Amin Associates - A Partnership Firm v. Bharatbhai Purshottambhai Patel
2017-11-15
B.N.KARIA, M.R.SHAH
body2017
DigiLaw.ai
JUDGMENT : M.R. Shah, J. 1. By way of this petition under Article 227 of the Constitution of India the petitioner herein – original defendant No.1 has prayed for an appropriate writ, direction and order quashing and setting aside the impugned order dated 28.09.2016 passed below Exh.24 by the learned Judge, Commercial Court, Vadodara in Commercial Civil Suit No.251/2016, by which the application submitted by the petitioner No.1/1 herein – original defendant No.1/1 under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “Arbitration Act”) is rejected. 2. The facts leading to the present Special Civil Application in nutshell are as under: 2.1 That the respondent No.1/1 herein – original plaintiff claiming to be partner of partnership firm – Amin Associates (original defendant No.1) instituted Special Civil Suit No.148/2016 in the Court of learned Civil Judge (S.D.), Vadodara, against the original defendant No.1 – partnership firm – Amin Associates through its remaining partners and others for a declaration to declare the sale deed executed by the partners of the partnership firm – Amin Associates in favour of the original defendant No.2 – Nilambar Infratech LLP with respect to the land owned by the partnership firm as illegal and that the original defendant No.1/1 has no authority to execute the sale deed in favour of the original defendant No.2 and also for a declaration that on the basis of such illegal transaction, the original defendant No.2 does not get any right, title or interest. That in the said suit the original plaintiff had prayed for the following reliefs. “1. Be pleased to declare that in connection with the suit land in the sim area at moje village Vasna, bearing survey no. 35/12, F.P. 7, 8, though there was no consent of the plaintiff, the defendant No.1/1 the sole partner of Amin Associates, has no right or interest to execute the sale deed in favour of the defendant No. 2 against the provisions of the Partnership Act. The defendant No. 2 does not receive any rights by virtue of such illegal sale transaction, that being ultra vires and without sale consideration; 2.
The defendant No. 2 does not receive any rights by virtue of such illegal sale transaction, that being ultra vires and without sale consideration; 2. Be pleased to grant injunction in connection with suit land located in the sim area at moje village Vasna, bearing survey No. 35/12, F.P. 7, 8, against the defendant No. 2 or his agents that they may neither make development nor change conditions of the place nor sell, mortgage, gift, transfer by any means nor create any obstacle in legally occupied land nor get the same done on the basis of the illegal sale transaction of the suit land executed by defendant No.1/1sole partner of Amin Associates, without our consent in favour of defendant No.2 against the provisions of Partnership Act; 3. Be pleased to declare that as stated in the suit, in connection with the suit land in the sim area at moje village Vasna, bearing survey No. 35/12, sale transaction done by defendant No.1/1 with defendant No.2 without my consent was illegal, ultra vires and to deprive me of my right and the defendant No.2 Partnership Firm does not get any rights on the basis of such illegal transaction; 4. Be pleased to grant permanent injunction against the defendant No.2 that he shall neither transfer the suit land to any other person nor create any rights thereof nor get the same done on the basis of sale transaction done by defendant No.1/1 in favour of the defendant No.2, in connection with suit land in sim area of moje village Vasna, bearing survey No.35/12 as the said transaction was against my consent; 5. Be pleased to direct to call for the books of the accounts in connection with whatever development has been done in the entire properties of the defendant No.1/1 to 1/5 including the land bearing survey No.333 at Vasna and survey/block No.623, 1317/A, 1357, 1786, etc.
Be pleased to direct to call for the books of the accounts in connection with whatever development has been done in the entire properties of the defendant No.1/1 to 1/5 including the land bearing survey No.333 at Vasna and survey/block No.623, 1317/A, 1357, 1786, etc. at moje Bhaili,, and to award me my share from it.” Thus, it appears that the reliefs sought by the plaintiff in the aforesaid suit were with respect to the suit property of the partnership firm – original defendant No.1 – Amin Associates and the sale deed executed by the original defendant No.1/1 as partner of original defendant No.1 – partnership firm – Amin Associates in favour of the original defendant No.2 as well as for accounts of the partnership firm – original defendant No.1 – Amin Associates of which the plaintiff and the original defendant No.1 – defendant Nos.1/1 to 1/5 were the partners. From the averments in the plaint it appears that according to the plaintiff the land bearing survey No.35/12, F.P. Nos. 7, 8 situated at Saiyad Vasna; land bearing survey/Block Nos.623, 1317/A, 1317/B, 1357, 1786 situated at village Bhayli and survey No.333 situated at Saiyed Vasna were owned and belonged to the original defendant No.1 – partnership firm – Amin Associates of which the plaintiff was one of the partner alongwith original defendant Nos.1/1 to 1/5. According to the plaintiff, original defendant No.1/1, without the consent of the plaintiff as one of the partner executed sale deed in favour of the defendant No.2 with respect to the land bearing survey No.35/12, F.P. Nos.7, 8 situated at village Saiyed Vasna and therefore, the plaintiff prayed for a declaration to declare the said transaction/sale deed illegal and without authority under the law and also for a declaration that the original defendant No.2 on the basis of such illegal transaction/sale deed does not get any valid right, title or interest. With respect to the remaining lands situated at Bhayli and Saiyed Vasna in which the developments have taken place, the plaintiff filed the suit for accounts. That on establishment of the Commercial Court, at Vadodara under the provisions of The Commercial Court, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (hereinafter referred to as “Act, 2015”), the said suit came to be transferred to the Commercial Court, Vadodara, which has been numbered as Commercial Suit No.251/2016.
