Andhra HC (Pre-Telangana)
Asian Securities And Estates Limited vs Ms. Nausheen Riyaz & Others on 22 August, 2014
Bench: K.C.Bhanu, Anis
THE HONBLE SRI JUSTICE K.C.BHANU AND THE HONBLE SMT JUSTICE ANIS CIVIL REVISION PETITION No. 2038 OF 2014 22-08-2014 Asian Securities and Estates Limited.Petitioner Ms. Nausheen Riyaz & others .Respondents Counsel for the Petitioner:Mr. Mahfooz Nazki Counsel for the Respondents: Mr. V.Ravinder Rao <Gist : >Head Note: ? Cases referred: 1. AIR 1997 Cal 397 2. 2011 (3) CHN 680 3. AIR 2000 P&H 53 4. ILR 2005 (3) Kerala 268 5. ILR 2006 (2) Kerala 251 6. 2009 (2) CTC 234 7.MANU/DE/1383/2014 8. 2012 (1) ARBLR 279 (Gujarat) 9. (2010) 1 Supreme Court Cases 72 10. AIR 2008 Supreme Court 1016 11. (2004) 8 Supreme Court Cases 579 12. (2012) 10 Supreme Court Cases 1 13. (2011) 5 Supreme Court Cases 532 14. (2014) 6 Supreme Court Cases 677 15. AIR 1962 Supreme Court 406 16. (2006) 7 Supreme Court Cases 275 17. 2013 (6) ALT 457 (D.B.) AIR 1997 Cal 397 2011 (3) CHN 680 AIR 2000 P&H 53 ILR 2005 (3) Kerala 268 ILR 2006 (2) Kerala 251 2009 (2) CTC 234 MANU/DE/1383/2014 2012 (1) ARBLR 279 (Gujarat) (2010) 1 Supreme Court Cases 72 AIR 2008 Supreme Court 1016 (2004) 8 Supreme Court Cases 579 (2012) 10 Supreme Court Cases 1 (2011) 5 Supreme Court Cases 532 (2014) 6 Supreme Court Cases 677 AIR 1962 Supreme Court 406 (2006) 7 Supreme Court Cases 275 2013 (6) ALT 457 (D.B.) THE HONBLE SRI JUSTICE K.C.BHANU AND THE HONBLE SMT JUSTICE ANIS CIVIL REVISION PETITION No.2038 of 2014 ORDER :
(per the Honble Sri Justice K.C.Bhanu)
1. The Civil Revision Petition is directed against the order dated 02.06.2014 in I.A. No. 178 of 2014 in O.S. No. 53 of 2014 on the file of the V Additional District Judge (Fast Track Court), Ranga Reddy at L.B. Nagar, Hyderabad.
2. The petitioner, who is defendant in the suit, filed a petition under Section 8 of the Arbitration and Conciliation Act, 1996 (for short, the Act, 1996) read with Section 151 of the Code of Civil Procedure, 1908 (for short, CPC) to refer the matter to Arbitrator for adjudication of dispute in view of clause 39 of the Development Agreement-cum-General Power of Attorney dated 22.01.2007. That petition was dismissed by the trial court, vide the impugned order.
3. The petitioner herein is defendant, and the respondents herein are plaintiffs, in the suit. For better appreciation, the parties are hereinafter arrayed as they are arrayed in the suit.
4. The averments of plaint, in brief, may be stated as follows;
Plaintiffs are owners of an extent of 640 square yards of land in plot Nos. 35, 35 (part) and 36 in survey no.38 of Kothaguda Village, Serilingampally Mandal, Ranga Reddy District. They came to know that the defendant and its group companies were developing entire area and approached the defendant along with their father, and offered for its development along with other abutting land. After negotiations, they entered into a registered Development Agreement- cum-General Power of Attorney vide document No.1380/2007, dated 22.01.2007, on the terms and conditions mentioned therein whereunder the defendant agreed to develop the schedule property within 36 months from the date of according permissions. Thereafter, at the request of the defendant, plaintiffs entered into a supplementary agreement on 24.01.2007. Though the plaintiffs are requesting the defendant to obtain necessary permissions from the authorities concerned from the date of execution of the agreement, the defendant has not taken any effective steps in that direction. As per the terms and conditions of the development agreement, the plaintiffs are entitled to 22 square feet of built up per square yard for the land entrusted for development to the defendant. As the defendant has not taken any effective steps to develop the project, they got issued a notice dated 18.11.2013 cancelling the development agreement. The defendant did not give any reply to the said notice. As per the clauses of the development agreement, permissive possession was granted to the defendant permitting it to enter upon the suit schedule property for development activity. Hence, the suit is filed for cancellation of the Development Agreement-cum-General Power of Attorney dated 22.01.2007 and the supplementary agreement dated 24.01.2007 and for redelivery of the suit schedule property to the plaintiff.
