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2003 DIGILAW 167 (AP)

Cotton Corporation of India Ltd. , adilabad v. Surya Jyothi Spinning Mills Ltd. , secunderabad

2003-01-31

G.ROHINI

body2003
( 1 ) THIS Revision Petition is directed against the order dated 5-4-2002 in I. A. No. 1389 of 2000 in O. S. No. 1 of 2000 on the file of the Court of the Chairman, Motor accidents Claims Tribunal-cum-District judge, Adilabad. The plaintiff, who, is the respondent in I. A. No. 1389/2000 is the revision Petitioner. The respondent herein is the defendant in the main suit. I shall refer the parties as plaintiff and defendant for the sake of convenience. ( 2 ) THE suit was filed for recovery of a sum of Rs. 25,54,450/- towards the alleged loss suffered by the plaintiff due to the failure of the defendant to lift the cotton bales as per the agreement dated 5-1-1995. In the plaintit is stated that since the agreement entered into between the parties contains a specific clause for determination of disputes between the parties by arbitration, the dispute was referred for arbitration but the arbitrators revoked their consent and therefore the cause of action arose for filing the suit. After service of summons, the defendant filed I. A. No. 1389 of 2000 under Section 8 of the arbitration and Conciliation Act, 1996 (for short the Act ). In the affidavit filed in support of the said petition it is stated that since the parties have referred the matter for arbitration and since the arbitral proceedings are not terminated the suit is not maintainable, and therefore, the plaint is liable to be rejected. The plaintiff opposed the said petition. In the counter it is stated that though it is true that the dispute was referred for arbitration by two Arbitrators appointed by the parties and an Umpire was also appointed by the said Arbitrators, the defendant is not co-operating to proceed with the Arbitration and the proceedings have been pending since 1997 onwards. It is further stated that a senior Advocate who was the Arbitrator appointed by the defendant revoked his consent and the arbitrator appointed by the plaintiff expressed his inability to proceed with the arbitration. In the circumstances the plaintiff is compelled to file the suit since the arbitral proceedings failed. It is further stated that a senior Advocate who was the Arbitrator appointed by the defendant revoked his consent and the arbitrator appointed by the plaintiff expressed his inability to proceed with the arbitration. In the circumstances the plaintiff is compelled to file the suit since the arbitral proceedings failed. It is also alleged that the petition filed by the defendant to stay the suit proceedings is nothing but an attempt to delay the proceedings on false and vexatious grounds: ( 3 ) THE Court below on consideration of the material on record, by order dated 25-4-2002 allowed the application holding that the suit itself is not maintainable in view of the mandatory provisions of the Act. However, in view of the fact that the value of the subject matter of the dispute is more than rs. 5,00,000/-, as per the scheme made under Section 11 (1) of the Act, the parties were directed to approach the High Court of a. P. for appointment of an Arbitrator. The said order is assailed by the plaintiff in this revision Petition. ( 4 ) I have heard the learned counsel for the Revision Petitioner Ms. M. Vidyavati and the learned counsel for the respondent sri B. Chinnapa Reddy. ( 5 ) THE learned counsel for the petitioner contended that the Court below failed to properly appreciate the facts and circumstances of the case and erroneously held that the suit is not maintainable. The learned counsel has brought to my notice the fact that the defendant having received the notice in the suit, approached this Court by filing Arbitration Application No. 25 of 2000 under Section 11 (2) and (6) of the Act, which was subsequently dismissed as withdrawn. That apart, the defendant also filed tr. C. M. P. No. 107 of 2000 seeking transfer of the suit from District Court, Adilabad to city Civil Court. Hyderabad/secunderabad, which was rejected by this Court by order dated 27-7-2000. The learned counsel for the petitioner vehemently contended that the conduct of the defendant makes clear their intention to delay the proceedings. The learned counsel submitted that since the defendant was not co-operating to continue the arbitral proceedings, the only alternative available to the plaintiff is to file a civil suit for recovery of the heavy amounts due from the defendant. The learned counsel submitted that since the defendant was not co-operating to continue the arbitral proceedings, the only alternative available to the plaintiff is to file a civil suit for recovery of the heavy amounts due from the defendant. The learned counsel further contended that as per Section 9 of Civil procedure Code the Court shall have jurisdiction to try all suits of a civil nature and therefore the conclusion of the Court below that the suit is not maintainable is erroneous and cannot be sustained. ( 6 ) ON the other hand, the learned counsel for the respondent submitted that in view of the mandatory provisions of the Act the court below has rightly held that the suit is not maintainable. The learned counsel