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High Court of Judicature at Bombay
D.Y. CHANDRACHUD & A.A. SAYED
Deceased Sharda Raje Uday Singh Rao Gaekwar through her heir and legal representative Ujjwala Raje Shah & Another
Versus
Veer Corporation
APPEAL NO.23 OF 2000 IN ARBITRATION PETITION NO.324 OF 1999
Decided on : 13-12-2011
Before the Court can exercise its power under Section 8, several conditions are to be satisfied, these being that
(i) There must be an arbitration agreement;
(ii) An action is brought by a party to the arbitration agreement against the other party before a judicial authority;
(iii) The subject-matter of the action before the judicial authority is the subject of the arbitration agreement; and
(iv) The other party applies before the judicial authority for referring parties to arbitration before it submits his first statement on the substance of the dispute.
Arbitration and Conciliation Act, 1996 - Section 8 - Application for reference to arbitration - Section 8 of Act applies to a judicial authority which expression is of a wider connotation than Court.
Section 8 applies to a judicial authority, which expression is of a wider connotation than the Court. Parliament has advisedly used the expression "judicial authority" in sub- section (1) of Section 8 so as to cast an obligation even upon a judicial authority which, strictly speaking, may not be a Court to refer parties to arbitration where an action is brought in a matter which form the subject-matter of an arbitration agreement.
Before the Court can exercise its power under Section 8, several conditions are to be satisfied these being that -
(i) There must be an arbitration agreement;
(ii) An action is brought by a party to the arbitration agreement against the other party before a judicial authority;
(iii) The subject-matter of the action before the judicial authority is the subject of the arbitration agreement; and
(iv) The other party applies before the judicial authority for referring parties to arbitration before it submits his first statement on the substance of the dispute.
Arbitration and Conciliation Act, 1996 - Section 8 - Power of Court - Court, while exercising its power under Section 8 of Act, to refer parties to arbitration, several conditions are to be satisfied.
Where the application under Section 9 of the Act of 1996 was dismissed by the Single Judge by his impugned order dated 25.11.1999 holding that an application under Section 8 filed by the appellants was pending before the Court at Vadodara where the respondent filed a suit seeking a decree for specific performance and injunction against the appellants. The Judge was of the view that since an application under part-I of the Act of 1996 was pending, then it is only that Court, would have jurisdiction over the arbitral proceedings.
The mere filing of an applicant under Section 8 of the Arbitration and Conciliation Act, 1996, would not confer jurisdiction on the Court in which the application is filed over the arbitral proceedings and all applications arising out of the agreement Section 8 applies to a judicial authority, which expression is of a wider connotation than a Court. An application under Section 9 for an interim measure has to be moved before a Court. That expression. for the purposes of Section 9, must necessarily have the same connotation as dehued in Section 2(e). Evidently, where the judicial authority is not a Court, there would be no scope for the application of Section 42, because Section 42 postulates a situation where with respect to an arbitration agreement any application under Part I has been made in a Court.
A party which has breached its obligation under the contract to refer dispute to arbitration by bringing an action in a Court cannot by its conduct ensure that the Court which would have jurisdiction over the arbitral proceedings is the Court in which the action was brought. For, once an action is commenced by one of the parties to the arbitration agreement, the other party, if it is desirous of proceeding with arbitration has necessarily to apply under Section 8 in the Court in which the action is brought.
In view of the matter, that the Single Judge was, in error in holding that once an application was filed under Section 8, it is only that Court where the application was pending which would have jurisdietion over the arbitral proceedings and that till the application under Section 8 remains pending before the Court of Vadodara, Bombay High Court would not have jurisdiction to pass an order in relation to arbitral proceedings, including under Section 9. The impugned judgment is set aside and the proceedings are remanded hack to the Single Judge for a fresh expeditious decision.
Arbitration and Conciliation Act, 1996 - Section 8 - Reference to arbitration - Once conditions are satisfied, an obligation Courts on Court/Judicial Authority to refer parties for arbitration.
Arbitration and Conciliation Act, 1996 - Sections 8, 9 and 42 - Application under Section 8 of Act - Where an application under Section 8 of Act is pending then it cannot be said that it is only that Court where it is pending would have jurisdiction and no other Court would have jurisdiction to pass order under Section 9 of Act.
D.Y. CHANDRACHUD, J.
1. This appeal arises out of an order of a Learned Single Judge dated 22 November 1999, dismissing a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996, on the ground that the Appellants having filed an application under Section 8 before a Court at Vadodara, where the Respondent has instituted a suit, this Court would not have jurisdiction to pass any orders in relation to arbitral proceedings, including orders under Section 9.
2. The Appellants claim to be owners of land admeasuring 21,706 sq.mtrs. bearing R.S.86 (part) and 95B situated at Jetalpur Taluka in the District of Baroda. Between 2 March 1995 and 18 March 1995, the Appellants entered into diverse agreements with the Respondent for the development of the property. On 11 August 1995, the Appellants addressed a communication to the Respondent alleging breach in the performance of the obligation under the agreements. The agreements contain an arbitration agreement. On 25 August 1995, the Respondent responded to the letter and contended that as provided in the agreements disputes between the parties in this regard or regarding the development agreement have to be referred to arbitration. On 6 September 1995, the Appellants purported to reiterate that the agreement stood terminated.
3. The Respondent filed a suit Civil Suit 671 of 1998 before the Civil Judge, Senior Division, Vadodara on 7 September 1998, seeking inter alia a decree for specific performance and an injunction restraining the Appellants from disturbing the Respondent “from making use and occupation” of the land and from disturbing the Respondent from pursuing the work of development and construction on the land. On 16 September 1998, the Appellants filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 in the Court of the Civil Judge, Senior Division at Vadodara. On 14 January 1999, the Appellants invoked arbitration and sought to appoint Hon’ble Mr.Justice M.L.Pendse, former Judge of this Court as Arbitrator. By a response dated 21 February 1999, the Respondent contended that only a Civil Court would be competent to pass a decree for specific performance and hence, there was no question of a reference to arbitration. On 15 September 1999, the Appellants filed an arbitration petition under Section 9 before this Court seeking an injunction restraining the Respondent from proceeding with or continuing with the suit filed in the Court of the Civil Judge, Senior Division at Vadodara. The application under Section 9 was dismissed by a Learned Single Judge by his impugned order dated 25 November 1999.
4. The Learned Single Judge held that an application under Section 8 filed by the Appellants was pending before the Court at Vadodara. The Learned Single Judge was of the view that since an application under Part-I of the Arbitration and Conciliation Act, 1996 was pending, then it is only that Court where such an application is pending, which would have jurisdiction over the arbitral proceeding. Hence, the Learned Single Judge was of the view that until an application filed by the Petitioners under Section 8 remains pending before the Civil Court at Vadodara, this Court would not have jurisdiction to pass orders in relation to the arbitral proceeding, including orders under Section 9 of the Act.
5. In assailing the judgment of the Learned Single Judge Counsel appearing on behalf of the Appellants submitted that: (i) The filing of an application under Section 9 would not be such an application as contemplated under Section 42 in view of the judgment of the Supreme Court in P.AnandGajapathi Raju vs. P.V.G. Raju; (2000) 4 SCC 539(ii) An application under Section 8 is not an application which is made with respect to an arbitration agreement and hence, Section 42 would have no application; (iii) In the present case, Clause 15 of the Contract which contains an arbitration agreement would clearly show that parties intended to refer all
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