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High Court of Judicature at Calcutta
ASIM KUMAR RAY, J.
Deb Kumar Basu & Others
Versus
M/s. Amarpali Barter (P) Ltd. & others
C.O. No. 3632 of 2013 with CAN No. 1211 of 2014 (Appellate Side)
Decided on: 08-04-2014
ARBITRATION - STAY OF SUIT - ARBITRATION AGREEMENT - SECTION 8(2) OF THE ARBITRATION AND CONCILIATION ACT, 1996 - NON-COMPLIANCE - APPLICATION ACCOMPANIED BY PHOTOCOPY OF ARBITRATION AGREEMENT - PARTICIPATION OF PETITIONERS IN APPOINTMENT OF ARBITRATOR - CONSENT ORDER - NATURAL JUSTICE - SECTION 21 OF THE ARBITRATION AND CONCILIATION ACT, 1996 - COMMENCEMENT OF ARBITRAL PROCEEDINGS - NOTICE AND/OR ISSUANCE OF REQUEST FOR APPOINTMENT OF ARBITRATOR - SECTION 11 OF THE ARBITRATION AND CONCILIATION ACT, 1996 - APPOINTMENT OF ARBITRATOR - CONSENT OF PARTIES - SECTION 5 OF THE ARBITRATION AND CONCILIATION ACT, 1996 - JUDICIAL INTERVENTION - EXCEPTIONS - SECTION 16(2) OF THE ARBITRATION AND CONCILIATION ACT, 1996 - SCOPE OF APPLICATION - SECTION 37(2) OF THE ARBITRATION AND CONCILIATION ACT, 1996 - APPLICATION FOR SETTING ASIDE ARBITRAL AWARD - LIMITATION PERIOD.
Fact of the Case:
Petitioners filed a suit for declaration, partition, and consequential relief, along with an application for a temporary injunction to restrain the opposite party from disturbing their peaceful possession or changing the nature of the suit property. The opposite party filed an application under Sections 5 and 8 of the Arbitration and Conciliation Act, 1996 (the Act), seeking a stay of further proceedings in the suit. The trial court allowed the application and stayed the suit subject to the outcome of the arbitration proceeding.
Finding of the Court:
The court held that the application under Sections 5 and 8 of the Act was maintainable despite the non-compliance with Section 8(2) of the Act, as the petitioners had participated in the appointment of the arbitrator before the court and the order was passed on consent. The court also held that the suit was primarily for a declaration aiming at the development agreement rather than partition and that the arbitration agreement was put into action by the opposite party, with the petitioners participating in the day-to-day sittings before the learned arbitrator.
Issues: 1. Whether the application under Sections 5 and 8 of the Act was maintainable despite the non-compliance with Section 8(2) of the Act? 2. Whether the suit was primarily for a declaration aiming at the development agreement rather than partition? 3. Whether the arbitration agreement was put into action by the opposite party, with the petitioners participating in the day-to-day sittings before the learned arbitrator?
Ratio Decidendi: 1. The court held that the non-submission of the original copy of the arbitration agreement or a certified copy was not fatal, as the petitioners had a role in the appointment of the arbitrator before the court and the order was passed on consent, which satisfied the requirements of natural justice. 2. The court held that the main thrust of the plaint was against the development agreement dated 15-10-1999 and that the master brain had couched the plaint to give it a shape that it was meant for partition and declaration, to avoid the track of the provisions of the Act. 3. The court held that the opposite party had put the arbitration agreement into action by serving a notice on the petitioners and that the petitioners had participated in the appointment of the arbitrator before the court and in the day-to-day sittings before the learned arbitrator.
Final Decision: The court dismissed the revisional application and upheld the order of the trial court staying the suit subject to the outcome of the arbitration proceeding.
1. This revisional application is directed against the order dated 5-7- 2013 as corrected by the order dated 15-7-2013 passed in Title Suit No. 13652 of 2012 (Deb Kumar Basu and Ors.–vs- Smt. Anita Paul and Ors. ) by learned Civil Judge (Senior Division ), 2nd Court, Alipore, South 24- Parganas whereby an application under Section 5 and 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act ) filed by opposite party No. 1/defendant No. 4 was allowed and Title Suit No. 13652 of 2012 was stayed subject to the outcome of the arbitration proceeding .
2. A brief background leading to the presentation of this revisional application is that petitioners as plaintiffs instituted Title Suit No. 13652 of 2012 before the Court of learned Civil Judge (Senior Division), 2nd Court, Alipore, South 24Parganas praying for declaration, partition and consequential relief. They also filed an application for temporary injunction and obtained an ad interim order of injunction restraining the opposite party No. 1/defefendant No. 4 from disturbing their peaceful possession or from changing the nature and character in respect of the suit property. The said interim order was extended from time to time. The opposite party No. 1 entered appearance. He submitted an application under Section 5 and 8 of the Act praying for stay of further proceeding of the suit. On hearing the parties the order impugned was passed giving rise to this revisional application.
3. Mr. Bidyut Kumar Banerjee, learned senior advocate appearing on behalf of the petitioner has contended that the application should not have been entertained by the learned Court below as the provisions laid down in Section 8 (2) of the act was not complied with. The application was not accompanied by the original arbitration agreement or duly certified copy thereof. It was accompanied with a photocopy of the agreement. The suit was for partition as well as for declaration. The bifurcation of causes of action for invoking application of Section 8 of the act is not permissible. Ashok Kumar Pal /O.P. No. 3 is one of the necessary parties in the suit who was not a party to the agreement and as such there was no scope for referring the matter to arbitration. Notice for referring the matter to arbitration was not in accordance with clause 6 of the arbitration agreement. It was insufficient to commence the arbitration proceeding. The opposite party did not disclose about an application submitted before this Court under Section 11 of the act at the time of filing application under Section 5 and 8 of the Act. It was suppressed. Petitioners cannot be estopped to raise points against the arbitration as their application being GA No. 1095 of 2013 was not decided on merit. There is scope of attraction of Section 16 (2) of the Act. He has referred to Sections 11, 16(2), 21 and 37(2) of the Act. He has relied on decisions reported in AIR 2003 SC 2252 (Sukanya Holdings Pvt. Ltd. –vs- Jayesh J. Pandya and another), AIR 2004 SC 3145 (Milkfood Ltd. –vs- M/s. GMC Ice Cream (P) Ltd.), (1997) 10 SCC 538 (Collector of Customs, Calcutta vs- The Plate Co. of India Ltd.) and AIR 2006 Rajasthan 43 (Tata Finance Ltd. –vs- Sumit Khamsera and another) in support of his contention.
4. Mr. Saptangshu Basu, learned senior advocate appearing for the opposite party has contended that the Suit was not a suit for partition. The plaint has been couched in such a manner so as to wriggle out of the provisions of the Arbitration and Conciliation Act, 1996. The petitioner has suppressed the order of appointment of arbitrator by this Hon’ble Court in AP No. 751 of 2012 and GA No. 1095 of 2013 on consent. The opposite party No. 1 has given notice to the petitioners to initiate arbitral proceeding as per the arbitration agreement and the arbitral proceeding was set in motion on appointment of arbitrator by this Court. The photocopy of the arbitration agreement was annexed with the application under Section 5 a
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