This civil revision petition is filed under Article 227 of the Constitution of India, challenging the order dated 2.7.2008 made in I.A.No.125 of 2006 in O.S.No.72 of 2005 on the file of the District Court, Kanyakumari at Nagercoil.
2. I.A.No.125 of 2006 was filed by the first defendant in the suit praying to refer the dispute between the petitioner/first defendant and the respondent/plaintiff before the Arbitrator as per
Section 8 of the Arbitration and Conciliation Act, 1996 (Act 26 of 1996), as per the terms of the purchase orders.
3. The respondent herein filed the suit O.S.No.72 of 2005 against the petitioner herein and four others and prayed for a decree for recovering a sum of Rs.18,62,679.52 along with interest at the rate of 18% per annum from the date of the suit till the date of the decree and from the date of decree till the date of realisation.
4. The petitioner/first defendant's case is that the purchase orders contain a clause stating that 'All disputes are subject to arbitration and the matter shall be referred to the sole Arbitrator or Chairman of the Company or to the person nominated by him on his behalf and the venue of arbitration will be at Madras. The decision of the arbitrator described above shall be final and binding on both the parties' and therefore the suit filed for recovery of the amount is not maintainable and the remedy open to the respondent/plaintiff is only to seek reference for arbitration.
5. The said application filed in I.A.No.125 of 2006 was resisted by the respondent/plaintiff stating that there is no agreement signed between the parties, containing such arbitration clause and clause 9 of the purchase order relied on by the petitioner/first defendant is not acceptable as it is unreasonable and opposed to public policy since the petitioner/first defendant seeks to be a Judge of his own case.
6. The learned District Judge, Kanyakumari at Nagercoil dismissed the application by holding that as per
section 8(2) of the Arbitration and Conciliation Act, 1996, the application seeking reference to arbitration shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. The petitioner herein has not chosen to file any original arbitration agreement or a certified copy thereof and therefore rejected the application seeking reference to arbitration.
7. The learned counsel for the petitioner/first defendant submitted that the purchase order having contained a clause for arbitration, the same has to be treated as arbitration agreement and therefore the petitioner is justified in seeking reference to arbitration.
8. The learned counsel for the respondent/plaintiff on the other hand submitted that for filing a petition seeking reference under
section 8(2) of the Arbitration and Conciliation Act, 1996, there must be an agreement signed by both the parties and the original agreement or the certified copy thereof shall be filed and then only the Court will get jurisdiction to refer the matter for arbitration. In the absence of any agreement signed between the parties, it cannot be treated that there exists an agreement containing arbitration clause and therefore the learned District Judge, Kanyakumari at Nagercoil is right in dismissing I.A.No.125 of 2006. The learned counsel also submitted that the respondent herein has no confidence on the petitioner/first defendant for referring the matter for arbitration and the respondent/plaintiff prefer adjudication of the suit by the Civil Court.
9. I have considered the rival submissions of the learned counsel for the petitioner/first defendant and the respondent/plaintiff.
10. Admittedly the suit was filed by the respondent/plaintiff for recovery of a sum of Rs.18,62,679.52.
Section 8 of the Arbitration and Conciliation Act, 1996 (Act 26 of 1996) reads as follows:
"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."
Section 7 of the Act deals with arbitration agreement, which reads as follows:
"7. Arbitration agreement.-
(1) In this Part, 'arbitration agreement' means an agreement by the parties to submit to arbitration all or certain disputes which have arisen 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 letters, 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."
11. It is an admitted case of the petitioner/first defendant as well as respondent/plaintiff that there is no arbitration agreement between the parties. The application was filed before the District Court on the basis of a clause contained in the purchase order. The said clause is not accepted by the respondent/plaintiff and admittedly there is no agreement between the parties and no agreement/contract signed by the parties was filed before the District Court along with I.A.No.125 of 2006, seeking reference for arbitration.
12. The learned counsel for the petitioner/first defendant contended that as per
Section 7(5) of the Act, the purchase order contains a clause for arbitration and the same constitutes an arbitration agreement.
13.
Section 7(5) clearly states that 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. Here, in this case, there is no contract in writing and consequently there cannot be any reference with regard to the clause contained in the purchase order in the contract. It is also relevant here to note that neither in the affidavit filed before the District Court nor before this Court, the petitioner stated about the existence of a written contract. The clause contained in the purchase orders, to refer the disputes, is only a statement on the part of the petitioner. It cannot be presumed that the respondent herein accepted the said clause of the contract in writing, signed by parties. Thus, the petitioner/first defendant cannot rely on
Section 7(5) of the Act to support its contention.
14. Similar issue was considered in the decision reported in (2007) 5 SCC 719 (Jagdish Chander v. Ramesh Chander), particularly with regard to the scope of Section 7(5) of the Act. The Supreme Court in paragraph 11 held that existence of the arbitration clause as defined under
section 7 of the Act is a condition precedent for the exercise of power to appoint an Arbitrator.
15. The decision cited by the learned counsel for the petitioner reported in (2006) 5 SCC 272 (Groupe Chimique Tunisien Sa v. Southern Petrochemicals Industries Corporation Ltd.) is not supporting the case of the petitioner since admittedly there is no contract in writing between the parties.
16. The issue as to whether for seeking arbitration under
section 8(2) of the Act, certified copy of the agreement is required to be filed, came up for consideration before the Honourable Supreme Court in the decision reported in (2008) 2 SCC 602 : 2008 (2) Law Weekly 872 (Atul Singh v. Sunil Kumar Singh), wherein in paragraphs 18 and 19 (in SCC), it is held thus, "18. 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 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 the 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 and Conciliation 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 the Arbitration Act, 1940 and as such there was no occasion for Defendant 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 25-11-2004, 16-12-2004 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."
19. 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 with sub-section (2) of
Section 8 of the 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 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."
17. It is also to be noted in this case that the respondent herein/plaintiff demanded the amount by letter dated 27.7.2005 and also on various occasions as claimed in the plaint as well as in the counter affidavit in I.A.No.125 of 2006. If really there is a clause for settling the dispute through arbitration, nothing prevented the petitioner/first defendant to refer the matter for arbitration as per clause 9 in the purchase orders. Thus, it is evident that there is no bona fide on the part of the petitioner/first defendant in filing I.A.No.125 of 2006.
18. In the light of the above findings as well as the decisions cited above, I am of the view that dismissal of I.A.No.125 of 2006 in O.S.No.72 of 2005 by order dated 2.7.2008 by the learned Principal District Judge, Kanyakumari at Nagarcoil, rejecting the request of the petitioner/defendant to refer the matter for arbitration is just and proper and no interference is called for in the said order.
There is no merit in the revision petition and the same is dismissed. No costs. Connected miscellaneous petition is also dismissed.
vr To The Principal District Judge, Kanyakumari at Nagercoil.