Limras Lottery Trading & Co. Pvt. Ltd. v. State of Mizoram
2017-06-27
MICHAEL ZOTHANKHUMA
body2017
DigiLaw.ai
JUDGMENT : Michael Zothankhuma, J. Heard Mr. P. Madhavan, learned counsel for the petitioner. Also heard Mr. Samuel Vanlalhriata Chhangte, learned counsel for the State Government. 2. The petitioner by way of this petition under Article 227 of the Contitution of India has made a challenge to the Judgment & Order dated 24.06.2011 passed in Money Suit No. 47/2011 by the Court of Senior Civil Judge, Aizawl on the ground of lack of inherent jurisdiction. 3. The petitioners' case is that the petitioner was the sole distributor of online and paper lottery in the State of Mizoram on the basis of two agreements dated 01.07.2008 (for online lotteries) and 26.05.2009 (for paper lotteries) executed by the petitioner and the State of Mizoram. The petitioner's counsel submits that the respondents filed Money Suit No.47/2011 before the Court of the Senior Civil Judge, Aizawl alleging that the petitioner failed to comply with the provisions of the above agreements and prayed for a decree for payment of Rs. 2,00,39,794/- with interest. 4. The Trial Court thereafter passed ex-parte Judgment & Order and Decree dated 24.06.2011 in Money Suit No. 47/2011, by decreeing that the petitioner was to pay to the respondents, the sum of Rs.2,00,39,794/- with interest @ 12% per annum w.e.f. 15.04.2011, i.e. the date of institution of the suit till final payment. Cost of Rs.21,000/- was also directed to be paid with interest thereon @ 12% per annum from the date of the Judgment & Order till final payment. 5. The petitioner's counsel submits that the Judgment & Order dated 24.06.2011 and decree dated 24.06.2011 passed by the Court of the Senior Civil Judge-II, Aizawl in Money Suit No. 47/2011 should be set aside on the ground that no notice was received by the petitioner and that there is nothing on record to show that there was deemed service of the notice to the petitioner in respect of the said money suit. The petitioner's counsel submits that as the respondents had filed Execution Case No. 82/2013 for execution of the Judgment & Order and Decree dated 24.06.2011 passed in Money Suit No. 47/2011, the petitioners' came to know about the impuged Judgment & Order and Decree dated 24.06.2011. 6.
The petitioner's counsel submits that as the respondents had filed Execution Case No. 82/2013 for execution of the Judgment & Order and Decree dated 24.06.2011 passed in Money Suit No. 47/2011, the petitioners' came to know about the impuged Judgment & Order and Decree dated 24.06.2011. 6. The petitioner's counsel submits that as per the terms of the two agreements made between the parties, the parties are to refer any differences or disputes arising out of the agreements to arbitration. Accordingly, the respondents should have referred the matter to arbitration and not gone to a Civil Court in violation of the terms and conditions of the agreements. He also submits that the question of the petitioner having a liability in favour of the respondents is disputed. The petitioner's counsel thus submits that as there is inherent lack of jurisdiction on the part of the Civil Court to take up the dispute between the parties, the impugned Judgment & Order and Decree should be set aside. 7. The counsel for the respondents on the other hand submits that the petitioners were issued notice with regard to the amount of liability to be paid by them. He also submits that the petitioners had also written letters asking for time to pay their liability. However, the petitioners have not paid their liability till date. The Government Advocate also submits that the agreements made between the parties contains a clause whereby, the parties can approach the Civil Court at Aizawl with regard to any differences or disputes between them arising out of the agreements. The respondent counsel also submits that the respondents tried to recover outstanding dues from the petitioner against the Bank Guarantees submitted by the petitioner. However, in view of the interim order passed by the Supreme Court of Judicature at Madras, the Bank Guarantee could not be encashed. He submits that the above also clearly shows that there was disputes/differences between the parties. However, as the petitioner has also not availed of the arbitration clause, he cannot now claim that the dispute should be decided in an arbitration proceeding when the petitioner himself has waived his right to the same. 8. I have heard the learned counsels for the parties. 9.
However, as the petitioner has also not availed of the arbitration clause, he cannot now claim that the dispute should be decided in an arbitration proceeding when the petitioner himself has waived his right to the same. 8. I have heard the learned counsels for the parties. 9. A perusal of the agreements dated 01.07.2008 executed by the parties regarding "online lotteries" shows at Clause-13 that any differences or disputes arising between the parties and touching upon the agreements shall be referred to arbitration as per the provisions of the Indian Arbitration and Conciliation Act, 1996. Further, the agreement dated 26.05.2009, executed by the parties in respect of "paper lotteries", at Clause-17 states that in case of any differences or disputes arising between the parties, on any matter pertaining to or arising of in the agreement, shall be refer to an arbitrator to be nominated by the parties, whose decision would be final and binding on both the parties. Further, Clause 18(1) of the agreement dated 26.05.2009 states as follows:- 18.1 "(1) For the purpose of any legal case or proceedings relating to any civil or contractual rights and liabilities of the parties to this Agreement and arising out of the performance or otherwise of this Agreement only the Civil Courts at the place of execution of this Agreement shall have the jurisdiction to entertain and adjudicate such dispute, subject to the provision contained in Clause 17 hereinbefore. In cases of such suits, cases or proceedings brought by third parties in Courts outside the State, a part of legal expenses shall be borne by the Sole Distributor in the form of miscellaneous expenses." 10. A reading of Clause-18 of the agreement dated 26.05.2009 shows that the same is subject to Clause-17 of the agreement, which requires the party to go for arbitration in case of any disputes or differences arising out of the agreement in question. 11. In the case of SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., reported in (2011) 14 SCC 66 , the Apex Court has held that when a contract contains an arbitration agreement, it is a collateral term relating to the resolution of disputes, unrelated to the performance of the contract.
