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GAUHATI HIGH COURT
I. A. ANSARI, J.
West Bengal State Electricity Board and others -Appellant
Versus
Shanti Conductors Pvt.Ltd -Resopndent
C.R.P. No. 406 of 2002
Decided On : 03-02-2003
Arbitration - Refusal to Refer Dispute to Arbitration - Arbitration and Conciliation Act, 1996, Section 8
Fact of the Case:
The defendants filed an application to refer a dispute to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996 after submitting their written statement in a civil suit. The trial Court declined the application, and the defendants also challenged the order declining to invoke the provisions of Section 89 CPC.
Finding of the Court:
The Court found that the application under Section 8 was not maintainable as it was filed after the written statement was submitted. The Court also held that the trial Court was justified in declining to invoke Section 89 CPC as no element of compromise existed due to the plaintiff's refusal to settle outside the Court.
Issues: The main issues were the maintainability of the application under Section 8 of the Arbitration and Conciliation Act, 1996 and the refusal to invoke the provisions of Section 89 CPC due to the absence of an element of compromise.
Ratio Decidendi: The Court held that for a dispute to be referred to arbitration under Section 8, the application must be filed before the submission of the written statement. Additionally, the Court emphasized that the foundation of Section 89 rests on compromise, and if no element of compromise exists due to one party's refusal, the Court cannot be compelled to pursue settlement efforts.
Final Decision: The revision failed, and the Court disposed of the case accordingly, with no order as to costs.
This revision originally arose out of order, dated 11-11-2002, passed by learned Civil Judge (Sr. Divn.) No. 1, Kamrup Guwahati, in Title Suit No. 101/97, rejecting the application made by the revision petitioners defendants under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the said Act of 1996).
When the present revision was pending, the petitioners have, with the help of an amendment petition, also challenged, in this revision, the order, dated 6-1-2003, passed in the said suit, whereby an application made by the petitioners praying for invoking the provisions of Section 89 CPC was declined by the learned trial Court.
2. In order to appreciate the relevant provisions of law involved in the present revision and the challenges made to the orders impugned in this revision, let me state in a nutshell, the material facts, which have led to this revision.
3. Title Suit No. 101/96 aforementioned, instituted by the opposite party as plaintiffs, was decreed ex parte on 15-12-99. The revision petitioners, as defendants, filed, inter alia, application for vacating the said ex parte decree. This ex parte decree was vacated subject to certain conditions by order, dated 19-8-2000, passed in Misc. (J) Case No. 117/2000. Thereafter, the petitioners, as defendants, file their written statement, on 22-9-2000, indicating in their written statement to the effect that the dispute, which had arisen between the parties and led to the institution of the suit, was covered by arbitration clause of the agreement, which had been entered into between the parties concerned. After having, thus, submitted their written statement, the petitioners filed an application, on 7-11-2000, in the learned Court below, praying for referring the dispute between the parties to arbitration in terms of Section 8 of the said Act of 1996. By the order, dated 11-11-2000, aforementioned, this prayer was declined, whereupon the petitioners made another application praying before the learned trial Court to invoke the provisions of compromise contained in Section 89 CPC. This prayer too was declined by the order, dated 6-1-2003, aforementioned.
4. I have heard Mr. S. R. Bhattacharjee, learned counsel for the petitioners. I have also heard Mr. S. P. Roy, learned counsel appearing on behalf of the opposite party, and perused the materials on record including the impugned orders.
5. It has been submitted, inter alia, on behalf of the petitioners, that in the plaint itself, the plaintiffs have admitted the existence of the arbitration clause and the written statement of the defendants also indicated about the existence of the arbitration clause in the agreement, which had given rise to the suit, but the learned Court below, under a misconceived view of its jurisdiction, declined to exercise the powers under Section 8 of the said Act.
6. Controverting the above submissions made on behalf of the petitioners, Mr. Roy has pointed out that the learned trial Court was wholly justified in declining to refer the matter to arbitration on the ground that the written statement had already been submitted in the suit by the defendants before making their application for referring the matter to arbitration.
7. The rival submissions made before me, on behalf of the parties, makes me closely examine the provisions of Section 8 of the said Act. For the sake of brevity, Section 8 is quoted hereinbelow :
"8. Power to refer parties to arbitration where there is an arbitration agreement.-
(1) A judicial authority before which 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.
(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.
(3) Notwithstanding that an application has
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