Research › Search › Judgment

Calcutta High Court · body

2004 DIGILAW 434 (CAL)

JOYNATH SHAW v. BUOY KUMAR GUPTA

2004-06-30

ALOK KUMAR BASU

body2004
ALOK KUMAR BASU, J. ( 1 ) BOTH sides are present. ( 2 ) HEARD the learned Advocate of both the sides. ( 3 ) THIS is an application under Article 227 of the Constitution of India challenging order dated 23rd December, 2003 passed by the learned Civil judge (Junior Division) Fourth Court, Howrah in title suit No. 30 of 2003. ( 4 ) THE brief background behind preferring the present application is that the present petitioner filed the above mentioned title suit for declaration and injunction against opposite party No. 1 and others and an agreement entered into between the present petitioner and the opposite party No. 1 was one of the subject matter of consideration in the said title suit. ( 5 ) DURING the pendency of the suit, opposite party No. 1 and opposite party No. 2 jointly filed an application under Section 8 of the arbitration and Conciliation Act, 1996 for referring the pending dispute to the arbitral Tribunal contending inter alia, that there is an agreement between the plaintiff and the opposite party No. 1 and in the agreement there is a clause of arbitration and according to the provision of Section 8 of the Arbitration Act, the dispute now raised through the civil suit must be referred to the Arbitral tribunal. ( 6 ) THE plaintiff/petitioner tried to resist the prayer of the opposite party Nos. 1 and 2 mainly on the ground that there was no agreement with plaintiff and defendant No. 2 and as such defendant No. 2 has no jurisdiction to pray for reference to the Arbitral Tribunal and that there are other defendants in the said title suit and subject matter raised through the civil suit is not identical with the subject matter of the agreement and hence there was no scope for referring the matter to the Arbitral Tribunal. ( 7 ) IT appears from the impugned order that the learned Court below on hearing both sides and after taking into consideration several decisions of the Apex Court as well as other High Courts as mentioned by the learned advocate of the parties was of the view that as there is an agreement containing a clause for reference to the Arbitrator, the title suit cannot continue in view of the mandatory provision of Section 8 read with new provision of Section 89 of the Code of Civil Procedure which has been inserted with effect from 1 st July, 2001. The Court was mainly guided by the reason that Section 8 is mandatory and apart from Section 8 the spirit of section 89 of the amended Code of Civil Procedure also encourages adjudication through arbitration. ( 8 ) BEING aggrieved by and dissatisfied with the order of the learned trial Court referring the matter to the Arbitral Tribunal, the plaintiff has now come before this Court. ( 9 ) THE learned Advocate appearing for the plaintiff/petitioner submits that under the provision of Section 8 of the Arbitration Act, 1996 there must be three conditions before referring the matter to the Arbitral Tribunal and these conditions are that such prayer must be made before filing of written statement, that prayer must accompany the certified copy of the arbitration agreement and the subject matter of the arbitration agreement and pending title suit must be same and identical. The learned Advocate contends that it is available from the plaint that apart from defendant No. 1 with whom there was an agreement, there are other defendants in the title suit and the plaintiff petitioner apart from claiming title relating to the agreement or arising out of the agreement, has also claimed specific relief against the other defendants and such relief has no connection with the purported agreement, Learned advocate submits that there is no possibility of making any bifurcation of the reliefs prayed against defendant No. 1 arising out of the agreement and against other defendants with whom there is no connection with the agreement and for that view of the matter, the learned Court below was not justified in referring the matter to the arbitral tribunal. ( 10 ) THE learned Advocate appearing for the opposite parties, on the other hand, submits before me after making a comparative analysis of section 34 of the Arbitration Act of 1940 with that of Section 8 of the arbitration Act of 1996 that there was an element of discretion in earlier section 34 in the matter of making reference to the Arbitration and now, the legislature by inserting Section 8 in the new Act has left no scope of discretion before a Civil Court and the Civil Court is bound to refer the dispute to the Arbitral Tribunal provided the conditions in Section 8 are satisfied. The learned Advocate submits that in the present case all the necessary ingredients for referring the matter to the Arbitral Tribunal were satisfied and learned Court below on examination of the plaint and other materials was satisfied that such conditions were fulfilled and hence the reference was made. The learned Advocate, therefore, submits that there is nothing wrong or infirmity in the impugned order calling for any interference. ( 11 ) HAVING regard to the submissions of the learned Advocate of both sides I am inclined to hold that the interpretation put forward by the learned advocate for the opposite parties on Section 34 of the Old Act and Section 8 of the 1996 Act is acceptable and there is no scope of dispute over the same. There is also no scope of dispute that if the conditions iaid down in section 8 are satisfied, the Civil Court shall have no option but to refer the matter to the Arbitral Tribunal. It would be very pertinent in this connection and also to appreciate the rival contentions of the parties, to refer to specific observation of the Apex Court recorded in its judgment reported in AIR 2003 sc 2252 paragraphs 12 to 18. The Hon'ble Court had the opportunity to deal in detail the impact of Section 8 and its interpretation in the background of the question raised before it as to the scope of Civil Court to refer a dispute raised in Civil suit to the Arbitral Tribunal notwithstanding the fact that there was an agreement containing the Arbitration Clause. The Hon'ble Court had the opportunity to deal in detail the impact of Section 8 and its interpretation in the background of the question raised before it as to the scope of Civil Court to refer a dispute raised in Civil suit to the Arbitral Tribunal notwithstanding the fact that there was an agreement containing the Arbitration Clause. ( 12 ) THE Apex Court in paragraphs 12 to 18 after dealing with the conditions required for that reference was of the view that even if one con- dition is left out, the Civil Court cannot refer the dispute to the Arbitral tribunal. ( 13 ) THE Hon'ble Court further observed that in its view there is no scope of bifurcation in the matter of reference. The Hon'ble Court made it abundantly clear that Section 8 of the Arbitration Act, 1996 would be attracted only where the subject matter of the agreement and the subject matter of the suit shall be same and identical. The Apex Court has gone to examine whether there is any possibility of bifurcation of the dispute so that adjudication of same matter may be made by the Civil Court while adjudication of same matter by the Arbitral Tribunal and in that context the Apex Court expressed its view that as a matter of general principle such bifurcation is to be discouraged unless the parties agree to such bifurcation for their own con-venience and interest. ( 14 ) APPLYING the decisions laid down by the Apex Court and having regard to the submissions made by both the parties, I have examined the materials on record and I hold that impugned order suffers from inherent defect in view of mandatory provision of Section 8 of the Arbitration Act because although defendant No. 2 was not a party to the agreement, he joined with the defendant No. 1 in preferring the reference and having regard to the principles laid down by the Apex Court, it is not permissible and only on this ground, the impugned order is required to be set aside as it appears that it suffers from inherent defect. I also feel that the subject matter of the plaint described by the petitioner is not and cannot be same and identical with the agreement so far the number of defendants are concerned and also reliefs prayed for are concerned and in view of that matter, applying the test of bifurcation as propounded by their Lordships, I am of clear view that the learned trial Court certainly erred in law by making reference. Accordingly, on the discussion as stated above I am of the view that the impugned order cannot be allowed to survive and the present application has got merit. The application is accordingly, allowed without any order as to costs. The learned court below is directed to proceed with the suit in accordance with law.