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2010 DIGILAW 547 (GAU)

Raman Agarwal v. Sadhuram Agarwal

2010-08-05

UTPALENDU BIKAS SAHA

body2010
JUDGMENT U.B. Saha, J. 1. The instant revision petition is filed by the Petitioner Sri Raman Agarwal under Section 115 of the Code of Civil Procedure (for short, hereinafter referred to as 'Code of Civil Procedure') challenging the order dated 5-11-2009 passed by the learned Munsiff No. 1, Tinsukia in Misc. (J) case No. 93 of 2009 arising out of Title Suit No. 28 of 2009 whereby and whereunder the application filed by the Petitioner under Section 8 of the Arbitration and Conciliation Act, 1996 (for short, hereinafter referred to as 'Act') has been rejected on the ground that the Defendant No. 2, proforma opposite party No. 2 herein, who has been arrayed in the Title Suit No. 28 of 2009, is not a party in the Arbitration Agreement for which the matter cannot be referred to arbitration on the basis of the Arbitration agreement. 2. Heard Mr. G.N. Sahewalla, learned senior Counsel assisted by Ms. K. Borah, learned Counsel appearing for the Petitioner and Mr. B. C. Das, learned senior Counsel appearing for the opposite parties. 3. The brief facts needed for disposal of the instant revision petition are as follows : The Plaintiff, the father of the Petitioner, for the purpose of treatment on his ailment shifted to Kolkata and being unable to look after his properties situated in Assam, executed two separate Power of Attorney in favour of his son, the Petitioner herein, (the Defendant No. 1 in the suit), which was registered on 30-8-2001 being Nos. 39 and 40, to supervise the said properties. But some time in February, 2007, the Plaintiff came to know that the Defendant No. 1 was not discharging his duties properly, rather misusing his power for his personal gain. Therefore, the Plaintiff revoked the said two Power of attorney and that was intimated to the Defendant No. 1 also. The said facts of revocation was also published in the local daily newspaper, namely, 'Assam Tribune'. But the Plaintiff further came to know that the Defendant No. 1 had transferred, alienated and parted with the possession of the said properties to some third persons by executing four separate Deeds of lease viz. The said facts of revocation was also published in the local daily newspaper, namely, 'Assam Tribune'. But the Plaintiff further came to know that the Defendant No. 1 had transferred, alienated and parted with the possession of the said properties to some third persons by executing four separate Deeds of lease viz. (1) Deed of lease No. 1650 dated 21-12-2006 in respect of Schedule-A property in favour of the Defendant No. 1 for 99 years, (2) Deed of lease No. 1135 dated 24-9-2007 in respect of Schedule-B property in favour of the Defendant No. 1 for 99 years, (3) Deed of lease No. 1168 dated 24-9-2007 in respect of Schedule-C property in favour of the Defendant No. 2 for 99 years, (4) Deed of lease No. 1439 dated 18-11-2006 in respect of Schedule-D property in favour of the Defendant No. 1 for 99 years, which the Defendant No. 1 made in the capacity of the attorney of the Plaintiff and the said transactions were made between the Defendant No. 1 and Defendant No. 2. A substantial part of the properties were also let out to different tenants on rental basis. Therefore, the Plaintiff on several occasions had sent notices to all the tenants of the properties owned by the Plaintiff at Sadhu Mills Compound, Makum Road, Tinsukia and also to the Defendants. The Plaintiff also instructed the Defendants to abstain from making any dealing with the said properties, but the Defendant No. 1 did not follow the instructions of the Plaintiff. 4. Hence, the Plaintiff filed the instant suit for declaring him the absolute lawful owner of the land described in Schedules A, B, C & D in the plaint having valid right, title and interest over the said land and also for declaring the lease deed No. (1) 1650 dated 21-12-2006, (2) 1135 dated 24-9-2007, (3) 1168 dated 5-10-2007 and (4) 1439 dated 18-11-2006 void, illegal and inoperative in law which are liable to be set aside/cancelled and also for a decree of permanent injunction against the Defendants restraining them from doing any acts prejudicial to the interest of the Plaintiff by using power of attorney Nos. 39 and 40, both dated 30-8-2001, along with other prayers. 39 and 40, both dated 30-8-2001, along with other prayers. The Plaintiff also filed an application under Order 39, Rules 1 and 2 read with Section 151, Code of Civil Procedure as well as under Order 40, Rule 1 read with Section 151 of the Code of Civil Procedure for granting of injunction and for appointment of receiver in respect of those properties which was registered as Misc. (J) case No. 41 of 2009. 