Delhi District Court
M/S Online Micro Services Pvt. Ltd vs Spanco Bpo Services Limited on 2 September, 2014
IN THE COURT OF SH. R.K. GAUBA: DISTRICT & SESSIONS
JUDGE (SOUTH DISTRICT) : SAKET: NEW DELHI
RCA No. 27/13
ID No.: 02406C0228372013
M/s Online Micro Services Pvt. Ltd.
Having its registered office at :
546, Chirag Delhi, New Delhi 110017.
Through its Supervisor
Mr. Shakeel Ahmed ... Appellant
Versus
Spanco BPO Services Limited,
96/97, Neel Tower, Udyog Vihar, PhaseIV,
Gurgaon 122015, (Haryana).
Regd. Office at :
Spanco BPO Services Ltd.
B022, Krishna Bhavan, B. S. Deoshi Marg,
Deonar, Mumbai 400088.
Also at :
8th Floor, Godrej Coliseum,
Soumaiya Hospital Road,
Off Eastern Express Highway,
Sion (E), Mumbai400022. ... Respondent
Instituted on: 27.08.2013
Judgment reserved on: 02.09.2014
Judgment pronounced on: 02.09.2014
RCA No. 27/2013 M/s Online Micro Serv. P. Ltd. Vs. Spanco BPO Serv. Ltd. Page 1 of 9
J U D G M E N T
1. This regular civil appeal seeks to assail the order dated 26.07.2013 passed by Shri Sonu Agnihotri, Additional Senior Civil Judge (South) on the file of civil suit no. 358/2012.
2. Vide the impugned order, the Ld. Civil Judge allowed the application of the respondent herein (defendant before the trial court) under section 8 of Arbitration and Conciliation Act, 1996 and found that the dispute brought by the appellant herein (plaintiff before the trial court) through the aforesaid civil suit was subject matter of an arbitration agreement and, therefore, the suit could not be entertained. The Ld. Civil Judge directed the dispute to be referred to arbitration and drew curtain on the proceedings arising out of the civil suit.
3. On notice, the respondent has appeared to contest the appeal on the basis of trial court record.
4. I have heard Ms. Padmini Gupta, Advocate for the appellant and Shri Sunil Chaudhary, Advocate for the respondent. I have called for the record of the trial court and perused the same with the assistance of counsel on both sides.
5. The civil suit was preferred by the appellant on 17.09.2012 RCA No. 27/2013 M/s Online Micro Serv. P. Ltd. Vs. Spanco BPO Serv. Ltd. Page 2 of 9 seeking a decree for recovery of Rs. 1,86,546. 30 only along with pedente lite and future interest. The suit was contested by the respondent through written statement filed on 06.12.2012, to which a replication was also submitted by the appellant on 23.01.2013. Besides putting up contest through the written statement, the respondent also moved an application under section 8 of Arbitration and Conciliation Act, 1996 contending that the dispute was subject matter of an arbitration agreement existing between the parties. It is the said application which was considered by the Civil Judge and allowed through the impugned order.
6. A perusal of the impugned order, the pleadings of the parties and the documents submitted would indicate that the socalled arbitration agreement to which the respondent referred in above context is stated to be part of the terms and conditions which were agreed upon by both sides for the transactions from which the cause of action is claimed to have arisen. The clause in particular is indicated as item no. 17 in the said terms and conditions (the document being presently at page 127 of the trial court record). It reads as under : RCA No. 27/2013 M/s Online Micro Serv. P. Ltd. Vs. Spanco BPO Serv. Ltd. Page 3 of 9 "17. Arbitration: To the best of their ability the parties hereto shall try and endeavour to settle and clarify all disputes arising in connection with the order by discussions and with the intention to resolve the matter amicably."
7. The Ld. Civil Judge considered the submissions on both sides and found that the above quoted clause indeed constitutes an arbitration agreement within the meaning of the expression used in the Arbitration and Conciliation Act, 1996 and consequently concluded the proceedings before him with order as indicated above.
8. On being asked to justify his stand about the above clause being construed as an arbitration agreement, the counsel for the respondent in appeal fairly conceded that the submissions before the trial court were not correct and that the clause, as worded, cannot be treated or construed as an arbitration agreement in the face of provision contained in Section 7 (1) & (2) of the Arbitration and Conciliation Act, 1996 which reads as under : "7. Arbitration agreement.(1) In this part, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain RCA No. 27/2013 M/s Online Micro Serv. P. Ltd. Vs. Spanco BPO Serv. Ltd. Page 4 of 9 disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement."
