The existence of an arbitration clause mandates referral to arbitration, rendering the civil suit not maintainable.

ORAL JUDGMENT

(PER: HON'BLE MR JUSTICE V KAMESWAR RAO)

The challenge in these appeals is to a common order dated 26.11.2021, whereby the learned Principal District and Sessions Judge at Davangere, has decided two applications in IA No.II and IA No.III in Com. O.S. No.8/2021.

2. The appeal No.80/2022 has been filed challenging the order passed in IA No.II, whereas the appeal No.81/2022 is filed challenging order in IA No.III.

3. IA No.II was filed by the appellant herein under Order 39 Rules 1 & 2 of CPC, seeking an ad-interim order of temporary injunction restraining the respondent herein from seizing the suit schedule vehicles from the custody of the appellant except under due process of law, till the pendency of the suit. Whereas, IA No. III was filed by the respondent herein under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘Act 1996’) seeking an order in view of Article 15 of the Loan Agreement dated 22.10.2018, that the parties to the suit be referred to Arbitration.

4. The learned District Judge has allowed IA No.III filed by the respondent herein by holding that, the suit is not maintainable and ordered the return of the plaint for referring the matter to Arbitration. Consequently, the learned District Judge dismissed IA No.II filed by the appellant herein.

5. On the application filed under Section 8 of Act 1996, the stand of the appellant was that the same is not maintainable. All the agreements relied upon by the respondent herein were created, including the clause of the Arbitration and under such circumstances, the dispute cannot be referred to Arbitration. It was further contended that the suit is only for Permanent Injunction against the respondent and the respondent has not filed the written statement, despite taking several opportunities to file the same and hence, the filing of application is highly belated.

6. Further, it was contended that, the suit was filed by the appellant as a Commercial Original Suit as per the Commercial Courts Act, 2015 and hence, the learned District Judge has the jurisdiction to entertain the suit. In support of his contention, the learned counsel has relied upon Section 10 of the Commercial Courts Act, 2015 .

7. The learned District Judge, on the application filed under Section 8 of the Act 1996, has in Paragraphs- 18, 19 & 20 of the order held as under:-

“18. Sec.8 of Arbitration and Conciliation Act provides that; Power to refer parties to arbitration where there is an arbitration agreement. Sec.8 mandates a judicial authority, before whom an action is brought in a matter which is the subject of an arbitration agreement then the matter shall be referred to the arbitration and therefore, this Court is of the opinion that unless the matter is referred to arbitration, this Court has no jurisdiction to entertain the suit.

19. In this case though the plaintiff has contended that the arbitration clause mentioned in the suit documents are created, that has to be considered only during the course of trial. Now it is not in dispute that there is arbitration clause. The plaintiff without invoking arbitration clause approached this Court. As rightly contended by the defendants as there is an agreement with arbitration clause, as per Sec.8 of Arbitration Act, parties shall resolve their dispute before the Arbitrator and as per Sec.9 of CPC the suit is barred and further as per Sec.11 of Commercial Courts Act also it is specifically stated that any Commercial dispute in respect of which the jurisdiction of the Civil Court is either expressly or impliedly barred under any other law for the time being in force and Commercial Court shall not entertain such dispute. Therefore, this Court is of the opinion that the present suit is not maintainable before this Court and hence, I.A.No.III deserves to be allowed. When t