That on establishment of the Commercial Court, at Vadodara under the provisions of The Commercial Court, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (hereinafter referred to as “Act, 2015”), the said suit came to be transferred to the Commercial Court, Vadodara, which has been numbered as Commercial Suit No.251/2016. That the original defendant No.1/1 – one of the partner of the partnership firm – Amin Associates, submitted the application Exh.24 before the Commercial Court, Vadodara in the aforesaid commercial suit under Section 8 of the Arbitration Act to refer the dispute in the suit for arbitration. It was the case on behalf of the original applicant – original defendant No.1/1 that he is the partner of partnership firm – Amin Associates. That the plaintiff has filed the suit against defendant Nos.1/1 to 1/5 who are the partners of the partnership firm – Amin Associates and also against the other defendants for seeking relief to declare the sale deed as null and void which was executed in respect of the property of the parntership firm; that the plaintiff also averred that the property in question i.e. block/survey Nos.35/1/1 and 35/2 situated at village Saiyed Vasna, Vadodara which has been held in favour of the defendant No.2 is the property of the partnership firm; that the partnership deed at Exh.4/1 contains the arbitration clause and as per clause 18, all the disputes arising between the partners has to be referred to the Arbitrator. Therefore, it was submitted that dispute involved in the said suit pertains to the property of the partnership firm and accounts of the firm and therefore, in accordance with clause 18 of the partnership deed the said dispute has to be referred to the Arbitrator/for Arbitration in accordance with the provisions of Section 8 of the Arbitration Act. 2.2 The said application Exh.24 was vehemently opposed by the original plaintiff. A reply to the said application was filed vide Exh.25. It was vehemently submitted on behalf of the plaintiff that the defendant Nos.2 to 6 are not the partners of the partnership firm and therefore, not parties to the Agreement/Deed and therefore they are not bound by clause 18 of the partnership deed.
A reply to the said application was filed vide Exh.25. It was vehemently submitted on behalf of the plaintiff that the defendant Nos.2 to 6 are not the partners of the partnership firm and therefore, not parties to the Agreement/Deed and therefore they are not bound by clause 18 of the partnership deed. Therefore, it was submitted that with respect to the reliefs sought against defendant Nos.2 to 6 and as the original defendant Nos.2 to 6 are not party to the partnership deed containing the arbitration clause, they are not bound by the arbitration agreement, more particularly clause 18 of the partnership deed. It was submitted that therefore, the Commercial Court, Vadodara has jurisdiction to try and adjudicate the suit and the application filed by the defendant Nos.1/1 submitted under Section 8 of the Arbitration Act is liable to be rejected. 2.3 It was also submitted on behalf on behalf of the plaintiff that as the defendants have colluded with each other and played fraud upon the plaintiff and thereby sold the property of the partnership firm and in para 5 of the plaint, the plaintiff has specifically pleaded that the fraud has been perpetrated by the defendants upon the plaintiff, the issue of fraud cannot be adjudicated by the arbitrator. It was also further submitted on behalf of the plaintiff that the plaintiff has inter alia sought the relief for declaring the sale deed as null and void and the sale deed can be declared as void by the Civil Court only and the Arbitrator has no jurisdiction to declare the sale deed as void and therefore, the subject matter of the suit cannot be referred to the Arbitrator. 2.4 To the aforesaid it was submitted on behalf of the defendant No.1/1 – original applicant that the question of fraud can also be referred to the Arbitrator. It was further submitted on behalf of the defendant No.1/1 that so far as the relief of declaring the sale deed as null and void is concerned, the said relief falls within the ambit of Specific Relief Act and as per the decisions of the Hon’ble Supreme Court in the case of M/s. Sundaram Finance Limited and another vs. T. Thankam reported in AIR 2015 SC 1303 , relief pertaining to Specific Relief Act also can be referred to the Arbitrator.
2.5 That after considering the submissions made by the learned Advocate appearing on behalf of the original plaintiff as well as the original defendant No.1/1 and considering the averments made in the plaint and the reliefs sought which can be said to be against the plaintiff and the original defendant No.1 (original defendant No.1/1 to 1/5 as partners of the defendant No.1 – partnership firm – Amin Associates, who are the parties to the partnership deed containing arbitration clause 18 and between the plaintiff and the original defendant No.1 and other defendant Nos.2 to 6 and considering the fact that defendant Nos.2 to 6 are not the parties to the partnership deed containing arbitration clause, by impugned order the learned Commercial Court, Vadodara has rejected the application Exh.24 submitted by the original defendant No.1/1 under Section 8 of the Arbitration Act, mainly on the ground that other defendants i.e. defendant Nos.2 to 6 who are not the parties to the partnership deed which contained the arbitration clause cannot be compelled by the Court to abide by the arbitration clause. The learned Judge has also observed and held that looking to the reliefs sought in the plaint the bifurcation of the cause of action i.e. the subject matter of the suit and the bifurcation of the reliefs sought against defendants who are the parties to the agreement and those others who are not the parties to the arbitration agreement, is not permissible. In support of the above, the learned Judge has heavily relied upon the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. vs. Jayesh H. Pandya & Anr. reported in AIR 2003 SC 2252 . 2.6 Feeling aggrieved and dissatisfied with the impugned order passed by the learned Judge, Commercial Court, Vadodara rejecting the application Exh.24 submitted by the original defendant No.1/1 submitted under Section 8 of the Arbitration Act and refusing to refer the dispute in the suit for arbitration, original defendant No.1 (including original defendant No.1/1) has preferred the present Special Civil Application under Article 226 of the Constitution of India. 3. Ms. Archana Acharya, learned Advocate has appeared on behalf of the petitioner – original defendant No.1 and Shri B.S. Patel, learned Advocate has appeared on behalf of the respondent No.1 hererin – original plaintiff. 3.1 Ms.
3. Ms. Archana Acharya, learned Advocate has appeared on behalf of the petitioner – original defendant No.1 and Shri B.S. Patel, learned Advocate has appeared on behalf of the respondent No.1 hererin – original plaintiff. 3.1 Ms. Acharya, learned Advocate appearing on behalf of the petitioner herein – original defendant No.1 has vehemently submitted that in the facts and circumstances of the case more particularly considering clause 18 of the partnership deed which contains the arbitration clause and considering the relief sought in the plaint and the main dispute between the plaintiff and the defendant Nos.1/1 to 1/5 – partners of the partnership firm – Amin Associates, the learned Judge has materially erred in rejecting the application Exh.24 and refusing to refer the dispute in the suit for arbitration. 3.2 It is vehemently submitted by Ms. Acharya, learned Advocate appearing on behalf of the petitioner that while rejecting the application Exh.24 and refusing to refer the parties and/or the dispute in the suit for arbitration/to Arbitrator, the learned Judge has not properly appreciated the fact that as such the dispute is with respect to the properties/lands belonging to partnership firm and the accounts of the defendant No.1 – partnership firm. It is submitted that the learned Judge has failed to appreciate the subject matter of the dispute in the suit is against amongst the partners of the defendant No.1 – partnership firm i.e. plaintiff and the defendant Nos.1/1 to 1/5 and that the dispute in the suit pertains to the sale deeds of various properties of the defendant No.1 – partnership firm and the accounts of the defendant No.1 – partnership firm. It is submitted that therefore the entire dispute revolves around the dispute amongst the partners inter se. It is submitted that therefore the dispute raised by the plaintiff in the suit shall be covered by clause 18 of the partnership deed of the defendant No.1 – partnership firm which provides that in case of any dispute amongst the partners of the partnership firm, the same shall be referred to Arbitration. It is submitted that therefore in view of clause 18 of the partnership deed read with section 8 of the Arbitration Act, the learned Commercial Court ought to have referred the dispute raised in the suit to Arbitrator. 3.3 It is further submitted by Ms.
