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2005 DIGILAW 165 (HP)

AYAZ AHMED v. SHAMIM ANSARI

2005-05-26

V.M.JAIN

body2005
JUDGMENT V.M. Jain, J.—This Revision Petition has been filed by the plaintiff against the order dated December 21, 2004 passed by Additional District Judge, Sirmaur at Nahan ordering the return of the plaint for filing the same before the appropriate authority, as there existed an arbitration clause in the agreement between the parties. 2. The facts, which are relevant for the decision of the present revision petition, are that a suit for declaration and permanent and mandatory injunction was filed by Ayaz Ahmed plaintiff against the defendants. In the said suit a reference was made to the agreement dated 28th April, 1997, vide which the defendants had financed the vehicle (Tata truck) of the plaintiff for a sum of Rs. 4,30,000/-. It was alleged that the defendants had illegally snatched the said vehicle from the plaintiff even though they had no right to do so. It was alleged that the acts of the defendants in snatching the vehicle were illegal and void and that the plaintiff was entitled to the release of the said vehicle on paying the instalments as per the aforesaid agreement and the defendants be restrained from interfering in the plying of the said vehicle by the plaintiff. In the alternative, it was prayed that a decree for Rs. 4,50,000/- along with interest be passed in favour of the plaintiff and against the defendants, towards the damages suffered by the plaintiff, in this regard. This suit was filed on July 21, 1999. 3. After being served in the said suit, defendant No. 2 M/s. Tata Finance lid., filed application dated November 27, 1999, under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) with a prayer that the parties may be ordered to be referred to the Arbitrator for arbitration in accordance with the terms and conditions of the agreement. In the said application it was alleged that the plaintiff had entered into a hire purchase agreement dated April 29, 1997 with the defendants in respect of truck in question which was the subject matter of the present suit. Attested copy of hire purchase agreement dated April 29, 1997 was attached along with the said application. In the said application it was alleged that the plaintiff had entered into a hire purchase agreement dated April 29, 1997 with the defendants in respect of truck in question which was the subject matter of the present suit. Attested copy of hire purchase agreement dated April 29, 1997 was attached along with the said application. It was further alleged that as per the said hire purchase agreement dated April 29, 1997 and condition No. 25 of the terms and conditions of the said agreement, the plaintiff had agreed to refer all the disputes and differences to the Arbitrator to be nominated by the applicants-defendants. Clause 25 of the said agreement was reproduced in para 4 of the application. It was further alleged that up till date the plaintiff had not made any request for referring the dispute, which had arisen between the parties, arising out of the aforesaid agreement to the Arbitrator. It was accordingly prayed that the parties be ordered to be referred to the Arbitrator for arbitration, as per the terms and conditions of the said agreement. 4. The plaintiff filed reply dated March 4, 2004 to the said application. It was alleged that the said agreement was a result of fraud, which was committed by the defendant Company upon the plaintiff and his surety. It was alleged that the parties in the suit were not parties to the alleged agreement, the execution of which was denied by the plaintiff. It was alleged that in fact at the time of financing the vehicle the defendant Company had obtained signatures on blank forms and since the plaintiff was in need of money, he had fallen prey to the defendant Company, who later forged these documents and agreement etc. It was alleged that the alleged agreement was the result of unilateral act of the defendant Company and that the terms and conditions in the said agreement were never agreed or entered into by the plaintiff. It was alleged that the said agreement being null and void, no relief could be given to the detendants on the basis of the said agreement. It was further alleged that even if it was held that the agreement was valid there was no bar for the filing of the present suit. 5. It was alleged that the said agreement being null and void, no relief could be given to the detendants on the basis of the said agreement. It was further alleged that even if it was held that the agreement was valid there was no bar for the filing of the present suit. 5. After hearing both the sides and perusing the record, the learned trial Court accepted the aforesaid application filed by defendant No. 2 Company and ordered the return of the plaint to the plaintiff for filing the same with the appropriate authority, holding that there existed an arbitration clause in the agreement and in view of Section 8 of the Act, the Court had no jurisdiction to try the present suit filed by the plaintiff. Aggrieved against this order dated December 21, 2004 passed by the trial Court, the plaintiff filed the present revision petition in this Court. 6. Notice of this revision petition was ordered to be issued to the respondents and the trial Court record was also ordered to be requisitioned. Subsequently, vide order dated April 28, 2005 while adjourning the case for argument; it was made clear that the revision petition shall be disposed of on the adjourned date, at the motion stage itself. 7. I have heard learned Counsel for the parties and gone through the record carefully. 