Punjab-Haryana High Court
Escorts Finance Ltd. vs Dharambir And Anr. on 19 November, 2004
Equivalent citations: 2005(2)ARBLR385(P&H), (2005)140PLR57A
Author: Ashutosh Mohunta
Bench: Ashutosh Mohunta
JUDGMENT Ashutosh Mohunta, J.
1. This is a revision against the order dated 4.8.2003 passed by the Additional Civil Judge (Sr. Divn.), Jind, whereby the application filed by the defendant/petitioner under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Arbitration Act') for referring the matter to the Arbitrator has been dismissed.
2. Briefly the facts of the case are that the petitioner is a Finance Company and the plaintiff-respondent No. 1 approached the petitioner for financing of a tractor under the loan-cum-hypothecation-cum-guarantee agreement (hereinafter called the agreement) on 30.9.2002. The agreement was executed between the petitioner and respondent No. 1 and as per the agreement the petitioner financed the respondent to the extent of Rs. 2,23,000/-. As per Clause 11 of the agreement it was agreed between the parties that in the event of any difference or dispute between the patties then the matter shall be referred to an Arbitrator who shall constitute the Arbitral Tribunal. Clause 11 of the Agreement is reproduced as under:-
"Clause 11: Any difference or dispute arising between the parties, out of the operation of this agreement, or any renewal thereof, or in any way relating to the rights and liabilities of the parties thereunder, shall be settled by arbitration by a sole arbitrator to be appointed by Escorts Finance Ltd, and the sole arbitrator shall constitute the Arbitral Tribunal. The Arbitral Tribunal shall conduct the arbitration proceedings exclusively at New Delhi. It is agreed between the patties that the Arbitral Tribunal may order a party to take any interim measure of protection as the Arbitral Tribunal considers necessary in respect of the subject matter of the dispute, and may require a party to provide appropriate security in connection with any such measure ordered by it. The Arbitration proceedings shall be conducted in accordance with the provision of the Arbitration and Conciliation Act, 1996, and the Rules and Bye-laws framed thereunder and/or any statutory modification made thereto. The award of the Arbitral Tribunal shall be final and binding on the parties, and shall be enforced under the Code of Civil Procedure, 1908 in the manner as if it were a decree of the Court."
3. The plaintiff-respondent No. 1 did not pay the installments in time and when a demand was raised then the respondent filed a civil suit before the trial Court. The petitioner filed an application under Section 8 of the Arbitration Act praying therein that as per the Agreement the matter is to decided by an Arbitrator and, therefore, the Civil Court does not have the jurisdiction to try this case and the matter should be referred to an Arbitrator. Reply to the application was filed by the plaintiff wherein it was averred that the plaintiff never signed any Agreement and that the alleged signatures on the Agreement are not that of the plaintiff and, hence, the matter cannot be referred to the Arbitrator and it is the civil Court which will have the jurisdiction to decide the dispute between the parties. The trial Court vide its impugned order dismissed the application under Section 8 of the Arbitration Act filed by the petitioner and held that as the plaintiff has denied the execution of the Agreement and as it cannot be decided at this stage as to whether the plaintiff/respondent has in fact signed the same or not, therefore, the civil Court at Jind would have the jurisdiction to decide the matter. It is against this order that the present revision has been filed.
4. Learned counsel for the petitioner has contended that as per Clause 11 of the Agreement, in case of any dispute arising between the parties then the matter would be referred to the sole Arbitrator to be appointed by the petitioner for adjudication. It is submitted that as per the terms and conditions of the Agreement, a loan of Rs. 2,23,000/-was disbursed to respondent No. 1 who has also availed of the same for purchasing a tractor. It is contended that as the respondent is not paying the amount, therefore, the matter is liable to be referred to an Arbitrator and the civil Court has no jurisdiction to try the suit. Learned counsel has relied upon the judgment in Civil Appeal No. 5156 of 2003 (Arising out of S.L.P. (C) No. 21154 of 2002) decided on 23.7.2003, Hindustan Petroleum Corporation Ltd. v. Pinkcity Midway Petroleums, A.I.R 2003 S.C. 2881.
5. The arguments of the petitioner have been controverted by Mr. Lohan, learned counsel for respondent No. 1. It is contended that the respondent never entered into any Agreement with the petitioner. It is further contended that the signatures appearing on the Agreement are not that of the respondent and, therefore, as this question can only be decided by the civil Court, hence, the revision is liable to be dismissed.
6. A perusal of the contents of Clause 11 of the Agreement clearly shows that in case of any difference or dispute arising between the parties then the matter shall be settled through arbitration by appointment of a sole Arbitrator to be appointed by the petitioner. The plaintiff/respondent No. 1 having availed of a loan which has duly been disbursed by the petitioner is therefore bound by the terms and conditions of the Agreement. Whatever be the nature of dispute, the matter would have to go before the Arbitrator who will decide the dispute between the parties. The Arbitrator is fully competent to decide whether the signatures appearing on the Agreement are those of respondent No. 1 or not. It is not disputed that loan was advanced by the petitioner to respondent No. 1 and the respondent has also availed of the amount received by him. Moreover, in the judgment of the Apex Court in Hindustan Petroleum Corpn. Ltd. (supra) it has been held as under:-
"Perusal of the arbitration clause clearly shows that the parties to the Dealership Agreement had agreed to refer their dispute arising out of the agreement, of whatever nature it may be, to an arbitrator as contemplated in that agreement-In cases where there is an arbitration clause in the agreement, it is obligatory for the Court to refer the parties to arbitration in terms of their arbitration - Arbitral Tribunal is empowered to rule on its own jurisdiction including rule on any objection with respect to the existence or validity of the arbitration agreement - Courts below ought not to have proceeded to examine the applicability of the arbitration clause to the facts of the case in hand but ought to have left that issue to be determined by the Arbitral Tribunal."
7. In the instant case, as the petitioner had filed an application under Section 8 of the Arbitration Act before filing the written statement, therefore, the trial Court was bound to refer the matter to the Arbitrator and should not have exercised its jurisdiction to try the case between the parties.
8. Resultantly, this revision is allowed. The impugned order dated 4.8.2003 passed by the Additional Civil Judge (Sr. Divn.) Jind, is set aside the and the dispute between the parties shall be adjudicated by an Arbitrator.