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2014 DIGILAW 705 (ORI)

Bharat Petroleum Corpn. Ltd. v. Anjali Das

2014-10-29

SANJU PANDA

body2014
JUDGMENT : Sanju Panda, J. 1. Petitioner in this petition has challenged the order dated 6.12.2011 passed by learned Civil Judge (Sr. Divn.) 1st Court, Cuttack in C.S.(1) No. 193 of 2007 rejecting an application under Section 8(1) of the Arbitration and Conciliation Act, 1996 to refer the matter for arbitration as the application was filed two years after filing of the written statement. The facts leading to the present case as narrated in the application are as follows:-- "The opposite party No. 1 as plaintiff filed the suit for damages and compensation with a further prayer to declare the notice dated 26.4.2007 and 2.5.2007 as null and void and to declare the invocation of bank guarantee as illegal. The plaintiff further pleaded that the dispute arising out of an arbitration agreement entered into between the parties on 22.12.2006 and as per Clause-33 of the agreement it clearly manifests to refer any dispute or difference of any nature whatsoever to Arbitration for due decision in consonance with Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act). However she has alleged being a Service Provider she was awarded with B.P. 'Ghar' retail outlet at Manakahani under Kendrapara Police Station by the petitioner with effect from 19.9.2001. She was operating the said outlet by executing fresh agreement from time to time. She has also furnished the bank guarantee to operate the said outlet for different agreement period. The opposite party No. 3 is defendant No. 2 who was the O.S.T.S. manager of the petitioner's company has imposed his own idea on the plaintiff for which she sustained heavy loss. As such the petitioner has issued a letter of intents to opposite party No. 1 wherein the labour supply contract of the plaintiff was renewed from 19.11.2006 to 18.11.2007 with certain conditions and she was directed to furnish bank guarantee to the tune of Rs. 23 lakhs to operate the said outlet. The plaintiff expressed her inability to furnish such bank guarantee and she was informed for withdrawal of letter of intent and termination of operatorship, if she fails to furnish the bank guarantee. She has requested to exempt her from furnishing the bank guarantee. Accordingly, on 12.1.2007 the petitioner-company has reduced the amount of bank guarantee to Rs. 15.2 lakhs. The plaintiff expressed her inability to furnish such bank guarantee and she was informed for withdrawal of letter of intent and termination of operatorship, if she fails to furnish the bank guarantee. She has requested to exempt her from furnishing the bank guarantee. Accordingly, on 12.1.2007 the petitioner-company has reduced the amount of bank guarantee to Rs. 15.2 lakhs. However defendant No. 2 instigated the people with false allegation hence she has wrote a letter for termination of the operatorship and to release the bank guarantee which she has filed in consonance with agreement from 19.11.2005 to 18.11.2006 for treatment of her ailment outside the State. After receiving the said letter the company requested her for production of statutory dues paid to the workmen for verification of the allegations with regard to non-payment of minimum wages to the employees and other benefits. As the company has took step for invocation of the bank guarantee she has filed the suit with aforesaid relief. After receiving the notice the defendant No. 1- present petitioner filed the written statement traversing the plaint allegation and taken a stand that in view of the arbitration clause the suit is not maintainable. However defendant Nos. 1 and 2 have not filed any application under Section 8(1) of the Act to refer the matter for Arbitration at the first instance and they have filed such an application on 2.11.2011. The plaintiff filed her objection to the said application and took a specific stand that as per Section 5 of the above Act since the defendants have not filed their application on their first appearance the application liable to be dismissed. The court below by impugned order rejected the application with an observation that earlier similar application dated 5.9.2011 under Section 5 of the Arbitration and Conciliation Act was rejected on 12.9.2011 accordingly the present petition is also not maintainable. It further reveals that defendant Nos. 1 and 2 have filed their written statement on 27.1.2009 and they have filed an additional written statement on 25.3.2009. Plaintiff has filed her evidence on affidavit on 14.5.2010. Thereafter defendants have filed the present application at a belated stage to refer the matter for arbitration." 2. It further reveals that defendant Nos. 1 and 2 have filed their written statement on 27.1.2009 and they have filed an additional written statement on 25.3.2009. Plaintiff has filed her evidence on affidavit on 14.5.2010. Thereafter defendants have filed the present application at a belated stage to refer the matter for arbitration." 2. Learned counsel for the petitioner submitted that in view of Clause-33 of the agreement between the parties the matter should have been referred to the arbitration instead of continuation of the suit which will takes time and also not convenient for the parties to proceed with the dispute. He further submitted that Section 5 of the Arbitration and Conciliation Act the bar for continuation of the suit as per clause in the arbitration of the agreement therefore the impugned order need be interfered with. 3. Learned counsel appearing for the opposite party submitted that the court below passed the impugned order taking into consideration the conduct of the petitioner and the agreement between the petitioner and the plaintiff whereas the plaintiff seeking relief against the defendant No. 3 the bank who is not a party to the agreement. He further submitted that as the defendants have filed their written statement and plaintiff has filed her evidence on affidavit therefore in view of under Section 8(1) of the Act since the defendants have filed application to refer the matter for arbitration at a belated stage and they have not filed the application before filing of the written statement rightly the court below rejected the application. Therefore the impugned order need not be interfered with. 4. In support of their respective contention they have cited the decision reported in A.I.R. 2006 S.C. 2800, Rashtriya Ispat Nigam Limited and another V. M/s. Verma Transport Company wherein the Apex Court held that if an application is filed before actually filing the first statement on the substance of the dispute, in our opinion the party cannot be said to have waived his right or acquiesced himself to the jurisdiction of the Court. What is therefore material is as to whether the petitioner has filed his first statement on the substance of the dispute or not, if not, his application under Section 8 of the 1996 Act may not be held wholly un-maintainable. By opposing the prayer for interim injunction the restriction contained in Sub-section (1) of Section 8 was not attracted. What is therefore material is as to whether the petitioner has filed his first statement on the substance of the dispute or not, if not, his application under Section 8 of the 1996 Act may not be held wholly un-maintainable. By opposing the prayer for interim injunction the restriction contained in Sub-section (1) of Section 8 was not attracted. Disclosure of a defence for the purpose of opposing a prayer for injunction would not necessarily mean that substance of the dispute has already been disclosed in the main proceeding. In such a situation Court has held that application under Section 8 of the Act was maintainable. 5. Further the Apex Court in the case of Atul Singh and others V. Sunil Kumar Singh reported in AIR 2008 SC 1016 held that an application under Section 8(1) shall not be entertained unless it accompanied by the original arbitration agreement or a duly certified copy thereof and Court has to first decide whether there was an agreement between the parties to refer the matter for arbitration before filing of their first statement. The Apex Court in the case of Sukanya Holdings Private Limited V. Jayesh H. Pandya and another reported in (2003) 5 S.C.C. 531 held that where a suit is commenced in respect of a matter which falls partly within the arbitration agreement and partly outside and which involves parties some of whom are parties to the arbitration agreement while some are not so Section 8 is not attracted. The words "a matter" in Section 8 indicate that the entire subject-matter of the suit should be subject to arbitration agreement. There is no provision in the Act for bifurcating the suit into two parts, one to be referred to arbitration for adjudication and the other to be decided by civil court. In view of the above settled position and after going through the record it appears that defendant No. 3 is not a party to the agreement and plaintiff has already filed her evidence on affidavit therefore this Court is not inclined to interfere with the impugned order as there is no error apparent on face of the record. The court below is directed to dispose of the suit as expeditiously as possible since pleadings of the parties completed. Accordingly the writ petition is dismissed.