IMPORTANT POINTS
(1) Reference to arbitration – In absence of a pre-existing arbitration agreement, Court has no power, authority or jurisdiction to refer unwilling parties to arbitration.
(2) Advocate Commissioner’s report is only an opinion or noting, as the case may be with details and/or statement to court actual state of affairs – Such a report does not automatically form part of court’s opinion.

JUDGMENT :

Sanjiv Khanna, J.

The legal issue arising in the present appeal is whether the parties had agreed that the subject matter of the suit or a part thereof should be referred to arbitration under Section 21 of the Arbitration Act, 1940.¹[We are examining the provisions of the Arbitration Act, 1940 and consequently, the observations and the findings recorded should not be without proper appreciation of the principles applied to the proceedings under the Arbitration and Conciliation Act, 1996.]

2. On 03rd September 1993, the respondent before us - M/s. Modi Transport Service, ²[The plaintiff', for short.] a partnership firm, had filed a civil suit in the Court of the District Judge, Sehore Camp, Astha, Madhya Pradesh, for the settlement of accounts of transportation of coal undertaken by them according to the agreement dated 01st October 1990 and the supplementary agreement dated 13th December 1991, with M.P. Rajya Tilhan Utpadak Sahkari Sangh Maryadit, Pachama, District Sehore, Madhya Pradesh (the first defendant). The General Manager and Managing Director of the said Sahkari Sangh were impleaded as second and third defendants. ³[Collectively three defendants are referred to as 'the defendant', for short.] The plaintiff had also prayed for a grant of the amount due and payable by the defendant and the amount spent by the plaintiff on the security of the defendant's goods and all other amounts (sic) with interest @ 2%.⁴[Interest period was not specified.]

3. The plaint, in brief, states that the plaintiff had transported coal on the delivery orders issued by the defendant from the coal mines to the defendant's plant. The plaintiff had no connection with the quality or any deficiency in the quality of the coal. The plaintiff, as per directions, had loaded the coal from the coal mines of Western India Coalfields Limited. The plaintiff's sole responsibility was to deliver the coal on time at the defendant's plant. By communication dated 05th June 1992, the defendant had informed that the plaintiff would be paid transportation charges at Rs. 1.42p. per tonne per kilometre till the finalisation of the new agreement. The order would remain in force for at least six months. The plaintiff, as required, had furnished a bank guarantee of Rs. 1,00,000/- (rupees one lakh only) for six months. Thereafter, the defendant had refused to pay transportation charges @ Rs. 1.42p. per tonne per kilometre. Further, the defendant had made deductions from the bills raised on the basis of the actual tonnage of coal delivered, though the plaintiff, as per the agreement, was entitled to a 1% variation or exemption on the quantum of coal loaded at the coal mine. Accordingly, transport charges were payable per ton per kilometre as loaded at the collieries and not on the quantity actually delivered as long as the shortfall was within 1%. The defendant had also made false and wrong deductions on account of the high moisture content in the coal. Interest was charged and deducted from the bills of the plaintiff by the defendant. Subsequently, the defendant had issued a telegraph asking the plaintiff not to transport coal. The plaintiff had to arrange for a plot to store the coal for which he had to pay a rent of Rs. 10,000/- (rupees ten thousand only) per month and incur security expenses of Rs. 5,000/- (rupees five thousand only) per month for up to five months.

4. The defendant contested the suit by filing a detailed written statement. As per the defendant, it was an essential duty of the plaintiff to lift the coal offered only on being satisfied that the coal was of good quality. The plaintiff had lifted good quality coal from the collieries against the release orders of the defendant, but low quality of coal was delivered to the defendant. The defendant was cheated. The representatives of the plaintiff were informed about the low quality of coal on account of excessive moisture, and stone and dust being mixed with the coal. The truck drivers had showered