IMPORTANT POINT
The Arbitration Act prevails over the Commercial Courts Act regarding arbitration agreements in commercial disputes, allowing referral to arbitration despite the latter's provisions.

JUDGMENT :

An order referring the parties in a litigation before the Commercial Court to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “Arbitration Act”) is under challenge in this proceedings under Article 227 of the Constitution of India, at the instance of the plaintiffs. The subject matter of the suit is based on a joint development agreement entered between the parties on 15.7.2013, wherein there is an arbitration clause. As per the arbitration clause (clause 41 of the agreement), the parties agreed that if any dispute or differences arise between the builder and the owners, they shall be amicably resolved, and if they failed to resolve the issue mutually, the same shall be referred to an Arbitrator mutually agreed upon between the parties and his decision shall be final and binding on them.

2. On 15.10.2019, the plaintiffs issued a notice alleging a breach of the contract by the defendants. The defendants denied the allegation of breach in the reply dated 13.11.2019 and raised a counterclaim. On 6.12.2019, the plaintiffs issued notice to the defendants under Section 21 of the Arbitration Act informing the unilateral appointment of an Arbitrator to resolve the dispute by initiating arbitration proceedings. On 27.12.2019, the defendants responded to the notice, resisting the unilateral appointment of the Arbitrator and suggesting a panel of Arbitrators. The plaintiffs did not agree to select one of the Arbitrators from the panel. The defendants further informed that if the panel of Arbitrators is not acceptable, the only remedy is to approach the High Court under Section 11 of the Act.

3. The plaintiffs instituted C.S.No10/2020 before the Principal Subordinate Judge’s Court, Thiruvananthapuram, the designated Commercial Court, for mandatory injunction, recovery of money and other consequential reliefs. On getting summons in the suit, the defendants filed I.A.No.6 of 2020 under Section 8 of the Arbitration Act, seeking to refer the parties to arbitration. The plaintiffs resisted the application, contending that the attempt of the defendants was to delay and obstruct the proceedings in the Commercial Court. They contended that the provisions of the Arbitration Act are no longer applicable to disputes that fall under the Commercial Courts Act, 2015. The plaintiffs submitted that in view of the enactment of the Commercial Courts Act, the Commercial Court alone is empowered to adjudicate commercial disputes. They pleaded that the dispute between the parties from a joint venture agreement is a commercial dispute. The Commercial Courts Act is a complete code enacted to provide for speedy disposal of commercial disputes. The plaintiffs pleaded that as per Section 21 of the Commercial Courts Act, it has an overriding effect on any other law inconsistent with it. The plaintiffs specifically contended that the dispute is not liable for being referred to arbitration. The court below, adverting to the rival contentions, held that prima facie, there exists an arbitration agreement, and therefore, in view of the provisions under Section 8 of the Arbitration Act, the parties are to be referred to arbitration.

4. I have heard the learned counsel for the petitioners and the learned counsel for the respondents.

5. The learned counsel for the petitioners/plaintiffs made the following submissions:-

(i) In view of the enactment of the Commercial Courts Act, 2015 a commercial dispute cannot be referred to arbitration.

(ii) Section 21 of the Commercial Courts Act provides that the provisions of the Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law for the time being in force other than the Act.

(iii) Sub-section (3) of Section 10 of the Commercial Courts Act says that where the subject matter of an arbitration is a commercial dispute, all applications under the provisio