Karnataka High Court
Ramakrishna Theatre Limited, Rep. By ... vs General Investments And Commercial ... on 29 July, 2003
Equivalent citations: AIR2003KANT502, 2004(1)ARBLR430(KAR), ILR2003KAR3463, 2004(1)KARLJ611, AIR 2003 KARNATAKA 502, 2003 AIR - KANT. H. C. R. 2621, 2004 (1) ARBI LR 430, (2003) ILR (KANT) (4) 3463, (2004) 2 ICC 709, (2004) 1 KANT LJ 611, (2004) 1 ARBILR 430, (2003) 4 KCCR 2780, (2003) 4 CIVLJ 545
Author: A.V. Srinivasa Reddy
Bench: A.V. Srinivasa Reddy
ORDER Srinivasa Reddy, J.
1. This revision is filed under Section 115 C.P.C. against the order dated 16.3.2002 passed on I.A. No. 2 in O.S. No. 118/98 on the file of the Addl. Civil Judge (Sr. Dn), Udupi dismissing I.A. No. 2 filed by the petitioner herein under Section 8 of the Arbitration and Conciliation Act, 1996 requesting the Court to refer the dispute between the parties to arbitration and stay the suit proceedings.
2. The plaintiff-respondent filed the suit for delivery of possession of the plaint property on the ground of expiry of the lease period. The plaintiff-respondent contended in the suit that immediately on the expiry of the lease period, the plaintiff got issued a notice calling upon the petitioner to hand over possession of the property. The petitioner-defendant sent reply notice on 20.3.1998 refusing to hand over possession of the premises. The respondent-plaintiff decided to invoke the provisions of arbitration clause contained in the lease deed and as per the amended provision of Arbitration Act, 1996 notified the appellant by registered letter dated 9.4.1998 expressing that the matter should be referred to an Arbitrator for determination. The defendant took up a stand that the plaintiff has no right to refer the dispute to the arbitration as per Clause 4(a) of the registered lease deed and further stated that the present issue is not an arbitrable issue and further stated that Clause 11(2) of the Arbitration and Conciliation Act, 1996 will not apply. It is under these circumstances the plaintiff-respondent has filed the present suit. In the suit the petitioner filed I.A. No. 2 under Section 8 of the Arbitration and Conciliation Act, 1996 for an order to refer the dispute between the parties to arbitration and stay the proceedings in the suit till finality of the arbitration award. The Court dismissed the I.A. No. 2. Being aggrieved, the present revision has been filed by the petitioner - defendant.
3. I have heard the learned Counsel on both sides.
4. Certain undisputed facts of the case are:
The petitioner took possession of the premises under a registered lease deed. The lease period under the lease agreement has come to an end. The plaintiff-respondent issued notice calling upon the petitioner-tenant to hand over possession of the premises. The same was refused by the petitioner. The further notice issued by the plaintiff-respondent to subject the dispute to an Arbitrator for determination also has been refused by the petitioner-defendant on the ground that the matter is not arbitrable. It is thereafter that the suit has been filed by the respondent-plaintiff.
5. In the light of these undisputed facts, the question that arises for my consideration is whether the Court-below was right in rejecting I.A.2 filed by the petitioner-defendant for referring the dispute to an Arbitrator for adjudication.
6. The registered lease deed is dated 3.9.1973. The recitals contained in 4(a) of the said lease deed read as follows:
"Every dispute difference or question which may at any time arise between the parties hereto or any person claiming under them, touching or arising out or in respect of this deed or the subject matter thereof shall be referred to arbitration and the provisions of the Indian Arbitration Act, 1940 will be applicable thereto."
The handing over of possession by the petitioner - defendant to the respondent - plaintiff after the expiry of the lease period is certainly a matter touching or arising out or in respect of the registered lease deed. As the handing over of possession of the premises is subject matter of the lease agreement and, therefore, any dispute relating to the handing over of the possession would certainly have to be determined in an arbitration proceedings in terms of Clause 4(a) of the agreement entered into between the parties. Despite the dispute being fully covered by Clause 4(a) of the agreement, the petitioner-defendant played traunt and refused to submit to arbitration proceedings and this fact that he refused to accede to the request of the plaintiff for referring the mater to arbitration is not disputed by the petitioner-defendant now and the same is also borne out form the documentary material on record. When on such refusal by him, the plaintiff was constrained to file an action before the Court, he turns around and set up a case that the matter cannot be decided by the Civil Court as there is an agreement between the parties to subject themselves to the arbitration proceedings in case of any dispute arising between them in relation to the lease of the premises. The question therefore that arises for my consideration is, whether a party could be permitted in law to approbate and reprobate in mater governing determination of rights arising under an agreement entered into between them in relation to an immovable property when there is absolutely no scope for misunderstanding or misconstruing the clauses contained in the agreement.
7. Learned Counsel for the petition Mr. T.N. Ragupathy submits that it is permissible where the conditions required to be satisfied under Section 8(1) and 8(2) of the Act are satisfied by the party seeking for such a remedy under the Act. Section 8 stipulates the procedure for referring parties to arbitration where there is an arbitration agreement. The provision reads:
"8. Power to refer parties to arbitration where there is an arbitration agreement - (1) A judicial authority before which an action is brought in a matter which is the subject matter of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.
