Questions and issues occurring in the dispute to be decided by an arbitrator.

K.Govindarajan,J.

The above Appeal is filed against the order dated 20.3.1997, passed by the learned single Judge in rejecting the Application filed in A.No.3758/1996.

2. The respondents filed a suit in C.S.No.1007/1994 on the file of this Court to declare that the licence agreement dated 25.4.1991, as amended, is unenforceable, illegal, invalid and void, and to direct the defendant to pay the plaintiffs a sum of Rs.10,92,710/- towards the losses sustained by the plaintiff on account of the constructive fraud played by the defendant through illegal agreements and means and also for a direction to pay a sum of Rs.4,40,000/- towards compensatory damages suffered by the plaintiffs on account of the tortious acts committed by the defendant. Pending Appeal, the appellant/defendant filed Application No.3758/1996 under Sec.8 of the Arbitration and Conciliation Act, 1996, hereinafter called 'the Act', to stay further proceedings of the suit in C.S.No.1007/1994 and to refer a dispute for arbitration in terms of Article 15 of the agreement dated 25.4.1991. The said Application was contested by the respondents/plaintiffs.

3. The learned Judge accepted the case of the respondents/plaintiffs and rejected the Application filed by the appellant/defendant holding that the prayer sought for in the suit cannot be decided by the arbitrator and so the Application filed under Sec.8 of the Act cannot be sustained. Aggrieved against the same, the appellant/defendant has field the above Appeal.

4. Learned counsel appearing for the appellant/defendant submitted that in view of Article 15 of the arbitration agreement, even the issue raised in the suit has to be decided by the arbitrator as contemplated under Sec.16 of the Act. On that basis, learned counsel also submitted that the learned Judge is not correct in rejecting the said Application.

5. Learned counsel for the respondents/plaintiffs submitted that in the suit, the respondents/plaintiffs prayed for a declaration that the arbitration agreement itself is not valid and unenforceable and so the appellant/defendant cannot insist Article 15 in support of their claim made in the application filed under Sec.8 of the Act. According to him, the prayer sought for can be granted only by the civil Court and not by the Arbitrator. So, he further submitted that the learned Judge has rightly rejected the Application and it does not warrant any interference. He also submitted that since there is no provision under Sec.8 of the Act to stay the suit, the Application is not maintainable.

6. On the above said pleadings and arguments, the following point arises for determination:-

"Whether the Application filed under Sec.8 of the Act on the basis of Article 15 of the arbitration agreement dated 25.4.1991 is sustainable in law?"

7. To decide the above said issue, it is beneficial to extract Article 15 of the agreement which reads as follows:-

Sec. 15.1: Arbitration

"All disputes and differences of whatsoever nature arising out of this agreement, whether during its term or after expiry thereof or prior termination shall be referred to the sole arbitration of the Chairman of the Board of Directors of the Licensors, whose decision shall be final on any matter arising hereunder. It is further agreed that the fact that the Chairman of the Board of Directors of the Licenser may have had occasion to deal with any matter related to this licence either before or after its execution, shall not disqualify him from acting as Arbitrator. The venue of the Arbitration shall only be Delhi.

Section15.2: Jurisdiction:

The parties agree that only the Courts in Delhi in the Republic of India shall have jurisdiction to entertain any proceedings related to this agreement whether during pendency, or after termination. No other Court shall have jurisdiction."

So from the above, it is clear that the parties have agreed for arbitration to decide the disputes arise between them. The learned Judge referring to the decision of the Apex court