High Court of Judicature at Madras
S. VIMALA, J.
M. Vijaya
Versus
Dinesh Kumar & Others
C.R.P. (NPD) No. 3812 of 2012 & M.P. No. 1 of 2012
Decided on: 04-09-2014
Arbitration - Validity of Reference to Arbitration - The Arbitration Act, 1996, Section 16 - The Specific Relief Act - [Section 16 of The Arbitration Act, 1996] - The judgment discusses the validity of reference to arbitration when the validity and enforceability of the underlying contract is challenged. It highlights the concept of separability of the arbitration agreement from the underlying contract and the inarbitrability of disputes. The court emphasizes that the dispute is arbitrable despite the existence of an arbitration clause in the sale agreement and dismisses the Civil Revision Petition.
Fact of the Case:
The plaintiff filed a suit seeking injunction against the defendants from interfering with the possession and enjoyment of the property. The defendants filed a petition to refer the case to arbitration based on an agreement to sell the property.
Finding of the Court:
The court found that the dispute was arbitrable despite the existence of an arbitration clause in the sale agreement. It emphasized the concept of separability of the arbitration agreement from the underlying contract and upheld the validity of the reference to arbitration.
Issues: The issues raised in the revision petition included the validity of reference to arbitration, consensus ad idem between the parties, and the nature of the relief sought in the suit.
Ratio Decidendi: The court held that the dispute was arbitrable, emphasizing the concept of separability of the arbitration agreement from the underlying contract and the inarbitrability of disputes. It also highlighted the statutory recognition of separability under Section 16 of The Arbitration Act, 1996.
Final Decision: The Civil Revision Petition was dismissed, and the order referring the matter to arbitration was upheld.
Even where the parties might have agreed upon arbitration as the forum for settlement of their disputes, by the very nature of the dispute where the cause or dispute is claimed to be inarbitrable, whether the Court is bound to refer / refuse to refer, the matter to arbitration?
1.1. When the concept of separability of the arbitration agreement from the underlying contract has been statutorily recognised under Section 16 of The Arbitration Act, 1996,whether the reference to arbitration can be claimed to be invalid, when the validity and the enforceability of under relying contract alone is challenged?
1.2. Where the dispute raised (suit for injunction), is covered by the Specific Relief Act, which did not contain any exclusionary clause for the arbitral jurisdiction, whether the reference to arbitration can be claimed to be invalid?
2. The plaintiff is the Revision Petitioner.
These are the issues raised in this revision petition
2.1. The plaintiff filed the suit in O.S.No.3366 of 2010 against respondents 1 to 3 / defendants 1 to 3 and one Srinivasalu, seeking the relief of injunction restraining the defendants from interfering with the peaceful possession and enjoyment of the property and dispossessing the plaintiff from the property without due process of law.
2.2. Defendants 1 to 3 filed a petition, under Section 8 of The Arbitration and Conciliation Act, 1996, (hereinafter will be referred to as "the Act") in I.A.No.16856 of 2010 in O.S.No.3366 of 2010, praying to refer the case to arbitration for resolving the dispute and consequently, to dismiss the suit.
2.3. In the supporting affidavit filed in support of the said Interlocutory Application, it is stated by defendants 1 to 3 that the plaintiff, along with his co-owners, entered into an agreement, dated 18.12.2007, agreeing to sell the suit property in favour of defendants / petitioners therein, and the agreement provides that all disputes and differences between the parties shall be resolved by arbitration under the provisions of the Act.
2.4. The Court, by the order, dated 24.11.2010, allowed the said Interlocutory Application. Challenging the same, this Civil Revision Petition has been filed.
3. The main contentions of the learned counsel for the Revision Petitioner / plaintiff are as under:-
(i) There was no consensus Ad Idem between the petitioner and the respondents herein towards the execution of alleged sale agreement and therefore, Section 8 of the Act would not apply.
(ii) The signature in the agreement was obtained by the fourth defendant by misrepresentation, but he has not been made as a party in the petition (I.A.No.16856 of 2010) filed under Section 8 of the Act.
(iii) Suit in O.S.No.3366 of 2010 had been filed for the relief of injunction and it is not a suit for declaration as to the validity or otherwise of the agreement of sale and therefore, the agreement cannot be relied upon.
4. In order to appreciate the contentions raised, it is necessary to look into clause 11 of the sale agreement, dated 18.12.2007, which reads as follows:-
"11. All Controversies, disputes, differences, claims, claims in tort arising out of or in connection with or in relation to this contract including its existence, validity or termination(emphasis supplied by the court) shall be referred to and finally resolved by arbitration of Sole Arbitrator nominated by the Counsel of National and International Commercial Arbitration (CNICA)....."
5. A perusal of the terms and conditions of the agreement, especially, Clause 11, would go to show that, Clause 11 is a comprehensive one, i.e., it is an all encompassing clause, providing for resolution of all the disputes, differences, claims and controversies, which would arise, not only with reference to terms of the sale agreement, but also disputes arising out of or in connection with or in relation to this sale agreement. It is also with reference to its existence, validity or termination.
6. Contenting that despite the existence of
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