The main legal point established in the judgment is that the court is obligated to refer the matter to the arbitrator once the conditions under Section 8 of the Arbitration and Conciliation Act,1996 are fulfilled. Additionally, the competence of the arbitrator to decide jurisdiction and validity of the arbitration agreement under Section 16 of the Act was emphasized.

JUDGMENT

Raj Mohan Singh, J. - Petitioner has assailed the order dated 15.9.2015 passed by Civil Judge (Junior Division), Panipat, whereby application under section 8 of the Arbitration and Conciliation Act,1996 (for short 'the Act') was dismissed.

2. A suit for recovery was filed by the plaintiff against defendant-petitioner along with interest. In the said suit, an application under Section 8 of the Act was filed by the defendant-petitioner by invoking clause 6 (b) (i) of the arbitration agreement dated 24.9.2008. For ready reference, clause 6 of the arbitration agreement is reproduced here as under:-

"Governing Law and Arbitration

(A) in the event the services are being provided in India then the following provisions shall apply

(a) the provisions of the service provider agreement and the other transaction documents shall be governed by and construed in accordance with Indian law, unless other specified in any of the transaction documents.

(b) (i) any dispute, controversy or claim is arising out of or relating to the service provider agreement and/ or the other transaction documents or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the provisions of the Indian Arbitration and Conciliation Act, 1996

(ii) the dispute, controversy or claims arising out of in connection with the service provider agreement and/ or the other transaction documents shall be referred to two (2) arbitrators, one (1) to be appointed by each party and such arbitrators shall then appoint a 3rd arbitrator."

3. The execution of agreement between the parties is not in dispute. Petitioner claims that the plaintiff-respondent No.1 was a service provider to the petitioner-bank. After collection of money, he did not deposit it in the account of the bank, rather misappropriated the same in his personal account.

4. As per bilateral understanding, petitioner-bank operated the account of the plaintiff to recover the due amount from him. In case of any dispute, clause 6 (A) (b) has to be invoked for referring the matter to the arbitrator. The existence of arbitration clause is not in dispute. The only dispute is with regard to recovery of the amount from the personal account of the plaintiff-respondent No.1, who was a sole proprietorship of the plaintiff.

5. In Agri Gold Exims Ltd. vs. Sri Lakshmi Knits & Wovens and others, (2007) 3 Supreme Court Case 686 , The Branch Manager, M/s Magma Leasing & Finance Limited and another vs. Potluri Madhavilata and another, 2009 (4) RCR (Civil) 900 , Bharat Rasiklal Ashra vs. Gautam Rasikla Ashra and another, 2011 (4) RCR (Civil) 869 , the provisions in terms of Section 8 of the Act are preemptory in nature. In the event of finding existence of arbitration clause, the Court is obligated to refer the matter to arbitrator. The breach of agreement by any of the party to the agreement and even if, there is termination of agreement, the same will not affect the arbitration clause. The arbitrator is competent to decide his jurisdiction under Section 16 of the Act.

6. In Hindustan Petroleum Corporation Limited vs. M/s Pinkcity Midway Petroleums, 2003 RCR (Civil) 686 , the Hon'ble Apex Court while interpreting sections 8 and 16 of the Arbitration and Conciliation Act, held that once the agreement and existence of arbitration clause are admitted then as per mandatory language of Section 8 of the Act, the Court is bound to refer the dispute to the Arbitrator. The question whether that arbitration clause applied to the facts of the case, has to be decided by the Arbitrator as the Arbitrator is competent and has the jurisdiction to adjudicate upon and decide upon his jurisdiction and validity and existence of arbitration agreement with reference to arbitrability of the subject matter of dispute under arbitration clause. Once the existence of agreement between the parties is found containing arbitration clause, the jurisdiction of the civil Court has to be treated as barred.

7. The applicatio