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2004 DIGILAW 807 (AP)

Reddys Laboratories Ltd. , Hyderabad v. Bombay Trading Company (1993) pvt. Ltd. , Singapore

2004-08-06

DEVENDER GUPTA

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DEVENDER GUPTA, J. ( 1 ) THIS is an application filed under section 11 (5) of the Arbitration and conciliation Act, 1996 (hereinafter referred as act ) seeking appointment of an Arbitral tribunal and for reference of disputes as enumerated in the notice sent by the petitioner through its counsel on 07th July, 2003. The facts are not in dispute. I have heard learned counsel for the parties on the maintainability of the present application in this Court. ( 2 ) ARTICLE 8 of the Agreement, which is the arbitration clause, reads as under:"this agreement is written in accordance with the Laws of India and is subject to the jurisdiction of the courts of India. In the event of any dispute or difference arising out of or relating to this agreement or breach thereof, the parties thereto shall use their best endeavours to settle such disputes or differences. To this effect, they shall consult and negotiate with each other in good faith and understanding their mutual interest to reach a just and equitable solution satisfactory, to both parties. If they do not reach such solution within a period of 30 days, then the disputes or differences shall be settled by arbitration in accordance with the Rules of Conciliation and Arbitration, shall be conducted in Bombay or any other place in India mutually acceptable to both the parties. " ( 3 ) ADMITTEDLY, one of the parties to the agreement, namely the respondent is a company incorporated in a country other than India. In view of Section 2 (1 ) (f) of the act, it is an "international commercial arbitration". Objection raised by learned counsel for the respondent is that in an international commercial arbitration, application, if any, has to be moved before the Chief Justice of India and not before chief Justice of a High Court. Learned counsel for the petitioner submits that chapter-I of the Act makes no difference and treats the international awards at par with domestic awards and for that, he placed reliance upon the decision of the Supreme court in Bhatia International v. Bulk Trading s. A saying that the Act nowhere debars even Chief Justice of a High Court to entertain application for appointment of an arbitrator in an international commercial arbitration. Considering the scheme of the act, in my view the submission made on behalf of the petitioner has no force since the question before the Supreme Court was about the applicability of Section 9 of the Act in respect of arbitration proceedings taking place in a foreign country. This decision does not deal with the question as to whether application for appointment of arbitrator can or cannot be entertained by chief Justice of a High Court when the matter pertains to international commercial arbitration. ( 4 ) SUB-SECTION (12) of Section 11 of the act clearly stipulated that where the matters referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in an international commercial arbitration, reference to the chief Justice in those sub-sections shall be construed as a reference to the chief justice of India . Therefore, even on admitted facts also, the petitioner has to approach the Chief Justice of India and the application filed in this Court will not be maintainable. ( 5 ) LEARNED counsel for the petitioner in the alternative submitted that this application be treated as a request made under Sec. 8 of the Act which enables this Court to refer the parties to arbitration since existence of arbitration clause in the agreement is not disputed and for this, reliance is placed on the decision of the Delhi High Court in dominant Offset Private Limited v. Adamovske Strojirny A. S. ( 6 ) HAVING gone through the decision relied upon, with due respect of the Hon ble judge of the Delhi High Court, I am unable to subscribe to the views expressed by learned single Judge of the Delhi High Court. The power, which is conferred under Section 8 of the Act to refer the parties to arbitration where there is an arbitration agreement, can be exercised by such of the judicial authority before which an action is brought in a matter, which is subject-matter of an arbitration agreement. In other words, only when some proceedings like suit etc. , are filed, or some proceedings are taken out by party with respect to a matter, which is subject-matter of arbitration agreement, in those proceedings, if a party so applies not later than submitting his first statement on the substance of the dispute, the judicial authority can exercise powers under section 8 of the Act and refer the dispute to arbitration. This provisions can be availed of by a party when proceedings are taken out against it by the opposite party, not later than submitting first statement on the substance of disputes, praying the judicial authority for referring the parties to arbitration. The judicial authority can thus exercise power at the instance of the party applying. This power is not meant to be exercised at the behest of a party who has approached a wrong forum for appointment of an arbitrator. ( 7 ) IN view of the above, the petition is held not maintainable in this Court. Petition is ordered to be returned.