5. After filing of the suit, defendant filed I.A. No.178 of 2014 under Section 8 of the Act, 1996 to refer the matter to the Arbitrator for adjudication in view of clause 39 of the Development Agreement dated 22.01.2007 as the dispute arose out of the said Development Agreement. The plaintiffs filed counter in the said interlocutory application admitting that they entered into the Development Agreement-cum-General Power of Attorney vide document No.1380/2007, dated 22.01.2007 and also admitting that there is arbitration clause in the said agreement, but contending that as plaintiffs had already issued notice for cancellation of the agreement and filed a suit, the question of arbitration does not arise; that when the notice was got issued for cancellation of the agreement, the defendant gave a reply to the said notice but it had not invoked the arbitration clause in the said reply notice; that all the clauses in the agreement would go to show that it can be invoked only if there is a dispute pertaining to the agreement, but the plaintiffs have not sought adjudication of any dispute arising out of the agreement, but cancelled the agreement by virtue of the notice, and therefore, Arbitrator has no jurisdiction for cancellation of the agreement and it is only the Civil Court which has substantial right to deal with the matter.
6. The trial Court dismissed the said application holding that Section 8 (2) of the Act, 1996 is mandatory and also that the dispute in the suit is not arbitral dispute. Challenging the same, the present revision is filed.
7. Learned counsel for the petitioner/defendant contended that as the plaintiffs filed certified copy of the Development Agreement-cum- General Power of Attorney dated 22.01.2007 containing the arbitration clause into the trial court, and as the plaintiffs are not disputing about the clause to refer a dispute to the Arbitrator, the trial court ought to have referred the same to the Arbitrator, and that the decision in Radhakrishnans case (2009 (7) Supreme 80) relied upon by the trial court, has no application to the facts of the present case; that the object behind the necessity of filing of original, or certified copy, of the agreement is to enable the court to verify the existence of an arbitration clause in it; that the other decisions relied upon by the trial court are not relevant for the purpose of deciding the matter, and therefore, he prays to set aside the impugned order.
8. On the other hand, learned counsel for the respondents/ plaintiffs contended that Section 8 (2) of the Act, 1996 is mandatory but the defendant did not file either certified copy, or the original, of the development agreement along with the application under Section 8 of the Act, 1996; that there was no arbitral dispute because the Arbitrator has no jurisdiction to cancel the agreement between the parties, and that the trial court, considering the decisions of various High Courts and the Supreme Court, rightly dismissed the application filed by the defendant, and there are no grounds to interfere with the same.
9. Both the counsel relied upon various decisions, which will be referred to, at appropriate time.
10. Two points that arise for consideration before this Court are-
(i) Whether filing of the original or certified copy of the agreement along with a petition under Section 8 of the Act, 1996 is mandatory, when, admittedly, certified copy of the agreement was already filed by the other side along with the plaint ?
(ii) Whether the dispute, which is covered by the suit, can be the subject matter of Arbitration ?
POINT No.1:
Whether filing of the original or certified copy of the agreement along with a petition under Section 8 of the Act, 1996 is mandatory when, admittedly, certified copy of the agreement was already filed by the other side along with the plaint ?
11. The Arbitration and Conciliation Act, 1996 is an Act enacted to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation and for matters connected therewith or incidental thereto. One of the main objectives of the Bill is to make a provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration. The basic concept at the root of arbitration under the Act, 1996 is an arbitration agreement. Under Section 2 (b) of the Act, 1996, arbitration agreement means an agreement referred to in Section 7 of the Act. Section 7 of the Act, 1996 reads thus:
Arbitration agreement :
(1) In this Part, arbitration agreement means an agreement by the parties to submit to arbitration all or certain disputes which have arises 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.
(3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in,-
(a) a document signed by the parties;
(b) an exchange of letter, telex, telegrams or other means of telecommunication which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.
Such an agreement is, thus, the foundation of every proceedings under the Act.