5. The case of the Petitioner Defendant that he is the second son of the opposite party No. 1. Since the Petitioner and his brother became major, an agreement, namely, co-ownership Agreement was executed on 2-2-2001 among the family members of the Plaintiff opposite party No. 1 wherein the Plaintiff opposite party No. 1, mother and other brothers of the Petitioner are parties regarding various properties which were known as 'Sanwaria properties'. It is also stated that the mother of the Petitioner and his three brothers were residing in Kolkata and one younger brother was residing in New Delhi and the Petitioner was residing in Tinsukia. As such, he was entrusted to look after the entire properties in Tinsukia under the said co-ownership Agreement (Annexure I to the revision petition) which commenced on and from 1-4-1972 and was to be continued till such time the parties agree to. The said Agreement has an arbitration clause, namely, clause No. 11, that any dispute among the parties would be referred to sole arbitrator, if the parties agree to, otherwise the same would be referred to the Board of Arbitrator followed by an appointment of an Umpire. The Plaintiff opposite party No. 1 who was staying in Kolkata executed two power of attorneys, viz. (1) the power of attorney No. 39 in respect of personal properties and HUF properties, (2) the power of attorney No. 40 in respect of Sanwaria properties, in favour of the Petitioner authorizing him to supervise and sell, lease, hire etc. of the said properties and for the purpose of proper management and also to earn revenue from the said properties, the Petitioner executed three lease deeds in his favour and one lease deed in favour of the proforma opposite party No. 2. But due to some mis-understanding, the opposite party No. 1 cancelled the power of attorney and filed the instant suit. 6. But due to some mis-understanding, the opposite party No. 1 cancelled the power of attorney and filed the instant suit. 6. The Petitioner and the opposite party No. 2 as Defendants appeared before the learned Munsiff and since in the agreement of co-ownership, there was an arbitration clause for referring the dispute for arbitration, the Petitioner also filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 on 4-11-2009 which was registered as Misc. (J) case No. 93 of 2009. The Petitioner also filed the original copy of the co-ownership agreement by another application on the same day and another application for deferring the filing of the written statement till disposal of the aforesaid application under Section 8 of the Act. The learned Munsiff heard the matter and dismissed the said petition on the ground that the Defendant No. 2, opposite party No. 2 herein, is not a party to the Arbitration agreement and as such, the matter cannot be referred to the Arbitrator, by relying on the decision of the Apex Court in Sukanya Holdings (P) Ltd. v. Jogesh S. Pandia AIR 2003 SC 2252 . 7. Mr. Sahewalla, learned senior counsel while assailing the impugned order dated 5-11-2009 would contend that the learned Munsiff acted illegally and on material irregularity in exercising its jurisdiction vested upon him by law while rejecting the application under Section 8 of the Act and also failed to consider the object of the said Section. He further contended that when the Defendant Petitioner is a party to the co-ownership agreement and in the said agreement, admittedly there is a Clause for arbitration and the disputes between these two parties in proceedings of the title suit are covered by the said agreement, then it is obligatory for the learned Munsiff to refer the disputes of the parties for arbitration in terms of the Arbitration Act after filing of the application under Section 8 of the Act, as nothing remains to be decided in the suit. He further contended that the main dispute as referred to in the suit is mainly between the Petitioner Defendant and the opposite No. 1 Plaintiff and the opposite party No. 2 Defendant has nothing to do, as she is a beneficiary only in respect of the lease deed and the properties involved are covered by arbitration clause and hence, the learned Munsiff committed gross error in rejecting the petition under Section 8 of the Act only because the proforma O.P. No. 2 who is a Defendant in the suit is not a party in the arbitration Agreement. In support of his aforesaid contention, he placed reliance on a decision of the Apex Court in Rashtriya Ispat Nigam Ltd. v. Verma Transport Co. (2006) 7 SCC 275 : AIR 2006 SC 2800 particularly he referred to para-26 of the said report. 