8. The learned Counsel appearing for the revision petitioner submitted before me that the provisions of the Act would not apply to the present case since the plaintiff was disputing that he had entered into the alleged agreement with the defendant Company containing arbitration clause. It was further submitted that in any case the entire matter, which is the subject matter of the present suit, was not covered by the arbitration clause contained in the said agreement and as such, the matter could not he referred to the Arbitrator under Section 8 of the Act. Reliance was placed on the law laid down by the Honble Supreme Court, in the case Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya and another, (2003) 5 SCC 531. 9. However, I find no force in these submissions of the learned Counsel for the plaintiff petitioner. Reliance was placed on the law laid down by the Honble Supreme Court, in the case Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya and another, (2003) 5 SCC 531. 9. However, I find no force in these submissions of the learned Counsel for the plaintiff petitioner. As referred to above, in para 3 of the plaint the plaintiff himself had made a reference to the agreement vide which the defendant Company had financed the vehicle of the plaintiff for a sum of Rs. 4,30,000/-. It was alleged that the said agreement was in respect of contract No. 230562 dated April 28, 1997. A perusal of the agreement in question, a copy of which was filed by the defendant Company along with the application under Section 8 of the Act, would clearly show that the said agreement was bearing identification No. 230562 and the same is dated April 29, 1997. Except the difference in the date being April 29, 1997 instead of April 28, 1997, as alleged by the plaintiff, there is no other difference, inasmuch as, the said agreement was in respect of identification No. 230562 and the same has been referred to by the plaintiff in para 3 of the plaint as agreement bearing contract No. 230562. In the entire plaint the plaintiff had not said anything in respect of the said agreement, inasmuch as, in the plaint it was no where alleged that the said agreement was the result of any fraud etc. or that the plaintiff had not executed the said agreement or that his signatures were obtained by the defendant Company on the blank and unfilled forms or that the said agreement was the result of unilateral act of the defendant Company or that the terms and conditions contained in the said agreement were never agreed or entered into by the plaintiff or that the same was null and void as alleged by the plaintiff in the reply. On the other hand, as referred to above, the plaintiff had himself made a reference to the agreement in question vide which the defendant Company had financed the vehicle of the plaintiff. Under these circumstances, the plea taken by the plaintiff in reply to the application under Section 8 of the Act challenging the aforesaid agreement, in my opinion, cannot be made the basis for holding that no such agreement was arrived at between the parties. Under these circumstances, the plea taken by the plaintiff in reply to the application under Section 8 of the Act challenging the aforesaid agreement, in my opinion, cannot be made the basis for holding that no such agreement was arrived at between the parties. Furthermore, in my opinion, the plaintiff petitioner cannot be allowed to claim that the provisions of the Act would not apply to the present case especially when under clause 25 of the aforesaid agreement there is a reference about the matter being referred to the arbitrator. Clause 25 of the said agreement reads as under : "25. All disputes, differences and/or claims arising out of these presents or as to the construction, meaning or effect hereof or as to the rights and liabilities of the parties, hereunder shall be settled by Arbitration to be held in Mumbai in accordance with the provisions of the Arbitration and Conciliation Ordinance, 1995, or any statutory amendments thereof or any statute enacted for replacement thereof and shall be referred to the sole arbitration of a person to be nominated by the Owners. In the event of death, refusal, neglect, inability or incapability of the person so appointed to act as an Arbitrator, the Owners may appoint a new arbitrator. The award including interim award/s of the arbitrator shall be final and binding on all parties concerned. The arbitrator shall not give any reason for his award including interim award/s. The arbitrator may lay down from time to time the procedure to be followed by him in conducting arbitration proceedings and shall conduct arbitration proceedings in such manner as he considers appropriate." 10. So far as the argument of the learned Counsel for the plaintiff-petitioner that the entire suit was not covered by the arbitration clause is concerned, in my opinion, there is no merit in this submission as well. The learned Counsel appearing for the plaintiff-petitioner, during the course of arguments, could not point out anything from the plaint to show that the entire subject matter of the suit was not covered by the arbitration clause referred to above. The learned Counsel appearing for the plaintiff-petitioner, during the course of arguments, could not point out anything from the plaint to show that the entire subject matter of the suit was not covered by the arbitration clause referred to above. On the other hand, in my opinion, prima facie, it would be clear that the entire dispute between the parties is covered by the aforesaid agreement bearing arbitration clause and as such, the provisions of Section 8 of the Act would fully apply to the present case and it cannot he said that the case was partly covered and partly not covered under the arbitration clause. In this view of the matter, in my opinion, the law laid down by the Honble Supreme Court in the case (2003) 5 SCC 531 (supra), relied upon by the learned Counsel for the plaintiff-petitioner would have no application to the facts of the present case. 11. It was then submitted before me by the learned Counsel for the plaintiff-petitioner that the trial Court could not have ordered the return of the plaint to the plaintiff, keeping in view the provisions of Section 8 of the Act. There is considerable force in this submission of the learned Counsel for the petitioner. Section 8 of the Act reads as under : "8. Power to refer parties to arbitration where there is an arbitration agreement.