12. The Law of Arbitration is integrally connected with the question as to how far the parties should choose their own forum rather than that constituted by law. It is not uncommon for the parties to choose arbitration that is intended to resolve the dispute between them. The provisions as to waiving objections, etc. contained in Sections 4, 12, 14 (4), 16 (5), 19 (1) and 25 of the Act, 1996 amply demonstrate that the object is to see that the disputes are not unduly prolonged. The Law of Arbitration must be simple, less technical and more responsible to the actual reality. The object of submitting certain disputes to arbitration is that such disputes shall not be heard and decided by the judicial authority. If, nevertheless, any person brings an action in a matter, which is the subject of an arbitration agreement, the judicial authority has to refer the parties to arbitration, if a party to the arbitration agreement applies to it in the manner prescribed in Section 8 of the Act, 1996.
13. Section 8 of the Act, 1996 authorizes the judicial authority before which an action is brought in a manner which is the subject of an arbitration agreement, to refer the matter to arbitration. On application of a party to refer the parties to arbitration, the Court must refer the parties to arbitration. However, before making such an order, the Court must be satisfied that (i) a valid arbitration clause exists; and (ii) the subject matter of the action is within the clause. Such an application should be made not later than submitting his first statement on the substance of the dispute and must be accompanied by the original arbitration agreement or a duly certified copy of it.
14. It is the contention of the learned counsel for the respondents/ plaintiffs that Section 8 (2) of the Act, 1996 is mandatory and admittedly the original, or certified copy, of the agreement has not been filed along with the Interlocutory Application and therefore the petition is liable to be dismissed on that ground. Section 8(2) of the Act reads :
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.
The Section appears to an adjective law which regulates the procedure to be followed in referring the matter to an Arbitrator.
15. (a) In ITC Classic Finance Ltd. v. Grapco Mining and Co. Ltd. & another , the Calcutta High Court held thus:
It appears to me that the xerox copies of the said lease agreements containing the said arbitration clause that have been annexed to the present application, are in sufficient compliance with the said S. 8 (2) of the said Act.
(b) In another decision in Rajeev Maheshwari and Ors. V. Indu Kocher and Ors. , the Calcutta High Court held thus: (para 20) Atul Singh and Maestro Engineers have been cited by the Plaintiffs in support of the contention that this application is not maintainable in view of the original arbitration agreement or a duly certified copy thereof not being appended to the petition. The decision in Atul Singh on such aspect was upon recognizing that the existence and validity of the arbitration agreement was in serious dispute. In Maestro Engineers the view taken was that notwithstanding the subject-matter of the suit being found to be covered by the arbitration agreement, if complicated questions of facts or law are involved or where a serious allegation of fraud is made, the civil court can refuse to refer the matter to arbitration.
The judgment also found that the procedural requirement under Section 8 (2) of the Act was mandatory. In Verma Transport, the same question arose and the Court disregarded the objection on the ground of non-compliance of Section 8 (2) of the Act on the reasoning that the existence of a valid arbitration agreement stood admitted. The judgments rendered in Verma Transport, Maestro Engineers, and Atul Singh were all rendered by two-judge benches of the Supreme Court. In both Atul Singh and Maestro Engineers, the primary ground for rejecting the applications under Section 8 of the 1996 Act was other than under Section 8 (2) thereof, though the procedural requirement was found to be mandatory. It is the decision in Verma Transport, however, that is found to be more apposite in the present context since the arbitration agreement has been referred to in the plaint and the existence thereof has not been questioned by the Plaintiffs.
16. Similarly, the Punjab and Haryana High Court in Parampal Singh and others v. Punjab State Ware House Corpn., Chandigarh and others , held thus:
This being the position, the appellants cannot be allowed to raise this technical plea of non-compliance of the provision of sub-section (2) of Section 8 of the 1996 Act.
It is a case where copy of the arbitration agreement was already produced on record by the defendant in that case. Similarly, in this case also, certified copy of the agreement was filed along with the plaint by the plaintiffs.
17. (a) The Kerala High Court also took the similar view in a decision in NIIT Ltd. v. A.V. Manoharan , wherein it is held thus:
The requirement of Section 8(2) for the production of the original arbitration agreement or duly certified copy thereof is only to ensure that there is an arbitration clause and to ascertain whether the Arbitrator is named and other allied maters. The requirement would be satisfied if the agreement is before court.
