BADAR DURREZ AHMED, J. ( 1 ) THIS is an application under Section 45 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the said Act") moved on behalf of the defendant No. 2 claiming that there is an arbitration agreement between the parties and that the disputes which are sought to be raised in the present suit be referred to arbitration. The admitted position is that the purported agreement between the parties is one which has reference to Section 44 of the said Act and, therefore, the provisions of section 45 would apply. Section 45 of the said Act reads as under:"45. Power of judicial authority to refer parties to arbitration. Notwithstanding anything contained in Part I or in the code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed. " ( 2 ) IT is contended by Mr Jaitley, the learned senior counsel for the applicant/defendant no. 2, that there exists an arbitration agreement between the parties of the nature specified in Section 44 of the said Act and as such the disputes that are sought to be raised in the present suit are referable to arbitration in terms of the arbitration clause. On the other hand, Mr. Mohta, the learned senior counsel for the plaintiffs submitted that a reference under Section 45 of the arbitration cannot arise in a situation where the court finds that the arbitration agreement is null and void or where the agreement is inoperative or incapable of being performed. He submitted that the present arbitration agreement which is being invoked by the defendants, and, in particular, by defendant no. 2, is null and void, inoperative and incapable of being performed. This is the ambit within which this application has to ( 3 ) THE suit filed by the plaintiffs seeks, Inter alia, the following reliefs:" (A) Pass a decree of declaration in favour of the Plaintiffs and against the defendants declaring that Distributor agreement dated 22. 02. 2, is null and void, inoperative and incapable of being performed. This is the ambit within which this application has to ( 3 ) THE suit filed by the plaintiffs seeks, Inter alia, the following reliefs:" (A) Pass a decree of declaration in favour of the Plaintiffs and against the defendants declaring that Distributor agreement dated 22. 02. 1999 as being null void, inoperative and being unenforceable between the parties; (B) Pass a decree of permanent injunction in favour of the Plaintiffs and against the Defendants restraining the defendants from proceeding with the international. Chambers of Commerce arbitration Case N0. 13588/ms before the International Court of Arbitration; (C)Any other order or direction as this hon ble court may deem fit and proper in the facts and circumstances of the case. " ( 4 ) SOME background would be necessary for the determination of the question at hand. On 9. 5. 1987 a Joint Venture was entered into between the defendant No. 1 and one usha Services and Consultants (P) Ltd. This was by a Joint Venture Agreement for conducting business in India. As a result of this Joint Venture Agreement of 9. 5. 1987, the plaintiff No. 1, being the joint venture company, came to be incorporated under the name Usha Draeger (P) Ltd (hereinafter referred to as UDPL ). Subsequently, it appears that an agreement was entered into on 22. 2. 1999 between the defendant No. 2 and the said Joint Venture Company, that is the plaintiff No. l (UDPL ). This agreement was a distributor Agreement. Therefore, we have two agreements one being the Joint Venture agreement of 1987 and. the other being the distributor Agreement of 1999. ( 5 ) THE learned counsel for the applicant/defendant No. 2 drew my attention to the relevant clauses contained in these agreements. Both the agreements contained arbitration clauses providing for settlement of disputes by way of arbitration. The agreement with which we are concerned with in the present suit is the Distributor Agreement between the defendant No. 2 and the plaintiff no. 1. It is also submitted by the counsel for the plaintiffs that the plaintiff No. 2 is the successor-in-interest of the said Usha Services consultant (P) Ltd who was the original joint venture partner in the plaintiff No. 1. 1. It is also submitted by the counsel for the plaintiffs that the plaintiff No. 2 is the successor-in-interest of the said Usha Services consultant (P) Ltd who was the original joint venture partner in the plaintiff No. 1. ( 6 ) THE learned counsel for the applicant/ defendant No. 2 pointed out that the distributor Agreement of 1999 was acted upon and the plaintiff No. 1 received payments under the agreement and therefore, there is no question of the plaintiffs now challenging the validity of the same. He further submitted that the validity of the agreement was being challenged on the ground that the same was not authorised by the plaintiff No. 1. In response to this submission, he stated that there was a Board Meeting of the plaintiff No. 1 (UDPL) held on 22. 9. 1999 itself wherein one dr. Mahavadi was authorised to enter into such an agreement. The agreement itself was signed on 22. 2. 