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2009 Supreme(UK) 373

2009 (2) UAD 642
UTTARAKHAND HIGH COURT
Hon’ble Mr. Chief Justice V.K. Gupta
Appeal from Order No. 503 of 2008 with Appeal from Order No. 504 & 505 of 2008
INDIAN OIL CORPORATION –Appellant
Versus
M/S. DEVKI OILS – Respondent
Decided on : 21.07.2009

Advocates:
For the Appellant :Mr. V.K. Kohli, Sr. Advocate with Mr. I.P. Kohli, Advocate.
For the Respondent:Mr. Sandeep Kothari, Advocate.

Headnote:(A) Arbitration and Conciliation Act, 1996, Secs. 5, 8 and C.P.C. 1908, Order 39, Rules 1 and 2 — Civil suit in respect of a subject matter involving an arbitration agreement — Barred by Section 5 of 1996 Act — Grant of temporary injunction in such suit by Civil Court and subsequently referring the parties to arbitration by stopping proceeding in the civil suit but directing such temporary injunction to continue in force till final disposal of matter by arbitrator — Patently without jurisdiction — Section 5 of 1996 Act completely and totally bars jurisdiction of every judicial authority which means and includes a Civil Court with respect to any matter which is the subject matter of an arbitration agreement — Suit filed in Civil Court despite the bar contained in Section 5 with respect to subject matter which is also the subject matter of an arbitration agreement — Section 8 immediately comes into play which mandates a Civil Court to immediately stop the proceedings in the Civil Court and refer the parties to arbitration. (Paras 7, 8, 9)

       (B) Arbitration and Conciliation Act, 1996, Secs. 5, 8, 9(i),(ii),2(e) and C.P.C. 1908, Order 39, Rules 1, 2 — Jurisdiction of Court in Civil suit to grant temporary injunction under Order 39, Rules 1, 2, C.P.C. and jurisdiction powers exercised under Section 9 of 1996 Act — Distinction between — Whereas exercise of jurisdiction with regard to Order 39, Rules 1, 2, C.P.C. in a civil suit is practically unlimited as well as untrammeled — Exercise of a power under-section 9 of 1996 Act is limited as well as guided by sub-clauses (a) to (e) of clause (ii) of Section 9 — A court exercising jurisdiction under section 9 is not permitted to traverse beyond what has been spelt out in clauses (i) and (ii) of Section 9. (Para 10)

       (C) Arbitration and Conciliation Act, 1996, Sec. 17 — Jurisdiction of arbitrator under — Scope of — Section 17 confers jurisdiction upon an arbitrator to grant interim measures of protection as the arbitrator may consider necessary with regard to the subject matter of dispute pending before him for adjudication through arbitration. (Para 13)

       ¼v½ vkjfcVªs'ku ,.M dUlhfy;s'ku vf/kfu;e] 1996] /kkjk 5] 8 rFkk lhdihdlhd] 1908] vkns'k 39] fu;e 1 o 2 & e/;LFkrk vuqcU/k okys ekeys esanhokuh okn vf/kfu;e 1996 dh /kkjk 5 }kjk izfrcfU/kr gS & nhokuh okn esa vLFkkbZ O;kns'k ikfjr djus ds ckn ekeyk e/;LFkrk ds fy;s lanfHkZr fd;k x;k & nhokuh okn esa ikfjr vLFkkbZ O;kns'k dks rc rd izHkkoh j[kk tkus dk vkns'k tc rd e/;LFkrk ekeyk r; gks & izR;{k :i ls {ks=kf/kdkj foghu gS & 1996 vf/kfu;e dh /kkjk 5 izR;asd U;kf;d vfHkdj.k ds {ks=kf/kdkj dks iw.kZ :i ls gS] ftlesa nhokuh U;k;ky; lfEefyr gS] izfrcfU/kr djrh gS] fdlh ,sls ekeys ds lEcU/k esa tks fd e/;LFkrk vuqcU/k dh fo"k; oLrq gS & ,slh fo"k; oLrq ds lEcU/k esa] tks fd e/;LFkrk vuqcU/k dh fo"k; oLrq gS] /kkjk 5 esa fn;s x;s izfrcU/k ds ckotwn nhokuh U;k;ky; esa okn ;ksftr fd;k x;k & /kkjk 8 rqjUr izHkkoh gks tkrh gS tks nhokuh U;k;ky; esa dk;Zokgh dks rqjUr jksdus ds fy;s nhokuh U;k;ky; dks vknsf'kr djrh gS rFkk i{kdkjksa dks e/;LFkrk gsrq lUnfHkZr djrh gSA ¼izLrj 7] 8] 9½

