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2001 Supreme(AP) 627

Andhra Pradesh High Court
Judges : B.S.A.SWAMY
MANAGING DIRECTOR, SUNDARAM FINANCE LTD., MADRAS - Appellant
Versus
G.S.Nandakumar - Respondent
Decided On : 06-28-01

Headnote:

Code of Civil procedure, 1908 - Section 2 (4) – Civil Law - Arbitration and Conciliation Act, 1996 - Sections 2 (l) (e), 8 and 9 of - General Clauses act - Section 3 (17) - Arbitration Act, 1940 - Section 2 (c), 21 – Suit for recovery of money - Seized two lorries - Appointment of an arbitrator - Respondent filed a suit on the file of First Additional junior Civil Judge for rendition of accounts against the petitioners herein along seeking injunction restraining the petitioners herein from seizing the two lorries which were hypothecated to the petitioners on hire purchase agreement and obtained ex parte injunction - While representing the matter the petitioners herein agreed to confine the relief for appointment of an arbitrator without prejudice to their right to contest the temporary injunction granted earlier having heard the matter at length directed the parties to settle the dispute through arbitration. But at the same time the Court observed that the respondent - Plaintiff in the suit shall possess and enjoy the two vehicles in issue till the attainment of finality of the prospective arbitral award which may be passed between them and subject to the said award on his written undertaking to keep the said vehicles in tact in his safe custody in a roadworthy condition without creating any charge or encumbrance over the same and on his furnishing security for a sum of to the satisfaction of the Court – Held, Court as defined in section - From distinction also it can be safely concluded that the court referred in Section is District Court but not any other Court having original jurisdiction - Suit filed by the respondent in the Court of First Additional Junior Civil Judge chittoor is not maintainable in law - But at the same time, as the word used in section 8 is judicial authority - Court need not interfere with the order of the Court below to the extent of directing the parties to settle the dispute through arbitration as per the terms of the agreement - Rest of the order cannot be sustained in law and it is accordingly set aside - But at the same time as the Act made a provision for obtaining interim orders even before arbitration proceedings are commenced – Court direct the respondent to approach the District Court if he is so advised seeking interim orders with regard to the custody of the vehicles - Petition is allowed

B. S. A. SWAMY, J.

( 1 ) THE Managing Director-Sundaram finance Limited, Madras and the local branch Manager at Chittoor filed this revision Petition aggrieved by the order to the extent that it went against their interest.

( 2 ) HEARD both the Counsel.

( 3 ) THE respondent filed a suit O. S. No. 185 of 2001 on the file of First Additional junior Civil Judge, Chittoor for rendition of accounts against the petitioners herein along with I. A. No. 150 of 2001 seeking injunction restraining the petitioners herein from seizing the two lorries which were hypothecated to the petitioners on hire purchase agreement and obtained ex parte injunction. Thereafter, the petitioners herein filed I. A. No. 214 of 2001 bringing to the notice of the Court that the hire purchase agreement contains a Clause for appointment of an arbitrator to be nominated by the first petitioner herein and as such the Court has no jurisdiction to entertain the suit and the same has to be dismissed. The Court seemed to have taken an objection that two reliefs cannot be claimed in a single petition. While representing the matter the petitioners herein agreed to confine the relief for appointment of an arbitrator without prejudice to their right to contest the temporary injunction granted earlier. The Court having heard the matter at length directed the parties to settle the dispute through arbitration. But at the same time the Court observed that the respondent i. e. , the plaintiff in the suit shall possess and enjoy the two vehicles in issue herein till the attainment of finality of the prospective arbitral award which may be passed between them and subject to the said award on his written undertaking to keep the said vehicles in tact in his safe custody in a roadworthy condition without creating any charge or encumbrance over the same and on his furnishing security for a sum of Rs. 50,000. 00 to the satisfaction of the Court by 12-4-2001, failing which automatically he shall not be entitled to enjoy the benefits of the order any more. Aggrieved by the order of the lower Court to that extent, the petitioner company filed the revision petition.

( 4 ) THE case of the petitioners herein is that the application was filed before the court below under Section 8 of the Act, whereunder an obligation is cast on the judicial authority to refer the parties to arbitration, when the arbitration agreement contains such a clause and one of the parties applies for a reference to the arbitrator as contemplated under the agreement. Hence, the Court below having referred the parties to arbitration exceeded its limits in directing the custody of the two lorries covered by hypothecation with the respondent. If any party intends to get any interim orders during the pendency of the arbitration proceedings, such a party can only make an application to a Court under Section 9 of the act. It is not in dispute that Section 9 of the act deals with interim measures to be taken by a Court at the instance of one of the parties to the dispute either before or during arbitral proceedings or after making the arbitral award, but before it is enforced in accordance with Section 36.

( 5 ) THE only question to be considered now in this revision petition is which is the court that the parties have to approach in the light of the definition given for the word "court" in Section 2 (l) (e) of the Arbitration and Conciliation Act, 1996. It is useful to extract the definition of Court. "section 2 (l) (e):- "court" means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit, but does not include any civil Court of a grade inferior to such Principal Civil Court, or any Court of Small Causes. "

( 6 ) WHILE it is the case of the petitioners that the parties have to approach the di










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