8. Per contra, Mr. Das, learned senior counsel for the opposite parties while supporting the impugned order dated 5-11-2009 would contend that the Court can refer the parties of a suit to arbitration only when the subject-matter of the suit and the subject-matter of the arbitration Agreement are the same. Not only that, the party to the suit has also to be the party of the arbitration agreement. He further contended that if one of the aforesaid conditions are absent, then the Court cannot refer the disputes to the arbitrator. Not only that, even if both the conditions are fulfilled, then also an application under Section 8 of the Act is to be filed along with original copy of the arbitration Agreement as required under Section 8 of the Act, and then only the Court is empowered to refer the arbitration. He further contended that in the instant case, the Plaintiff O.P. No. 1 made a prayer for granting a decree by declaring the lease deed being void, illegal and inoperative in law and also to cancel the same, which cannot be decided by the arbitrator/arbitrators in an arbitration proceedings being not authorized under law. He again contended that it is also an admitted position that the Petitioner Defendant leased the suit property to his wife, the Defendant O.P. No. 2 herein, who is not a party to the arbitration agreement. Therefore, on that account also, Section 8 of the Act is not applicable. He again contended that it is also an admitted position that the Petitioner Defendant leased the suit property to his wife, the Defendant O.P. No. 2 herein, who is not a party to the arbitration agreement. Therefore, on that account also, Section 8 of the Act is not applicable. He finally contended that there is no provision in the Act that when the subject-matter of the suit includes the subject-matter of the arbitration agreement as well as other disputes, the matter is required to be referred to arbitration. Not only that there is also no provision for splitting the cause or parties and referring the subject-matter of the suit to the arbitrator. Therefore, the learned Court below rightly did not split the cause as well as party Defendant and did not refer the subject-matter of the suit for arbitration. In support of his aforesaid contention, he placed reliance on Sukanya Holdings (P) Ltd. AIR 2003 SC 2252 ) (supra) relying, which the learned Court below passed the impugned order. 9. For appreciating the contention raised by the learned Counsel for the parties, it would be proper for this Court to first examine the subject-matter of the agreement, then to reproduce the arbitration clause therein. It appears from the agreement that the parties thereunder mutually agreed to own and possess the properties both moveable and Immovable under the name and style of 'Sanwaria properties' with the parties thereto as co-owners and its principal office shall be located at Tinsukia in the district Dibrugarh, Assam and shall own the properties in equal proportion and the income from the properties shall also be enjoyed by the parties thereto in equal proportion. Neither of the parties thereto shall be entitled to dispose of their shares in any of the properties owned jointly by the parties thereto to any other person until and unless all the other parties thereto expressed their unwillingness to purchase the same. All accounts of the assets and liabilities and profits and losses shall be taken on the 31st day of March each year or on any other convenient date suitable to the parties thereto. Nowhere in the said agreement discussed about the lease of the properties or mode of cancellation of the deeds and also in the arbitration clause made therein. For better appreciation, the said arbitration clause in the co-ownership Agreement is reproduced hereunder: 11. Nowhere in the said agreement discussed about the lease of the properties or mode of cancellation of the deeds and also in the arbitration clause made therein. For better appreciation, the said arbitration clause in the co-ownership Agreement is reproduced hereunder: 11. That all disputes and questions in connection with these presents or to the joint property rights credits or effects or to any of the joint account, affairs or transactions whatsoever arising between the parties hereto and or their legal representatives whether raised during the continuance or after the termination of the co-ownership shall be referred to the arbitration of a single Arbitrator if the parties agree upon one otherwise to a Board of Arbitrators one to be appointed by each party and in case of their disagreement to an UMPIRE appoint by the said Board of Arbitrators or in case of their default by the Court and the arbitration proceedings shall be conducted in the manner provided in the Arbitration Act, 1940 and the decision of the arbitration shall be final and binding on all the parties hereto. 