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2015 DIGILAW 320 (JK)

Sanjeev Kumar Gupta v. Brij Mohan Sawhney

2015-07-06

TASHI RABSTAN

body2015
JUDGMENT : Tashi Rabstan, J. 1. This civil revision is directed against the order dated 25.04.2015 passed by the learned 1st Additional District Judge, Jammu, dismissing the application of petitioner-defendant, namely, Sanjeev Kumar Gupta filed under Section 5 of J & K Arbitration & Conciliation Act, 1997 (hereinafter, for short, the Act) seeking dismissal of the suit. The facts-in-brief are that respondent-plaintiff, namely, Brij Mohan Sawhney through Attorney filed a suit against the petitioner-defendant for rendition of accounts and recovery of his share in the trial court with regard to their partnership firm M/s. Sanjeev Exporters, Ramsoo. 2. The contention of learned counsel for petitioner-defendant is that the partnership had already dissolved more than three years before filing of the suit by the respondent-plaintiff. His further contention is that although no name of arbitrator was mentioned in the Partnership Deed, yet there was a specific clause that any dispute arising between the parties with respect to the partnership business would be got adjudicated by arbitration. Thus, it is contended that without resorting to the said clause, the respondent-plaintiff filed a suit against the petitioner-defendant before the trial Court. The petitioner-defendant in view of specific clause of arbitration in the Partnership Deed filed an application under Section 5 of the Act before the trial court seeking dismissal of the suit. Learned trial court, however, vide order dated 25.04.2015 dismissed the application on the ground that the petitioner-defendant ought to have filed application under Section 8 and not under Section 5 of the Act seeking dismissal of the suit being barred by the arbitration clause contained in the Partnership Deed. 3. The contention of learned counsel for petitioner-defendant is that Section 5 of the Act bars the judicial authority to intervene in the matters where there is an arbitration clause in the agreement, whereas under Section 8 of the Act, the reference could be made by the Court, only if there is agreed named arbitrator in the arbitration agreement. Thus, it is contended that the trial court while dismissing the application of petitioner-defendant had not properly understood the import of Sections 5 and 8 of the Act. 4. In contra, learned counsel for respondent-plaintiff argued that the only provision available to a party to move an application for referring the matter to the arbitrator is Section 8 of the Act. 4. In contra, learned counsel for respondent-plaintiff argued that the only provision available to a party to move an application for referring the matter to the arbitrator is Section 8 of the Act. He further argued that Section 5 is to be read with Section 8 of the Act. He, thus, argued that the trial court has rightly rejected the application of petitioner-defendant. In support of his arguments, learned counsel for respondent-plaintiff has relied upon two decisions of the Supreme Court in cases, titled as, P. Anand Gajapathi Raju v. P.V.G. Raju, AIR 2000 SC 1886 and Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya, AIR 2003 SC 2252 . 5. Learned counsel for petitioner-defendant though not disputed the law laid down by the Supreme Court in the aforesaid two cases, however, argued that the latest judgment of the Supreme Court delivered in case, titled as, State of Goa v. Praveen Enterprises, (2012) 12 SCC 581 holds the field. 6. Heard learned counsel appearing for the parties. 7. Before discussing the rival contention of both the parties, it would be relevant to reproduce Sections 5 and 8 of the Act hereunder: "5. Extent of judicial intervention Notwithstanding anything contained in any other law for the time being in force, in matters governed by this part no judicial authority shall intervene except where so provided in this part." "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 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." 8. (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." 8. A perusal of the above Sections reveals that although Section 5 under Part-1 of the Act tilts jurisdiction in favour of arbitration where an agreement in this regard has been executed by the parties, however, Section 8 under this part provides the provision how to refer the parties to arbitration in a pending matter. Section 8 clearly envisages that 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, if the application is accompanied by the original arbitration agreement or a duly certified copy thereof; meaning thereby, in a pending matter, one of the parties to the dispute has to apply before the judicial authority for referring the matter to arbitration in terms of Section 8 of the Act; Thus, in a pending matter if a party applies to the judicial authority in terms of Section 8 of the Act, the dispute ought to have been adjudicated through arbitration and not through the normal remedy and procedure of civil court. 9. The Supreme Court in Hindustan Petroleum Corporation Limited v. M/s. Pinkcity Midway Petroleum, AIR 2003 SC 2881 , has held that the language of Section 8 is peremptory and it is obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement. 10. The Supreme Court also in Kalpana Kothari v. Sudha Yadav, (2002) 1 SCC 203 , has held that Section 8 of the Act mandates that a judicial authority before whom an action is brought, which is the subject matter of arbitration agreement between the parties, shall refer the parties to arbitration. 11. In case State of Goa v. Praveen Enterprises (supra), referred by the learned counsel for petitioner-defendant, the Supreme Court has not discussed the earlier judgments delivered in P. Anand Gajapathi Raju v. P.V.G. Raju and Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya (supra). Therefore, it is not necessarily binding to follow the latest judgment in which earlier judgments have not been discussed. Therefore, it is not necessarily binding to follow the latest judgment in which earlier judgments have not been discussed. Since all these three judgments have been passed by the same strength of the Bench, it is to be seen which judgment is nearer to the facts of the case-in-hand. 12. In a latest judgment reported as, Ranjit Kumar Bose v. Anannya Chowdhury, 2014 AIR SCW 1696, the Supreme Court while referring its earlier judgment delivered in Hindustan Petroleum Corporation Limited v. M/s. Pinkcity Midway Petroleum (supra), has held as under: "13. This Court reiterated that Section 8 is in the form of legislative command to the court and once the prerequisite conditions are satisfied, the Court must refer the parties to arbitration..." "14. The High Court, therefore, was not correct in coming to the conclusion that as per the decisions of this Court in the aforesaid three cases, the Court has no alternative but to refer the parties to arbitration in view of the clear mandate in Section 8 of the 1996 Act. On the contrary, the relief claimed by the appellants being mainly for eviction, it could only be granted by the "Civil Judge having jurisdiction" in a suit filed by the landlord as provided in Section 6 of the Tenancy Act. The expression "Civil Judge having jurisdiction will obviously mean the Civil Judge who has jurisdiction to grant the other reliefs: decree for arrears of rent, decree for recovery of arrears of proportionate and enhanced municipal taxes a decree for mesne profits and a decree for permanent injunction claimed in the suit." 13. Thus, from the perusal of Section 5 of the Act and the case law referred to above, it appears that in a case where no application is made in terms section 8 of the Act, then the trial court is not required to refer the parties to arbitration and the suit can be decided by the trial Court in accordance with law. Section 5 is attracted only when an application is filed under Section 8 of the Act. In view of the above, I do not find any error in the order passed by the learned trial Court. Hence, the civil revision is dismissed along with the connected application, if any.