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2008 Supreme(Bom) 1477
BOMBAY HIGH COURT
Anoop V. Mohta, J.
GIRISH MANUBHAI PAREKH
v.
CONTINENTAL STEEL CORPORATION AND ORS
First Appeal No. 2686 of 2007 in SC Suit No. 4142 of 2006 with CA No. 3180 of 2007,
Decided on: October 10, 2008
Jayesh Bhatt - Appellant.
G.S. Godbole, Suresh Gole - Respondents.
The main legal point established is that the arbitrator has the power to decide on the existence of the arbitration agreement and objections regarding jurisdiction, and judicial intervention in arbitration matters should be minimal as per the provisions of the Arbitration Act, 1996.
Headnote:
Arbitration Act, 1996 - Jurisdiction - Section 16
Fact of the Case:
The appellant filed a suit challenging an alleged arbitration agreement. The court held that the suit was not maintainable due to the scheme and object of the Arbitration and Conciliation Act, 1996.
Finding of the Court:
The court found that the suit was not maintainable as the matter was pending before the arbitral tribunal, and the appellant was bound by the arbitration clause based on which the arbitrator had been appointed.
Issues: The main issue was the maintainability of the suit in light of the Arbitration Act, 1996 and the existence of the arbitration agreement.
Ratio Decidendi: The court relied on the provisions of Section 16 of the Arbitration Act, 1996, which grants the arbitrator the power to decide on the existence of the arbitration agreement and objections regarding jurisdiction. The court also emphasized the limited judicial intervention in arbitration matters as per Section 5 of the Act.
Final Decision: The court dismissed the appeal and the civil application, upholding the dismissal of the suit on the ground of maintainability.
By consent, heard finally
This is the first appeal filed by the original plaintiff against the order dated 22.03.2007 passed in Regular Civil Suit No. 4142/2006 by the learned judge of Bombay City Civil Court at Bombay, whereby, in notice of motion, by consent of the parties, a preliminary issue of maintainability of the suit was raised and decided against him by holding that suit is not maintainable in view of the scheme and object of the Arbitration and Conciliation Act, 1996 (for short "the Arbitration Act, 1996").
On 26.02.2007, the court had framed the following issue: Whether defendants prove that in view of Arbitration Act, 1996 this Hon'ble Court has no jurisdiction to entertain and try the present suit? The relevant events and facts are as under:
In November 2001, respondent Nos. 1 to 5 requested the appellant to import waste paper on their behalf and made on account payment of Rs. 10,00,000. Appellant imported goods worth about Rs. 21,66,230 on behalf of respondent Nos. 1 to 5.
On 28.04.2004, the appellant became entitled to receive Rs. 13,82,835 as his share of profit in the said import business in view of various amounts already paid by him to respondent Nos. 1 to 5.
On 29.04.2005, the advocate for respondent Nos. 1 to 5 addressed letter to the appellant contending that the appellant allegedly executed alleged writing dated 01.04.2003 inter alia admitting his alleged liability to pay Rs. 31,80,000 to the respondent Nos. 1 to 5 with interest at 24% and also allegedly agreeing to refer the matter to arbitrator to be appointed by respondent Nos. 1 to 5 in the event of non-payment. By the said letter the said advocate threatened to refer the matter to alleged arbitrator Mr. Bharat B. Jain if payment was not made as per alleged arbitration agreement. On 11.05.2005, appellant through his advocate, denied having executed alleged writing dated 01.04.2003 and asked for inspection of the same. The appellant has not paid the amount. On 21.07.2005, Mr. Bharat B. Jain, Advocate claiming to be sole arbitrator allegedly appointed by respondent Nos. 1 to 5 as per said alleged writing dated 01.04.2003, fixed meeting for arbitration. Number of letters were thereafter exchanged between the parties where appellant pointed out that the alleged arbitration was without any authority and the said alleged writing dated 01.04.2003 is a forged one.:
On 07.12.2005, Mr. Bharat B. Jain, Advocate addressed letter recording that he was withdrawing from arbitration as his conscience did not allow to continue as arbitrator in view of serious allegations of forgery and pendency of criminal case in respect thereof.
On 16.12.2005, Mr. Piyush M. Shah, Advocate addressed letter claiming to be appointed by respondent Nos. 1 to 5 as arbitrator under alleged writing dated 01.04.2003. The appellant pointed out the relevant facts to Mr. Piyush M. Shah but he persisted in going on with the alleged arbitration.
On 20.02.2006, Mr. Piyush M. Shah addressed letter directing appellant to deposit Rs. 20,000 with him on account of alleged arbitration fee.
On 21.08.2006, respondent No. 6 passed an ex parte order in the alleged arbitration proceedings for forwarding the alleged confirmation letter dated 01.04.2003 to handwriting expert.
On 12.09.2006, the appellant filed the suit.
On 29.09.2006, the judge of the city civil court passed order recording that next date for arbitration is not fixed and directing respondent No. 6 to give notice if he wanted to fix any meeting for hearing. Liberty was granted to the appellant to move court for ad interim relief if such notice is received. Such notice has thereafter not been issued till date.
The relevant Section 16 of Arbitration Act, 1996 is reproduced as under:
"16. Competence of arbitral tribunal to rule on its jurisdiction -
(1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that