11. In the case of SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., reported in (2011) 14 SCC 66 , the Apex Court has held that when a contract contains an arbitration agreement, it is a collateral term relating to the resolution of disputes, unrelated to the performance of the contract. It is as if two contracts-one in regard to the substantive terms of the main contract and the other relating to resolution of disputes-had been rolled into one, for purposes of convenience. An arbitration clause is therefore an agreement independent of the other terms of the contract or the instrument. Resultantly, even if the contract or its performance is terminated or comes to an end on account of repudiation, frustration or breach of contract, the arbitration agreement would survive for the purpose of resolution of disputes arising under or in connection with the contract. 12. In the case of Empire Jute Company Limited and Ors. v. Jute Corporation of India Limited and Anr. reported in 2007 14 SCC 680 , the Apex Court has held that the power of judicial review vested in the superior Courts undoubtedly has wide amplitude but the same should not be exercised when there exists an arbitration clause. 13. Section 2E and 5 of the Arbitration and Conciliation Act, 1996 states as follows:- "[(e) "Court" means- (i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes; (ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of Courts subordinate to that High Court.] 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. 14. A reading of the above two sections would go to show that the Court of the Senior Civil Judge does not have any role to play in matters regarding arbitration. A perusal of section 5 of the Arbitration Act would also go to show that the Court ought to have referred the respondents case for arbitration as the two agreements executed by the parties had been annexed along with the plaint in Money Suit No. 47/2011. 15. In the present case no notice was received by the petitioner and neither has the Trial Court made any observation or finding that notice had been deemed to be served upon the petitioner. Keeping the above in view, the Trial Court should have directed the respondents to go for arbitration proceedings as per the terms and conditions of the agreement mentioned above. A perusal of the order sheet also goes to show that notice was issued to the petitioner only on 18.04.2011. Thereafter, on 18.05.2011, the matter was again fixed on 24.06.2011. On 24.06.2011, the order sheet states as follows: "Since the defendant neither appear nor file W/S till date without knowing reasons, Judgment and Decree is framed and is pronounced in an open Court." 16. Besides the above, a perusal of the original records of Money Suit No. 47/2011 shows that besides the two agreements dated 01.07.2008 and 26.05.2009, which were submitted along with the plaint before the Trial Court, no other document was submitted by the respondents while making their claim for recovery of Rs.2,00,39,794/-. Further, no evidence had been adduced by the Trial Court in Money Suit No. 47/2011. No document also has been exhibited by the Trial Court. The Judgment & Order and Decree dated 24.06.2011 passed by the Court of the Senior Civil Judge is not based on any document or evidence. The decree made by the Trial Court for recovery of Rs.2,00,39,794/- is without any basis and is only speculative in nature. For all the above reasons, the proceedings and findings of the Trial Court are vitiated and improper.
The decree made by the Trial Court for recovery of Rs.2,00,39,794/- is without any basis and is only speculative in nature. For all the above reasons, the proceedings and findings of the Trial Court are vitiated and improper. Further, in view of the law laid down by the Apex Court, quoted above, the Trial Court should not have proceeded with Money Suit No. 47/2011 as it did not have the jurisdiction to do so. 17. In the case of P. Anand Gajapathi Raju and Ors. v. P.V.G Raju and Ors. reported in AIR 2000 SC 1886 , the Apex Court has held that Section 5 brings out the object of the Arbitration and Conciliation Act, 1996, namely, that of encouraging resolution of disputes expeditiously and less expensively and when there is an arbitration agreement, the Courts intervention should be minimal. The Apex Court has also held that as per section 8 of the Arbitration Act, it is obligatory for the Court to refer the parties to arbitration in terms of the arbitration agreement. 18. The Apex Court has held in Harshad Chiman Lal Modi v. DLF Universal Limited and Anr. reported in 2005 7 SCC 791 that an order passed by a Court, having no jurisdiction is a nullity. In the present case, the Trial Court, not having any jurisdiction over the subject matter, the Judgment & Order and Decree passed by the Court of the Senior Civil Judge-II, Aizawl is a nullity. 19. In view of the reasons stated above, the impugned Judgment & Order and Decree dated 24.06.2011 passed in Money Suit No. 47/2011 cannot withstand the scrutiny of law as it has been made without any basis and also because the Civil Court did not have the jurisdiction to try the case. Accordingly, the same is set aside. The parties have to go for arbitration proceedings for settling their disputes/differences. 20. Accordingly, in view of Clause-13 of the agreement dated 01.07.2008 and Clause-17 of the agreement dated 27.05.2009, the parties are directed to refer their difference or disputes, arising out of the above agreements, before the arbitrator to be nominated by the parties. The question of whether the arbitrator should be 1(one) arbitrator or 3(three) arbitrators would be decided by the parties within a period of 1(one) month from the date of receipt of a certified copy of this order.
The question of whether the arbitrator should be 1(one) arbitrator or 3(three) arbitrators would be decided by the parties within a period of 1(one) month from the date of receipt of a certified copy of this order. In the event, the parties cannot agree to only one arbitrator being appointed, the parties shall appoint 1(one) arbitrator each within the said 1(one) month period. The 2(two) arbitrators who are subsequently appointed by each of the parties shall thereafter appoint the third arbitrator within a further period of 1(one) month. The arbitrators shall then decide the difference or disputes between the parties arising out of the agreement mentioned above. 21. Revision Petition is accordingly allowed.