1999 and, therefore, according to the learned counsel for the applicant/defendant No. 2, such a contention that the agreement :was not authorised by the plaintiff No. 1 could not be raised at all. Insofar as this contention is concerned, the learned counsel for the plaintiffs submitted that the agreement was no doubt signed by dr. Mahavadi but the same was not to be acted upon and there was an oral arrangement between the parties that although this Distributor Agreement is being entered upon, it is not to be acted upon by the parties and that it was only for the purposes of showing to Governmental agencies and other agencies that there was a foreign partner involved. ( 7 ) CONSIDERING the fact that Dr. Mahavadi was indeed authorised by the Board of UDPL on 22. 2. 1999 to sign such an agreement, there are only two situations which are possible. The first situation is that the distributor Agreement of 22. 2. 1999 was signed prior to the Board Meeting. The second situation is that the said Distributor Agreement was signed and executed after the Board meeting. In the former case it would be obvious that although the execution of the agreement would initially have been without authority, but, because the Board had authorised Dr. Mahavadi subsequently, the same would stand ratified. In the latter case, it is obvious that as Dr. In the former case it would be obvious that although the execution of the agreement would initially have been without authority, but, because the Board had authorised Dr. Mahavadi subsequently, the same would stand ratified. In the latter case, it is obvious that as Dr. Mahavadi had been authorised, the execution of the Distributor agreement would be with the authority of the plaintiff No. 1 company. So, whichever way one looks at the matter, it cannot be contended that the Distributor Agreement did not have the stamp of approval by the board of Directors of the plaintiff No. 1. ( 8 ) THE other contention raised by the learned counsel for the plaintiffs that there was an oral understanding between the parties that the Distributor Agreement was not to be acted upon and, therefore, the same was null and void and consequently a reference under section 45 of the said Act cannot be made, is not tenable. This is because; at this stage where only a prima facie view has to be arrived at, oral evidence with regard to an alleged oral arrangement negativing a written document executed by the parties cannot be considered. Secondly, the learned counsel for the applicant/defendant No. 2 has been able to show, prima facie, that the Distributor agreement was acted upon by the plaintiffs. Payments were received and even the balance-sheet for the year ending 31. 3. 2002 of the plaintiff No. 1 shows amounts receivable from and payable to the defendant No. 2. This clearly shows that not only the agreement was entered upon but transactions were conducted involving money transfers between the plaintiff No. 1 and the defendant no. 2. Furthermore, Mr. Jaitley, who appeared for the applicant/defendant No. 2, also pointed out that the Distributor Agreement was terminated by a notice dated 18. 6. 2003, a copy whereof is at page 80 of the documents file, whereby, the defendant No. 2 purported to terminate the Distributor Agreement w. e. f. 31. 12. 2003. In response to this letter, the plaintiff No. 2 gave various reasons as to why the termination would not be valid and ultimately; by its letter dated 5. 8. 2003, I requested the defendant No. 2 to take back the notice of termination of the Distributor agreement. 12. 2003. In response to this letter, the plaintiff No. 2 gave various reasons as to why the termination would not be valid and ultimately; by its letter dated 5. 8. 2003, I requested the defendant No. 2 to take back the notice of termination of the Distributor agreement. However, since disputes had: arisen between the parties, an Arbitral Tribunal had been constituted in terms of clause 27 of the Distributor Agreement and the Arbitral tribunal even had its first meeting on 20. 7. 2005. In the Minutes of the Meeting of 21. 7. 2005, the Arbitral Tribunal had noted that issues with regard to the jurisdiction of the Tribunal were raised by the plaintiff No. 1 herein and that the same would be decided upon as the Arbitral Tribunal had jurisdiction to entertain and decide such issues. It was also noted in the said Meeting that the question of jurisdiction would be decided after the terms of reference were settled. It is thereafter that on 29. 8. 2005 this suit came to be filed. So, according to the learned counsel for the applicant/defendant No. 2, the present suit has been filed only as a delaying tactic to derail the arbitration which has already commenced. He further submitted that the plaintiffs did not challenge the validity of the Distributor Agreement at any time between 22. 2. 1999 till the institution of the suit. ( 9 ) HAVING considered the arguments raised by the parties on this issue, I am of the prima facie view that the plaintiffs and in particular plaintiff No. 1, in point of fact, had executed the Distributor Agreement, had acted upon it, had money transactions under the said agreement and had even requested the defendant No. 2 by virtue of its letter dated 5. 8. 