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2001 DIGILAW 790 (KAR)

S. VENKAT REDDY v. M. BACHE GOWDA

2001-10-16

M.P.CHINNAPPA

body2001
M. P. CHINNAPPA, J. ( 1 ) HEARD both sides. ( 2 ) THE respondent herein filed a suit against the petitioner in O. S. No 118 of 2001 on the file of Additional Civil Judge (Junior Division) and Judicial Magistrate First Class, Chintamani for declaration and permanent injunction restraining the petitioner herein from interfering with the possession of the property. When the matter was pending thus, the petitioner herein filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 contending that there is a clause in the agreement to refer the dispute to the Arbitrator. On the basis of it he requested the Court to refer it to the Arbitrator to be nominated as per the agreement. However, the respondent herein contended that no agreement was entered into and it need not be referred to the Arbitrator etc. After hearing to both the parties, the Court has rejected I. A. No. III on 1-9-2001. This order is questioned in this petition. ( 3 ) THE learned Counsel for the respondent also filed his detailed objections on this petition. The learned Counsel for the petitioner submitted that notwithstanding the denial made by the respondent it is open to the Arbitrator to decide as to whether such agreement was in exisence and whether it can be decided. Therefore, he submitted that the Court has committed an error in dismissing the application filed by the petitioner. ( 4 ) AS against it, the learned Counsel for the respondent has drawn my attention to Sections 7 and 8 of the Arbitration Act to make out that:"when one party denies the existence of the agreement it is not open to the Court to refer it to the Arbitrator". ( 5 ) REPELLING this argument, the learned Counsel for the petitioner has drawn my attention to Section 16 of the Arbitration and Conciliation act, 1996 which reads:"the Arbitral Tribunal may rule on its own jurisdiction, including ruling or any objections with respect to the existence or validity of the arbitration agreement, and for that purpose: (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract, and (b) a decision by the Arbitral Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause". He has also drawn my attention to the Arbitration and Conciliation Act, 1996 by V. A. Mohta, Former Chief Justice, Orissa High Court on Section 16, page 118 which reads:"section 16 of this Act empowers the Arbitral Tribunal initially to rule upon the existence or validity of the arbitration agreement subject to ultimate supervision by the Court under Section 34 of the Act. It is in keeping with this general approach of this Act that section 8 does not permit the Court to go into the question of existence or validity of the arbitration agreement at that stage. This is intended to discourage a party to stall arbitration proceedings by raising challenges on the basis of invalidation of the agreement, which had become an usual feature". ( 6 ) IN view of this, the finding of the Court below calls for interference. Accordingly, petition is allowed. Impugned order is set aside, directing the Court to refer it to the Arbitrator for further proceedings in the light of the observations made above. However, the injunction granted in favour of the respondent shall continue until the Arbitrator passes any order. --- *** --- .