submits that the plea of the plaintiff that the arbitral proceedings are terminated is absolutely false and at any rate in the facts and circumstances of the case, the only course available to the plaintiff is to file an application under Section 11 (6) of the Act for appointment of Arbitrator but it is not open to file a suit for recovery of the alleged amounts due. ( 7 ) I have perused the order under revision and the other material on record. ( 8 ) THE facts that clause 9 of the agreement between the parties provides for arbitration for determination of the disputes between the parties and that in pursuance of the same the plaintiff and the defendant appointed one Arbitrators each who in turn appointed a former Judge of this Court as Umpire are not in dispute. The plaintiff also admitted that the parties appeared before the arbitrators and submitted their respective claims. However, according to the plaintiff the Arbitrators decided to terminate the arbitral proceedings and since the defendant is not co-operating for revival of the proceedings, the plaintiff lost all the hopes for determination of the dispute by arbitration. Hence, according to the plaintiff the only alternative available is to file a suit. ( 9 ) I am unable to agree with the contention of the learned counsel for the petitioner that since the arbitral proceedings failed due to non-cooperation of the defendant and their arbitrator, it is open to the plaintiff to file a suit in the civil Court. ( 9 ) I am unable to agree with the contention of the learned counsel for the petitioner that since the arbitral proceedings failed due to non-cooperation of the defendant and their arbitrator, it is open to the plaintiff to file a suit in the civil Court. Section 11 of the Act provides for appointment of Arbitrators and there is absolutely no ambiguity about the procedure to be followed. Under sub-sec. (2) of Section 11 the parties are free to agree on a procedure for appointing an Arbitrator or arbitrators. Sub-section (6) of Section 11 states that whereunder an appointment procedure agreed upon by the parties a party fails to act as required under that procedure or where the parties or the two appointed arbitrators fail to reach an agreement expected of them under that procedure or where a person including an institution fails to perform any function entrusted to him or it under that procedure, it is open to a party to make a request to the Chief Justice or any person or institution designated by him to take the necessary measure unless the agreement on the appointment procedure provides other means for securing the appointment. Sub-section (7) states that a decision on a matter entrusted to the Chief justice under sub-section (6) is final. ( 10 ) IN my considered opinion of subsection (6) of Section 11 of the Act directly applies to the facts and circumstances of the present case. In the instant case both the parties agreed on a procedure for appointment of Arbitrators and accordingly each party nominated one Arbitrator and the arbitral proceedings were continued for some time. However, the arbitration could not be completed. Though the learned counsel for the petitioner sought to contend that the arbitral proceedings stand terminated, the said fact could not be substantiated on the basis of the material on record. It is pertinent to note that in the plaint itself it is stated that the arbitrator appointed by the defendant revoked his consent to be the arbitrator, however, the correspondence is going on for revival of arbitral proceedings. It is pertinent to note that in the plaint itself it is stated that the arbitrator appointed by the defendant revoked his consent to be the arbitrator, however, the correspondence is going on for revival of arbitral proceedings. On a perusal of the correspondence between the parties, which was filed before the Court below along with the plaint, it appears that when the arbitrator nominated by the defendant expressed his inability to proceed with the arbitration the plaintiff made a proposal for continuation of the proceedings through the sole arbitrator nominated by the plaintiff who has already heard the matter along with the other arbitrator. However, the defendant by their letter dated 21-4-1999 expressed that the said proposal is not acceptable to them and that they are pursuing their arbitrator to continue the arbitral proceedings. As expressed above, even as per the plaint averments the correspondence was going on for revival of the arbitral proceedings by the date of the institution of the suit. It is to be noted that under the Act the termination of arbitral proceedings was given a specific connotation under Sections 14, 15 and 32 and in the fact and circumstances of the case, there is absolutely no reason to hold that the arbitral proceedings stood terminated. ( 11 ) IN the circumstances, as prescribed under sub-section (6) of Section 11 of the Act either of the parties has to request the Chief justice or any person or institution designated by him to take the necessary measure since admittedly the agreement does not provide for any other means for securing the appointment. As rightly observed by the Court below since the value of the subject matter is more than rs. 1,00,000/- as per the scheme the parties have to