9. The well settled principals on the question as to what constitutes arbitration agreement have been commented upon by Hon'ble Supreme Court of India in the case of Jagdish Chander Vs. Ramesh Chander, (2007) 5 SCC 719 as under :
(i) The intention of the parties to enter into an arbitration agreement shall have to be gathered from the terms of the agreement. If the terms of the agreement clearly indicate an intention on the part of the parties to the agreement to refer their disputes to a private tribunal for adjudication and an willingness to be bound by the decision of such tribunal on such disputes, it is arbitration agreement. While there is no specific form of an arbitration agreement, the words used should disclose a determination and obligation to go to the arbitration and not merely contemplate the possibility of going for arbitration. Where there is merely a possibility of the parties agreeing to arbitration in future, as contrasted from an obligation to refer disputes to arbitration, there is RCA No. 27/2013 M/s Online Micro Serv. P. Ltd. Vs. Spanco BPO Serv. Ltd. Page 5 of 9 no valid and binding arbitration agreement.
(ii) Even if the words 'arbitration' and 'arbitral tribunal (or arbitrator)' are not used with reference to the process of settlement or with reference to the private tribunal which has to adjudicate upon the disputes, in a clause relating to settlement of disputes, it does not detract from the clause being an arbitration agreement if it has the attributes or elements of an arbitration agreement. They are: (a) The agreement should be in writing, (b) The parties should have agreed to refer any disputes (present or future) between them to the decision of a private tribunal, (c) The private tribunal should be empowered to adjudicate upon the disputes in an impartial manner, giving due opportunity to parties to put forth their case before it. (d) The parties should have agreed that the decision of the Private Tribunal in respect of the disputes will be binding on them.
(iii) Where the clause provides that in the event of disputes arising between the parties, the disputes shall be referred to Arbitration, it is an arbitration agreement. Where there is specific and direct expression of intent to have the disputes settled by arbitration, it is not necessary to set out the attributes of an arbitration agreement to make it an arbitration agreement. But where the clause relating to settlement of disputes, contains words which specifically RCA No. 27/2013 M/s Online Micro Serv. P. Ltd. Vs. Spanco BPO Serv. Ltd. Page 6 of 9 excludes any of the attributes of an arbitration agreement or contains anything that detracts from an arbitration agreement, it will not be an arbitration agreement. For example, where an agreement requires or permits an authority to decide a claim or dispute without hearing, or requires the authority to act in the interests of only one of the parties, or provides that the decision of the Authority will not be final and binding on the parties, or that if either party is not satisfied with the decision of the Authority, he may file a civil suit seeking relief, it cannot be termed as an arbitration agreement.
(iv) But mere use of the word 'arbitration' or 'arbitrator' in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration. For example, use of words such as "parties can, if they so desire, refer their disputes to arbitration" or "in the event of any dispute, the parties may also agree to refer the same to arbitration" or "if any disputes arise between the parties, they should consider settlement by arbitration" in a clause relating to settlement of disputes, indicate that the clause is not intended to be an arbitration agreement. Similarly, a clause which states that "if the parties so decide, the disputes shall be referred to arbitration" or "any disputes between parties, if they so agree, shall be referred to RCA No. 27/2013 M/s Online Micro Serv. P. Ltd. Vs. Spanco BPO Serv. Ltd. Page 7 of 9 arbitration" is not an arbitration agreement. Such clauses merely indicate a desire or hope to have the disputes settled by arbitration, or a tentative arrangement to explore arbitration as a mode of settlement if an when a dispute arises. Such clauses require the parties to arrive at a further agreement to go to arbitration, as and when the dispute arise. Any agreement or clause in an agreement requiring or contemplating a further consent or consensus before a reference to arbitration, is not an arbitration agreement, but an agreement to enter into an arbitration agreement in future." (emphasis supplied)
10. Given the phraseology employed in clause 17, as extracted above, the Ld. Civil Judge clearly fell into error by construing it as an arbitration agreement. There is actually no arbitration agreement shown to be in existence or subsisting between the parties relating to the contract from which the money suit arises.
11.The impugned order is, thus, set aside. The application under section 8 of Arbitration and Conciliation Act of the respondent is dismissed. The civil suit is restored on the file of the Civil Judge for further proceedings in accordance with law.
12.The appeal stands disposed of accordingly. Parties are left to bear their own costs.
RCA No. 27/2013 M/s Online Micro Serv. P. Ltd. Vs. Spanco BPO Serv. Ltd. Page 8 of 913.The parties shall appear before the court of Additional Senior Civil Judge (South) for further proceedings on 18.09.2014.
Decree sheet be drawn up accordingly.
14.The trial court record along with copy of this judgment be sent back.
15.The file of the appeal be consigned to record room.
Announced in open Court today on this 2nd day of September, 2014 (R. K. GAUBA) District & Sessions Judge (South) Saket, New Delhi RCA No. 27/2013 M/s Online Micro Serv. P. Ltd. Vs. Spanco BPO Serv. Ltd. Page 9 of 9