Associated Business Corporation v. State of Gujarat
2024-01-18
DEVAN M.DESAI
body2024
DigiLaw.ai
ORDER : 1. Heard learned advocate Mr. Harsh V. Gajjar for the petitioner and learned Assistant Government Pleader Mr. Aditya D. Davda for the respondent-State. 2. Upon joint request and consent of learned advocates for the respective parties, this matter is taken up for final hearing. 3. By way of this petition under Articles 226 and 227 of the Constitution of India, the present petitioner has prayed for the following reliefs :- “A. By issuing a writ of certiorari or any other appropriate writ, order and / or direction, Your Lordships may be pleased to quash and set aside the impugned order dated 12.02.2021 passed below Exhibit 1 and A in Regular Civil Suit No. 2346/2015 (Old Special Civil Suit No. 144/1992) by the Learned Principal Senior Civil Judge, Vadodara (At Annexure-A) and further direct the Learned Trial Court to decide the Regular Civil Suit No. 2346/2015 on its own merits within time bound manner. B. Pending admission, hearing and final disposal of the present petition, Your Lordships may be pleased to stay the execution, implementation and operation of the impugned order dated 12.02.2021 passed below Exhibit 1 and A in Regular Civil Suit No. 2346/2015 (Old Special Civil Suit No. 144/1992) by the Learned Principal Senior Civil Judge, Vadodara. C. An ex-parte ad interim relief may be granted in terms of paragraph B as above. D. xxx...” 4. The learned advocate for the petitioner has submitted that the present petitioner had filed Regular Civil Suit No.2346 of 2015 (Old Special Civil Suit No.144 of 1992) before the learned Principal Senior Civil Judge, Vadodara for recovery of amount. It is submitted that the defendant-State appeared and filed an application below Exhibit-7 under Section 34 of the Arbitration Act, 1940 and prayed for the stay of the proceedings. Thereafter, the suit was proceeded and issues were framed. Evidences of both the parties were recorded and arguments of both the sides were placed before the learned trial Court and the suit was kept for pronouncement of judgment. At this stage, instead of pronouncing the judgment, the learned Principal Senior Judge took a suo motu call and passed an order dated 12.02.2021 relegating the parties to the arbitration proceedings. Against which, the present petitioner is before this Court. 5.
At this stage, instead of pronouncing the judgment, the learned Principal Senior Judge took a suo motu call and passed an order dated 12.02.2021 relegating the parties to the arbitration proceedings. Against which, the present petitioner is before this Court. 5. It is submitted by the learned advocate for the petitioner that upon service of summons of the suit, defendant-State appeared and moved an application below Exhibit-7 under Section 34 of the Arbitration Act, 1940 and prayed for the stay of the suit. However, the said application was not pursued by the defendant and instead of that, defendant participated in the suit proceedings and filed Written Statement. 6. On the basis of pleadings, issues came to be framed vide Exhibit-22 on 17.04.2018 and the oral evidence of parties was led and concluded in the year 2019. Written submissions were submitted on 05.12.2019 vide Exhibit-74 and thereafter, the matter was kept for pronouncement of judgment. It is further submitted that the petitioner is a senior citizen and aged about 87 years of age. After waiting for almost more than 25 years, the learned trial Court relegated the parties to the arbitration proceedings. It is submitted that the order itself is illegal as the learned trial Court ignored the provisions of Section 34 and law laid down in the catena of decisions whereby, the law is settled that once the defendant had participated in the proceedings, Court shall decide the controversy rather than relegating the parties to the arbitration. It is further submitted that the learned Civil Court has no jurisdiction to suo motu exercise the powers under Section 8 of the Arbitration and Conciliation Act, 1996. It is further submitted that for the similar works contract, the original-plaintiff had filed Regular Civil Suit No.2345 of 2015 (Old Special Civil Suit No.575 of 1991), wherein the suit of the present plaintiff was decreed on 21.04.2018 and the decree has been satisfied by the respondent herein. 7. In support of his submission, the learned advocate for the petitioner has placed reliance upon Section 34 of the Arbitration Act, 1940, which is as under:- “Power to stay legal proceedings where there is an arbitration agreement.
7. In support of his submission, the learned advocate for the petitioner has placed reliance upon Section 34 of the Arbitration Act, 1940, which is as under:- “Power to stay legal proceedings where there is an arbitration agreement. - Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him, in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings ; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings.” 8. In support of his submission, learned advocate for the petitioner has further relied upon the following decisions; 1. Babulal Prabhudas Modi Versus Narayanbhai Prabhudas Modi reported in 1996 (1) GLR 794 . 2. Vishal Retail Ltd. & Anr. Versus Achhar Singh Bhumer & Ors. reported in 2011 AIR (Orissa) 159. 3. Kishandas Parsram Ahuja and another Versus Bhagchand Dwardadas Nagdev and others reported in 1991 SCC Online Mp 113 : AIR 1991 MP 309 . 4. Rachappa Gurudappa Bijapur Versus Gurudiddappa Nurandappa and Others reported in (1989) 3 SCC 245 . 9. Per contra, learned AGP has vehemently submitted that the impugned order does not require any interference and has mainly placed reliance upon affidavit-in-reply filed by the respondent. It is further submitted that Section 8(1) of the Arbitration and Conciliation Act, 1996 is a mandatory provision and wherever in the agreement, arbitration clause exist the jurisdiction of the Civil Court is ousted. It is further submitted that the submission of participation in the Civil Suit has no application since there was a valid clause of arbitration in the works contract. There is no dispute raised by the plaintiff that there is no arbitral dispute between the parties.