file an application before the Chief justice of this Court and nothing prevented the plaintiffs to approach this Court seeking appropriate relief. The mere fact that the earlier application filed by the defendant was dismissed as withdrawn does not operate as a bar to take such a recourse by the plaintiff. As a matter of fact the relief sought in Arbitration Application No. 25/2000 filed by the defendant is entirely different and has nothing to do with the appointment of arbitrators under Section 11 (6) of the Act. As a matter of fact the relief sought in Arbitration Application No. 25/2000 filed by the defendant is entirely different and has nothing to do with the appointment of arbitrators under Section 11 (6) of the Act. ( 12 ) THE learned counsel for the petitioner raised yet another contention that in the facts and circumstances of the case it cannot be said that the jurisdiction of the civil Court is ousted. The learned counsel in support of her contention placed reliance upon a decision of the Supreme Court reported in state of A. P. v. Majeti Laxmi Kantha Rao ( (2000) 3 SCC 689 ). In the said case it is held as follows:"the normal rule of law is that civil courts have jurisdiction to try all suits of civil nature except those of which cognizance by them is either expressly or impliedly excluded as provided under Section 9 of the Code of Civil procedure but such exclusion is not readily inferred and the presumption to be drawn must be in favour of the existence rather than exclusion of jurisdiction of the civil courts to try a civil suit. The test adopted in examining such a question is (i) whether the legislative intent to exclude arises explicitly or by necessary implication, and (ii) whether the statute in question provides for adequate and satisfactory alternative remedy to a party aggrieved by an order made under it. "there is absolutely no quarrel as to the said proposition. As a matter of fact the tests laid down by the Apex Court are satisfied in the present case. ( 13 ) IT is pertinent to note that Section 8 of the Act mandates that the Judicial Authority shall refer the parties to arbitration if a party to the agreement applies and if all the requirements under Section 8 are satisfied. The language of Section 8 shows that it is obligatory on the Judicial Authority to refer the parties to arbitration, on compliance of the provisions thereof. In Kalpana Kothari v. Sudha Yadav the Apex Court explained the scope and object of Section 8 of the Act. The observations of the Apex Court may be extracted hereunder. The language of Section 8 shows that it is obligatory on the Judicial Authority to refer the parties to arbitration, on compliance of the provisions thereof. In Kalpana Kothari v. Sudha Yadav the Apex Court explained the scope and object of Section 8 of the Act. The observations of the Apex Court may be extracted hereunder. "in striking contrast to the said scheme underlying the provisions of the 1940 act, in the new 1996 Act, there is no provision corresponding to Section 34 of the old Act and Section 8 of the 1996 act mandates that the Judicial authority before which an action has been brought in respect of a matter, which is the subject-matter of an arbitration agreement, shall refer the parties to arbitration if a party to such an agreement applies not later than when submitting his first statement. The provisions of the 1996 Act do not envisage the specific obtaining of any stay as under the 1940 Act, for the reason that not only the direction to make reference is mandatory but notwithstanding the pendency of the proceedings before the Judicial authority or the making of an application under Section 8 (1) of the 1996 Act, the arbitration proceedings are enabled, under Section 8 (3) of the 1996 Act to be commenced or continued and an arbitral award also made unhampered by such pendency. " ( 14 ) AS explained by the Apex Court and in the light of the specific provisions under sub-sections (1) and (3) of Section 8, it is clear that in view of the application made by the defendant under Section 8 of the Act, the jurisdiction of the Civil Court to proceed further stands excluded. Hence, I am unable to agree with the contention of the learned counsel for the petitioner. ( 15 ) IT is also relevant to note that as per the scheme made by the Chief Justice of Andhra pradesh High Court in exercise of the powers conferred by the Act, the Court below is not competent to make a reference in the case on hand. Therefore the Court below while allowing I. A. No. 1389/2000 granted liberty to the parties to approach the Court of competent jurisdiction for obtaining necessary orders for reference of the dispute to arbitration. The said order cannot be said to be vitiated by any error in exercise of jurisdiction vested under law. Therefore the Court below while allowing I. A. No. 1389/2000 granted liberty to the parties to approach the Court of competent jurisdiction for obtaining necessary orders for reference of the dispute to arbitration. The said order cannot be said to be vitiated by any error in exercise of jurisdiction vested under law. ( 16 ) FOR the aforesaid reasons I do not see any justifiable reason to interfere with the order under revision. Accordingly the Civil revision Petition is dismissed. No costs.