JUDGMENT P.K. Lohra, J. By the instant appeal, under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, 'Act'), appellant has assailed order dated 23rd of August, 2018, passed Addl. District Judge No.2, Jodhpur Metropolitan, Jodhpur (for short 'learned Court below'). Learned Court below, by the order impugned, has rejected application of the appellant-defendant under Section 8(1) of the Act in a summary suit filed by respondent-plaintiff under Section 37 CPC for recovery of a sum of Rs.37,71,943. 2. Scorning the checkered history of the case, suffice it to state that respondent-plaintiff instituted a civil suit under Order 37 CPC against appellant before the learned Court below, inter-alia, on the ground that it is a proprietorship firm manufacturing quicklime and there were business transactions between plaintiff-firm and appellant-company since 2013. Further, elaborating the averments in this behalf, it is averred in the plaint that in the interregnum period from 25th of September 2013 to 12th of June 2014 petitioner company purchased quicklime worth Rs.58,37,204 including freight charges. The details of quicklime purchased by petitioner company from time to time is also mentioned in the plaint. The respondent-firm has also pleaded that out of the total amount aforementioned, appellant-company has paid Rs.16,21,558 through NEFT/RTGS/Cheque and the last payment of Rs.50,000 was vide Cheque No.001392 on 17th of August, 2016. With these positive assertions, it is asserted in the plaint that as on the day of filing of the suit, Rs.37,71,943 remained outstanding which the respondent-firm is entitled to recover. Details of 'C' forms furnished by the appellant-company and recitals about deduction of debit notes is also given in the plaint. For showing cause of action, respondent-firm has specifically averred that despite various phone calls and e-mails, when the appellant-company did not respond, the firm was left with no option but to institute a summary suit. 3. Upon receipt of summons, on behalf of appellant-company an application under Section 8(1) of the Act was moved before the learned Court below. As per averments in the application, appellant-company has specifically asserted that the purchase orders issued by it from time to time contained agreement with a clause of arbitration, as such, the dispute is arbitrable and can be settled by an Arbitral Tribunal. The recitals of arbitration clause were also produced in the application.
As per averments in the application, appellant-company has specifically asserted that the purchase orders issued by it from time to time contained agreement with a clause of arbitration, as such, the dispute is arbitrable and can be settled by an Arbitral Tribunal. The recitals of arbitration clause were also produced in the application. It is also pleaded in the application that the subject matter of the suit is a dispute covered within the four corners of arbitration agreement and in fact arbitration proceedings have already commenced entailing stay in the suit proceedings. 4. Contesting the application of appellant-company, it was specifically pleaded by respondent-plaintiff in the preliminary objections that pertaining to the transactions neither there was any written agreement, nor the same was signed on behalf of respondent-firm, therefore, the terms of so-called agreement cannot be enforced vis-a-vis respondent-firm. Taking shelter of sub-section (2) of Section 8 of the Act, it is also averred in the reply that the application is not accompanied by original arbitration agreement or a duly certified copy thereof. Besides aforementioned preliminary objections, on merit also respondent contested the application by completely repudiating settlement of dispute through arbitration. That apart, respondent also pleaded in the reply that document dated 31st of May 2013 is not a purchase order but it is simply trial order and furthermore such trial order was never served on the respondent-firm containing the aforementioned conditions. Yet another objection was raised that trial order cannot be construed as an agreement between rival parties and therefore by virtue of Section 7 of the Act, petition under Section 8 is not tenable. Joining issue with the appellant on commencement of arbitral proceedings, it is pleaded by respondent that the appellant has unilaterally appointed its own Manager as sole arbitrator and when notices were received by the respondent-firm, reply was given to terminate the arbitral proceedings but after submission of reply there is no communication from the Arbitrator. With these positive assertions, it is submitted that presumably the arbitral proceedings have been terminated after receipt of reply of the respondent. 5. The learned Court below, after hearing rival parties, by the order impugned, rejected the application of appellant. 6. Mr.
