IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF FEBRUARY, 2019 BEFORE THE HON'BLE MR.JUSTICE ASHOK G. NIJAGANNAVAR CIVIL REVISION PETITION NO.633 OF 2015 (IO) BETWEEN:
1. THE MANAGER, M/S SHRIRAM TRANSPORT, FINANCE CO. LTD., OPP. SYNDICATE BANK, I.G.ROAD, CHIKMAGALURU – 577116.
2. THE DIVISIONAL MANAGER, M/S SHRIRAM TRANSPORT, FINANCE CO. LTD., MANGALURU – 575001.
3. THE CHIEF MANAGER, M/S SHRIRAM TRANSPORT, FINANCE CO. LTD., REGD. OFFICE: MOOKAMBIKA COMPLEX, LADY DESIKA ROAD, MYLAPORE, CHENNAI – 600004.
4. THE CHIEF MANAGER, M/S SHRIRAM TRANSPORT, FINANCE CO. LTD., ADMINISTRATIVE OFFICE, NO.101 – 105, 1ST FLOOR, ‘B’ WING, SHIVA CHAMBERS, SECTOR – 11, CBD BELAPUR, NAVI MUMBAI – 400614, NOS.1 TO 4 ARE REP. BY ITS CHIEF EXECUTIVE (LEGAL), MR.NAGABHUSHAN M.C, S/O.CHIKKARANGAIAH, AGED ABOUT 39 YEARS. …PETITIONERS (BY SRI.M.J.ALVA, ADVOCATE) AND:
B.LOKESHA, S/O LATE BETTACHARY, AGED ABOUT 45 YEARS, RESIDENT OF SHANKARAPURA, LAST CROSS, CHIKMAGALURU CITY – 577116. ...RESPONDENT **** THIS CIVIL REVISION PETITION IS FILED UNDER SECTION 115 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED 09.11.2015 PASSED IN OS.NO.53/2015 ON THE FILE OF THE 2ND ADDL. CIVIL JUDGE AND JMFC., CHIKAMAGALURU, DISMISSING IA NO.3 FILED UNDER SECTION 8 OF ARBITRATION AND CONCILIATION ACT.
THIS PETITION COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER This petition is filed for setting aside the impugned order dated 9.11.2015 in O.S. No.53/2015 passed by the learned II Additional Civil Judge and JMFC, Chikamagaluru.
2. The facts briefly stated are that the respondent has filed a suit against the petitioners for bare injunction to restrain the petitioners from seizing the suit schedule vehicle. In the said suit, the temporary injunction was granted by the Court below. The petitioners herein appeared in the said suit and filed an interlocutory application under Section 8 of the Arbitration Act to refer the matter to the Arbitration in view of clause 15 in Loan cum Hypothecation agreement. The plaintiff – respondent filed objection to I.A. No.3, but the Court below rejected the I.A. No.3 filed by the defendant – petitioners under Section 8 of the Arbitration and Conciliation Act without assigning any reason. Thus, being aggrieved by the impugned order the petitioners have filed this petition.
3. The only grievance of the counsel for the petitioners is that the trial Court has passed a cryptic order without assigning reasons. In view of clause 15 of the Loan cum Hypothecation Agreement, the trial Court ought to have referred the matter for arbitration, but the application was rejected mechanically without application of mind. Whenever an application is filed under Section 8 for arbitration, the Courts shall have to consider the same. It is obligatory for the Court to refer the parties to arbitration in terms of Arbitration Agreement and nothing remains to be decided after such application is made, except to refer to arbitrator. In support of the said contention, he has relied on the following decisions of the Hon’ble Supreme Court:-
(1) 2015 (4) SCJ 52 (M/s. Sundaram Finance Limited and another vs. T Thankam) (2) 2017 (3) SCJ 646 (Mrs. Hema Khattar and another vs. Shiv Khera) 4. The impugned order dated 09.11.2018 passed by the trial court, reads as under:
“I.A. 3 filed by the defendants u/Sec. 8 of Arbitration and Conciliation Act filed by defendants is hereby dismissed.
Call for written statement.”
5. As could be seen from the impugned order, I.A. No.3 filed by the defendants under Section 8 of the Arbitration and Conciliation Act is rejected without any reasons. It is evident that the order passed on I.A. No.3 is a cryptic order, there is no mention about the grounds stated in the IA filed by the defendants or the objections filed by the plaintiff to I.A. No.3. There is no reason whatsoever to show that whether the arbitration clause can be invoked or not, or whether the parties can be referred to the arbitration as provided in the Loan and Hypothecation Agreement.
6. In a decision reported in 2015(4) SCJ 52 the Hon’ble Supreme Court has held as under:
“ 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 terms of the 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.”
7. In another decision reported in 2017(3) SCJ 646 the Hon’ble Supreme Court has held as under:
“Arbitration and Conciliation Act, 1996, Section 8 – Prerequisite conditions, scope and applicability.
The prerequisites for an application under Section 8 are fulfilled, viz., there is an arbitration agreement; the party to the agreement brings an action in the court against the other party, the subject matter of the action is the same as the subject matter of the arbitration agreement; and 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 language of Section 8 is peremptory in nature. Therefore, 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 agreement and nothing remains to be decided in the original action after such an application is made except to refer the dispute to an arbitrator. Therefore, it is clear that in an agreement between the parties before the civil court, if there is a clause for arbitration, it is mandatory for the civil court to refer the dispute to an arbitrator.”
8. In view of the principles laid down in the aforesaid decisions duty is cast upon the civil Court to refer the dispute to an arbitrator and it is mandatory for the civil Court to refer the dispute to an arbitrator. Thus, the impugned order dated 09.11.2015 is not sustainable in law and the same deserves to be set aside.
9. For the foregoing reasons, the petition is allowed. the impugned order dated 09.11.2015 passed in O.S. No.53/2015 on the file of the 2nd Additional Civil Judge and JMFC, Chikamagaluru, dismissing I.A. No.3 filed under Section 8 of Arbitration and Conciliation Act is set aside. The trial Court is directed to consider the I.A. No.3 afresh and pass necessary orders.
Sd/- JUDGE ykl