Judgement

SABYASACHI MUKHARJI, J.:- Special leave granted.

2. This is an appeal from the judgment and order of the High Court of Madhya Pradesh dated 17th December, 1986. The appeal was filed by the plaintiff whose suit for a declaration that the eight agreements contracts executed between it and the defendant No. 1 M/s. Jayabharat Credit and Investment Company Ltd. were not Hire purchase agreements but were agreements relating to transaction of loan and for injunction restraining the defendant No. 1 from enforcing them until the decision of the suit, had been dismissed on the ground that the suit was not maintainable in view of the provisions of S. 32 of the Arbitration Act. 1940 (hereinafter called the Act). S. 32 of the Act stipulates that notwithstanding any law for the time being in force no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be enforced, set aside, amended, modified or in any way affected otherwise than as provided in the said Act. The execution of documents containing the alleged arbitration clause was not disputed in this case. The clause was as follows :

"All disputes, differences or claims arising out of this agreement shall be settled by arbitration in accordance with the provisions of the Arbitration Act, 1940 or any statutory amendments thereof and shall be referred to the sole arbitration of a person to be nominated by the owners. In the event of death, refusal, neglect, inability or incapability of the person so appointed to act as arbitrator, the owners may appoint a new arbitrator. The award of the arbitrator shall be final and binding on all the parties concerned."

3. Various issues were framed by the trial Court. The Appellate Court confirmed the said decision. There was a second appeal to the High Court. The High Court framed the question of law in the impugned judgment as follows :

"Whether the Courts below were right in holding that S. 32 of the Arbitration Act barred the suit and in dismissing the same on that ground?"

It was contended before the High Court by the appellant that the so-called hire purchase agreements were nothing else than agreements entered into by the plaintiff and the defendant No. 1 with respect to transaction of loan. It was the case of the appellant that the alleged arbitration agreement was not entered into as such in the sense though certain documents were executed, these were not properly understood as hire purchase agreements. Therefore, the main question was whether the existence of the agreement as hire purchase agreement was denied by the appellant and put in issue before the Court. Specific case of the appellant was that this was a transaction of loan and there was in fact no agreement of arbitration. It appears from the perusal of the plaint as well as the issues framed that the very existence of the agreement described as hire purchase agreement was put in issue. The execution of the documents was not denied but it was alleged that these were manipulated documents, in other words fraudulent documents and it was further the case of the appellant that there were in fact no agreements which contained the arbitration agreement. The case of the appellant was that there was no document containing any valid arbitration agreement in existence. This fact was raised in the plaint and issue to that effect was raised, in other words that the appellant, plaintiff in this case had contended that the agreements described as hire purchase agreements were untrue and void and procured fraudulently. The issues framed by the learned trial Judge also included this specific point. S. 32 of the Act does not contemplate the case suits challenging the validity of a contract because it contains an arbitration clause. If the intention of the legislature were that all documents containing an arbitration clause should come within the purview of Ss. 32 and 33, the leg