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M/S Super Vending Technologies Village Nariyal, Solan v/s Shri Mukesh Sahni & Another

    Civil Misc. Petition Main (Original) No. 168 Of 2021
    Decided On, 28 September 2021
    At, High Court of Himachal Pradesh
    By, THE HONOURABLE MS. JUSTICE JYOTSNA REWAL DUA
    For the Petitioner: Dibender Gosh, Ravi Shankar Sood, Advocates. For the Respondents: R1, Dalip k. Sharma, R2, Arvind Thakur, Advocates, Manju Negi, Sbi Law Officer.


Judgment Text
1. An application moved by defendant No.1 under Section 8 of the Arbitration and Conciliation Act 1996 (in short the Act) read with Order 7 Rule 11(d) of the Code of Civil Procedure was allowed by the learned trial Court vide order dated 20.07.2021. The parties were directed to refer the dispute raised in the plaint to the Arbitrator. The plaint was also ordered to be returned to the plaintiffs. Based on this order, a separate order of even date was also passed for returning the plaint etc. to the plaintiffs. Aggrieved against the aforesaid orders passed on 20.07.2021, the plaintiffs have moved the instant petition under Article 227 of the Constitution of India.

2(i) A civil suit was filed by the petitioners seeking permanent prohibitory injunction for restraining respondent No.1 from interfering in the assets and properties described in the plaint and also in the business of plaintiffs as described therein. A decree of mandatory injunction was also prayed for directing respondent No.1 to execute certain documents.

2(ii) On receipt of the notice of the plaint, defendant No.1/respondent No.1 filed an application under Section 8 of the Arbitration and Conciliation Act read with Order 7 Rule 11(d) of the Code of Civil Procedure. It was submitted in the application that the plaintiffs and defendant No.1 had executed a partnership deed registered on 11.10.2007. In terms of this partnership deed, plaintiff No.2, defendant No.1 and one Sh. Inder Pal became partners of partnership firm M/s Super Vending Technologies (plaintiff No.1). Inder Pal retired as partner of the firm vide ‘Deed Of Dissolution Of Retirement Of One Partner’ registered on 17.3.2016. The other two partners continued as partners of the firm (Petitioner No.1/plaintiff No.1). It was also submitted that an arbitration clause was contained in the partnership deed dated 11.10.2007 to the effect ‘that in case of any dispute between the partners, the same shall be referred to an Arbitrator, who may be appointed by mutual consent of the partners.’ Paragraph-3 of the application moved by respondent No.1 reads as under:-

“3. That as per the above said partnership deed dated 11.10.2007 it was mutally agreed amongst the partners of the firm that in event of any kind of dispute between the partners of the firm, same shall be referred to Arbitrator. The contents of relevant paras of the partnership deed are reproduced for the kind perusal of the Hon’ble Court as under:-

“That in case of any dispute between the partners, the same may be referred to an ARBITRATOR, who may be appointed by mutual consent of the partners”.

On the strength of above averments, prayer was made in the application to refer the dispute to arbitration and to order return of the plaint.

2(iii) In their reply filed to the above application, the plaintiffs denied the assertions made in the application. The above extracted para-3 of the application was replied by them as under:-

“Para 3 to 6 That the contents of para 3 to 6 as alleged are wrong hence denied and not admitted to be correct in view of detailed submissions made herein above since there exists no arbitration clause with respect to matter in dispute in as much as the dispute if any is not subject to arbitration in view of minutes of meeting dated 23.12.2019 therefore the contention raised in this paras is a result of misinterpreting and misunderstanding and misconception of the issue involved as such the present application deserves to be dismissed being misconceived/devoid on any merit.”

2(iv) Learned trial Court vide impugned orders dated 20.07.2021 held that the partnership deed dated 11.07.2007 contained a clause in terms of which, the dispute between the partners was required to be adjudicated by the Arbitrator. The dispute raised by the petitioners/plaintiffs fell within the ambit of the arbitration clause. Accordingly, vide order dated 20.07.2021, the parties were directed to refer the dispute raised in the plaint to the Arbitrator “as mentioned in the Arbitration clause of the agreement”. Vide separate order of the even date, the copy of the plaint and other documents were ordered to be returned to the petitioners for forwarding it to the Arbitrator. In the aforesaid background, the petitioners have filed the instant petition assailing the orders passed on 20.07.2021 by the learned Trial Court.

3. I have heard learned counsel for the parties and gone through the documents available on record.

4(i) Since the application allowed by the learned trial Court under the impugned orders was moved under Section 8 of the Act, therefore, it will be appropriate to first notice this section. Section 8 of the Arbitration and Conciliation Act, 1996 reads as under:-

“8. Power to refer parties to arbitration where there is an arbitration agreement:-

(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.

(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof: Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.

