Navalji Cotspin Limited v. Amravati Growers Co-operative Spinning Ltd.
2015-06-25
A.S.CHANDURKAR
body2015
DigiLaw.ai
Judgment : 1. By the present writ petition filed under Articles 226 and 227 of the Constitution of India, the petitioner – plaintiff has challenged the order passed below Exhibit-25 whereby the trial Court referred the dispute arising between the parties to the Arbitrator. Similarly, the petitioner also challenges the order passed by the trial Court below Exhibit-41 rejecting the application for amendment moved by the plaintiff. 2. The relevant facts are that defendant No.1 was running a Spinning Mill, which subsequently went under liquidation. In said proceedings, the Liquidator took possession of the assets of defendant No.1. The State Government took steps to dispose of the assets of defendant No.1 and on 17.07.1997, the petitioner entered into an agreement with the Liquidator for purchase of said Mill. Various terms and conditions were agreed upon between the parties. There were some disputes between the parties in the matter of possession being handed over, which ultimately led to filing a suit for specific performance of the agreement by the petitioner. The petitioner also prayed for permanent injunction seeking to restrain the defendant from disturbing the peaceful possession of the petitioner. 3. During pendency of the suit, the plaintiff moved an application for grant of temporary injunction vide Exhibit-5 which was contested by the defendant No.1 by filing reply. Ultimately, this application came to be rejected on 16.01.2006. 4. On 27.09.2001, respondent No.1 filed an application under provisions of Section 9A of the Code of Civil Procedure (for short the Code) stating therein that the suit as filed was barred under Section 107 of the Maharashtra Cooperative Societies Act, 1960. On said application, the trial Court was pleased to frame preliminary issues in respect of its jurisdiction and the bar under Section 107 as well as absence of notice under Section 164 of the said Act. On 03.10.2001, an affidavit came to be filed on behalf of respondent No.1 in relation to the prayer for interim injunction. Thereafter on 04.10.2001, respondent No.1 filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 (for short the Act of 1996) stating therein that in terms of Clause 27 of the agreement dated 17.07.1997, the dispute was required to be referred to the Arbitrator.
Thereafter on 04.10.2001, respondent No.1 filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 (for short the Act of 1996) stating therein that in terms of Clause 27 of the agreement dated 17.07.1997, the dispute was required to be referred to the Arbitrator. This application was opposed by the petitioner and by order dated 16.01.2006, the trial Court accepted the prayer as made in the application and directed that the dispute be referred to the Arbitrator in terms of the agreement between the parties. 5. The application for amendment that was moved by the plaintiff vide Exhibit-41 was also decided by the trial Court and by order dated 16.01.2006, said application came to be rejected. These orders are under challenge in the present writ petition. 6. Shri M.G. Sarda, the learned counsel appearing for the petitioner submitted that the trial court committed an error in directing the parties to approach the Arbitrator in terms of the agreement between them. He submitted that in terms of Section 8(1) of the said Act, the defendant No.1 had already submitted its first statement on the substance of the dispute and hence, the same precluded the defendant No.1 from making any application under Section 8 of the said Act. He referred to the reply filed by the defendant to the application for grant of temporary injunction. He also submitted that an affidavit came to be filed by the Liquidator on behalf of the defendant No.1 on 03.10.2001. The aforesaid indicated that the defendant No.1 had acquiesced to the jurisdiction of the Civil Court and it was precluded from seeking reference of the dispute to the Arbitrator. He further submitted that perusal of the reply to the application for injunction as well as the affidavit filed on 03.10.2001 indicated the stand of the defendant No.1 on the merits of the dispute and hence, the defendant No.1 was barred from seeking reference to the Arbitrator. In support of said submission the learned counsel placed reliance on the judgment of the Supreme Court in (2000) 4 SCC 539 P. Anand Gajapathi Raju and others v. P.V.G. Raju (dead) and others and 2000 (3) Mh.L.J. 487 Jashu M. Patel v. Shivdatta R. Joshi.
In support of said submission the learned counsel placed reliance on the judgment of the Supreme Court in (2000) 4 SCC 539 P. Anand Gajapathi Raju and others v. P.V.G. Raju (dead) and others and 2000 (3) Mh.L.J. 487 Jashu M. Patel v. Shivdatta R. Joshi. As regards the rejection of the application for amendment it was submitted that the trial court ought to have allowed the application for amendment as the amendment was necessary for complete adjudication of the dispute between the parties. It was submitted that addition of the party as sought was also necessary in the facts of the case. He, therefore, submitted that both the impugned orders deserve to be set aside and the suit needs to be decided on its own merits. 7. On the other hand Shri A.C. Dharmadhikari, the learned counsel appearing for respondent no.1 supported the impugned order. According to him, the trial court rightly held that the dispute was required to be referred to the Arbitrator in terms of the agreement between the parties. He submitted that the defendant No.1 had not submitted to the jurisdiction of the Civil Court and mere filing of reply to the application for interim injunction cannot preclude the defendant from seeking reference under Section 8 of the said Act. He further submitted that the affidavit dated 03.10.2001 was filed for opposing the relief sought in the injunction application and it did not amount to filing a first statement on the substance of the dispute. In that regard he placed reliance on the judgment of the Supreme Court in (2011) 5 SCC 532 Booz Allen and Hamilton Inc. v. SBI Home Finance Limited and others and (2006) 7 SCC 275 Rashtriya Ispat Nigam Ltd. and another v. Verma Transport Co. He then submitted that the trial court rightly rejected the application for amendment in as much as the party sought to be added was the Arbitrator himself as named in the agreement. He, therefore, submitted that there was no case for interfering in writ jurisdiction. Shri S.M. Bhagde, the learned AGP has represented respondent No.2. 8. I have carefully considered the submissions as advanced and I have gone through the documents filed on record.
