A. RAMAMURTHI J.

For the Applications filed by the defendants under Order 14, rule 8 of the Original Side Rules read with section 8 of the Arbitration and Conciliation Act, 1996, and also under section 22 of the Sick Industrial Companies Act.

The case in brief is as follows : The plaintiff instituted a suit for declaration that they are the sole and absolute owners of the suit schedule machinery, for a mandatory injunction directing them to deliver the schedule mentioned properties to them at Chennai, and also for permanent injunction. The existence of the alleged hire purchase agreement dated March 31, 1997, is denied. The transaction between the two companies is nothing but a loan transaction is evidently clear from the documents. The transaction was styled and named as "hire purchase agreement" so as to enable the plaintiff to obtain a tax benefit towards depreciation. The plaintiff not being the owner of the schedule mentioned equipment, is not entitled to re-possess the same. This court does not have the jurisdiction to entertain the suit in view of the valid arbitration agreement that has come into existence between the parties. The plaintiff caused a legal notice dated May 30, 1998, and the same was received on June 11, 1998. Clause 18(a) of the said hire purchase agreement also empowers the managing director of the plaintiff-company to appoint a sole arbitrator under the Arbitration Act, 1940, to decide all disputes or claims arising out of the said agreement. The defendant also sent a reply dated June 23, 1998. The plaintiff had suggested that the dispute/claim be referred to arbitration under the 1996 Act by a sole arbitrator to be appointed by their chairman. The defendant replied that they are not agreeable for having an arbitrator appointed by their chairman; but, however, communicated their willingness to refer the dispute under section 11 of the Arbitration and Conciliation Act, 1996. Section 11 deals with appointment of arbitrators. If the parties fail to agree on an arbitrator within 30 days from the receipt of a request by one party to the other, the appointment shall be made, upon request, by the Chief Justice. The plaintiff has ignored the reply dated June 23, 1998, in totality and filed the present suit before the court. An arbitration agreement means an agreement by the parties to submit to arbitration all or certain dispute which have arisen between them. According to section 8 of the new Arbitration Act, the court has to refer the matters to arbitration and it is not mandatory. Hence, this court has no jurisdiction to entertain the suit and, as such, the matter has to be referred for arbitration.The defendant also filed Application No. 2790 of 1999 for suspending all proceedings in the suit. The company has been declared a sick industry as contemplated under section 3(1)(o) of the Sick Industrial Companies Act, 1985. In view of its declaration, all proceedings initiated against the defendant-company have to be suspended as per section 22 of the Act. The defendant is possessed of vast properties. If during this time, the process of revival hampered by various legal proceedings initiated against the defendant-company the object of the Act would be totally lost. If all the legal proceedings are suspended as contemplated under section 22 of the Act, it would only be to the advantage of the creditors.

The respondent/plaintiff filed a separate counter and denied the various allegations. These applications have been filed with a mala fide intention to postpone the evil days, protract the suit and to delay payments of the lawful dues to the plaintiff. The parties intended and had actually gone for only hire purchase agreement. The transaction between the parties was not a loan transaction but a hire purchase re-transaction. Under clause 18(a) of the hire purchase agreement, all disputes or claims arising out of the agreement are to be settled by arbitration under the provisions of the Arbitration Act,