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1984 Supreme(MP) 689
High Court Of Madhya Pradesh
V. D. GYANI
TAJ BUILDERS - Appellant
Versus
INDORE DEVELOPMENT AUTHORITY - Respondents
C. M. W. P. 866 Of 1982
Decided On : 10/19/1984
G.M.CHAPHEKAR, S.C.BAGADIYA, S.M.SANYAL
Headnote:(1) Arbitration Act, 1940 - S. 2(a) - arbitration agreement'-defendant proposing to get the dispute settled by arbitration-plaintiff accepting the offer-agreement complete.
A letter was sent to the plaintiff that the dispute between the plaintiff and the defendant should be got settled by arbitration. The plaintiff accepted the offer. This is sufficient to establish the existence of an arbitration agreement. It can not be interpreted in a manner to annul the effect of the letter and its acceptance. AIR 1976 SC 2257 relied on. [Para 8
(2) Civil P.C., 1908,-O.1, R.10-necessary party to a suit-arbitration agreement between one party and the plaintiff-any third party is not a necessary party when the defendant has entered in the shoes of the third party.
Municipal Corporation gave a contract to the plaintiff for constructing a complex when the work was being completed the construction, the complex was transferred by the State Government to the Development Authority. In regard to the work by the plaintiff a dispute arose between the Development Authority and the plaintiff. The Development Authority offered to refer the dispute to arbitration. The plaintiff accepted this offer. In the meantime the Development Authority issued fresh tenders for the work which was to be done by the plaintiff. The plaintiff filed a suit and prayed for interim injunction under section 41 of the Arbitration Act read with O.39, Rules 1 and 2 of the C. P. C. The defendant Development Authority opposed the application on the ground that the Municipal Corporation was a necessary party to the suit.
Held: Once the valid arbitration agreement comes into existence, the different which exist between the parties can be resorted to by reference to the arbitration, which in fact has been proposed by the Development Authority. [Para 9
(3) Civil P.C., 1908-O.39, Rr. 1 & 2-delay in filing application-the defendant being also responsible for the delay-the delay if any, is of no consequence. [Para 10
(4) Arbitration Art, 1940-S. 41-the parties agreed to get the dispute through arbitrators-dispute existing between the parties-section 41 is attracted-it is not necessary, that the arbitration proceedings should to existing-effect of amendment in section 47.
As a result of the recommendation of an Advisory Committee, appointed to advice in the matter of Indira complex, it was decided by the respondents to resolve this dispute by resort to the arbitration, proposing the Collector and the Superintending Engineer as the two Arbitrators. This statement contained in the letter clearly goes to show that the dispute existed between the parties, which required to be resolved and was proposed to be resolved by appointment of Arbitrators and in fact two Arbitrators were proposed by the respondents. [Para 11
Held : The Court has power to issue interim injunction but such interim injunction can only be for the purpose of and in relation to arbitration proceedings. AIR 1974 SC 1265 & 1962 JLJ 580 relied on. AIR 1970 Cal. 255 & AIR 1975 Cal. 165 referred to. AIR 1963 Cal 594 held to be no more good law.
In this connection it would not be out of place to trace and refer the Legislative intent, which is clear from the fact that expression "arbitration proceedings" has been substituted in S.41 (b) of the Act for the words' "reference" in order to cover the various kinds of proceedings, which the Act contemplates. Surely enough the intention of the Legislature by effecting this amendment was to include within the scope of Clause (b) of S.41, all those proceedings, which are held in pursuance to an arbitration agreement, whether with or without intervention of the Court. [Para 12
(5) Civil P.C., 1908-O.39 Rr. 1 & 2-party having a prima facie cash is entitled to an ad interim relief of injunction unless the facts otherwise warrant. [Para 13
( 1 ) THIS revision petition arises out of an order dt. 9-8-1984, passed by the VI Additional Judge to the court of the District Judge, Indore thereby disposing of an application under S. 41 of the Indian Arbitration Act (hereinafter referred to as the Act), read with O. 39, Rr. 1 and 2, C. P. C.
( 2 ) FACTS necessary for disposal of this revision petition, stated in brief, are that the petitioner-firm is a registered contractor. The firm had entered into a contract for construction of inner roads and service roads in the Indira Complex, Naulakha, Indore. Initially this work was to be carried out by the Indore Municipal Corporation, but it appears that eventually the work was entrusted to the Indore Development Authority, Indore, under the directions of the State Government.
( 3 ) THE petitioner's grievance is that the Indore Municipal Corporation having paid the first running bill, amounting to Rs. 3,97,945. 80 paise, refused to pay the second running bill, amounting to Rs. 1,95,580. 86p as submitted by it and the petitioner firm was asked to stop the work, which was to be resumed only on obtaining orders from the higher authorities. The petitioner contends that it approached several times through letters expressing its intent to complete the work, but it was not allowed to complete the same. In the meanwhile the stipulated time for completion of work of the contract expired and the Indore Municipal Corporation acting unilaterally, without affording any opportunity to the petitioner terminated the contract on 23-11-1982. The petitioner thereafter served a notice, calling upon the Indore Municipal Corporation to come to arbitration in view of Cl. 47 of the contract. The work, as has been stated above, was entrusted to the Indore Development Authority under orders of the State Government about four months after the notice dt. 1-1-1983, served by the petitioner on the administrator of the Indore Municipal Corporation. By this notice the petitioner made it clear that the notice be treated under the arbitration clause for appointment of an Arbitrator. In pursuance to this notice two Arbitrators were appointed, vide letter dt. 14-6-1983. The petitioner by its reply dt. 2-7-1983 agreed to the appointment of the Arbitrators and craved for a fair opportunity to put forth its case before the Arbitrators.
( 4 ) IN the meantime the Indore Development Authority issued a notice, calling for fresh tenders in respect of the work, which was to be completed by the petitioner. The tenders were to be received till 25-5-1984, but the petitioner on 24-5-1984 moved the lower court with an application under S. 41 of the Act, read with O. 39, Rr. 1 and 2, C. P. C. and the lower court holding that the petitioner was entitled to an ex parte injunction, passed an order restraining the respondents from opening and accepting any tender in respect of the work, which was the subject-matter of the petitioner's contract.
( 5 ) ON 1-6-1984 the respondents made their appearance and submitted reply to the aforesaid application preferred by the petitioner. This reply is signed by the attorney, Shri Manoharlal Mootha, who has also sworn an affidavit in support of the reply. It appears from the record that on 9-7-1984 an application under O. 19, R. 2, C. P. C. was preferred by the petitioner for permission to cross-examine the deponent Manoharlal Mootha on his affidavit, but this application was rejected by the trial court. The petitioner had also submitted a rejoinder to the reply filed by the respondents. It was allowed to be taken on record. The trial Court after hearing the learned counsel for the parties, dismissed the application as not maintainable under S. 41 of the Act. It is against this order that the petitioner has come up in revision before this court.
( 6 ) SHRI Chaphekar, learned counsel for the petitioner, appearing with Shri Sanyal has contended that the trial court has misconstrued the scope of S. 41 of the Act. He further contends