(b) In another decision in Natarajan v. General Manager, Southern Railway , the Kerala High Court held thus: (para 7) But according to me it would be myopic to read into section 8(2) any invariable mandate that the arbitration agreement or a copy thereof must be produced along with such request. The purpose of such production has got to be borne in mind. It is only to help the court to decide whether as a matter of fact there is such an arbitration agreement or not. The plea for reference under section 8 cannot be made by a party without any bonafide intent or with the sole intention of protracting the proceedings. That is why it is very specifically stipulated that the arbitration agreement in original or copy must accompany the application for reference under section 8.
Considering the object and purpose the word accompany in section 8(2) according to me need not be read and understood to mean that the Arbitration agreement or copy thereof must be Annexed to the application. If it is already there before must be Annexed to the application. If it is already there before court or if it is not disputed or if it is produced in the event of a dispute when such dispute is raised it can still be said that the agreement had accompanied the petition. The word accompany used in section 8(2) must be reasonably and realistically understood. In language one can accompany another in a march even if one does not walk with the other. He can walk ahead or walk behind and can still be said to accompany the other. No artificial or inelastic or rigid meaning need be assigned. The expression accompany used by the statute is inherently elastic.
18. The Madras High Court also took the same view in a decision in Cash and Gain Finance and Investments & 2 others v. Manjula Udaya Shankar , wherein it is held thus: (para 18) THE objections regarding the non filing of the original or the certified copy of the arbitration agreement itself does not appear to be tenable and the reliance on the decision of the Supreme Court reported in ATUL SINGH & OTHERS Vs. SUNIL KUMAR SINGH & OTHERS reported in 2008(2) CTC 856 is not helpful. THE Supreme Court has dealt with the case where the arbitration agreement itself was denied and they found that no document had even been filed along with the suit. On the other hand, in the present case, the partnership deed which contains the arbitral agreement is relied on by the plaintiff herself and it is that document which is the basis for the suit.
19. The Delhi High Court also took similar view in a decision in AEZ Infratech Pvt. Ltd. v. SNG Developers Ltd. wherein it is held thus: (para 13) The objective of filing certified copy is to ensure that there is no dispute apropos existence of the arbitration clause. However, it would be pedantic to insist upon compliance of the said provision in a situation like the present where the agreement containing the arbitration clause itself forms the basis of the suit and the said clause itself is clearly admitted by the respondent. The consideration before the Court would be that it should refer the matter to arbitration, when it is brought to the notice of the Court that such an agreement exists between the parties, and such request is made before filing of the Written Statement. It is not as if the Courts jurisdiction is ousted by the non-filing of the certified copy or the original copy of the agreement. Conversely, it cannot be said that it is the filing of the certified copy of the original agreement or its certified copy that vests jurisdiction on the Court. What the Court is required to see as per the scheme of the Arbitration Act is that an arbitration clause exists which is accepted by the parties. During the course of the arguments a query was put to counsel for the respondent where he disputed the existence or contents of the flat buyers agreement. His answer was in negative. Therefore, it is admitted that the flat buyers agreement (containing the arbitration clause) which forms basis of the suit exists. Therefore, quite clearly, the Trial Court fell into error in not referring the parties to arbitration. This view also appears to be in consonance with various pronouncements of the High Courts as well as the Supreme Court, where applications under section 8 of the Act were allowed, except where the plaintiff denied the existence of the agreement itself, or of the dispute actually arising out of the agreement.
20. The Gujarat High Court in Comed Pharmaceuticals Ltd. v. Blue Star Limited , held thus: (para 17) From the principles enunciated in the above referred decisions, it is apparent that though the language of sub- section (2) of section 8 of the Act mandates that the original arbitration agreement or a duly certified copy thereof should accompany the application under sub-section (1) of section 8 of the Act, in effect and substance what the provision mandates is that the arbitration agreement should be on the record and that there should be no dispute as regards the existence of the arbitration agreement. The said provision cannot be read to mean that notwithstanding the fact that the arbitration agreement is on record and there is no dispute as regards the existence of the same, the original arbitration agreement or a duly certified copy thereof has to accompany the application. That would amount to taking a highly technical view of the matter. In the circumstances, if a copy of the arbitration agreement is already found on record produced either by the plaintiff or the defendant and other party does not dispute the same, the non-submission of the original arbitration agreement or a duly certified copy thereof along with the application under section 8(2) of the Act, cannot be said to be non-compliance of the said provision.
Relying upon the above decisions, the learned counsel for the petitioner/defendant contended that Section 8 (2) of the Act, 1996 is mandatory when the original, or certified copy, of the agreement is not available on record before filing of application under Section 8 of the Act, and that when once certified copy, or original, of the agreement is not before the Court, then necessarily, for moving an application under Section 8(1) of the Act, filing of the original, or certified copy, of the agreement is mandatory; that once the document containing the arbitration clause was filed by either of the parties, and neither of the parties had disputed the existence thereof, there is no bar to refer the matter for arbitration in terms of the arbitration clause.