       ¼c½ vkjfcVªs'ku ,.M dUlhfy;s'ku vf/kfu;e] 1996] /kkjk 8, 9(i),(ii), 2(e) o lhdihdlhd] 1908] vkns'k 39] fu;e 1 o 2 & lhdihdlhd ds vkns'k 39] fu;e 1 o 2 ds vUrxZr flfoy U;k;ky; dh 'kfDr;k¡ vlhfer gSa tcfd vf/kfu;e 1996 dh /kkjk 9 ds vUrxZr {ks=kf/kdkj lhfer gSa rFkk mldh DykWt (ii) dh miDykWtst (a) ls (e) rd ls ekxZnf'kZr gksrk gS & /kkjk 9 ds vUrxZr {ks=kf/kdkj dk iz;ksx /kkjk 9 dh DykWtst (i) o (ii) ds ckgj ugha fd;k tk ldrk gSA ¼izLrj 10½

       ¼l½ vkjfcVªs'ku ,.M dUlhfy;s'ku vf/kfu;e] 1996] /kkjk 17 & mDr ds vUrxZr eè;LFk ds {ks=kf/kdkj dh ifjf/k & /kkjk 17 e/;LFk dks vf/kdkj nsrh gS fd og cpko ds fy, vUrfje vkns'k ikfjr dj ldrk gS tks og fookn ds fo"k; esa vius lkeus yfEcr dk;Zokgh esa i{kdkjksa ds chp fu.khZr djus gsrq mfpr le>sA ¼izLrj 13½

Judgment

These three Appeals are being disposed of by this common judgment.

2. The respondents/plaintiffs, in all the three Appeals, are the dealers/distributors of the appellant with respect to procurement, storage, distribution and sale of Kerosene Oil and Super Kerosene Oil. Certain disputes with respect to the location for shifting of the distribution points arose between the parties, which led the respondents/plaintiffs to file their separate individual suits in the learned Trial Court. The learned Trial Court received and entertained the suits, and in the accompanying applications filed under Order 39 Rules 1 & 2 C.P.C., granted ad interim injunction against the appellant and in favour of the respondents/plaintiffs. The appellant filed Written Statements also in the three suits in which a specific plea was taken that the Civil Court did not have jurisdiction to entertain the civil suits in view of the fact that there was, in existence between the parties, an arbitration agreement which required that all disputes and differences as well as questions between the parties would be adjudicated upon and resolved through arbitration. Having regard to such a preliminary objection in the Written and resolved through arbitration. Having regard to such a preliminary objection in the Written Statements, the learned Trial Court framed the following issue for consideration and adjudication.

“Whether the suit of plaintiff is barred by the provisions of Arbitration and Conciliation Act? If so, its effect?”

3. After hearing the parties, the learned Trial Court vide the impugned order held as under:

“Hence, as per agreement, the dispute between the parties needs to be referred to the contention of defendants is acceptable, because the provisions of the Act clearly show that when there is any arbitration clause in the contract between the parties, then the dispute arising out of the contract shall be heard by arbitrator and Civil Court will have no jurisdiction.”

4. Finally, while disposing of the Suit, based upon its finding on Issue No.1, the learned court below held as under:

“Accordingly, this Preliminary Issue is decided in the positive in favour of defendants and it is hereby held that this Court has no jurisdiction to hear the dispute between the parties and defendants are directed to refer the matter to the arbitrator within a period of one month.”

5. Having decided Issue No. 1 in the aforesaid manner and having disposed of the Suit as indicated herein above by clearly holding that the existence of the arbitration agreement between the parties gave rise to a situation where the disputes had to be settled through arbitration, as regards the question relating to the grant of temporary injunction and its continuance etc., the learned court below in the course of the impugned order held as under:

“As regards the temporary injunction already granted, there is no dispute about the position that this is a matter within the purview of Civil Court now at this stage and the order about temporary injunction of this Court will remain in force till the matter is finally decided by the arbitrator. In these circumstances, it is also necessary that the defendants be also directed to refer the matter to arbitrator as per agreement clause immediately who will decide the dispute between the parties as per agreement and the provisions of Arbitration and Conciliation Act.”

6. There is absolutely no doubt in my mind and I have no hesitation in saying so that the learned court below patently erred in assuming jurisdiction about the grant of temporary injunction as well as its continuance.

7. Section 5 of the Arbitration and Conciliation Act, 1996 (‘1996 Act’ for short) completely and totally bars the jurisdiction of every judicial authority, which means and includes a civil court, with respect to any matter which is the subject matter of an arbitration agreement. Section 5 reads thus:

“5. Extent of judicial intervention. – Notwithstanding anything cont
















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