It is submitted that therefore in view of clause 18 of the partnership deed read with section 8 of the Arbitration Act, the learned Commercial Court ought to have referred the dispute raised in the suit to Arbitrator. 3.3 It is further submitted by Ms. Acharya, learned Advocate appearing on behalf of the petitioner that as such the entire dispute in the suit is between the partners of the partnership firm and the defendant Nos.2 to 6 are unnecessarily joined as party, just to avoid arbitration clause as per clause 18 of the partnership deed which provides for arbitration in case of dispute amongst the partners. It is submitted that therefore the learned Judge has not properly appreciated the fact that as such by deliberately joining the defendant Nos.2 to 6, the plaintiff has misused and abused the process of law and more particularly delayed the proceedings and to frustrate the right of the partner of the firm to seek resolution of dispute through arbitration. 3.4 It is further submitted by Ms. Acharya, learned Advocate appearing on behalf of the petitioner that the learned Commercial Court has failed to appreciate that the reliefs sought in the suit are such which can be adjudicated and granted in arbitration by Arbitrator. 3.5 It is further submitted by Ms. Acharya, learned Advocate appearing on behalf of the petitioner that the learned Judge has not properly appreciated the fact that as such the main reliefs in the suit can be said to be with respect to the properties of the partnership firm and between the partners of the partnership firm and the reliefs which are sought against the defendant Nos.2 to 6 can be said to be consequential reliefs and/or ancillary reliefs. It is submitted that in any case all the reliefs sought in the suit are such which can be adjudicated and granted in the arbitration and therefore, the learned Judge ought to have allowed the application Exh.24 and ought to have referred the dispute in the suit to the arbitration. 3.6 It is submitted by Ms. Acharya, learned Advocate appearing on behalf of the petitioner that once all the conditions mentioned in section 8 of the Arbitration Act are satisfied, in that case the approach of the Court should be not to see whether the Civil Court has jurisdiction, but it should be to see whether its jurisdiction has been ousted.
Acharya, learned Advocate appearing on behalf of the petitioner that once all the conditions mentioned in section 8 of the Arbitration Act are satisfied, in that case the approach of the Court should be not to see whether the Civil Court has jurisdiction, but it should be to see whether its jurisdiction has been ousted. It is submitted that once it is brought to the notice of the Court that its jurisdiction has been taken away in terms of the procedure prescribed under the special statute (Arbitration Act), the Civil Court has to first see whether there is ouster of jurisdiction in terms or compliance of the procedure under the special statute. 3.7 It is further submitted by Ms. Acharya, learned Advocate appearing on behalf of the petitioners that the lower Court has failed to appreciate that an analysis of Section 8 would show that for its applicability, the following conditions must be satisfied. (i) that there exists an arbitration agreement; (ii) that action has been brought to the court by one party to the arbitration agreement against the other party; (iii) that the subject matter of the suit is same as the subject matter of the arbitration agreement; (iv) that the other party before he submits his first statement of the substance of the dispute, moves the court for referring the parties to arbitration; and (v) that along with the application the other party tenders the original arbitration agreement or duly certified copy thereof. It is submitted that section 8 is in the form of legislative command to the court and once the prerequisite conditions as aforestated are satisfied, the Court must refer the parties to arbitration. It is submitted that as a matter of fact, on fulfillment of conditions of Section 8, no option is left to the court and the court has to refer the parties to arbitration. It is submitted that however, without appreciating these aspects, the Lower Court has passed the impugned order rejecting the application Exh.24. It is submitted that the impugned order therefore is illegal and requires to be quashed and set aside. 3.8 It is further submitted by Ms.
It is submitted that however, without appreciating these aspects, the Lower Court has passed the impugned order rejecting the application Exh.24. It is submitted that the impugned order therefore is illegal and requires to be quashed and set aside. 3.8 It is further submitted by Ms. Acharya, learned Advocate appearing on behalf of the petitioner that while holding that the dispute in respect of the defendant Nos.2 to 6 who are not the ties to the partnership deed should be kept alive, the learned Judge has materially erred in relying upon and/or considering the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra). 3.9 It is further submitted by Ms. Acharya, learned Advocate appearing on behalf of the petitioner that the learned Judge has not properly appreciated the fact that as such thereafter considering the decision in the case of Sukanya Hoardings Pvt. Ltd. (Supra), in the case of M/s. Sundaram Finance Limited (Supra) and Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc. reported in (2013) 1 SCC 641 , it is held that the entire dispute can be referred to Arbitrator. It is submitted that therefore the view taken by the learned Commercial Court relying upon and considering the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra) and not considering the law laid down by the Hon’ble Supreme Court in the case of M/s. Sundaram Finance Limited (Supra), is erroneous which deserves to be quashed and set aside. Making above submissions and relying upon the following decisions, it is requested to allow the present petition and quash and set aside the impugned order passed by the learned Commercial Court below Exh.24 and consequently allow the application Exh.24 and refer the dispute in the suit to the arbitration. 1. M/s. Sundaram Finance Limited and another vs. T. Thankam, AIR 2015 SC 1303 2. Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., (2013) 1 SCC 641 3. Ananthesh Bhakta Represented by Mother Usha A. Bhakta and Others vs. Nayana S. Bhakta and Others, (2017) 5 SCC 185 (Paras 32 and 33) 4. A. Ayyasamy v. A. Paramasivam and Ors., AIR 2016 SC 4675 (Paras 13, 18, 20, 38) 5. Mohanbhai Maganbhai Patel vs. Miral Vallabhbhai Surani, 2016 JX (Guj) 1290 (Para 11) 6. Ullasbhai Parsottambhai (Legal heirs of decd.) and Ors.
