Karnataka High Court
Mr. Shoheb G. Killedar vs M/S Tinna Agro Industries Ltd., on 19 June, 2018
Author: B.V.Nagarathna
Bench: B.V. Nagarathna
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IN THE HIGH COURT OF KARNATAKA,
DHARWAD BENCH
DATED THIS THE 19TH DAY OF JUNE 2018
BEFORE
THE HON'BLE MRS. JUSTICE B.V. NAGARATHNA
Writ Petition No.101353 of 2018 (GM-CPC)
BETWEEN
MR. SHOHEB G. KILLEDAR
AGE: 33 YEARS, OCC: BUSINESS,
R/O: 2ND FLOOR, "GAFOOR BUILDING",
OPP: KOLSABADA MASJID,
NEAR GARDENPETH, HUBBALLI-580020,
TQ: HUBBALLI, DIST: DHARWAD.
... PETITIONER
(By Sri. S.N. BANAKAR, ADVOCATE)
AND
M/S TINNA AGRO INDUSTRIES LTD.,
PRESENTLY KNOWN AS
ADM AGRO INDUSTRIES DHARWAD PVT. LTD.,
HAVING REGD. OFFICE AT B-1
DEFENCE COLONY, NEW DELHI-110024,
AND ITS FACTORY UNITS AT
PLOT NO.260-262, 45 AND 45A,
BELUR INDUSTRIAL AREA,
DHARWAD-580011,
REPRESENTED BY ITS DIRECTOR
PRAVEEN KUMAR S.P.
... RESPONDENT
THIS WRIT PETITION IS FILED UNDER ARTICLES
226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING
TO QUASH THE IMPUGNED ORDER DATED 10.01.2018
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PASSED ON I.A.II IN O.S.NO.272/2013 BY THE II
ADDITIONAL SENIOR CIVIL JUDGE AND C.J.M., DHARWAD
AS PER ANNEXURE-G AND TO ALLOW I.A.II FILED AS PER
ANNEXURE-E DATED 14.09.2017 BY ALLOWING THIS
WRIT PETITION.
THIS WRIT PETITION COMING ON FOR PRELIMINARY
HEARING THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
Petitioner has assailed order dated 10.01.2018 passed on I.A.2 in O.S. No.272 of 2013 pending on the file of II Additional Senior Civil Judge and CJM Dharwad. The said application was filed under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act' for the sake of brevity). By the impugned order, the trial Court has rejected the said application. Being aggrieved, petitioner has preferred this writ petition.
2. Briefly stated the facts are that, the respondent-plaintiff has filed O.S. No.272 of 2013 on 16.11.2013 seeking recovery of Rs.10,12,324/- from the petitioner/defendant in the suit. The said dispute arises under an agreement entered into between the parties. A 3 copy of which is at Annexure-D dated 03.04.2011. The said agreement contains an arbitration clause which reads as under:
"Arbitration and jurisdiction All disputes or differences whatsoever arising between the Parties out of or relating to the construction, meaning and operation or effect of this Agreement or the breach, thereof, shall be settled by arbitration at New Delhi under the provisions of the Indian Arbitration & Conciliation Act, 1996 and the Award made in pursuance thereof shall be binding on all the Parties to this Agreement. The venue of such arbitration shall be at New Delhi. Delhi Courts alone shall have jurisdiction over any disputes arising out of this Agreement.
Despite the said arbitration clause in the agreement, respondent herein filed original suit before the trial Court. In response to the suit summons and notices, the petitioner herein appeared and filed his written statement on 25.03.2014. Thereafter, on 14.09.2017, after a period of two and a half years, petitioner filed an application under Section 8 of the Act seeking reference to an Arbitrator in terms of Section 8 of the Act. By the impugned order, the 4 trial Court has rejected the said application. Being aggrieved, this writ petition has been preferred.
3. I have heard learned counsel for the petitioner. He submits that the trial Court was not right in rejecting his application; that there is an arbitration clause in the agreement. Therefore, respondent could not have approached the civil Court for redressal of his grievances. The matter had to be adjudicated by an Arbitrator. In the circumstances, the trial Court ought to have allowed the application filed under Section 8 of the Act and referred the matter for arbitration. Having not done so, the trial Court has committed an error which calls for rectification at the hands of this Court.
4. Having heard learned counsel for the petitioner and on perusal of the material on record, it is noted that there is indeed an arbitration clause in the agreement entered into between the parties on 03.04.2011. Despite there being an arbitration clause in the said agreement, respondent herein filed original suit before the civil Court 5 seeking recovery of certain sums of money from petitioner herein. If the petitioner indeed intended that the matter be referred to an Arbitrator so as to oust the jurisdiction of the trial Court, then the petitioner ought to have filed an application under Section 8 of the Act having regard to the mandatory requirements stated in the said Section. Section 8 of the Act reads as under:
"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 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."6
5. The said Section has been considered by the Hon'ble Supreme Court in the case of Sundaram Finance Limited and another v. T. Thankam reported in (2015) 14 SCC 444 wherein it has been observed as under:
" 8. Once there is an agreement between the parties to refer the disputes or differences arising out of the agreement to arbitration, and in case either party, ignoring the terms of the agreement, approaches the civil Court and the other party, in term of Section 8 of the Arbitration Act, moves the court for referring the parties to arbitration before the first statement on the substance of the dispute is filed, in view of the peremptory language of Section 8 of the Arbitration Act, it is obligatory for the court to refer the parties to arbitration in terms of the agreement, as held by this Court in P. Anand Gajapathi Raju v. P.V.G. Raju (AIR 2000 SC 1886)."
Further, reliance could be placed on P. Anand Gajapathi Raju and others v. P.V.G. Raju (dead) and others reported in (2000) 4 SCC 539 wherein conditions which are required to be satisfied under sub-sections (1) and (2) of Section 8 before the Court can exercise its powers are stated. The same read as under: 7
(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 before it submits his first statement on the substance of the dispute."
The Hon'ble Supreme Court has further observed that when once the prerequisites for an application under Section 8 are fulfilled, then the civil court would have no jurisdiction to entertain the suit and the application filed under Section 8 of the Act ought to be granted. That any refusal to refer the dispute to arbitration would amount to failure of justice and cause irreparable injury to the defendant. Therefore, the Hon'ble Supreme Court has stipulated that one of the conditions of Section 8 of the Act is that the defendant must move the civil Court seeking reference to arbitration before he submits his first statement on the substance of the dispute. It means that before filing written statement, an application under Section 8 of the Act ought to be filed.
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6. In the instant case, as already noted, written statement was filed by the petitioner herein on 25.03.2014. Thereafter, an application under Section 8 was filed on 14.09.2017 which is almost three years thereafter, when the issues were framed and the suit was at the stage of plaintiff's evidence. The trial Court was justified in dismissing the application though on different reasons. The said order would not call for any interference in this writ petition for the reason that the petitioner has not complied with the requirements of Section 8 of the Act in making an application seeking reference of the dispute to an Arbitrator before filing his written statement and thereby waving his right and acquiescing to the jurisdiction of the trial Court to entertain the dispute.
There is no merit in this writ petition. Writ petition is hence dismissed.
Sd/-
JUDGE Kmv