10. Now we may examine the provisions of Section 8 of the Act to appreciate the contention raised by the learned Counsel for the parties. Section 8 of the Act is as follows : 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 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 Sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made. 11. In Rashtriya Ispat Nigam Ltd. AIR 2006 SC 2800 ) (supra), the Apex Court noted inter alia, "Section 8 confers a power on the judicial authority. He must refer the dispute which is the subject matter of an arbitration agreement if an action is pending before him, subject to the fulfillment of the conditions precedent. 11. In Rashtriya Ispat Nigam Ltd. AIR 2006 SC 2800 ) (supra), the Apex Court noted inter alia, "Section 8 confers a power on the judicial authority. He must refer the dispute which is the subject matter of an arbitration agreement if an action is pending before him, subject to the fulfillment of the conditions precedent. The said power, however, shall be exercised if a party so applied not later than when submitting his first statement on the substance of the dispute." 12. In para-26, the Apex Court took note of the case of P. Anand Gajapathi Raju v. P.V.G. Raju (2000) 4 SCC 539 , wherein the scope of the said provision fell for consideration and it was held : 8. In the matter before us, the arbitration agreement covers all the disputes between the parties in the proceedings before us and even more than that. As already noted, the arbitration agreement satisfies the requirements of Section 7 of the new Act. The language of Section 8 is peremptory. It is, therefore, obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement. Nothing remains to be decided in the original action or the appeal arising therefrom. 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 new Act. All the rights, obligations and remedies of the parties would now be governed by the new Act including the right to challenge the award. The Court to which the party shall have recourse to challenge the award would be the Court as defined in Clause (e) of Section 2 of the new Act and not the Court to which an application under Section 8 of the new Act is made. An application before a Court under Section 8 merely brings to the Court's notice that the subject-matter of the action before it is the subject-matter of an arbitration agreement. This would not be such an application as contemplated under Section 42 of the Act as the Court trying the action may or may not have had jurisdiction to try the suit to start with or be the competent Court within the meaning of Section2(e) of the new Act. 13. This would not be such an application as contemplated under Section 42 of the Act as the Court trying the action may or may not have had jurisdiction to try the suit to start with or be the competent Court within the meaning of Section2(e) of the new Act. 13. There is no quarrel with the proposition laid down by the Apex Court in the aforesaid case of Rashtriya Nigam Ltd. AIR 2006 SC 2800 (supra). The fact of that case is that the Appellant No. 1 was a public sector undertaking engaged in the business of manufacturing and marketing of iron and steel products. The Respondent is a partnership firm engaged in the business of consignment agents which has its office at Jalandhar. A contract was entered into by and between the parties in regard to handing and storage of iron and steel materials of the Appellant at Ludhiana. The Appellants contended that one partner, namely, Sri Anil Verma, of the Respondent Firm had constituted various firms and companies and obtained several consignment agency contracts from the Appellant pertaining to Delhi, Faridabad, Chandigarh and Ludhiana, etc. who conspired with certain officials of the Appellants and obtained payments @ Rs. 140/- per MT in place of Rs. 36 per MT on a false plea that the Transport Union at Bahadurgarh did not permit transportation of goods without levy of a fee of Rs. 100 per MT on transportation of such goods. An investigation was conducted by the Central Bureau of Investigation and a criminal case was initiated against Shri Anil Verma and the officials concerned of the Appellants. Allegedly, with the object of presenting a clean image to the Appellants and with a view to avoid termination of all the contracts by them, a plea was put forth that Shri Anil Verma had resigned from the partnership firm as also from his other firms/companies. According to the Appellants, the said Shri Anil Verma was replaced by his family members as a partner of the said firm but he continued to be in complete control over the firms/companies. The contract of the Respondent was terminated by the Appellants on 23-5-2002. On the same day, a show-cause notice was also issued to Shri Anil Verma as to why he and his firms/companies should not be blacklisted. 