A. Ayyasamy v. A. Paramasivam and Ors., AIR 2016 SC 4675 (Paras 13, 18, 20, 38) 5. Mohanbhai Maganbhai Patel vs. Miral Vallabhbhai Surani, 2016 JX (Guj) 1290 (Para 11) 6. Ullasbhai Parsottambhai (Legal heirs of decd.) and Ors. vs. Patel Dineshbhai Ramabhai, 2014 (1) GLR 596 4. Present petition is vehemently opposed by Shri B.S. Patel, learned Advocate appearing on behalf of the respondent No.1/1. It is vehemently submitted by Shri Patel, learned Advocate appearing on behalf of the respondent No.1/1 that in the facts and circumstances of the case and considering the multiple cause of action and the multiple reliefs sought by the plaintiff against the original defendant No.1 and others more particularly the reliefs sought against the other defendants more particularly defendant No.2, who is not a party to the partnership deed/arbitration agreement and considering the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra), the learned Judge, Commercial Court has rightly rejected the application under Section 8 of the Arbitration Act and has rightly refused to refer the matter to the arbitration. 4.1 It is vehemently submitted by Shri Patel, learned Advocate appearing on behalf of the respondent No.1/1 that even the reliefs sought in the suit i.e. for declaration and permanent injunction cannot be a subject matter of arbitration proceedings and/or the same cannot be dealt with and/or granted by the Arbitrator. It is submitted that for the reliefs sought in the plaint namely declaration and permanent injunction and the dispute related to the same is not arbitrable and therefore also, the dispute between the parties in the suit cannot be referred to the arbitration in exercise of powers under Section 8 of the Arbitration Act. It is submitted that therefore the learned Judge, Commercial Court has rightly rejected the application under Section 8 of the Arbitration Act. 4.2 It is further submitted by Shri Patel, learned Advocate appearing on behalf of the respondent No.1/1 that even in the plaint/suit the plaintiff has pleaded fraud and therefore, the said dispute cannot be referred to arbitration. 4.3 It is further submitted by Shri Patel, learned Advocate appearing on behalf of the respondent No.1/1 that in the facts and circumstances of the case, the learned Judge, Commercial Court has rightly relied upon and/or considered the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra).
4.3 It is further submitted by Shri Patel, learned Advocate appearing on behalf of the respondent No.1/1 that in the facts and circumstances of the case, the learned Judge, Commercial Court has rightly relied upon and/or considered the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra). It is submitted that still the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra) holds the field. 4.4 Relying upon the decision of the Hon’ble Supreme Court in the case of Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. reported in (2011) 5 SCC 532 (Paras 32 and 33), it is vehemently submitted by Shri Patel, learned Advocate appearing on behalf of the respondent No.1/1 that while considering the application under Section 8 of the Arbitration Act, in a pending suit, as observed by the Hon’ble Supreme Court, where the issue of “arbitrability” arises, all aspects of arbitrability will have to be decided by the Court seized of the suit and cannot be left to the decision of the Arbitrator. It is further submitted that in the aforesaid decision it is further observed by the Hon’ble Supreme Court that even if there is an arbitration agreement between the parties, and even if the dispute is covered by the arbitration agreement, the court where the civil suit is pending, will refuse an application under Section 8 of the Act, to refer the parties to arbitration, if the subject matter of the suit is capable of adjudication only by a public forum or the relief claimed can only be granted by a special court or Tribunal. 4.5 It is further submitted by Shri Patel, learned Advocate appearing on behalf of the respondent No.1/1 that in the present case the plaintiff has sought the reliefs not only against the defendant No.1 – the partners of the partnership firm but has also sought the reliefs against the defendant No.2 and others who are not party to the partnership deed/arbitration agreement. It is submitted that therefore the reliefs sought against other defendants who are not party to the arbitration agreement/partnership deed, such a dispute cannot be referred to the arbitration as observed and held by the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra).
It is submitted that therefore the reliefs sought against other defendants who are not party to the arbitration agreement/partnership deed, such a dispute cannot be referred to the arbitration as observed and held by the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra). It is submitted that the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra) still holds the field and the same has not been subsequently overruled by the Hon’ble Supreme Court and/or there is no contrary decision to the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra). It is submitted that so far as the reliance placed upon the decision of the Hon’ble Supreme Court in the case of Sundaram Finance Ltd. (Supra) relied upon by the learned Advocate appearing on behalf of the petitioners in support of her submission that in the case of M/s. Sundaram Finance Limited (Supra) did consider the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra) and thereafter in paras 33 and 34 the Hon’ble Supreme Court has observed that once an application in due compliance of section 8 of the Arbitration Act is filed, the approach of the Civil Court should be not to see whether the Court has jurisdiction and it should be to see whether its jurisdiction has been ousted is concerned, it is vehemently submitted by Shri Patel, learned Advocate appearing on behalf of respondent No.1/1 that in the facts and circumstances of the case and the controversy before the Hon’ble Supreme Court, the said decision shall not be applicable to the facts of the case on hand. It is submitted that as such by the said decision it cannot be said that the Hon’ble Supreme Court has taken a contrary view than the view taken in the case of Sukanya Hoardings Pvt. Ltd. (Supra) and/or the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra) is overruled and/or is diluted.
It is submitted that as such by the said decision it cannot be said that the Hon’ble Supreme Court has taken a contrary view than the view taken in the case of Sukanya Hoardings Pvt. Ltd. (Supra) and/or the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra) is overruled and/or is diluted. It is submitted that therefore the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra) still holds the field and therefore, in the facts and circumstances of the case and the controversy in the suit and the reliefs sought in the planit, the learned Judge, Commercial Court has rightly rejected section 8 application relying upon the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra). Making above submissions and relying upon above decisions, it is requested to dismiss the present petition. 5. In reply to the aforesaid submissions made by the learned Advocate appearing on behalf of the original plaintiff, Ms. Acharya, learned Advocate appearing on behalf of the petitioners relying upon the decision of the Hon’ble Supreme Court in the case of Chloro Controls India (P) Ltd. (Supra) and the decision of the Hon’ble Supreme Court in the case of Ananthesh Bhakta Represented by Mother Usha A. Bhakta and Others (Supra) has vehemently submitted that even if the dispute is between the parties/one of the party who is not a party to the arbitration agreement, still the same can be referred to arbitration. Relying upon the decision of the Hon’ble Supreme Court in the case of M/s. Sundaram Finance Limited (Supra), it is submitted that as observed by the Hon’ble Supreme Court, when section 8 application is submitted in a suit pending before the Civil Court, the Civil Court should not see whether it has jurisdiction. What is required to be seen by the Civil Court is whether its jurisdiction is ousted or not. 5.1 Now, so far as the submission on behalf of the plaintiff that as the fraud is alleged and therefore, when there are allegations of fraud, the matter need not be referred to arbitration is concerned, it is submitted by Ms.