With these positive assertions, it is submitted that presumably the arbitral proceedings have been terminated after receipt of reply of the respondent. 5. The learned Court below, after hearing rival parties, by the order impugned, rejected the application of appellant. 6. Mr. Subhash Chawala, learned counsel for the appellant, has vehemently argued that pertaining to the subject matter of suit, proceedings are pending before arbitral Tribunal and therefore it would not be appropriate to continue the proceedings in summary suit. Elaborating his submission in this behalf, learned counsel would contend that respondent-firm can very well raise objection about competence and jurisdiction of arbitral Tribunal before the Arbitrator under Section 16 of the Act. It is also submitted by Mr. Chawala that, in the backdrop of facts and circumstances of the instant case, signing of arbitral agreement between rival parties was not at all necessary. Learned counsel has further submitted that the procedure adopted by learned Tribunal can be challenged by any party under Section 13 of the Act. In support of his arguments, Mr. Subhash Chawala, learned counsel for the appellant, has placed reliance on following judgments: (1) S.B.P. & Co. Vs. Patel Engineering Ltd. & Ors., (2005) 8 SCC 618 (2) M/s. Caravel Shipping Services Pvt. Ltd. Vs. M/s. Premier Sea Foods Exim Pvt. Ltd, (2018) 14 Scale 743 (3) Ian Exchange (India) Ltd. Vs. MSK Projects (India) Ltd, 2006 (4) BC 463 (4) M/s. Novelty Jewellers Vs. MMTC Ltd. (decided by Delhi High Court on 23.08.2004). 7. Per contra, Mr. Sunil Joshi, learned counsel appearing for the respondent, has vehemently argued that no ground much less substantial ground is available to the appellant to challenge the impugned order. Stoutly defending the impugned order, Mr. Joshi would contend that learned Court below has examined the matter threadbare while non-suiting the appellant on the anvil of embargo envisaged under sub-section (2) of Section 8 of the Act. Learned counsel further submits that Section 7 of the Act envisages with clarity and precision that arbitration agreement shall be in writing and the document is to be signed by the parties. Mr.
Learned counsel further submits that Section 7 of the Act envisages with clarity and precision that arbitration agreement shall be in writing and the document is to be signed by the parties. Mr. Joshi, elaborating his submission in this behalf, has further argued that the so-called arbitration agreement is not specifying the requirements of clause (b) & (c) of sub-section (4) of Section 7 of the Act and, therefore, the learned Court below has rightly turned down prayer of the appellant for staying proceedings in the suit. Learned counsel has further argued that the so-called arbitration agreement is a forged document and total fraud is being practiced by the appellant-company. Romping in Section 29 of the Indian Contract Act, 1972, Mr. Joshi contends that any agreement which is not certain or capable of being certain is void ab-initio. Learned counsel has further submitted that the contention of appellant about commencement of arbitral proceedings is far from truth inasmuch as after receipt of notice from Arbitrator the respondent sent its reply but thereafter respondent has not received any further communication from the Arbitrator. In support of his contentions, Mr. Joshi has placed reliance on following judgment: - A. Ayyasamy Vs. A. Paramasivam & Ors., (2016) 10 SCC 386 . 8. I have bestowed my considerations to the arguments advanced at Bar and perused the impugned order and other materials available on record. 9. A bare reading of Section 8 of the Act makes it abundantly clear that its language is peremptory in nature. Therefore, in cases where there is an arbitration clause in the agreement, it is obligatory for the Court to refer the parties to arbitration in terms of their arbitration agreement. Furthermore, it is also expected of the Court not to decide anything in the original action after such an application is made but for to refer the dispute to an Arbitrator. However, the application under Section 8(1) of the Act can only be entertained when it is accompanied by original arbitration agreement or a duly certified copy thereof. Sub-section (2) of Section 8 makes it abundantly clear that for entertaining an application under sub-section (1) filing of original arbitration agreement or duly certified copy thereof with it is sine qua non. 10.
Sub-section (2) of Section 8 makes it abundantly clear that for entertaining an application under sub-section (1) filing of original arbitration agreement or duly certified copy thereof with it is sine qua non. 10. From a bare perusal of the impugned order, it is crystal clear that the appellant has not produced either original copy of the agreement or its certified copy along with the application under Section 8(1) of the Act. It is also noteworthy that Section 7 defines arbitration agreement. Sub-section (3) of Section 7 postulates that an arbitration agreement shall be in writing and clause (a) of sub-section (4) further mandates that the document is required to be signed by the parties. Besides clause (a) of sub-section (4) of Section 7 of the Act, arbitration agreement can also be construed under certain contingencies by invoking clause (c) of sub-section (4) of Section 7. In order to constitute an arbitration agreement under Section 7(4)(c) of the Act, the basic requirement is statement of claim containing a specific allegation about existence of an arbitration agreement by applicant and non-denial thereof by other party. 11. By relying on Section 7(4)(c) of the Act, Supreme Court, in M/s. Caravel Shipping Services Pvt. Ltd. (supra), made following observations: "In addition, we may indicate that the law in this behalf, in Jugal Kishore Rameshwardas v. Mrs. Goolbai Hormusji, (1955) AIR SC 812, is that an arbitration agreement needs to be in writing though it need not be signed. The fact that the arbitration agreement shall be in writing is continued in the 1996 Act in Section 7(3) thereof. Section 7(4) only further adds that an arbitration agreement would be found in the circumstances mentioned in the three sub-clauses that make up Section 7(4). This does not mean that in all cases an arbitration agreement needs to be signed. The only prerequisite is that it be in writing, as has been pointed out in Section 7(3)." 12. In Patel Engineering Ltd. & Ors. (supra), it was observed by 7 Judge Bench of the Supreme Court that once matter reaches arbitral Tribunal or sole arbitrator, High Court would not interfere with the orders passed by Arbitrator or arbitral Tribunal during the course of arbitration proceedings and parties can approach the Court only in terms of Section Section 37 or in terms of Section 34 of the Act.
