The liability to pay the instalments did not arise from the agreement but from the statute relating to mines and minerals, and therefore, the dispute could not be referred to arbitration in terms of the arbitration clause contained in the agreement.

Per Honble S.N. Jha, CJ.(Oral)

This Civil First Miscellaneous Appeal is directed against an order by which application filed by the appellant for reference of dispute to Arbitrator in terms of section 20 of the Arbitration Act was rejected. Learned Single Judge observed that there was no existing dispute which could be referred for arbitration.

2. Facts of the case are that a chunk of land in Tehsil Kathua was settled with the appellant. The agreement executed on 13.4.1987 permitted the appellant to extract minor minerals namely Sand, Bajri, Stones, clay etc for a period of one year from 15.4.1987. The above settlement was made on payment of a sum of Rs.1,05,500/- as consideration in the shape of royalty- payable in four equal instalments of Rs 26,375/-. The appellant paid the first instalment, but failed to pay the rest. From the order of learned Single Judge,it appears that besides, payment of Rs. 26,375/- as the first instalment at the time of agreement he in all paid Rs. 29,622/- on 8.10.1988, 13.3.89, 9.12.1992 and 26.2.1993. Recovery proceeding in respect of the balance amount was initiated against him under the Jammu and Kashmir Land Revenue Act, 1996 (1939 AD). The appellant came to this Court challenging the recovery proceeding in Writ Petition OWP No. 996/1998. A learned Single Judge of this Court vide order dated 18.5.2000 took the view that there was provision for arbitration in the agreement and the appellate court could invoke arbitration clause. The learned Single Judge thus, disposed of the petition giving liberty to the appellant to exhaust remedy provided under the agreement, but in the meanwhile stayed the recovery proceeding.

3. It is well settled that where court declines to entertain a suit or writ petition and relegates the party to the alternative remedy, any interim order like injunction or stay should not be passed, and therefore, we have reservation about the correctness of the order staying the recovery proceeding. However, it is futile to go into that question, for, the order was not challenged by the other side. The appellant filed Arbitration Application No. 41/2000 for reference of dispute to the Arbitrator under the Arbitration Act which was rejected by order dated 20.12.2001, giving rise to this appeal.

4. Mr. M.K. Bhardwaj, learned counsel appearing for the appellant submitted that the learned Single Judge committed error in rejecting arbitration application on the ground that there was no dispute in existence which could be referred for arbitration. He submitted that in all cases of non-payment of dues, a dispute exists. The dispute in the instant case should have been referred to the Arbitrator for resolution in terms of the agreement. Counsel pointed out that the arbitration application was filed in view of the observation in OWP No. 996/1998 and there could be no justification at all to reject the application. Counsel submitted that there is thus apparent conflict between two orders.

5. Broadly speaking, it is true, where the parties to the agreement agree to get the dispute resolved through arbitration, the dispute should be referred to the Arbitrator. It also sounds logical that where a party disputes his liability or the quantum of dues, a dispute may be said to be existing. In the instant case it appears to us that what the learned Single Judge meant by observing that there is no dispute which could be referred to arbitration, was that the liability to pay the instalments arises from the agreement which the appellant cannot deny. Be that as it may, the recovery proceeding is pending before the concerned authority and we do not want to go into that aspect. We are satisfied, though for different reason, that no case for reference to arbitration is made out and the appeal, therefore, must be dismissed.

6. In order that dispute is referred to the Arbitrator, in the instant case, it goes without saying the same must fall within the scope of arbitration clause. It would be appropriate to quote th

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