What is required to be seen by the Civil Court is whether its jurisdiction is ousted or not. 5.1 Now, so far as the submission on behalf of the plaintiff that as the fraud is alleged and therefore, when there are allegations of fraud, the matter need not be referred to arbitration is concerned, it is submitted by Ms. Acharya, learned Advocate appearing on behalf of the petitioners that as observed and held by the Hon’ble Supreme Court in the case of A. Ayyasamy (Supra), the allegation of fraud would not nullify the effect of arbitration agreement. Relying upon the decision of this Court in the case of Mohanbhai Maganbhai Patel (Supra), it is submitted that mere allegation of fraud per se is not sufficient to nullify the arbitration agreement. It is submitted that as held by the Division Bench of this Court, the particulars of the allegation of fraud must be stated in the pleadings. It is submitted that as held by the Division Bench of this Court, pleading has to contain a statement in a concise form of material facts on which the party relies for his claim or defence. It is further submitted by Ms. Acharya, learned Advocate appearing on behalf of the petitioners that in order to make out a case of fraud or coercion all the material facts in support of such allegation must be laid in full and with high degree or precision. It is submitted that mere stating in the pleading that the fraud has been committed, would not be sufficient. It is submitted that it must be specifically pleaded. It is submitted that therefore the submission on behalf of the original plaintiff that as there are allegations of fraud, the matter needs not be referred to arbitration, may not be accepted. Making above submissions and relying upon above decisions, it is requested to allow the present petition. 6. Heard learned Counsel appearing on behalf of the respective parties at length. The short question which is posed for consideration of this is whether in the facts and circumstances of the case the learned Judge, Commercial Court has committed any error in rejecting section 8 application relying upon the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra)?
The short question which is posed for consideration of this is whether in the facts and circumstances of the case the learned Judge, Commercial Court has committed any error in rejecting section 8 application relying upon the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra)? 6.1 While considering the aforesaid question/issue, the nature of the suit and the reliefs sought in the suit/plaint and the parties to the suit/plaint are required to be considered. At the outset it is required to be noted that as such in the suit the original plaintiff has joined the partners of the partnership firm as defendant Nos.1/1 to 1/5 and has joined one Nilambar Infratech LLP and its partners as defendant Nos.2 to 6. It is an admitted position that except the defendant Nos.1/1 to 1/5, rest of the defendants more particularly defendant No.2 are not party to the partnership deed and/or the arbitration agreement. In the suit the original plaintiff has prayed for the following reliefs. “1. Be pleased to declare that in connection with the suit land in the sim area at moje village Vasna, bearing survey no. 35/12, F.P. 7, 8, though there was no consent of the plaintiff, the defendant No.1/1 the sole partner of Amin Associates, has no right or interest to execute the sale deed in favour of the defendant No. 2 against the provisions of the Partnership Act. The defendant No. 2 does not receive any rights by virtue of such illegal sale transaction, that being ultra vires and without sale consideration; 2. Be pleased to grant injunction in connection with suit land located in the sim area at moje village Vasna, bearing survey No. 35/12, F.P. 7, 8, against the defendant No. 2 or his agents that they may neither make development nor change conditions of the place nor sell, mortgage, gift, transfer by any means nor create any obstacle in legally occupied land nor get the same done on the basis of the illegal sale transaction of the suit land executed by defendant No.1/1sole partner of Amin Associates, without our consent in favour of defendant No.2 against the provisions of Partnership Act; 3.
Be pleased to declare that as stated in the suit, in connection with the suit land in the sim area at moje village Vasna, bearing survey No. 35/12, sale transaction done by defendant No.1/1 with defendant No.2 without my consent was illegal, ultra vires and to deprive me of my right and the defendant No.2 Partnership Firm does not get any rights on the basis of such illegal transaction; 4. Be pleased to grant permanent injunction against the defendant No.2 that he shall neither transfer the suit land to any other person nor create any rights thereof nor get the same done on the basis of sale transaction done by defendant No.1/1 in favour of the defendant No.2, in connection with suit land in sim area of moje village Vasna, bearing survey No.35/12 as the said transaction was against my consent; 5. Be pleased to direct to call for the books of the accounts in connection with whatever development has been done in the entire properties of the defendant No.1/1 to 1/5 including the land bearing survey No.333 at Vasna and survey/block No.623, 1317/A, 1357, 1786, etc. at moje Bhaili,, and to award me my share from it.” Thus, considering the reliefs sought in para 11(1) to 11(4), the main/most of the reliefs are sought against the defendant No.2 who admittedly is neither a party to the arbitration agreement nor a party to the partnership deed containing the arbitration agreement. Only the reliefs sought in para 11(5) to 11(6) can be said to be the dispute between the partners who are party to the arbitration agreement and partnership deed. Thus, the reliefs sought in the suit can be bifurcated between two parties. One between the parties who are parties to the arbitration agreement and other reliefs between the parties who are not party to the arbitration agreement. Therefore, after following the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra), the learned Judge, Commercial Court has rejected section 8 application and has refused to refer the dispute/matter to the arbitration. In the case of Sukanya Hoardings Pvt. Ltd. (Supra), in para 16 and 17, the Hon’ble Supreme Court has observed and held as under: “16.
In the case of Sukanya Hoardings Pvt. Ltd. (Supra), in para 16 and 17, the Hon’ble Supreme Court has observed and held as under: “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 laying 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 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.