That apart, the Court also held: "(ix) In a case where an arbitral tribunal has been constituted by the parties without having recourse to Section 11(6) of the Act, the arbitral tribunal will have the jurisdiction to decide all matters as contemplated by Section 16 of the Act." 13. Likewise, Bombay High Court in Ian Exchange (India) Ltd. (supra) has held that summary procedure provided in Order supra-XVII to certain suits cannot be left out of the purview of Section 8(1) of the Act. Same view is also reiterated by Delhi High Court in M/s. Novelty Jewellers (supra). 14. While concurring with the ratio decidendi of the judgments referred to above, it may be observed here that in the instant case the very existence of arbitration agreement between the rival parties is not forthcoming and same is also not discernible even by invoking Section 7(4)(c) of the Act. Therefore, the observations made by the Supreme Court in M/s. Caravel Shipping Services Pvt. Ltd. (supra) about non-signing of the arbitration agreement by the parties, cannot be read in isolation to the observations made in two preceding paras, which read as under: "Having heard learned counsel for both parties, we are of the view that the Bill of Lading makes it clear that the term "Merchant" (which is defined in the Standard Conditions Governing Multimodal Transport Documents – Clause (1)(e) as meaning shipper, consigner or consignee) expressly agrees to be bound by all the terms, conditions, clauses and exceptions on both sides of the Bill of Lading whether typed, printed or otherwise. The arbitration clause, which is Clause 25 being a printed condition annexed to the Bill of Lading, reads as under: "25. Jurisdiction/Arbitration: The contract evidenced by the Bill of Lading shall be governed by the laws of India, and subject to the exclusive jurisdiction of court in Chennai only. Disputes/difference arising out of this contract and/or connection with the interpretation of any of its clauses shall be settled by arbitration in India in accordance with the Arbitration & Conciliation Act, 1996. The No. of Arbitrators shall be three, the Arbitrators shall be commercial persons the venue for arbitration shall be Chennai." A perusal of the same shows that the respondent has expressly agreed to be bound by the arbitration clause despite the fact that it is a printed condition annexed to the Bill of Lading.
The No. of Arbitrators shall be three, the Arbitrators shall be commercial persons the venue for arbitration shall be Chennai." A perusal of the same shows that the respondent has expressly agreed to be bound by the arbitration clause despite the fact that it is a printed condition annexed to the Bill of Lading. Secondly, it must be remembered that the respondent has itself relied upon the Bill of Lading as part of its cause of action to recover the sum of Rs.26,53,593/- in the suit filed by it. The respondent, therefore, cannot blow hot and cold and argue that for the purpose of its suit, it will rely upon the Bill of Lading (though unsigned) but for the purpose of arbitration, the requirement of the Arbitration Act is that the arbitration clause should be signed." 15. That apart, the learned Court below has also non-suited appellant for non-compliance of mandatory provisions contained under Section 8(2) of the Act. Section 8 of the Act envisages with clarity and precision that for referring parties to arbitration, it is absolutely essential that there should be an agreement between parties. Reliance in this behalf can be placed on a judgment of Supreme Court in case of Atul Singh & Ors. Vs. Sunil Kumar Singh & Ors., (2008) 2 SCC 602 . Moreover, the respondent has set out a case of fraud in order to wriggle out of the arbitration agreement. The case of fraud set out by the respondent is also strengthened due to non-filing of original arbitration agreement or certified copy thereof by the appellant and therefore in this behalf the observations made by Supreme Court in A. Ayyasamy (supra) are also relevant, which read as under: "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 non-arbitrable. Such categories of non-arbitrable subjects are carved out by the Courts, keeping in mind the principle of common law that certain disputes which are of public nature, etc. are not capable of adjudication and settlement by arbitration and for resolution of such disputes, Courts, i.e. public fora, are better suited than a private forum of arbitration. Therefore, the inquiry of the Court, while dealing with an application under Section 8 of the Act, should be on the aforesaid aspect, viz.
are not capable of adjudication and settlement by arbitration and for resolution of such disputes, Courts, i.e. public fora, are better suited than a private forum of arbitration. Therefore, the inquiry of the Court, while dealing with an application under Section 8 of the Act, should be on the aforesaid aspect, viz. whether the nature of dispute is such that it cannot be referred to arbitration, even if there is an arbitration agreement between the parties. When the case of fraud is set up by one of the parties and on that basis that party wants to wriggle out of that arbitration agreement, a strict and meticulous inquiry 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." 16. The learned Court below, in my considered opinion, has examined the matter threadbare while passing the impugned order and recording its finding about non-compliance of Section 8(2) of the Act besides observing that existence of arbitration agreement between the parties itself is neither visible nor traceable in the backdrop of facts and circumstances of the case. Therefore, in my view, impugned order passed by the learned Court below requires no interference in exercise of appellate jurisdiction. 17. Resultantly, the appeal fails and same is hereby rejected.