Gujarat High Court
Friends Co-Operative Housing Society ... vs Sarang Builders on 19 June, 2020
Author: Ashutosh J. Shastri
Bench: Ashutosh J. Shastri
C/SCA/4930/2019 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 4930 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI Sd/-
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1 Whether Reporters of Local Papers may be allowed to No
see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law No
as to the interpretation of the Constitution of India or any
order made thereunder ?
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FRIENDS CO-OPERATIVE HOUSING SOCIETY LIMITED
Versus
SARANG BUILDERS
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Appearance:
DELETED(20) for the Petitioner(s) No. 3
MR.SALIL M.THAKORE for the Petitioner(s) No.1,2
MR PARTHIV B SHAH(2678) for the Respondent(s) No. 1,2
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CORAM: HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI
Date : 19/06/2020
CAV JUDGMENT
1. Rule. Mr. Parthiv B. Shah, learned advocate waives service of notice of rule on behalf of the respondents.
Page 1 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT2. The present petition under Articles 226 and 227 of the Constitution of India is filed by the petitioners - original defendants for challenging the orders passed by the courts below and to indicate precise challenge the prayer clause of the petition is reproduced hereinafter :-
"17.(A) That the Hon'ble Court be pleased to issue a writ, order or direction quashing and setting aside the order dated 08.01.2018 below Exhibit-15 and order dated 26.12.2018 below Exhibit-56 passed by the Civil Court, Vadodara in Special Civil Suit No. 289 of 2006 and pleased to refer the parties to arbitration;
(B) That pending the hearing and final disposal of this petition, the Hon'ble Court be pleased to stay order dated 08.01.2018 below Exhibit-15 and order dated 26.12.2018 below Exhibit-56 passed by the Civil Court, Vadodara in Special Civil Suit No. 289 of 2006 and the further proceedings of the suit;
(C ) For ad-interim reliefs, in terms of prayer B;
(D) For such other and further reliefs as the Hon'ble Court may deem just and proper in the facts and circumstances of the case."
3. The background of the facts which has given rise to the present petition is that the premises in question of petitioner no. 1 is a Hall in the Page 2 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT name of Alkapuri Club, situated at the address mentioned in the cause title. This building of the club over the passage of time required renovation. As a result of which, the Society entered into an agreement dated 10.05.2004 with the respondent for renovation of the said club. Somewhere in August, 2006, the respondent filed Regular Civil Suit No. 289 of 2006 before the civil court at Vadodara against the present petitioners by asserting that the money which has been spent by the plaintiff for the work which has been undertaken in response to the construction agreement remained unpaid and as such prayed in suit for a decree of Rs.12 lakhs with interest and by submitting relevant documents attached to the plaint, a suit was brought before the court concerned.
4. Pursuant to the summons having been issued, a general plea is taken as it appears that the Society is not liable to pay any amount to the present respondent as the amount has already been paid and nothing more to be left for payment. The present petitioners simultaneously, have also submitted an application at Exhibit-15 under Section 8 of the Arbitration and Conciliation Act, 1996 (old Act), inter alia praying that the parties to be referred to the Arbitration in view of the arbitration clause contained in the Page 3 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT agreement. The said application came to be rejected by the civil court vide order dated 08.01.2018 and later on, it appears that another application came to be filed in the form of Exhibit-56 for recalling of the said order on the premise that there was miscommunication and no hearing has taken place and as such, Exhibit-56 application is filed for recalling of the order since passed without hearing. This application has also been taken up by the civil court, Vadodara and by an order dated 26.12.2018; this application has also been rejected, which has given rise to the present petition, by invoking extra ordinary jurisdiction of this Court.
5. This petition appears to have been time and again adjourned and thereafter with the consent of the learned advocates appearing for the respective parties and upon their request, the Court had heard the matter and kept for decision. With this background of the present case, the submissions which have been canvassed by the respective learned advocates are being considered by this Court.
6. Mr. Salil M. Thakore, learned advocate appearing for the petitioners has contended before the Court that the orders in question are Page 4 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT cryptic orders and passed without application of mind. It has been contended that it is the settled position of law that any orders which may be passed by the deciding authority must be supported by valid reasons and here according to learned advocate Mr. Thakore, reasons are not visible at all and as such, this laconic orders which have been passed deserves to be set aside.
6.1 It is further contended that originally no hearing is given and hearing to be given at a stage where it requires. Subsequent hearing will not cure the defect.