17. Secondly, such bifurcation of suit in two parts, one to be decided by the arbitral tribunal and 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.” 6.2 It is the case on behalf of the petitioners that in view of the subsequent decision of the Hon’ble Supreme Court in the case of M/s. Sundaram Finance Limited (Supra) in which the Hon’ble Supreme Court did consider its earlier decision in the case of Sukanya Hoardings Pvt. Ltd. (Supra) and therefore, in view of the observations made by the Hon’ble Supreme Court in para 15 in the case of M/s. Sundaram Finance Limited (Supra), the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra) is no longer a good law is concerned, on considering the entire decision of the Hon’ble Supreme Court in the case of M/s. Sundaram Finance Limited (Supra) and the controversy/issue involved in the said case, we are of the opinion that the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra) is neither overruled nor a contrary decision is taken than the decision in the case of Sukanya Hoardings Pvt. Ltd. (Supra). Learned Counsel appearing on behalf of the petitioners has heavily relied upon the observations made by the Hon’ble Supreme Court in para 15 in the case of M/s. Sundaram Finance Limited (Supra). However, it cannot be disputed that any observations in a decision are required to be considered in light of the controversy/issue involved in the case. It is required to be noted that in the case of M/s. Sundaram Finance Limited (Supra), it appears that before the Hon’ble Supreme Court the dispute was between two parties to the arbitration agreement. In a suit for injunction the prayer was made to restrain the defendant Institutions and their men from illegally taking away from the possession of the plaintiff or her employee, or interfering with the use and enjoyment of ambassador or causing damage to the car in ownership and possession of the plaintiff by way of decree of injunction.
In a suit for injunction the prayer was made to restrain the defendant Institutions and their men from illegally taking away from the possession of the plaintiff or her employee, or interfering with the use and enjoyment of ambassador or causing damage to the car in ownership and possession of the plaintiff by way of decree of injunction. The car was purchased on loan granted by the appellant. Duly complying with the procedure under section 8 of the Arbitration Act, the appellant before the Hon’ble Supreme Court filed an application bringing to the notice of the trial Court that in view of the agreement for arbitration between the parties regarding resolution of the disputes, the Court would not have jurisdiction to try the case and the parties were to be directed to the process of arbitration in terms of the agreement. The trial Court declined the relief holding that even though clause 22 of the Ext.A1 agreement provides that disputes should be referred to arbitration, this will not prevent the plaintiff from approaching this court especially when one of the parties to the agreement are trying to commit an act opposed to public policy and per se illegal; the arbitration clause in the agreement cannot be put forward as a shield when one of the parties to the agreement commit an act opposed to public policy; in such circumstances the plaintiff can seek protection under the common civil law; In this matter what the respondent alleged that the petitioners are trying to take forcible possession of the vehicle which is being run by her, relief sought for in the plaint is only against the illegal acts of the defendants; the apprehended acts of the plaintiff are against the public policy and per se illegal and hence the suit is maintainable. The applicant before the trial Court who submitted application under Section 8 approached the High Court. High Court confirmed the order passed by the learned trial Court rejecting section 8 application by observing and holding as under: “....Going by Section 8 of the Arbitration and Conciliation Act, I am of the opinion that mere inclusion of an arbitration clause in the agreement does not bar or cause to oust the jurisdiction of the civil court provided under Section 9 of the Code of Civil Procedure.
The above view is further supported by Section 5 of the Arbitration and Conciliation Act, which says that "in the matters governed by first part of the Arbitration and Conciliation Act, no judicial authority shall intervene except where so provided in the first part". It means that jurisdiction of the Civil Court is not completely ousted by Section 8 of the Arbitration and Conciliation Act. Section 5 of the Arbitration and Conciliation Act does not bar the exercise of general power of the civil court to grant interim relief including specific injunctive relief under Order XXXIX of the CPC and the Specific Relief Act." Against the aforesaid order passed by the High Court, one of the party to the arbitration agreement who submitted section 8 application approached the Hon’ble Supreme Court and after considering various decisions of the Hon’ble Supreme Court on the point more particularly in the case of P. Anand Gajapathi Raju and others v. P.V.G. Raju (Dead) and others reported in (2000) 4 SCC 539 ; Hindustan Petroleum Corporation Limited v. Pinkcity Midway Petroleums reported in (2003) 6 SCC 503 ; Branch Manager, Magma Leasing and Finance Limited and another v. Potluri Madhvilata and another reported in (2009) 10 SCC 103 and Orix Auto Finance (India) Limited v. Jagmander Singh and another reported in (2006) 2 SCC 598 , thereafter the Hon’ble Supreme Court has made the observations in para 15, which has been relied upon by the learned Counsel appearing on behalf of the petitioners, which reads as under: “15. Once an application in due compliance of Section 8 of the Arbitration Act is filed, the approach of the civil court should be not to see whether the court has jurisdiction. It should be to see whether its jurisdiction has been ousted. There is a lot of difference between the two approaches. Once it is brought to the notice of the court that its jurisdiction has been taken away in terms of the procedure prescribed under a special statue, the civil court should first see whether there is ouster of jurisdiction in terms or compliance of the procedure under the special statute. The general law should yield to the special law generalia specialibus non derogant. In such a situation, the approach shall not be to see whether there is still jurisdiction in the civil court under the general law.
The general law should yield to the special law generalia specialibus non derogant. In such a situation, the approach shall not be to see whether there is still jurisdiction in the civil court under the general law. Such approaches would only delay the resolution of disputes and complicate the redressal of grievance and of course unnecessarily increase the pendency in the court.” 6.3 It is true that in the said decision the Hon’ble Supreme Court did refer to paras 16 and 17 of the decision in the case of Sukanya Hoardings Pvt. Ltd. (Supra). However, as such the Hon’ble Supreme Court did not thereafter made any observations contrary to the observations made by the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra) made in paras 16 and 17 referred to hereinabove. Therefore, as such before the Hon’ble Supreme Court in the case of M/s. Sundaram Finance Limited (Supra), the Hon’ble Supreme Court had no occasion to consider the case/situation where one of the party to the suit is party to the arbitration agreement and the other defendants/parties are not party to the arbitration agreement. Therefore, the submission on behalf of the petitioners that in view of the subsequent decision of the Hon’ble Supreme Court in the case of M/s. Sundaram Finance Limited (Supra) in which the Hon’ble Supreme Court had an occasion to consider the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra), is no longer a good law, cannot be accepted. Therefore, as such the decision of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra) still holds the field. The same shall be applicable with full force to the facts of the case on hand. 6.4 In the case of S.N. Prasad, Hitek Industries (Bihar) Limited vs. Monnet Finance Limited and Others reported in (2011) 1 SCC 320 , the Hon’ble Supreme Court has specifically observed and held that there can be reference to arbitration only if there is an arbitration agreement between the parties. It is further observed and held that if there is a dispute between the parties to arbitration agreement with other parties not parties to arbitration agreement as also nonparties to the arbitration agreement, reference to arbitration or appointment of Arbitrator can only be with respect to the parties to the arbitration agreement and not the nonparties.