21. On the other hand, learned counsel for the respondents/ plaintiffs placed strong reliance on a decision in N.Radhakrishnan v. Maestro Engineers & others , wherein it is held thus: (para 27). Arguments were favoured by either parties relating to the ambit of Section 8 (2) of the Act wherein the scope of the mandatory requirement to file the original copy of the partnership deed dated 7-4-2003 was elaborately discussed. It is to be noted that since we have already decided that there is no requirement to appoint an arbitrator in view of the matter that the issues involved in the case involved detailed investigations into the same and production of elaborate evidence to prove the allegations or refute the same, there is no need to dwell into this matter. Even assuming that a dispute subsists and an arbitrator is appointed, still the appellant cannot absolve himself from the mandatory requirement of filing an original copy of the deed.
It is also observed in paragraph no.29 thus:
But it is to be noted herein that the claim of the appellant regarding the dispute was under the arbitration clause mentioned under the original partnership deed and not on the subsequent one. Since the original deed was not filed within the requirement of Section 8 (2) of the Act, it must be held that the mandatory requirement under the Act had not been complied with. Accordingly, even if we accept the factum of a dispute relating to the retirement of the appellant under the original deed dated 7th of April, 2003, still the Court would not be empowered to refer the matter to an Arbitrator due to the non compliance of the provisions mentioned under Section 8 (2) of the Act.
That is a case where Xerox copy of the partnership deed was already filed by the respondents before the Court but not original, or certified copy, of it.
22. The learned counsel for the respondents/plaintiffs also relied on a decision in Atul Singh and Ors. V. Sunil Kumar Singh and Ors., wherein it is held thus: (para 10).
SUB-SECTION (2) of Section 8 of the 1996 Act says that 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. As already stated in the earlier part of the judgment, defendant no. 3 had moved an application on 25. 11. 2004 under Section 34 of the Arbitration Act, 1940 for staying the proceedings of the title suit and for referring the matter to arbitration. He filed a supplementary petition to the aforesaid application on
16. 12. 2004. Herein also reference was made to Section 34 of arbitration Act, 1940. Thereafter, he filed an application on
28. 2. 2005 praying that as the Arbitration Act, 1940 had been repealed and the suit is of 1998, to avoid any confusion, his earlier petitions may be treated to have been filed under Section 8 of the Arbitration Act, 1996. None of these petitions were accompanied by the original arbitration agreement dated 17. 2. 1992 or a duly certified copy thereof. In fact, there is no requirement of filing the original arbitration agreement or a duly certified copy thereof under Section 34 of arbitration Act, 1940 and as such there was no occasion for defendant no. 3 to file the aforesaid document. The third petition filed on 28. 2. 2005 contained the following prayer :
"it is, therefore, prayed that your honour may graciously be pleased to treat the petitions dated 25. 11. 04, 16. 12. 04 and the present petition as supplement and part of each other for deciding the prayer with regard to stay of the proceedings of the aforesaid suit and/or to refer to arbitration in view of the arbitration agreement covering the subject matter of this suit. There is no whisper in the petition dated 28. 2. 2005 that the original arbitration agreement or a duly certified copy thereof is being filed along with the application. Therefore, there was a clear non-compliance of sub-section (2) of Section 8 of 1996 Act which is a mandatory provision and the dispute could not have been referred to arbitration. Learned counsel for the respondent has submitted that a copy of the partnership deed was on the record of the case. However, in order to satisfy the requirement of sub-section (2) of Section 8 of the Act, defendant no. 3 should have filed the original arbitration agreement or a duly certified copy thereof along with the petition filed by him on 28. 2. 2005, which he did not do. Therefore, no order for referring the dispute to arbitration could have been passed in the suit.
23. Under Article 141 of the Constitution of India, the law declared by the Supreme Court shall be binding on all Courts within the territory of India. Ratio decidendi is based upon the facts actually decided and is an authority for those facts. What is binding is the ratio of the decision and not finding on facts. It is a principle found out upon a reading of the judgment as a whole in the light of the questions before the Court. In Bharat Petroleum Corporation Limited and another v. Vairamani & another , it is held thus: (para 9).
Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. v. Morton, Lord Mac Dermot observed:
"The matter cannot, of course, be settled merely by treating the ipsissima vertra of Willes, J as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight-to be given to the language actually used by that most distinguished judge."
In Natural Resources Allocation, in RE. Special Reference No.1 of 2012 , it is held thus: (paras 69 & 70).
Article 141 of the Constitution lays down that the 'law declared' by the Supreme Court is binding upon all the courts within the territory of India. The 'law declared' has to be construed as a principle of law that emanates from a judgment, or an interpretation of a law or judgment by the Supreme Court, upon which, the case is decided. (See: Fida Hussain and Others v. Moradabad Development Authority and Another, 2011 (12) SCC 615). Hence, it flows from the above that the 'law declared' is the principle culled out on the reading of a judgment as a whole in light of the questions raised, upon which the case is decided. (Also see: Ambica Quarry Works v. State of Gujarat and Others, 1987 (1) SCC 213 and Commissioner of Income Tax v. Sun Engineering Works (P) Ltd., 1992 (4) SCC 363). In other words, the 'law declared' in a judgment, which is binding upon courts, is the ratio decidendi of the judgment. It is the essence of a decision and the principle upon which, the case is decided, which has to be ascertained in relation to the subject-matter of the decision.
45. EACH case entails a different set of facts and a decision is a precedent on its own facts; not everything said by a Judge while giving a judgment can be ascribed precedental value. The essence of a decision that binds the parties to the case is the principle upon which the case is decided and for this reason, it is important to analyse a decision and cull out from it, the ratio decidendi. In the matter of applying precedents, the erudite Justice Benjamin Cardozo in "The Nature of a Judicial Process", had said that "if the judge is to pronounce it wisely, some principles of selection there must be to guide him along all potential judgments that compete for recognition" and "almost invariably his first step is to examine and compare them;" "it is a process of search, comparison and little more" and ought not to be akin to matching "the colors of the case at hand against the colors of many sample cases" because in that case "the man who had the best card index of the cases would also be the wisest judge". Warning against comparing precedents with matching colours of one case with another, he summarized the process, in case the colours don't match, in the following wise words:-
"It is when the colors do not match, when the references in the index fail, when there is no decisive precedent, that the serious business of the judge begins. He must then fashion law for the litigants before him. In fashioning it for them, he will be fashioning it for others. The classic statement is Bacon's: "For many times, the things deduced to judgment may be meum and tuum, when the reason and consequence thereof may trench to point of estate. The sentence of today will make the right and wrong of tomorrow."
In paragraph no. 27 of judgment in N.Radhakrishnans case (9 supra), the Honble Supreme Court made it clear that there is no need to dwell into the ambit and scope of Section 8 (2) of the Act. Because original deed dated 7.4.2003 is not filed, the Honble Supreme Court held that Section 8 (2) of the Act is mandatory requirement. In our considered opinion, no ratio is laid down by the Honble Supreme Court that inspite of availability of original or certified copy of the agreement in the record, Section 8 (2) of the Act has to be complied with and it is mandatory.
24. In the case on hand, it is not in dispute that the plaintiffs filed certified copy of the agreement dated 22.01.2007 along with the plaint. The relevant paragraph of the plaint reads as follows:
After mutual discussions, the plaintiffs agreed to permit defendant company to develop the suit schedule property along with other land and in pursuance of the said intention, entered into a Development Agreement-CUM- General Power of Attorney on 22.01.2007 bearing Doc. No.1380/2007 registered in the office of the District Registrar, Ranga Reddy. The original Development Agreement is with the defendant and he may be called upon to produce the same before this Honble Court. Certified copy of the said agreement is enclosed herewith as Document No.1.
In the affidavit filed in support of the interlocutory application, it is specifically stated that the petitioner and the respondents therein entered into Development Agreement-cum-General Power of Attorney on terms and conditions mentioned therein vide document No.1380/2007, dated 22.01.2007. It is also specifically stated that the present dispute arose out of the said Development Agreement, and that as per clause 39 of the said Development Agreement, the parties agreed to get the disputes resolved through arbitration. Clause 39 of the Development Agreement dated 27.01.2007 is extracted hereunder:
All the disputes arising out of or in connection with this agreement shall be initially resolved by mutual discussions among the Developer and the Land owner or the nominated representatives of both the parties. In case of disputes not resolved by mutual discussions, the same shall be referred to the arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996. The disputes shall be referred to the mutually agreed arbitrator within 3 (three) months from the cause of action. The award of the arbitrator shall be binding and final on both the parties.