6.2 Learned advocate Mr. Thakore has further submitted that without considering the relevant provisions of the Arbitration Act and even without referring to the conjoint reading of the construction of agreement, surprisingly, the court held that there is no arbitration clause at all and thereby, the application came to be rejected. On the contrary, according to learned advocate Mr. Thakore if the arbitration clause if figuring in the contract, then it is mandatory for the civil court to refer the dispute to the arbitration. By drawing attention to Section 8 of the Act, a contention is raised that construction agreement dated 10.05.2004 certainly indicates Page 5 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT that intention of the parties to refer the dispute to the arbitration and that intention ought not to have been unnoticed by the Court. Hence, the orders impugned are passed without application of mind and dehorse the record. Hence, the same being perverse deserves to be quashed and set aside. It has further been contended that throughout the proceedings, settlement talks were going on between the parties that is the reason why Section 8 application was kept in abeyance. It is not that the respondent has pressed the hearing and the petitioners have avoided and, therefore, the reason which has been given for remaining silent for pretty long period is not a valid reason. It has further been contended that there was some miscommunication between the petitioners and the lawyer, which has resulted into non attending of the proceedings for quite some time, but in a situation like this, there is hardly any reason to deprive the petitioner from the legitimate chance of meeting with the case. The orders being cryptic in nature, therefore, the same be set aside. It has further been contended that the very object of arbitration act is to see that whenever there is a clause contained in the agreement and there was an intention while entering into contract about reference to arbitration, the Court should loath in Page 6 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT adjudicating the issue and ought to have sent back to the arbitration. This very object gets frustrated if such order is allowed to be stand in the eye of law.
6.3 Mr. Thakore, has referred to the following decisions to substantiate his stand in the present proceedings. The said decisions are reported in 1998 (8) SCC 1; 2003(6) SCC 563; 2000(4) SCC 539; 2015 (13) SCC 477; AIR 2014 SC 3152 and by referring to the relevant observations contained in the aforesaid decisions, a request is made to set aside the impugned orders passed by the courts below.
7. As against this, Mr. Parthiv Shah, learned advocate appearing for the contesting respondent has vehemently contended that there is an alternative efficacious remedy available to the petitioners by way of preferring appeal under Section 37 of the Act and as such, when the petitioners are having statutory remedy, there is hardly any reason for the petitioner to invoke extra ordinary jurisdiction. By referring to Section 8 of the Act, it has been contended by Mr. Shah that there are conditions precedent while resorting to Section 8 of the Act. Firstly, there has to be a valid arbitration agreement and Page 7 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT a specific clause. Unless and until, such is available, there is hardly any reason for the petitioner to adjudicate about reference to arbitration. The agreement in question dated 10.05.2004 has not been produced in the court below by the petitioners and then to make a reference and grievance about it is hardly fair for the petitioners. By referring to the said construction agreement dated 10.05.2004, which is visible on record of the present case, it has been that there is a clear area indicating about arbitration. But reference to arbitration and specific clause about it is completely missing and, therefore, it cannot be presumed by the petitioners that there is a valid arbitration agreement. Mr. Shah has further contended that it is absolutely a mala fide method generated by the petitioners to drag on the proceedings further and to evade the liability. There is absolutely no material to indicate that any payment is made and as such, this is nothing but ex-facie with a view to consume away the time further. On the false premise a contention is tried to be raised that the plaint was not served along with the documents. Had there been so, the written statement could not have been attempted to be submitted. It has further been contended that once the petitioners have submitted, to the jurisdiction of the civil court then now it is Page 8 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT not open for them to resile from the said step. On the contrary, there is absolutely no right for the petitioners to invoke Section 8 of the Act. However, a oblique motive is very much reflecting from the proceedings is that after rejection of Section 8 application below Exhibit-15 one another application which has been filed for recalling at Exhibit-56 is almost after a further period of 11 months. So the intention of delay and oblique motive is self-explanatory in a suit of 2006. Now, the petitioners are trying in 2019 to refer the dispute to arbitration once having submitted to the jurisdiction of the civil court in which suit is kept on advance stage and as such it is now not open for the petitioners to invoke extra ordinary equitable jurisdiction of this Court. Mr. Shah has further reiterated that in absence of any arbitration clause, specific in nature, no inference can be drawn of the intention of the parties, particularly, when it is the petitioners themselves who dragged on the proceedings for a pretty long period.
7.1 Mr. Shah has further contended that it is a trite law that the Court cannot re-write the terms of contract and as held by the Apex Court in the decision reported in 2011(5) SCC 532, now it is not open for the civil court to infer anything by re-writing the terms of contract.
Page 9 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENTTherefore, it appears that no error is committed by the courts below.
