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2019 Supreme(Del) 1138

IN THE HIGH COURT OF DELHI AT NEW DELHI
PRATHIBA M. SINGH, J.
Gurcharan Singh Sahney and Others – Appellants
Versus
Harpreet Singh Chhabra & Anr. – Respondents
Civil Suit (Os) No. 3891 of 2014; Interlocutory Application No. 5501 of 2015
Decided On : 25-02-2019

Advocates Appeared:
Sandeep Sharma, Adv., Amit Choudhary Rakshay, Adv., Virmani Sukhmeet Singh Lamba, Adv., H.S. Kohli, Adv.

The main legal point established is that once disputes have been referred to arbitration, issues raised in a suit should be addressed before the Arbitrator or in the appropriate forum, and the court may reject the suit as not maintainable.

Headnote:

Arbitration - Settlement Agreement - Arbitration and Conciliation Act, 1996 - Section 8

Fact of the Case:

The Plaintiffs filed a suit seeking various reliefs including cancellation and declaration of certain deeds against the Defendants. The Defendants filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, praying for arbitration.

Finding of the Court:

The Court found that the disputes raised in the suit had already been referred to arbitration in previous proceedings and, therefore, rejected the suit as not maintainable, relegating the parties to arbitral proceedings.

Issues: The issues revolved around the circumstances under which the Settlement Agreement was signed, coercion, and duress. The Court also considered the arbitrability of the disputes and the repeated invocation of the arbitration clause by the Plaintiffs.

Ratio Decidendi: The Court emphasized that the issues raised by the Plaintiffs should be addressed before the Arbitrator or in the appropriate forum, as the disputes had already been referred to arbitration in previous proceedings. The Court also highlighted the principle that the arbitrability of disputes must be considered at the stage of reference.

Final Decision: The suit was rejected as not maintainable, and the parties were directed to pursue the arbitral proceedings, with all contentions left open.

JUDGMENT :

Prathiba M. Singh, J.

I.A. 15997/2015 (u/S 8 of the Arbitration and Conciliation Act, 1996)

1. The Plaintiffs have filed the present suit for cancellation, declaration, recovery, permanent injunction and mandatory injunction, seeking the following reliefs:

"(a) pass and pronounce a decree to cancel the settlement deed dated 30.04.2012, letter of guarantee dated 30.04.2012, ratification deed dated 03.05.2012 and the special power of attorney dated 28.05.2012 against the Defendants and in favour of the Plaintiffs;

(b) pass and pronounce a decree to declare null and void the settlement deed dated 30.04.2012, letter of guarantee dated 30.04.2012, ratification deed dated 03.05.2012 and the special power of attorney dated 28.05.2012, against the Defendants and in favour of the Plaintiffs;

(c) pass and pronounce a money decree of Rs. 1.30 Crores, jointly and severally against the Defendants and in favour of the Plaintiffs;

(d) pass and pronounce a decree of permanent injunction to not to perform the settlement deed dated 30.04.2012, letter of guarantee dated 30.04.2012, ratification deed dated 03.05.2012 and the special power of attorney dated 28.05.2012, against the Defendants and in favour of the Plaintiffs;

(e) pass and pronounce a decree of Mandatory Injunction against the Defendants and in favour of the Plaintiffs to return all the papers signed by the Plaintiff under force and coercion.

(f) award the costs of this suit;"

2. The Defendants have filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter the "Act") praying that the parties be referred to arbitration. Ld. counsel for the Defendants submits that the arbitration clause in the Settlement Agreement dated 30th April, 2012, which has been challenged by the Plaintiffs in the present case, has already been invoked by the Plaintiffs and several orders have come to be passed by the High Court of Andhra Pradesh in respect of the said agreement. It is further submitted by Ld. counsel for the Defendants that the High Court of Andhra Pradesh was completely seized of the matter and the disputes between the parties, not once but in two rounds of litigation. The Plaintiffs have themselves invoked arbitration and thereafter filed an application under Section 11 for appointment of Arbitrator. The High Court of Andhra Pradesh appointed the Arbitrator referred to in the Settlement Agreement, which order was also confirmed by the Supreme Court on 11th August, 2014. Thereafter, the Plaintiffs sought termination of the mandate of the Ld. Arbitrator by way of a petition under Sections 14 & 15 of the Act before the City Civil Court, which was dismissed vide order dated 30th April, 2015. This order came to be challenged in a Civil Revision Petition before the Andhra Pradesh High Court, which was also dismissed. Thereafter, another application under Section 14 was filed and the Commercial Court in Hyderabad, terminated the mandate of the Arbitrator, giving the parties liberty to approach the High Court under Section 15(2) for appointment of an Arbitrator. This order came to be challenged in the Andhra Pradesh High Court, and the Division Bench on 7th September, 2018 set aside the said judgment of the Commercial Court, refusing to terminate the mandate of the Arbitrator, and held as follows:

"(69) For the aforesaid reasons, the Civil Revision Petition is allowed holding that the order under challenge terminating the mandate of the arbitrator is illegal and incorrect, and accordingly, the same is set aside."

3. On the last date of hearing i.e., on 12th December, 2018, a submission was made that a Special Leave Petition has been filed challenging the judgment dated 7th September 2018, of the Andhra Pradesh High Court and adjournment was sought on that ground. The matter was thereafter listed today. It is submitted by Ld. counsel for the Defendants that the SLP was not filed as on 12th December, 2018. In fact, the Defendants have filed a caveat but have not bee


























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