2003 for taking back the letter of termination of the Distributor Agreement. In these circumstances, it is extremely difficult to accept the view espoused by the learned counsel for the plaintiffs that the Distributor agreement was not to be acted upon and, as a consequence, it was null and void. Therefore, it is not possible for me to hold and return a finding that the Distributor agreement which contains the Arbitration clause is null and void, inoperative or incapable of being performed. ( 10 ) A question was also raised by. Therefore, it is not possible for me to hold and return a finding that the Distributor agreement which contains the Arbitration clause is null and void, inoperative or incapable of being performed. ( 10 ) A question was also raised by. the learned counsel for the plaintiffs that, during the course of inquiry as to whether a reference should be made under Section 45 of the said act, the court could and ought to look into even the oral evidence and conduct a sort of a mini-trial. On the other hand, Mr. Jaitley, who appeared for the applicant/defendant no. 2, placed before me a decision of the supreme Court in the case of Shin-Etsu chemical Co. Ltd Vs. M/s Ales" Optifibre ltd and Anr. 2005 VII AD (S. C.) 233 = JT 2005 (7) SC 426. He particularly referred to the majority view which was set out in paragraph 121 thereof and which reads as under:"121. For all these reasons, I respectfully differ from the judgment of my esteemed Brother Sabharwal. I am of the view that the present matter needs to be remitted to the trial court, but. not for a full trial as directed by the impugned judgment of the High Court. The application under Section 45 would have to be determined by the trial court alter arriving at the prima facie satisfaction that there exists an arbitral agreement, which is "not null and void, inoperative or incapable of being performed". If the trial court finds thus, the parties shall be referred to arbitration. " ( 11 ) THE learned counsel for the applicant/defendant No. 2 therefore submitted that the inquiry contemplated under section 45 is only of a prima facie nature and a full trial involving the leading of oral evidence and cross-examination is not to be undertaken because that would obviate the very purpose and object of the arbitration Act and the provisions for resolution of disputes through arbitration. The learned. counsel for the plaintiffs, however, submitted that although this is the ratio of the said decision of the Supreme Court, it was based upon the earlier decision of the supreme Court in the case of Konkan railway Corporation Ltd. Vs. M/s. Mehut construction Co. 2000 VI AD (S. C.) 670 = jt 2000 (9) SC 362 and that decision has. counsel for the plaintiffs, however, submitted that although this is the ratio of the said decision of the Supreme Court, it was based upon the earlier decision of the supreme Court in the case of Konkan railway Corporation Ltd. Vs. M/s. Mehut construction Co. 2000 VI AD (S. C.) 670 = jt 2000 (9) SC 362 and that decision has. been explicitly over-ruled by a subsequent decision of seven Hon ble Judges of the supreme Court in the case of M/s SBP and co. Vs. Patel Engineering Ltd: 2005 (9) scale 1 . According to him, the very foundation for the decision of the Supreme court in the case or Shin-Etsu Chemical Co (supra) has been knocked aside and therefore the said decision ought not to be relied upon and should be interpreted in such a manner that even at the stage of inquiry under section 45 of the said Act oral evidence should be permitted to be led. I am unable to subscribe to this view for two reasons. The first being that the decision in the case of Shill-Etsu chemical (supra) was directly on Section 45 of the said Act and it was clearly held therein that the court must arrive at a prima facie view looking at the pleadings and the available material on record. It did not contemplate the conduct of a full fledged trial, in fact, it negated the same as would be evident from paragraph 69 which reads as under:"69. The main issue is regarding the scope of power of any judicial authority including a regular civil court under section 45 of the Act in making or refusing a reference of dispute arising from an international arbitration agreement governed by the provisions contained in Part III Chapter-I of the act of 1996. I respectfully agree with learned Brother srikrishna J only to the extent that if on prima facie examination of the documents and material on record, including, the arbitration agreement on which request for reference is made by one of the parties, the judicial authority or the court decides to make a reference, it may merely mention the submissions and contentions of the parties and summarily decide the objection if any raised on the alleged nullity, void ness, inoperativeness or incapability of the arbitration agreement. In case, however, on a prima facie view of the matter, which is required to be objectively taken on the basis of material and evidence produced by the parties on the record of the case, the judicial authority including a regular civil court is inclined to reject the request for reference on the ground that the agreement is "null and void" or "inoperative" or "incapable of being performed" within the meaning of section 45 of the Act, the judicial authority or the I court must afford full opportunities to the parties to lead whatever documentary or oral evidence they, want to lead and then decide the question like trial of a preliminary issue on jurisdiction or limitation in regular civil suit and pass an elaborate reasoned order. Where a judicial authority or the court refuses to make a reference on the grounds available under Section 45 of the Act, it is Necessary for