14. The contract of the Respondent was terminated by the Appellants on 23-5-2002. On the same day, a show-cause notice was also issued to Shri Anil Verma as to why he and his firms/companies should not be blacklisted. 14. The Respondent Firm of that case, however, filed a suit for grant of permanent injunction restraining the Appellants therein from in any manner blacklisting the Respondent Firm or terminating the consignment agency contract. On an application for injunction having been filed, the Civil Judge Junior Division, directed the parties to maintain status quo in regard to the status of the Respondent-Plaintiff herein qua termination of the contract as also the order of blacklisting. The Appellants appeared to have sought for time to file written statement. They also filed a rejoinder to the counter-affidavit to the application for injunction wherein it took a specific plea that the subject-matter of the suit being covered by the arbitration agreement entered into by a and between the parties, it was not maintainable. On 7-6-2002, they filed an application under Section 8 of the 1996 Act, which was rejected by the Civil Judge, Junior Division by an order dated 3-10-2002, holding : The applicant Defendants have already filed a reply to application under Order 39, Rules 1 and 2 read with Section 151 Code of Civil Procedure and sought 15 days' time to file written statement which clearly proves that the process of the suit has already begun and the Defendants have already entered into a defence of the suit meaning thereby that they have subjected themselves to the jurisdiction of the civil Court. The Defendants have not spelt out as to what is the dispute or difference between the parties. Rather, they have straightway blacklisted the Plaintiff Firm, without giving them any notice regarding any dispute or difference, which was mandatory. From the perusal of the record, it is very much clear that there is no dispute or difference between the present Firm and the Company with regard to any of the transactions in the business between both of them. Rather, the Company is at a dispute with a person, who no more exists as a partner in the Plaintiff Firm. The Company also wrote an appreciation letter to the Plaintiff Firm for their cooperation for achieving the desired targets for the year 2001-2002. Rather, the Company is at a dispute with a person, who no more exists as a partner in the Plaintiff Firm. The Company also wrote an appreciation letter to the Plaintiff Firm for their cooperation for achieving the desired targets for the year 2001-2002. The same was made possible because of untiring efforts made by the Plaintiff of the present case. In the present case, the straightway blacklisting of the firm is not justified, even the principle of natural justice goes in favour of the Respondent-Plaintiff. Against the said order, a revision petition was filed by the Appellants before the High Court which was ultimately dismissed on the premise that the application filed by them being not accompanied by the original arbitration agreement or a duly certified copy thereof, the same was not maintainable, against which the Appellants went to the Apex Court. 15. From the scrutiny of the facts of the aforesaid case and the case in hand, it appears that the facts of both the cases are distinctly different. In that case, the parties in the arbitration Agreement and the parties in the suit are same. In the case in hand, the situation is otherwise. It is the admitted position that the Proforma O. P. No. 2, the Defendant No. 2, wife of the Petitioner was not a party to the arbitration Agreement. In Rashtriya Ispat Nigam Ltd. AIR 2006 SC 2800 ) (supra), the Apex Court also took note of Paras-13,16 and 17 of Sukanya Holdings (P) Ltd. AIR 2003 SC 2252 ) (supra) which would be evident from paras-45 and 46 of the said report and in para-47, it has been specifically stated, inter alia, that "such a question does not arise herein as the parties herein are parties to the arbitration agreement and the question in regard to the jurisdiction of the arbitrator, if any, can be determined by the arbitrator himself in terms of Section 16 of the 1996 Act." 16. From the above view taken by the Apex Court, it is evident that the parties to the arbitration Agreement and the parties to the suit are to be same for taking the benefit of Section 8 of the Act. However, the decision of the Apex Court in Rashtriya Ispat Nigam Ltd. AIR 2006 SC 2800 ) (supra) in no way help the Petitioner. However, the decision of the Apex Court in Rashtriya Ispat Nigam Ltd. AIR 2006 SC 2800 ) (supra) in no way help the Petitioner. More