High Court Of Delhi
VIKRAMAJIT SEN
MOULANA ASAD MADANI - Appellant
Versus
ABDUL HAFIZ - Respondents
Arb. P 214 Of 2005
Decided On : 07/10/2006
Arbitration - Appointment of Presiding Arbitrator - Arbitration and Conciliation Act, 1996, Section 11 - Section 8, Section 5, Section 42
Fact of the Case:
Dispute arose between the Applicants and the Respondent over partnership rights. Respondent initiated legal action, and Applicants sought appointment of an Arbitrator. Applicants failed to take appropriate action under Section 8 of the Act.
Finding of the Court:
The court found that the application under Section 11 of the Act was filed prior to the filing of the Written Statement, indicating the resolve of the Applicants to have their disputes adjudicated by arbitration. However, the court held that the responsibility of the applicants to take appropriate action under Section 8 of the Act was not fulfilled.
Issues: Failure of the Applicants to take appropriate action under Section 8 of the Act, jurisdictional grievances raised by the parties.
Ratio Decidendi: The court emphasized the importance of taking appropriate action under Section 8 of the Act when parties wish to arbitrate disputes, and highlighted the exceptions to the jurisdiction of civil court in matters governed by the Act.
Final Decision: The application was dismissed, and parties were ordered to bear their respective costs.
VIKRAMAJIT SEN, J.
( 1 ) BY this Judgment I shall dispose of an application under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as `the Act') seeking the appointment of a Presiding Arbitrator, in respect of dispute which has arisen between the Applicants and the Respondent. Briefly stated, the Applicants claim 50 per cent rights over a partnership concern in which the remaining 50 per cent rights vest in the Respondent. Disputes having been arisen between the parties and legal action has been initiated by them.
( 2 ) IRONICALLY, the first to issue a notice seeking the appointment of an Arbitrator is the Respondent who addressed a notice to the several applicants in terms of the communication of Sanjay Kumar Kumar, Advocate dated 3. 2. 2005. On 27. 7. 2005 in response to this notice the applicants had conveyed the names of three suggested or proposed Arbitrators. However, in that very month the Respondent filed Suit No. OC 92 of 2005 in the Court of Civil judge, JR. Division, Islampur, Dist. Uttar Dinajpur. The Applicants herein filed a Written Statement dated November, 2005 in those proceedings. On a cursory perusal of the Written Statement it appears that the Applicants did not either lodge any protest or objection to the maintainability of the suit in view of the Arbitration Agreement between the parties, or pleaded that the parties should be referred to arbitration.
( 3 ) THIS is categorically what Section 8 of the Act envisages. Learned counsel for the Applicants is justified on drawing attention to the fact that the present application under Section 11 of the Act has been filed prior to the filing of that Written Statement. This would no doubt indicate the resolve of the Applicants to have their disputes adjudicated by arbitration. It, however, does not dislodge the responsibility of the applicants to take appropriate action under Section 8 of the Act especially where it is their say that disputes should be adjudicated through arbitration and not through the normal remedy and procedure of a Civil Court.
( 4 ) CHAPTER I of Part I of the Act contains Section 5 which tilts jurisdiction in favour of arbitration where a compact in this regard has been executed by the parties. However, in the very next succeeding Chapter, section 8 prescribes that a judicial authority before whom 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. This Section while implementing the purpose of the statute itself, as expressed in Section 5 thereof, specifically envisages the filing of an application under Section 8 if the resolve to arbitrate upon all disputes is to be implemented even by rejection of a civil action. Without entering into legal wrangles of whether a separate application under Section 8 of the Act is required, a categorical plea to this extent must be recorded in the Written Statement itself if that turns out to be the ``first statement on the substance of the dispute'`. Learned counsel for the Applicants is not able to draw attention to any averment in the Written Statement filed in Suit No. OC 92 of 2005 in the court of Civil Judge, JR. Division, Islampur, Dist. Uttar Dinajpur where it has categorically and unequivocally been stated that the Applicant herein, who is the Defendant there, wishes to proceed in arbitration. This lapse is exacerbated in the present case, since the Applicants had already moved the present application.
( 5 ) INVOKING the jurisdiction of a civil Court is a common law right. It is available to every citizen in the country. Arbitration, however, runs as an exception to that rule, and is attracted only when two parties agree to refer their disputes to arbitration. Such an agreement can also be overridden and given up, which is what appears to have transpired in the present case. As has alread
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