the judicial authority or the court which is ,seized of the matter, to pass a reasoned order as the same is subject to appeal to the appellate court under section 50 (1) (a) of the Act and further appeal to this court under sub-section (2) of the said section. " ( 12 ) THE second reason why the submission of the learned counsel for the plaintiffs cannot be accepted is that the decision in Konkan railway (supra) was on the aspect of the power of the Chief Justice under Section 11 (6) of the said Act. The question there was whether the power under section 11 (6) of the said Act was an administrative power or judicial power. In Konkan Railway (supra), the Supreme Court had come to the view that it was an administrative power and, therefore, no special leave petition under article 136 of the Constitution would lie against an order passed in exercise of such power. This however, has been reversed by the decision of the seven judge bench of the supreme court in the case of M/s SBP and Co (supra) wherein it has been held that the power exercised by the Chief Justice is not an administrative power but a judicial power and, therefore, the same could be the subject matter of a special leave petition. The question of the nature of the power, that is, whether it is administrative or judicial, does not arise at all while considering the scope of section 45 of the said Act. Admittedly, the power exercised by the Court under Section 45 is a judicial power and a judicial function is carried out. Therefore, the reliance placed by the learned counsel for the plaintiffs on the aforesaid decision would not be apposite. ( 13 ) THE learned counsel for the plaintiffs also submitted that in case the disputes involved both arbitrable and non-arbitrable matters between the parties then the disputes should not be referred to arbitration but should be determined by court itself. I am unable to agree with this contention because the question here is whether the matter can be kept with" this court even on the face of the explicit provisions of section 45 of the Act which make it clear that unless and until the court finds that the said agreement is null and void or is inoperative or is- for any other reason incapable of being performed, the court is duty bound to refer the disputes to arbitration. It would not be possible to agree with the submission of the learned counsel for the applicant particularly in view of the fact that the decision relied upon by him (Sukanya Holdings (p) Ltd. Vs. Jayesh h. Pandya and Anr. 2003 IV AD (S. C.) 369 = (2003) 5 SCC 531 ) was one rendered in respect of an arbitration agreement to which part-I of the Act applied, whereas the present case is one governed not by Part-I, but, part-II of the Act. That decision was rendered on a different fact situation and upon an interpretation of section 8 which is inapplicable in the present case. Here, it is section 45 of the Act, which falls in Part-II of the said Act; which needs to be considered. The requirements are different and, therefore, need a different approach altogether. ( 14 ) ONE final matter remains and that is the submissions on behalf of the plaintiffs that subjecting them to an international arbitration would be burdening them with prohibitive costs. This aspect need not be dealt with anyfurther because the Supreme court, in the case of Shin-Etsu Chemical (supra), has taken care of it and has stated the clear position in paragraph 120 thereof which reads as under:"120. This aspect need not be dealt with anyfurther because the Supreme court, in the case of Shin-Etsu Chemical (supra), has taken care of it and has stated the clear position in paragraph 120 thereof which reads as under:"120. Undoubtedly, an international commercial arbitration involves huge expenses, particularly where the parties have subjected the contract to a foreign law. But that cannot be a deterrent to this court from pronouncing on the correct approach to be adopted under section 45 of the Act. In fact, as I have pointed out, adopting a final and determinative approach under Section 45 may not only prolong proceedings at the initial stage but also correspondingly increase costs and uncertainly for all the parties concerned. Finally, having regard to. the structure of the Act, consequences arising from particular interpretations, judgments in other jurisdictions, as well as the opinion of learned authors on the subject, (See, for example, FOUCHARD, GAILLARD, goldman ON INTERNATIONAL commercial ARBITRATION (E. Gaillard and 1. Savage, Eds. 1999) at pp. 412-412 (para 682) as well as JULIAN D. M. LEWETAL, COMPARATIVE international COMMERCIAL arbitration (2003) at p. 346 (para 14-53) who support the prima facie approach. ] I am of the view that, the correct approach to be adopted under section 45 at the pre-reference stage, is one of a prima facie finding by the trial court as to the validity or otherwise of the arbitration agreement. "it is apparent from a reading of the extracted portion that the question of prohibitive costs would also not come in the way of a reference being made under Section 45. ( 15 ) ACCORDINGLY, this application is allowed and the parties are referred to arbitration. The disputes sought to be raised in the present suit are therefore, to be settled by the Arbitral Tribunal. This application and the suit stand disposed of. .