so, the said decision also cannot be treated as precedent for deciding case in hand. A decision can be treated as precedent only if it decides a question of law and the judgment has to be read as a whole and the observation from the judgment have to be considered in the light of the question which were before the Court. The decision of the Apex Court upon the question of law is alone binding as a precedent. At the time of consideration on a decision reliance has to be placed if the facts and situation of a case and the case relied on fit in. The Apex Court in a catena of decisions observed that one additional or different fact can make the world of difference between conclusion in two different cases, even when the principle is applied in each case without similar facts. 17. Therefore, in view of the above, the law reports referred by Mr. Sahewalla, learned senior Counsel for the Petitioner has no application in the instant case. On the other hand, the factual situation in Sukanya Holdings (P) Ltd. (supra) squarely fit for deciding the question arise in the instant case. According to this Court, Mr. Das, learned senior counsel for the opposite parties has rightly urged that the Court below did not commit any error relying the decision in the case of Sukanya Holdings (P) Ltd. AIR 2003 SC 2252 ) (supra) while dismissing a petition under Section 8 of the Act. Paras 13, 16 and 17 of the said report are reproduced herein-below : 13. Secondly, there is no provision in the Act that when the subject-matter of the suit includes subject-matter of the arbitration agreement as well as other disputes, the matter is required to be referred to arbitration. There is also no provision for splitting the cause or parties and referring the subject matter of the suit to the arbitrators. 16. The next question which requires consideration is even if there is no provision for partly referring the dispute to arbitration, whether such a course is possible under Section 8 of the Act. There is also no provision for splitting the cause or parties and referring the subject matter of the suit to the arbitrators. 16. The next question which requires consideration is even if there is no provision for partly referring the dispute to arbitration, whether such a course is possible under Section 8 of the Act. In our view, it would be difficult to give an interpretation to Section 8 under which bifurcation of the cause of action, that is to say, the subject-matter of the suit or in some cases bifurcation of the suit between parties who are parties to the arbitration agreement and others is possible. This would be lying down a totally new procedure not contemplated under the Act. If bifurcation of the subject matter of a suit was contemplated, the legislature would have used appropriate language to permit such a course. Since there is no such indication in the language, it follows that bifurcation of the subject matter of an action brought before a judicial authority is not allowed. 17. Secondly, such bifurcation of suit in two parts, one to be decided by the Arbitral Tribunal and the other to be decided by the Civil Court would inevitably delay the proceedings. The whole purpose of speedy disposal of dispute and decreasing the cost of litigation would be frustrated by such procedure. It would also increase the cost of litigation and harassment to the parties and on occasions there is possibility of conflicting judgments and orders by two different forums. 18. In view of the decision of Apex Court in Sukanya Holdings (P) Ltd. (supra), the submission of Mr. Das, inter alia, the Court can refer the parties of a suit to arbitration only when the subject-matter of the suit and the subject-matter of arbitration Agreement are same and the parties to the suit has to be the same parties to the arbitration agreement has force. Not only that the Court cannot split up the subject-matter to the suit as well as parties to the suit for referring the disputes to the arbitration. On perusal of the impugned order, it cannot be said that the Court below has committed any jurisdictional error or material irregularity which calls for interference by this Court. 19. For the reasons stated above, there is no substance in this revision petition, which is, accordingly, dismissed. There shall be no order as to costs. On perusal of the impugned order, it cannot be said that the Court below has committed any jurisdictional error or material irregularity which calls for interference by this Court. 19. For the reasons stated above, there is no substance in this revision petition, which is, accordingly, dismissed. There shall be no order as to costs. Parties are at liberty to request the trial Court for expeditious disposal of the suit. Petition dismissed.