed of in terms as indicated above, but with no Order as to costs.