— (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. (3) Notwithstanding that an application has been made under subsection (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made." 12. On perusal of the above, it would be clear that where the judicial authority (Court) is satisfied that the action, which has been brought by the plaintiff (by filing the suit) was subject matter of an arbitration agreement, the judicial authority (Court) shall refer the parties to arbitration. On perusal of the above, it would be clear that where the judicial authority (Court) is satisfied that the action, which has been brought by the plaintiff (by filing the suit) was subject matter of an arbitration agreement, the judicial authority (Court) shall refer the parties to arbitration. From a reading of Section 8 of the Act it would be clear that where an action is brought before a judicial authority and the matter is the subject of an arbitration clause contained in the agreement between the parties, the judicial authority (Court) is bound to refer the parties to arbitration, where the other party makes an application in this regard. There is no provision under Section 8 of the Act to order the plaint to be returned to the plaintiff for filing the same with the appropriate authority, which has been done by the learned Additional District Judge in this case, while passing the order dated December 21, 2004. In P. Anand Gajapathi Raju and others v. P.V.G. Raju (dead) and others, (2000) 4 SCC 539, it was held by the Honble Supreme Court that the language of Section 8 is premptory and therefore it is obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement and that nothing remains to be decided in the original action or the appeal arising there from and there is no question of stay of the proceedings till the arbitration proceedings conclude and the award becomes final in terms of the provisions of the Act. It was further held that all the rights, obligations and remedies of the parties would now be governed by the Act including the right to challenge the award. 13. In view of the law laid down by the Honble Supreme Court in the aforesaid authority, in my opinion, it will be clear that keeping in view the provisions of Section 8 of the Act, it was obligatory on the part of the trial Court to refer the parties to arbitration, in terms of the arbitration clause contained in the agreement between the parties. Instead of referring the parties to arbitration as required under Section 8 of the Act, the learned trial Court illegally ordered the return of the plaint to the plaintiff for filing the same with appropriate authority. Instead of referring the parties to arbitration as required under Section 8 of the Act, the learned trial Court illegally ordered the return of the plaint to the plaintiff for filing the same with appropriate authority. As referred to above, no other order could be passed by the learned trial Court, once it was found that the matter was covered under the arbitration clause contained in the agreement between the parties. In my opinion, as referred to above, the Court was bound to refer the parties to arbitration as per the arbitration clause contained in the agreement between the parties. 14. It was then submitted before me by the learned Counsel for the plaintiff petitioner that if the matter is to be referred to the arbitration, instead of the arbitration proceedings being held at Mumbai, as provided in clause 25 of the agreement, the arbitration proceedings could take place either in Himachal Pradesh or at Chandigarh and at the most at Delhi. 15. As referred to above, there is a reference to arbitration in clause 25 of the agreement between the parties. As per clause 25 of the agreement, the arbitration is to be held in Mumbai and is to be referred to the sole arbitration of a person to be nominated by the owners. In case the petitioner wants that the arbitration proceedings should not be held at Mumbai and may be held either in Himachal Pradesh or Chandigarh and at the most at Delhi, it would always be open to the petitioner to approach the respondent-Company i.e. Tata Finance Ltd., referred to as the owners in the aforesaid agreement between the parties in this regard and it will always be open to the respondent Company to decide the place of arbitration in Himachal Pradesh, Chandigarh or Delhi instead of Mumbai, if so advised in accordance with law, keeping in view the provisions of Section 20 of the Act. So far as this Court is concerned, at this stage, no such order can be passed by this Court. 16. So far as this Court is concerned, at this stage, no such order can be passed by this Court. 16. For the reasons recorded above, the present revision petition is partly allowed, the order dated December 21, 2004 passed by the learned Additional District Judge, Sirmour at Nahan is modified and keeping in view the arbitration clause in the agreement between the parties, and the provisions of Section 8 of the Act, instead of ordering the return of the plaint to the plaintiff to file the same with the appropriate authority (as directed by the learned Additional District Judge), the parties are referred to arbitration, as envisaged in clause 25 of the agreement between the parties and the provisions of Section 8 of the Act. No costs. Revision partly allowed. -