It is further observed and held that if there is a dispute between the parties to arbitration agreement with other parties not parties to arbitration agreement as also nonparties to the arbitration agreement, reference to arbitration or appointment of Arbitrator can only be with respect to the parties to the arbitration agreement and not the nonparties. 6.5 Now, so far as the reliance placed upon the decision of the Hon’ble Supreme Court in the case of Chloro Controls India (P) Ltd. (Supra) relied upon by the learned Counsel appearing on behalf of the petitioners that as held by the Hon’ble Supreme Court in the said decision even if one of the party to the suit is not a party to the arbitration agreement, still the dispute can be referred to the Arbitrator is concerned, considering the entire decision we are of the opinion that the said decision shall not be applicable to the facts of the case on hand. In the case before the Hon’ble Supreme Court it was a case of composite transactions and multiple agreements. It is also required to be noted that the Hon’ble Supreme Court was dealing with a case relatable to Part II of the Arbitration Act, 1996. At this stage it is required to be noted that before the Hon’ble Supreme Court in the case of Chloro Controls India (P) Ltd. (Supra), the correctness of the judgment of the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra) was doubted and in fact one of the question framed by the Hon’ble Supreme Court was whether the principles enunciated in the case of Sukanya Hoardings Pvt. Ltd. (Supra) is the correct exposition of law? However, considering the fact that before the Hon’ble Supreme Court the dispute was relatable to Part II of the Arbitration Act, 1996 i.e. section 45 of the Arbitration Act and in the case of Sukanya Hoardings Pvt. Ltd. (Supra), the case was arising under section 8, Part I of the Arbitration Act, 1996, the Hon’ble Supreme Court observed that it is not necessary to examine correctness or otherwise of the judgment in the case of Sukanya Hoardings Pvt. Ltd. (Supra). In para 133 the Hon’ble Supreme Court has observed and held as under: “133.
In para 133 the Hon’ble Supreme Court has observed and held as under: “133. The ambit and scope of Section 45 of the 1996 Act, we shall be discussing shortly but at this stage itself, we would make it clear that it is not necessary for us to examine the correctness or otherwise of the judgment in the case of Sukanya (supra). This we say for varied reasons. Firstly, Sukanya was a judgment of this Court in a case arising under Section 8 Part I of the 1996 Act while the present case relates to Section 45 Part II of the Act. As such that case may have no application to the present case. Secondly, in that case the Court was concerned with the disputes of a partnership concern. A suit had been filed for dissolution of partnership firm and accounts also challenging the conveyance deed executed by the partnership firm in favour of one of the parties to the suit. The Court noticing the facts of the case emphasized that where the subject matter of the suit includes subject matter for arbitration agreement as well as other disputes, the Court did not refer the matter to arbitration in terms of Section 8 of the Act. In the case in hand, there is a mother agreement and there are other ancillary agreements to the mother agreement. It is a case of composite transaction between the same parties or the parties claiming through or under them falling under Section 45 of the Act. Thus, the dictum stated in para 13 of the judgment of Sukanya would not apply to the present case. Thirdly, on facts, the judgment in Sukanya’s case, has no application to the case in hand.” Therefore, the decision of the Hon’ble Supreme Court in the case of Chloro Controls India (P) Ltd. (Supra) shall not be applicable to the facts of the case on hand and it cannot be said that the Hon’ble Supreme Court in the said decision had taken any contrary view to that in the case of Sukanya Hoardings Pvt. Ltd. (Supra).
6.6 Now, so far as the reliance placed upon the decision of the Hon’ble Supreme Court in the case of Ananthesh Bhakta Represented by Mother Usha A. Bhakta and Others (Supra) (Paras 32 and 33), which has been relied upon by the learned Counsel appearing on behalf of the petitioners in support of her submission that even if one of the party to the suit is not a party to the arbitration agreement, the dispute can still be referred to Arbitrator/Arbitration is concerned, on considering the said decision of the Hon’ble Supreme Court, we are of the opinion that the said decision also shall not be applicable to the facts of the case on hand. Before the Hon’ble Supreme Court on facts it was held that there was no question of bifurcation of either cause of action or parties, if the same is to be referred to the arbitration as per the arbitration clause formed in the retirement deed and the partnership deed. Therefore, on facts the said decision shall not be applicable to the facts of the case on hand. 6.7 Now, so far as the submission on behalf of the plaintiff that as there is an allegation of fraud and therefore, the dispute may not be referred for arbitration is concerned, considering the averments in the plaint, except the bare averments that the original defendant Nos.1 and 2 have committed the fraud, there are no further allegations/pleadings. As observed by the Division Bench of this Court in the case of Ullasbhai Parsottambhai (Legal heirs of decd.) (Supra) in order to make out a case of fraud or coercion all the material facts in support of such allegations must be laid out in full and with a high degree or precision. In the aforesaid decision in paras 76 & 77, it is observed and held as under: “76. It is a plain and basic rule of pleadings that in order to make out a case of fraud or coercion there must be (a) an express allegation or fruad, and (b) all the material facts in support of such allegations must be laid out in full and with a high degree of precision. In other words, if coercion or fraud is alleged, it must be set out with full particulars. (See Shanti Budhiya Vesta Patel v. Nirmala Jayprakash Tiwari, reported in 2010(5) SCC 104 ) 77.