It is further submitted that the submission of participation in the Civil Suit has no application since there was a valid clause of arbitration in the works contract. There is no dispute raised by the plaintiff that there is no arbitral dispute between the parties. It is further submitted that over and above, the aforesaid provision of Section 8(1) of the Act, the suit is itself barred under the provisions of Gujarat Public Works Contracts Disputes Arbitration Tribunal Act, 1992. It is further submitted that since the jurisdiction of the Civil Court is ousted under the said Act, the impugned order is in consonance with provisions of law and only the arbitral tribunal will have the jurisdiction to try and decide the dispute. Learned advocate for the respondent has relied upon Section 8(1) of the Arbitration and Conciliation Act, 1996, which is as under:- “Power to refer parties to arbitration where there is an agreement.¹[(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.” 10. Thus, the core submission of the learned AGP is that Section 8(1) is applicable and the learned trial Court had jurisdiction to relegate the parties to the arbitration. Learned AGP has placed reliance upon the decisions of Hindustan Petroleum Corpn. LTD. Versus Pinkcity Midway Petroleum reported in (2003) 6 SCC 503 and decision of P. Anand Gajapathi Raju and Others Versus P. V. G. Raju (DEAD) and Others reported in (2000) 4 SCC 539 . Learned AGP has also placed reliance upon the decisions of R.M. Dasa Versus The Gujarat Water Supply and Sewerage Board and Ors. reported in AIR 2009 Guj 130 , 2009 (3) ARBLR 646 (Gujarat) and State of Gujarat & ANR. Versus Ajay S. Patel, Engineers, Contractors and Consultant passed in First Appeal No.413 of 2000. 11.
Learned AGP has also placed reliance upon the decisions of R.M. Dasa Versus The Gujarat Water Supply and Sewerage Board and Ors. reported in AIR 2009 Guj 130 , 2009 (3) ARBLR 646 (Gujarat) and State of Gujarat & ANR. Versus Ajay S. Patel, Engineers, Contractors and Consultant passed in First Appeal No.413 of 2000. 11. The limited issue before this Court is whether in the background of facts of the present case, whether the respondent-original defendant has participated in the proceedings and whether can it be said that the respondent has waived their right to refer the matter to the arbitration? The suit agreement is governed, Section 34 of the Arbitration Act, 1940 has the application. The application by respondent was also under Section 34 of the Arbitration Act, 1940. Thus, the parties were governed under the Old Act of 1940. For the reasons best known to the respondent, application was not pursued and instead of pursuing the application, defendant filed Written Statement and thereafter cross-examined the plaintiff on merits. Defendant also led evidence. These facts would be culled out from the record of the case. Thus, the respondent has not only participated in the proceedings but also duly and effectively participated in the proceedings. 12. This Court is of the view that in a Regular Civil Suit 2345 of 2015 (Old Special Civil Suit No.575 of 1991), the dispute was arising out of the similar type of works contract, wherein the arbitration clause was in existance. However, despite the question of jurisdiction of the Civil Court, defendant-State participated in the suit and the said suit was partly allowed and said decree came to be satisfied by the defendant-State. In the present case, the stage of the suit is at the pronouncement of the judgment and considering the stage of the suit, it would not be proper to relegate the parties to the arbitration, more particularly, the plaintiff has waited for almost 25 years and after such a long time, if the parties are relegated to the arbitral tribunal again, the entire exercise of the proceedings of arbitration is to be undergone. Thus, in all fairness, I am of the view that the order dated 12.02.2021 is required to be quashed and set aside. 13.
Thus, in all fairness, I am of the view that the order dated 12.02.2021 is required to be quashed and set aside. 13. In the totality of the facts, the order dated 12.02.2021 was passed by the learned Principal Senior Civil Judge, Vadodara in Regular Civil Suit No. 2346/2015 (Old Special Civil Suit No.144 of 1992) below Exhibits 1 and A are quashed and set aside and the learned Principal Senior Civil Judge, Vadodara is directed to conclude the final arguments and shall pronounce the judgment within a period of two months from the receipt of this order. 14. In view of above, present petition is allowed. Notice is discharged. 15. It is needless to mentioned that while deciding the suit, the learned trial Court shall not be influenced by the observations made hereinabove.