(2) The application referred to in Sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.
(3) Notwithstanding that an application has been made under Sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made."
8. The provision clearly brings out the conditions required to be satisfied by a party under Section 8(1) and 8(2) of the Arbitration and Conciliation Act, 1996 before the Court can be called upon to exercise its powers. These conditions are:
(1) there is an arbitration agreement;
(2) a party to the agreement brings an action in the Court against the other party;
(3) subject-matter of the action is the same as the subject-matter of the arbitration agreement;
(4) the other party moves the Court for referring the parties to arbitration when submitting his first statement on the substance of the dispute.
9. No doubt all the conditions stipulated in Section 8 do existing the present case. The interpretation of the phrase 'if a party so applies not later than when submitting his fist statement on the substance of the dispute' by the Court-below to mean that the application should be presented even before filing of the written statement is not correct. The term, 'if a party so applies not later than when submitting his first statement' means that such an application could be presented along with the first statement and not necessarily prior to the filing of the first statement. But, despite all these the petitioner-defendant has clearly disentitled himself to the relief sought by him in I.A. No. 2. The language of Section 8 though peremptory and an obligation is cast on the Court to refer the dispute to arbitration, the Court can still decline to exercise power under Section 8, if it is shown to the satisfaction of the Court that the person moving the Court is disentitled to the relief claimed by him and that the whole idea in moving the application for referring the matter to arbitration is to prolong the issue and to deny the other party the relief to which he is rightfully entitled to. The facts in this case clearly reveal that the petitioner who had the right to seek for adjudication of his rights under the agreement in an arbitration proceedings waived that right when he rejected the offer made by the plaintiff-respondent to subject the dispute to arbitration proceedings. The stand taken by the defendant then was that the matter is not arbitrable and the issue involved is not the subject matter of the arbitration agreement. It is trite law that no person can be permitted in law to approbate and reprobate while resisting a claim made against him. The recitals in the agreement did not provide a choice to the petitioner and he ought to have agreed to the course putforth by the respondent for deciding the dispute between them but he refused to do so and when the respondent having no other choice was compelled to take recourse to common law, the petitioner turned around and staked claim to his right to get the dispute adjudicated only through an adjudication proceedings. A right once waived by a party in respect of the course to be adopted for settlement of a dispute between himself and the other side is lost for ever and cannot be reclaimed or re-agitated later on, on being visited by the consequences that followed such waiver of the right to a specific course to which he was entitled to as a matter of right. This is so because when a party to an arbitration agreement gives up his right to refer the dispute to arbitration, a right comes to vest in the other party to take recourse to the other remedies that are open to him in law and when such a recourse is resorted to by the other party, the party who had waived his right to settle the dispute in an arbitration proceedings cannot be permitted to turn around and contend that he is entitled to the remedy of arbitration and the recourse to the suit by the other party under the common law is bad. The petitioner-defendant is estopped from taking up such a stand by his own conduct and the principle of law that no party to a legal proceeding can be permitted to approbate and reprobate in the matter of defending a cause has general application to all matters and the choice of the legal process to which one can stake claim in defending his legal rights is also governed by the said general principle. The general principles of law can be applied by the Courts while interpreting the provisions of any statute and their application can be barred only where a specific bar is incorporated in the statute against such application to the provisions of the statute. As there is no such bar in the Act, it must be held by application of this general principle to the facts of the case that the petitioner-defendant is not entitled to the relief sought by him in I.A. No. 2.
10.The decision in P. ANAND GAJAPATHI RAJU v. P.V.G. RAJU, cited by learned Counsel Mr. T.N. Ragupathy wherein it is held that it is not necessarily required that the agreement must be already in existence before the action is brought in the Court and the phrase 'which is the subject of an arbitration agreement' also connotes an arbitration agreement being brought into existence while the action is pending, is of no avail to the petitioner because the existence of an arbitration agreement is not in dispute at all in the present case. In the said case all the parties concerned had entered into an arbitration agreement when the matter was pending in appeal. It is in that context the Apex Court took the view that the pre-existence of the arbitration agreement is not essential for the Court to exercise power under Section 8. The case on hand rests on an altogether different footing. Herein, there is no dispute about the existence of the arbitration proceedings. The real dispute herein is whether the petitioner who had waived his right by taking the stand that the matter is not arbitrable can be permitted in law to turn around and regain the very same right merely on the ground that the conditions stipulated under Section 8 are all satisfied. The stand taken by the petitioner-defendant in the first place while replying to the notice of the respondent-plaintiff disputing the application of the arbitration Act to the dispute between them tantamounts to the waiving of the right to settle the dispute in an arbitration proceeding and a right once waived cannot be allowed to be reclaimed if it would work hardship against the other party. The order passed by the Court-below on I.A. No. 2, therefore, does not call for any interference. The revision petition is, accordingly, dismissed.