He, therefore, submitted that there was no case for interfering in writ jurisdiction. Shri S.M. Bhagde, the learned AGP has represented respondent No.2. 8. I have carefully considered the submissions as advanced and I have gone through the documents filed on record. The issue that requires consideration is whether in the facts of the present case, the defendant No.1 can be said to have submitted to the jurisdiction of the Civil Court when it filed its reply to the application for injunction as well as affidavit dated 03.10.2001 before seeking reference of the dispute under Section 8 of the said Act. 9. For the purposes of considering said issue the law as laid down by the Supreme Court can be referred to. In P. Anand Raju (supra), the Supreme Court laid down various conditions that were required to be satisfied before powers under Section 8 of the said Act could be exercised. It has been held that once a party submits his first statement of defence then a right is created in the other party to continue the adjudication in the Civil Court. In Booz Allen (supra) aforesaid issue has been considered in detail wherein it has been observed that filing of a reply to application for temporary injunction cannot be considered as submission of a first statement made on the substance of the dispute. It is further observed that filing of any statement, application, affidavit by a defendant prior to the filing of the written statement can be construed as “submission of a statement on the substance of the dispute” if by filing such statement, application or affidavit, the defendant shows his intention to submit himself to the jurisdiction of the Court and waives his right to seek reference to the arbitrator. In Rashtriya Ispat Nigam (supra) it had been observed that what was necessary was disclosure of the entire substance in the main proceedings itself and not taking part in the supplemental proceedings. The learned Single Judge in Jashu Patel (supra) has held that any reply filed in the proceedings must clearly disclose that the party intends to get its disputes resolved not by the Arbitrator, but by the Civil Court. 10. In the light of the law as laid down in Booz Allen (supra), reply to the interlocutory application for grant of temporary injunction cannot be treated as submission of first statement of substance.
10. In the light of the law as laid down in Booz Allen (supra), reply to the interlocutory application for grant of temporary injunction cannot be treated as submission of first statement of substance. Said reply is merely for the purposes of avoiding any interim order. The next document relied in that regard is an affidavit dated 03.10.2001 filed by the Liquidator on behalf of defendant No.1. Perusal of contents of said affidavit indicates that the same has been filed while opposing the grant of interim injunction in as much as there is a reference to possession of the Mill in question having been taken over by the Liquidator. It has been stated that as possession had been taken over on 26.09.2001 the application for injunction had been rendered infructuous. It was also stated that the suit was not tenable in view of provisions of Section 107 of the Maharashtra Cooperative Societies Act, 1960. Said affidavit therefore, contains various statements to indicate that the prayer for interim injunction had been rendered infructuous. Reading of the entire affidavit does not indicate that the same can be treated as a first statement on the substance of the dispute as per Section 8 of the said Act. As observed by the Supreme Court in aforesaid decisions such statement should indicate the unequivocal intention of the defendant to contest the proceeding in the Civil Court by giving up the right to have the dispute referred to the Arbitrator. The reply as well as the affidavit therefore cannot be said to be first statement of substance on behalf of said defendant. Hence, the order passed below Exh.25 on the application moved by the defendant No.1 for referring the dispute to the Arbitrator does not call for any interference whatsoever. 11. As regards the order passed below Exh.41 the trial court has observed that grant of said application for amendment would defeat the very purpose for which Clause 27 was agreed between the parties. Said conclusion appears to be just and proper in view of the fact that the plaintiff had sought addition of the Director of Handloom as a defendant in the proceeding. As per aforesaid Clause 27, the Director of Handloom was the Arbitrator agreed between the parties. Hence, by rejecting the application filed below Exh.41 it cannot be said that the trial court committed an error of jurisdiction. 12.
As per aforesaid Clause 27, the Director of Handloom was the Arbitrator agreed between the parties. Hence, by rejecting the application filed below Exh.41 it cannot be said that the trial court committed an error of jurisdiction. 12. In view of aforesaid discussion, it is clear that no relief can be granted to the petitioner. The writ petition is, therefore, dismissed. Rule stands discharged. No costs.