7.2 Mr. Shah has further submitted that the principles of natural justice is not an unruly horse that it may be invoked any point of time. On the contrary, the proceedings have been dragged on for more than a pretty long period, this itself is ousting the petitioners from equitable jurisdiction of this Court. On the contrary, from the basic communication, right from the notice stage, there appears to be no seriousness of the petitioners about intention to seek the reference before the arbitration and for that Mr. Shah, has drawn the attention of this Court to certain documents which are attached to the petition compilation. Lastly, Mr. Shah has vehemently contended that in a situation like this, peculiar in nature, when intention of petitioners is just to evade the liability, for this kind of litigant principle of delay and laches deserves to be considered in the right spirit. By referring to the rojkam of the proceedings, a reference is made about the intention of delaying the proceedings and hence a request is made that the petition being meritless, the same be dismissed in the interest of justice and furthermore, this petition being under Articles 226 and 227 of the Constitution of Page 10 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT India, no equitable jurisdiction deserves to be exercised especially, looking to the conduct of the petitioners. Mr. Shah has further submitted that there is a clear attempt made by the petitioners dribble the litigation since about two separate petitions which are filed along with this for this purpose of opening of defence and for submitting written statement. On the contrary, these two petitions are sufficient enough to indicate that there is hardly any merit in the stand of the petitioners about reference to the arbitration. Therefore, the petition deserves to be dismissed.
8. To meet with this stand, Mr. Thakore has in re-joinder submitted that these two petitions have been submitted without prejudice and even if the written statement is filed, the law is clear on the subject that the said does not tantamount to be submitting to the jurisdiction of the civil court. This time gap between Section 8 application and Exhibit-56 application is on account of the fact that settlement talks were going on and that was ex-facie the reason for delay, else, the petitioners were ready for referring the matter to the arbitration and by pointing out one decisions, the said delay cannot be said to be gross enough to oust the petitioners from invoking jurisdiction of this Page 11 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT Court. Mr. Thakore has reiterated that the orders have been passed without considering all these circumstances. As a result of this, there is hardly any reason to oppose the present petition. Accordingly, a request is made to grant the relief as prayed for or alternatively, had submitted to redirect for reconsideration. No other submissions have been made.
9. Having heard the learned advocates appearing for the respective parties and having gone through material on record, certain relevant circumstances are not possible to be unnoticed by this Court.
10. First of all the application which has been given under Section 8 of the Arbitration Act below Exhibit-15, appears to have been submitted on 29.09.2006 whereas the decision which has been taken is on 08.01.2018.
11. Further, it appears that even after this impugned order, in origin dated 08.01.2018, subsequent application Exhibit-56 which has been given is also almost after a period of 11 - 12 months and the same came to be dismissed by a brief order in December, 2018.
Page 12 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT12. Apparently, on perusal of the impugned order dated 08.01.2018, is a non-speaking order without assigning any cogent reasons and there appears to be no remote discussion about arbitration clause in controversy. This order dated 08.01.2018 reflecting on page 19 rightly said to be agitated else as cryptic order. Additionally, the impugned order dated 08.01.2018 is said to have been passed without extending any opportunity of hearing and to some extent, the grievance of the petitioners appears to be legitimate, if perusal of the rojkam be made. As a result of this, the impugned order dated 08.01.2018 is not only non- speaking order, but it appears to have been passed without granting any opportunity and the same has been passed at much, much, belated stage at least in considered opinion of this Court when the Court undertook hearing after a pretty long period, a bare minimum opportunity ought to have been given which is specifically not been afforded.
13. Further, it appears from even the subsequent order dated 26.12.2018 passed at Exhbit-56, the same is not only passed after extending the opportunity but it appears to be not with a sound reason, reference is made about some dates i.e. 06.05.2016 as well as 25.12.2017, but then the said dates are also not well founded if we see Page 13 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT the rojkam which is attached to the petition. The law requires a fair chance to be extended to a litigant to meet with the controversy posed before him. As a result of this, the order date 26.12.2018 also not found to be just and proper. It may be that the original application contained no detailed explanation, but then, one grievance was continuously raised with regard to grant of opportunity. That ought to have been given by the Court at an appropriate time. Law requires that hearing to be given at a stage where it requires.