(3) Notwithstanding that an application has been made under subsection (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made”

Plain reading of Section 8 of the Act makes out that alongwith the application moved under Section 8, the original arbitration agreement or a duly certified copy thereof has to be enclosed. Without these documents, the application cannot be maintained. The proviso to Section 8(2) states that in case the original/certified copy of the arbitration agreement is not available with the applicant and the same is with the other party to the agreement, then the applicant alongwith a copy of arbitration agreement appended with the application shall pray to the Court to direct the other party to produce the original/certified copy of arbitration agreement before the Court. In this regard, it is apt to refer to following paragraphs from a judgment reported in (2009) 10 SCC 103, titled as Branch Manager, Magma Leasing and Finance Limited and Another Vs. Potluri Madhavilata and another:-

“17………….An analysis of Section 8 would show that for its applicability, the following conditions must be satisfied:

(a) that there exists an arbitration agreement;

(b) that action has been brought to the court by one party to the arbitration agreement against the other party;

(c) that the subject matter of the suit is same as the subject matter of the arbitration agreement;

(d) that the other party before he submits his first statement of the substance of the dispute, moves the court for referring the parties to arbitration; and

(e) that along with the application the other party tenders the original arbitration agreement or duly certified copy thereof.

18. Section 8 is in the form of legislative command to the court and once the pre-requisite conditions as aforestated are satisfied, the court must refer the parties to arbitration. As a matter of fact, on fulfillment of conditions of Section 8, no option is left to the court and the court has to refer the parties to arbitration.

There is nothing on record that the pre-requisite conditions of Section 8 are not fully satisfied in the present case. The trial court, in the circumstances, ought to have referred the parties to arbitration as per arbitration clause 22.”

In (2008) 2 SCC 602 titled Atul Singh and others Vs. Sunil Kumar Singh and others, it was held that mandatory provisions of Section 8 requiring the application under Section 8 of the Act to be accompanied by original arbitration agreement or duly certified copy thereof, are required to be fulfilled. Relevant paragraph of the judgment reads as under:-

“19. There is no whisper in the petition dated 28.2.2005 that the original arbitration agreement or a duly certified copy thereof is being filed along with the application. Therefore, there was a clear non-compliance with sub-section (2) of Section 8 of 1996 Act which is a mandatory provision and the dispute could not have been referred to arbitration. Learned counsel for the respondent has submitted that a copy of the partnership deed was on the record of the case. However, in order to satisfy the requirement of subsection (2) of Section 8 of the Act, defendant no.3 should have filed the original arbitration agreement or a duly certified copy thereof along with the petition filed by him on 28.2.2005, which he did not do. Therefore, no order for referring the dispute to arbitration could have been passed in the suit.”

4(ii) While assailing the orders dated 20.07.2021, a specific ground has been taken in the present petition that the application moved by respondent No.1 under Section 8 of the Act was neither accompanied by the original nor the certified copy of either the agreement dated 6.9.2007 or the partnership deed dated 11.10.2007. Though the record of the case is not before this Court nor the same at present is before the learned trial Court. The impugned order passed by learned trial Court also does not indicate as to whether the necessary documents as per Section 8 of the Act were before it or not. However, learned counsel for respondent No.1 did not dispute that application moved by respondent No.1 under Section 8 of the Act was an application simplicitor. That neither the agreement dated 6.9.2007 nor the partnership deed dated 11.10.2007 were appended alongwith the application. That no document was enclosed with the application. It is not disputed that the documents viz. the partnership deed dated 11.10.2007 and the agreement dated 6.9.2007 were not even part of the plaint. It is not the case of respondent No.1 that he had invoked the proviso to Section 8(2) seeking procurement of the same. If that is so then, in absence of deed of partnership dated 11.10.2007, in absence of agreement dated 6.9.2007, the learned trial Court could not have drawn any conclusion about the existence of the arbitration clause or that the dispute raised in the plaint was required to be referred to the Arbitrator in terms of that imaginary clause. Mandatory provisions of Section 8 of the Arbitration Act were required to be complied with by respondent No.1 while filing application under Section 8 of the Act inasmuch as the necessary documen

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ts for reaching the conclusion as drawn by the learned trial Court in the impugned order had to be part of the application. Though the impugned orders passed by learned trial Court do not throw any light in this regard, however, in view of the submissions made by learned counsels for the parties during hearing of the case, it appears that provisions of Section 8 of the Act were not complied by respondent No.1. For the aforesaid reasons, the order dated 20.07.2021 passed in CMA No.139/2021 and the order dated 20.07.2021 returning the plaint passed in Civil Suit No.50/2021 by learned Civil Judge Kasauli District Solan are set aside. Civil Suit is ordered to be restored to its original number. Learned counsel for the parties are directed to remain present before the learned trial Court on 08.10.2021. Petitioners/plaintiffs shall timely take all necessary steps for bringing on record of the learned trial Court, the pleadings/documents/ orders etc., returned to them under the impugned orders. In view of above observations, learned trial Court is directed to decide the application moved by respondent No.1 afresh after considering the original record of the case, in accordance with law. Pending miscellaneous applications, if any, shall also stand disposed of.
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