The respondents herein filed counter affidavit in the interlocutory application admitting the Development Agreement-cum- General Power of Attorney dated 22.01.2007 and also the existence of an arbitration clause in the said Development Agreement.
25. In view of the pleadings and in view of the fact that the respondents herein/ plaintiffs filed the certified copy of the Development Agreement along with the plaint before the other party filed an application to refer the dispute to an Arbitrator, the requirement under Section 8 (2) of the Act is not imperative. If the certified copy or original agreement is not on record, then the requirement of Section 8 (2) of the Act is mandatory. What the court, prima facie has to see at the stage of Section 8 of the Act is whether there is any arbitration clause in the agreement or not. When original agreement is filed, it is primary evidence within the meaning of Section 62 of the Indian Evidence Act, 1872, and when certified copy is filed, it is secondary evidence within the meaning of Section 63 of the Act. At first sight or on first appearance, the judicial authority has to satisfy whether there is any clause in the agreement which is sufficient to establish fact. The fact is with regard to existence of arbitration clause so that the judicial authority can refer to an Arbitrator. For that purpose, either of the parties is required to file the original or certified copy of the Development Agreement into the court. If the certified copy is not already available on record, then Section 8 (2) of the Act, 1996, in our considered opinion, is mandatory. Therefore, in the factual back ground of the case, we hold that since the respondents/plaintiffs themselves filed certified copy of the Development Agreement-cum-General Power of Attorney dated 27.01.2007 in the trial court before filing the application under Section 8 (2) of the Act, 1996 by the petitioner/defendant, there is no need for the petitioner/defendant to file original, or certified copy, of the said agreement along with the interlocutory application. In the facts and circumstances of the case, in view of the fact that plaintiff already filed certified copy of the agreement and it is already on record, it would be redundant to file agreement again and it is no longer needed or useful for the purpose of deciding the issue under Section 8 (1) of the Act. The point is answered accordingly.
POINT No.2 :
Whether the dispute, which is covered by the suit, can be the subject matter of Arbitration ?
26. It is contended by the learned counsel for the petitioner/ defendant that the dispute is whether there exists arbitrable dispute or not,so as to refer the matter to the Arbitrator. It is stated by both the counsel that the learned trial Judge has not recorded any reasons as to whether the dispute raised by the plaintiff is arbitrable dispute or not.
On this aspect, The learned counsel for the petitioner/defendant placed reliance on a decision in Booz Allen and Hamilton Inc. v. SBI Home Finance Limited & others , wherein it is held thus: (para 36) The well-recognized examples of non-arbitrable disputes are: (i)disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii)matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii)guardianship matters; (iv) insolvency and winding-up matters; (v)testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes.
Whether the case of the plaintiffs falls under any one of the above examples or not, has not been considered by the trial court.
27. Similarly, in Swiss Timing Limited v. Commonwealth Games 2010 Organising Committee , it is held thus: (para 28) To shut out arbitration at the initial stage would destroy the very purpose for which the parties had entered into arbitration. Furthermore, there is no inherent risk of prejudice to any of the parties in permitting arbitration to proceed simultaneously to the criminal proceedings. In an eventuality where ultimately an award is rendered by the Arbitral Tribunal, and the criminal proceedings result in conviction rendering the underlying contract void, necessary plea can be taken on the basis of the conviction to resist the execution/ enforcement of the award. Conversely, if the matter is not referred to arbitration and the criminal proceedings result in an acquittal and thus leaving little or no ground for claiming that the underlying contract is void or voidable, it would have the wholly undesirable result of delaying the arbitration. Therefore, I am of the opinion that the Court ought to act with caution and circumspection whilst examining the plea that the main contract is void or voidable. The Court ought to decline reference to arbitration only where the Court can reach the conclusion that the contract is void on a meaningful reading of the contract document itself without the requirement of any further proof.
From the above decision, it is clear that when the agreement is void ab initio, then the dispute cannot be referred to the Arbitrator and Civil Court is competent to decide whether the contract is void or not. It is not the case of the plaintiffs that the document is void.
28. The learned counsel for the respondents/plaintiffs relied on a decision in Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak & another , wherein it is held thus: (para 13). There is no doubt that where serious allegations of fraud are made against a party and the party who is charged with fraud desires that the matter should be tried in open court, that would be a sufficient cause for the court not to order an arbitration agreement to be filed and not to make the reference. But it is not every allegation imputing some kind of dishonesty, particularly in matters of accounts, which would be enough to dispose a court to take the matter out of the forum which the parties themselves have chosen. This to our mind is clear even from the decision in Russell's case (1880) 14 Ch D 471. In that case there were allegations of constructive and actual fraud by one brother against the other and it was in those circumstances that the court made the observations to which we have referred above. Even so, the learned Master of the Rolls also observed in the course of the judgment at p. 476 as follows.
