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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
R.D. DHANUKA, J.
Supreme Mega Construction LLP - Appellant
Vs.
Symphony Co-operative Housing Society Limited & Ors. - Respondents
Notice of Motion (L) No. 2410 of 2014 in Suit (L) No. 867 of 2014
Decided on: 29th October, 2014
Civil Procedure Code, 1908 - Section 9-A Arbitration and Conciliation Act, 1996, Sections 2(1)(h) and 8 Jurisdiction of Civil Court. - Where application under Section 8 of Act filed by a party who was not party to arbitration agreement therefore said application is not maintainable and as such civil suit is maintainable. In case of Vardhaman Developers Ltd. v. Andheri Krupa Prasad Co-op. Hsg. Soc. Ltd. and others in Notice of Motion (L) No. 248 of 2014 in Suit No. 94 of 2014 in a judgment rendered on 20th February, 2014 has taken a view that the member of the society who was not party to the arbitration agreement cannot mention an application under Section 8 of the Arbitration and Conciliation Act, 1996. That even such application under Section 8 of the Arbitration and Conciliation Act it would have been filed by a member claiming through the society which society is party to the arbitration agreement, such application would not be maintainable.
Civil Procedure Code, 1908 - Section 9-A Arbitration and Conciliation Act, 1996, Section 8 Jurisdiction of Civil Court. - In absence of any application under Section 8 of Act to refer dispute to arbitration, civil suit in respect of said dispute is maintainable. There is no provision in the Arbitration and Conciliation Act, 1996 which bars filing of a civil suit even if arbitration agreement exist. A remedy of the defendants, if all the terms and conditions of Section 8 are satisfied, is to file an application under Section 8 for referring the parties to the arbitration. However in this case there is no such application made by the applicant under Section 8 of the Arbitration and Conciliation Act, 1996. Even if all the parties to the suit are parties to the arbitration agreement, such parties may choose not to apply for referring the parties to arbitration and may continue the civil proceedings.
It is thus clear that unless conditions of Section 8 of the Act are satisfied and an application is made by the defendants for referring the parties to arbitration, suit continues to be within the jurisdiction of a Civil Court.
A perusal of the record indicates that the applicant who has already disputed the development agreement itself cannot be even otherwise allowed to raise a plea that an arbitration agreement exist and thus this Court has no jurisdiction to entertain a civil suit.
By this Notice of Motion filed by defendant no. 9 it is prayed that this court be pleased to frame preliminary issue of jurisdiction under section 9A of the Code of Civil Procedure, 1908 and adjudicate upon the same first in point of time and also seeks stay of all civil proceedings in the suit till disposal of this Notice of Motion. Some of the relevant facts for the purpose of deciding this Notice of Motion are as under:-
2. The defendant no. 9 is one of the member of the defendant no. 1 society. Defendant no. 1 society had passed a resolution for inviting offers in order to redevelop the suit property on 12th June, 2011. The society ultimately entered into a development agreement with the plaintiff on 23rd June, 2012.
3. Clause 24 of the said development agreement provides for arbitration agreement which is extracted as under :-
24.1 Any dispute, controversy, claim or disagreement of any kind whatsoever between or among the Parties in connection with or arising out of this Agreement or the breach, termination or invalidity thereof ("Dispute") shall be referred to and finally resolved by agreement. This Agreement and the rights and obligations of the Parties shall remain in full force and effect pending the award in such arbitration proceeding, which award, if appropriate, shall determine whether and when any termination shall become effective.
24.2 The seat of the arbitration shall be at Mumbai, India and the arbitration proceedings shall be conducted under, and in accordance with the provisions of the Arbitration and Conciliation Act, 1996, or any statutory re-enactment thereof in force in India at the time such arbitration is commenced.
24.3 The arbitration proceeding shall be conducted by a sole arbitrator ("the Tribunal") to be mutually appointed by the Parties and failing such mutual agreement on the appointment, the sole arbitrator shall be appointed in accordance with the provisions of the Arbitration and Conciliation Act, 1996.
24.4 The language of the arbitration proceeding shall be English.
24.5 The award rendered by the Tribunal shall be in writing and shall set out the reasons for the Tribunal's decision. The award shall allocate or apportion the costs of the arbitration, as the Tribunal deems fair. The Tribunal shall also be entitled to grant any injunction and/or specific performance if it considers such remedy appropriate.
24.6 The Parties agree that the arbitration award shall be final and binding on the Parties.
24.7 The Parties expressly waive and forego any right to punitive, exemplary, or similar damages in connection with any Dispute and no such damages shall be awarded or provided for in any Dispute resolution proceeding under this Article [25].
24.8 Notwithstanding anything to the contrary contained herein, the Parties shall have the right to approach courts of competent, jurisdiction at any point of time for suitable interim relief, including injunctions as may be needed to maintain the status quo in aid of the arbitration to any Tribunal.
24.9 The provisions contained in this Article [25] shall survive the termination of this Agreement.
4. The plaintiff has filed a notice of motion for interim reliefs. In the plaint, the plaintiff has prayed for a declaration that the development agreement dated 21st June, 2012 executed by and between the defendant no. 1 and the plaintiff is valid, binding and subsisting and also seeks order and injunction against defendant nos. 2 to 24 and their family members, servants, agents and/or person or persons claiming through or under them to comply with the terms of the development agreement and to vacate and handover the flats and garages in their respective possession to the plaintiff. Some of the defendants including defendant no. 9 have filed affidavit in reply opposing the reliefs in Notice of Motion on various grounds. The said notice of motion is pending.
5. In so far as this Notice of Motion is concerned, it is filed on the premise that there is an arbitration agreeme
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