14. On perusal of the rojkam attached to the petition compilation on page 92 onwards, is requiring the Court to grant fair opportunity as it appears that to some extent, the grievance voiced out about non granting of opportunity is visibly correct and this fair chance is necessary. As a result of this, without much commenting upon the relevant entry contained in the rojkam about the dates reflecting on page 114 of the petition compilation, this Court is of the opinion that at least a fair chance to agitate deserves to be granted to the petitioners. From the grievance which has been raised by both the sides about arbitration clause, it prima facie appears to this Court that no doubt, the said clause whether can be said to be valid clause or not, is a specific clause or not and is a center Page 14 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT of controversy, but since the Court is not deciding the said issue at this stage of the proceedings since remaining, no clear opinion is assigned to the said issue by this Court, otherwise, the said clause prima facie appears to a very vague, whether cane be said to be valid or not is a question of debate before the Court at an appropriate stage.
15. As stated by catena of decisions delivered by the Apex Court, that reasons are the part and parcel of the principles of natural justice. Any order to be passed by any deciding authority has to assign cogent reasons and the contentions which may be raised have to be dealt with. This order of four line dated 08.01.2018 appears to be in complete contrast to said principle. As a result of this, ex-facie, this Court is of the opinion that on this solitary count, the impugned order requires to be set aside with a consequential direction.
16. While opinion this, and coming to the conclusion, the Court is mindful of the following decisions delivered by the Apex Court which has given emphasis about assigning of appropriate reasons and rather it is the duty of the Court to assign adequate reasons. The following are the Page 15 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT decisions which are taken note of by this Court.The said decisions are reported in 2019 (5) SCC 149; 2019 (5) SCC 337; 2018 (9) SCC 458 and 2019 (5) SCC 744.
17. Additionally, the Division Bench of this Court has also emphasized the significance of assigning of reasons and the said decision is reported in 2015 (1) GLR 894.
18. Therefore, considering the aforesaid decisions, this Court deems it proper that the impugned order in origin is required to be quashed and set aside essentially on two counts
(i) that the same has been passed without granting any opportunity and (ii) the same is passed without assigning any cogent reasons. That being so, the order in question is not sustainable in the eye of law.
19. Since the original order appears to be unsustainable, consequential further order for recalling of the said order is also quashed and set aside hereby. The said order is also appears to be not in consonance with the relevant record and about the dates, which are reflecting in the order, this Court would not like to stretch the issue any further. Be that as it may, without Page 16 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT much commenting upon the same, this Court would like to set aside the impugned order dated 26.12.2018 as the same is also not well founded.
20. The two issues which have been raised in the present proceedings about the existence of arbitration clause, about the reference to arbitration proceedings, this Court since is inclined to relegate the mater back the court below for deciding afresh, some contentions are not decided on merit, rather the Court has desisted itself from expressing any opinion just with a view to see that the observations may not be influenced while re-deciding the application. As a result of this, the present petition is ordered to be disposed of with the following directions and observations.
21. This Court ordinarily ought to have dealt with all the issues which have been raised by both the side, but this being petition under Articles 226 and 227 of the Constitution of India and the challenge is made to the impugned order, the Court would not like to expand the scope of jurisdiction and would not like to dwell much into the merit at this stage. Had it been prompt adjudication, this Court might have thought it fit to deal with the contentions but in this Page 17 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT peculiar background of facts and circumstances, instead of usurping the discretion of the trial court, in dealing with these issues which are centering around the application Exhibit-15, the Court would like to direct the court below to take appropriate decisions in accordance with law on its own merits based upon relevant record. Hence, the petition stands disposed of with a direction that the impugned order dated 01.08.2018 passed below Exhibit-15 as well as order dated 26.12.2018 below Exhibit-56 in Regular Civil Suit No. 289 of 2006 are quashed and set aside hereby with a consequential direction to rehear and re-decide application Exhibit-15 submitted under Section 8 of the Arbitration and Conciliation Act, 1996.
22. While deciding the said application, it is needless to say that the Court shall take up the hearing of the said application at the earliest and shall deal with and decide the same in accordance with law on the basis of the material on record and after dealing with the submissions which may be made and without being influenced by the earlier order, which is set aside by this Court shall take a fresh decision.
23. Since the petition is disposed of with a Page 18 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021 C/SCA/4930/2019 CAV JUDGMENT direction to re-decide afresh application Exhibit-8 below Exhibit-15, this Court has not expressed any opinion on merit.
24. Since enormous delay has taken place, this application is directed to be decided within a period of three months from the date of the receipt of the writ of this Court and the court below is requested to not to allow either parties to drag on the hearing of this application any more.
25. The parties are directed to co-operate with the hearing of application Exhibit-15 so as to see that the concerned court below can decide afresh with the aforesaid time schedule. Accordingly, the petition stands allowed. Rule is made absolute with no order as to costs.
Sd/-
(ASHUTOSH J. SHASTRI, J) PHALGUNI Page 19 of 19 Downloaded on : Mon Feb 22 00:18:02 IST 2021