( 1 ) HEARD Mr. Divekar for petitioners and Mr. Modi for respondents.

( 2 ) THIS is a petition under section 8 of the Arbitration and Conciliation Act, 1996. Petitioners submit that the suit instituted by the respondents is for recovery of a sum of rs. 12,97,529/- with interest @ 6% p. a. from the date of filing of the suit till payment of realisation. By this Arbitration Petition, the petitioners who are original defendants in summary Suit No. 2294 of 2003 pray that the dispute in the suit be referred to arbitration as per Arbitration and Conciliation Act, 1996.

( 3 ) IT is the case of the petitioners that the claim in the suit is based upon a letter dated 24th December, 1997. According to them, this was a Letter of Intent ('loi for short) for civil work on the terms and conditions more particularly set out therein. This LOI is relied upon by the respondents in the plaint. They have also referred to and relied upon the terms and conditions incorporated in the same.

( 4 ) MR. Divekar submits that as per the LOI and the terms and conditions annexed as annexures thereto, it is agreed between the parties that the civil work would be carried out in accordance therewith. Mr. Divekar submits that these terms and conditions of the LOI along with general terms and conditions are binding upon parties. Mr. Divekar submits that clause 26 of the general terms and conditions provide for reference of the disputes to arbitration as per Indian Arbitration Act, 1940 together with all statutory amendments and modification thereto. The venue of the arbitration is at mumbai. According to Mr. Divekar, the claim in the summary suit is based on the bills raised for the work entrusted under the LOI. Respondents claim that they have carried out civil works at the site as per the LOI and the claims are nothing but running bills for the work done under the LOI. Merely because reliance is placed upon a so called acknowledgment which is annexed at Exhibit-E, it cannot be said that the claim can be proceeded under Order xxxvii of the CPC in the face of a clear agreement to refer the dispute to Arbitration. That apart, on merits, Mr. Divekar submits that the letter does not acknowledge the liability as is sought to be contended on behalf of respondents.

( 5 ) MR. Modi and Mr, Parikh appearing for the original plaintiffs firstly contended that the claim in the suit arises out of a written contract coupled with acknowledgment of liability. It is maintainable under Order XXXVII of the CPC, 1908. According to them, Order XXXVII of CPC is an exception to the general procedural provisions and some suits could be entertained and decided in summary manner as provided therein. The Legislative intendment in providing for summary disposal of admitted claims ought to be borne in mind while considering the present application. It is not as if the reference to arbitration of summary suits is contemplated in the Arbitration and Conciliation Act, 1996. In their submission, assuming that the claim arises out of LOI and the terms and conditions therein have been relied upon, yet, the provisions of Order XXXVII of the CPC cannot be brushed aside in the present case.

( 6 ) SECTION 8 of the Arbitration and conciliation Act, 1996 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 authority may be commenced or continued and an arbitral award made. " secti