"Why should it be necessarily beyond the purview of this contract to refer to an arbitrator questions of account, even when those questions do involve misconduct amounting even to dishonesty on the part of some partner ? I do not see it. I do not say that in many cases which I will come to in the second branch of the case before the Court, the Court may not, in the exercise of its discretion, refuse to interfere; but it does not appear to me to follow of necessity that this clause was not intended to apply to all questions, even including questions either imputing moral dishonesty or moral misconduct to one or other of the parties."
We are clearly of opinion that merely because some allegations have been made that accounts are not correct or that certain items are exaggerated and so on that is not enough to induce the court to refuse to make a reference to arbitration. It is only in cases of allegations of fraud of a serious nature that the court will refuse as decided in Russell's case (1880) 14 Ch D 471 to order an arbitration agreement to be filed and will not make a reference. We may in this connection refer to Minifie v. Railway Passengers Assurance Co., (1881) 44 LT 552. There the question was whether certain proceedings should be stayed; and it was held that not withstanding the fact that the issue and the evidence in support of it might bear upon the conduct of a certain person and of those who attended him and so might involve a question similar to that of fraud or no fraud, that was no ground for refusing stay. It is only when serious allegations of fraud are made which it is desirable should be tried in open court that a court would be justified in refusing to order the arbitration agreement to be filed and in refusing to make a reference.
This decision has no application to the facts of the present case in view of the fact that nowhere it is alleged that it is a case of fraud played by the defendant.
29. In Rashtriya Ispat Nigam Limited & another v. Verma Transport Co. , it is held thus: (para 23).
In the instant case, the existence of a valid agreement stands admitted. There cannot also be any dispute that the matter relating to termination of the contract would be a dispute arising out of a contract and, thus, the arbitration agreement contained in clause 44 of the contract would be squarely attracted. Once the conditions precedent contained in the said proceedings are satisfied, the judicial authority is statutorily mandated to refer the matter to arbitration. What is necessary to be looked into therefore, inter alia, would be as to whether the subject-matter of the dispute is covered by the arbitration agreement or not.
30. The learned counsel for the respondents/plaintiffs also relied on a decision in Jalumuri Venkata Raja Rao & another v. Managing Director, Shriram City Union Finance Limited & others , wherein it is held thus: (para 10 ) The very occasion to include a clause providing for arbitration arises, when the parties to the transaction enter into a contract or agreement. By itself, an arbitration clause does not exist independently. It finds place in company with many other clauses that govern the relationship between the parties in relation to a commercial or other similar transaction. By their very nature, the arbitration clauses govern the relationship between the parties, which are purely contractual in nature or those arise out of the agreement between them. However, if a situation, which is purely governed by a provision of law arises, even from the same transaction, arbitration cannot be a remedy for that. In other words, an arbitration cannot be a substitute for a regular Court of law, for adjudication of disputes which are strictly governed by the substantive provision of law. In Booz Allen's case (supra), the Hon'ble Supreme Court maintained this distinction and categorically held that such of the disputes which are strictly governed by the provisions of substantive law, even if arising out of a contract between the parties, cannot constitute the subject -matter of an arbitration. By way of illustration, their Lordship furnished several instances.
Considering the specific prayer in the suit in the above decision, the suit of that nature is not at all barred by the arbitration clause. Hence, the above decision has no application to the acts of the present case.
31. The trial court simply referred to various decisions and came to the conclusion that there was no arbitrable dispute so as to refer the matter to the Arbitrator as agreed between the parties in clause 39 of the Development Agreement. No reasons are assigned on the point whether the dispute raised by the plaintiff is arbitrable dispute or not. Therefore, it is a fit case where the matter can be remanded to the trial court to record findings on point no.2. Hence, the impugned order is set aside and the matter is remanded to the trial court to decide whether the dispute raised by the plaintiff is arbitrable dispute or not.
32. In view of the findings on point nos.1 and 2, the Civil Revision Petition is allowed. No costs. Miscellaneous Petitions pending, if any, in the revision shall stand closed.
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(K.C.BHANU, J.)
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(ANIS, J.) 22-08-2014