In other words, if coercion or fraud is alleged, it must be set out with full particulars. (See Shanti Budhiya Vesta Patel v. Nirmala Jayprakash Tiwari, reported in 2010(5) SCC 104 ) 77. In Bishundeo Narain v. Seogeni Rai, reported in AIR 1951 SC 280 , it was held thus: “24. We turn next to the questions of undue influence and coercion. Now, it is to be observed that these have not been separately pleaded. It is true they may overlap in part in some cases but they are separate and separable categories in law and must be separately pleaded. 25. It is also to be observed that no proper particulars have been furnished. Now, if there is one rule which is better established thany any other, it is that in cases of fraud, undue influence and coercion, the parties pleading it must set forth full particulars and the case can only be decided on the particulars as laid. There can be no departure from them in evidence. General allegations are insufficient even to amount to an averment of fraud of which any Court ought to take notice, however, strong the language in which they are couched may be, and the same applies to undue influence and coercion. (See Order 6, Rule 4 of the Code of Civil Procedure)” 6.8 In the case of Mohanbhai Maganbhai Patel (Supra), the Division Bench of this Court has observed and held that particulars about alleged fraud must be stated in the pleadings. It is further observed that pleading has to claim a statement in a concise form of material facts on which the party relies for his claim or defence. 6.9 At this stage the decision of the Hon’ble Supreme Court in the case of A. Ayyasamy (Supra) is also required to be referred to. In the aforesaid decision the Hon’ble Supreme Court has observed and held that only those cases where there are serious allegations of fraud, they are to be treated as nonarbitrable and it is only the civil court which should decide such matters. However, where there are allegations of fraud simpliciter and such allegations are merely alleged, it may not be necessary to nullify the effect of the arbitration agreement between the parties as such issues can be determined by the Arbitral Tribunal.
However, where there are allegations of fraud simpliciter and such allegations are merely alleged, it may not be necessary to nullify the effect of the arbitration agreement between the parties as such issues can be determined by the Arbitral Tribunal. In paras 13, 18 and 20, the Hon’ble Supreme Court has observed and held as under: “13. When the case involves serious allegations of fraud, the dicta contained in the aforesaid judgments would be understandable. However, at the same time, mere allegation of fraud in the pleadings by one party against the other cannot be a ground to hold that the matter is incapable of settlement by arbitration and should be decided by the civil court. The allegations of fraud should be such that not only these allegations are serious that in normal course these may even constitute criminal offence, they are also complex in nature and the decision on these issues demand extensive evidence for which civil court should appear to be more appropriate forum than the Arbitral Tribunal. Otherwise, it may become a convenient mode of avoiding the process of arbitration by simply using the device of making allegations of fraud and pleading that issue of fraud needs to be decided by the civil court. The judgment in N. Radhakrishnan does not touch upon this aspect and said decision is rendered after finding that allegations of fraud were of serious nature. 18. A perusal of the aforesaid two paragraphs brings into fore that the Law Commission has recognized that in cases of serious fraud, courts have entertained civil suits. Secondly, it has tried to make a distinction in cases where there are allegations of serious fraud and fraud simplicitor. It, thus, follows that those cases where there are serious allegations of fraud, they are to be treated as nonarbitrable and it is only the civil court which should decide such matters. However, where there are allegations of fraud simplicitor and such allegations are merely alleged, we are of the opinion it may not be necessary to nullify the effect of the arbitration agreement between the parties as such issues can be determined by the Arbitral Tribunal. 20. In view of our aforesaid discussions, we are of the opinion that mere allegation of fraud simplicitor may not be a ground to nullify the effect of arbitration agreement between the parties.
20. In view of our aforesaid discussions, we are of the opinion that mere allegation of fraud simplicitor may not be a ground to nullify the effect of arbitration agreement between the parties. It is only in those cases where the Court, while dealing with Section 8 of the Act, finds that there are very serious allegations of fraud which make a virtual case of criminal offence or where allegations of fraud are so complicated that it becomes absolutely essential that such complex issues can be decided only by civil court on the appreciation of the voluminous evidence that needs to be produced, the Court can sidetrack the agreement by dismissing application under Section 8 and proceed with the suit on merits. It can be so done also in those cases where there are serious allegations of forgery/fabrication of documents in support of the plea of fraud or where fraud is alleged against the arbitration provision itself or is of such a nature that permeates the entire contract, including the agreement to arbitrate, meaning thereby in those cases where fraud goes to the validity of the contract itself of the entire contract which contains the arbitration clause or the validity of the arbitration clause itself. Reverse position thereof would be that where there are simple allegations of fraud touching upon the internal affairs of the party inter se and it has no implication in the public domain, the arbitration clause need not be avoided and the parties can be relegated to arbitration. While dealing with such an issue in an application under Section 8 of the Act, the focus of the Court has to be on the question as to whether jurisdiction of the Court has been ousted instead of focusing on the issue as to whether the Court has jurisdiction or not. It has to be kept in mind that insofar as the statutory scheme of the Act is concerned, it does not specifically exclude any category of cases as nonarbitrable. Such categories of nonarbitrable subjects are carved out by the Courts, keeping in implication in the public domain, the arbitration clause need not be avoided and the parties can be relegated to arbitration.
Such categories of nonarbitrable subjects are carved out by the Courts, keeping in implication in the public domain, the arbitration clause need not be avoided and the parties can be relegated to arbitration. While dealing with such an issue in an application under Section 8 of the Act, the focus of the Court has to be on the question as to whether jurisdiction of the Court has been ousted instead of focusing on the issue as to whether the Court has jurisdiction or not. It has to be kept in mind that insofar as the statutory scheme of the Act is concerned, it does not specifically exclude any category of cases as nonarbitrable. Such categories of nonarbitrable subjects are carved out by the Courts, keeping in into the allegations of fraud is needed and only when the Court is satisfied that the allegations are of serious and complicated nature that it would be more appropriate for the Court to deal with the subject matter rather than relegating the parties to arbitration, then alone such an application under Section 8 should be rejected.” Considering the aforesaid decisions of the Hon’ble Supreme Court as well as this Court, the submission on behalf of the plaintiff that as there are allegations of fraud and therefore, the matter/dispute may not be referred to arbitration is concerned, the same is required to be rejected. 6.10 Considering the aforesaid facts and circumstances and more particularly reliefs sought/prayed in the suit which as such are against nonparty to the arbitration agreement also, it will not be proper to bifurcate the dispute between the parties to the arbitration agreement and nonparties to the arbitration agreement i.e. between the original plaintiff and defendant No.1 on one side and between the original plaintiff and defendant No.2 on the other. Under the circumstances and applying the law laid down by the Hon’ble Supreme Court in the case of Sukanya Hoardings Pvt. Ltd. (Supra), we are of the opinion that the learned Judge, Commercial Court has not committed any error in rejecting section 8 application and not referring the dispute/parties to the suit for arbitration. 7. In view of the above and for the reasons stated above, present Special Civil Application fails and the same deserves to be dismissed and is, accordingly, dismissed. Notice is discharged. Adinterim relief granted earlier stands vacated forthwith. Notice discharged.