DATE OF JUDGEMENT: 04th March, 2020
JUDGES: Hon’ble Mr. Justice Rajiv Sahai Endlaw
SUBJECT: The counsel for the plaintiffs, notwithstanding the notice issued of the application on 28th August, 2019 and opportunity for filing reply having been given, has not filed the reply. The plaintiffs have sued the defendants for recovery of damages for loss by the defendants of the title deeds of the immovable property of the plaintiff deposited with the defendants by way of equitable mortgage. The suit came up first before this Court on 1st April, 2019, when subject to the reservations expressed in the order, the suit was entertained and summons thereof ordered to be issued. Whether the application under Section 8 was liable to be rejected as it was filed nearly 20 months after entering appearance in the suit
(i) The suit came up first before this Court on 1st April, 2019, when subject to the reservations expressed in the order, the suit was entertained and summons thereof ordered to be issued. The defendant appeared before the Joint Registrar on 20th May, 2019 and stated that complete set of documents and three pages of the plaint had not been received. It was further stated that there is an arbitration clause in the agreement between the parties and an application for referring the parties to arbitration would be filed. The Joint Registrar adjourned the proceedings to 1st August, 2019, granting time of four weeks to the defendant to file written statement and application if any.
(ii) On 1st August, 2019 also, there was no written statement of the defendant on record; the defendant complained that deficient copies as directed to be supplied had not been supplied by the plaintiffs till then. Per contra, the counsel for the plaintiffs contended that since the counsel who had appeared for the defendant on 20th May, 2019 had neither got his appearance recorded nor filed vakalatnama, the plaintiffs did not know to whom to supply the complete paper book.
(iii) The suit came up before this Court on 21st August, 2019, by when also written statement of the defendant was not on record. For the reasons stated in the order dated 21st August, 2019, the right of the defendant to file written statement was closed and the plaintiffs directed to file affidavits by way of examination-in-chief and the suit posted before the Joint Registrar on 15th October, 2019 for recording of evidence of the plaintiffs.
(iv) The defendant preferred FAO(OS) No.179/2019 to the Division Bench against the order closing its right to file written statement and the Division Bench vide order dated 27th September, 2019 has set aside the order closing the right of the defendant to file written statement and granted time till 11th October, 2019 to the defendant to file written statement. Notice thereof was ordered to be issued, pleadings therein directed to be completed and the application posted for hearing for today.
(1) In any of the following cases,-
(a) where an arbitration agreement provides that the reference shall be to one or more arbitrators to be appointed by consent of the parties, and all the parties do not, after differences have arisen, concur in the appointment or appointments; or
(b) if any appointed arbitrator or umpire neglects or refuses to act, or is incapable of acting, or dies, and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators, as the case may be, do not supply the vacancy; or
(c) where the parties or the arbitrators are required to appoint an umpire and do not appoint him; any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appointment or appointments or in supplying the vacancy.
(2) If the appointment is not made within fifteen clear days after the service of the said notice, the Court may, on the application of the party who gave the notice and after giving the other parties an opportunity of being heard, appoint an arbitrator or arbitrators or umpire, as the case may be, who shall have like power to act in the reference and to make an award as if he or they had been appointed by consent of all parties
The counsel for the defendant has contended that there is an arbitration clause in the agreement between the parties, copy of which has been filed by the plaintiffs themselves and copy of which has also been filed by the defendant along with the application and in accordance therewith, the parties are to be referred to arbitration.
The counsel for the plaintiffs has opposed the application contending that the defendant, by its conduct aforesaid has dis-entitled itself from applying under section 8 of the Arbitration Act. It is contended that the defendant, by filing an appeal to the Division Bench against the order dated 21st August, 2019 closing its right to file written statement, has opted to proceed with the suit by filing a written statement and cannot now be heard to claim arbitration.
Section 7 of the Arbitration Act defines an 'arbitration agreement' as meaning an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. In my view, the words "all or certain disputes" permit classification of disputes but do not permit classification of claims. The said words, in my view, do not allow a provision providing for claims of one of the parties arising in respect of a defined legal relationship to be adjudicated by arbitration but the claim of the other party arising in respect of the same legal relationship to be adjudicated by any other mode. The same would be contrary to the public policy prohibiting splitting up of claims and causes of action as enshrined in the provisions of the CPC and would result in multiplicity of proceedings, with claims of one of the parties to a legal relationship being decided by one forum and the claims of the other party to the same legal relationship being decided by another forum and possibility of conflicting findings. Such cannot be the interpretation of the words "all or certain disputes". The said words have to be interpreted as permitting the parties to specify the disputes of a particular nature/class to be submitted to arbitration, whether the said dispute arises from the claim of one or the other party.
Conclusively, applying the dicta of the Supreme Court and citing some judgments of other High Courts, Delhi High Court held that there was no arbitration agreement.
Click here to download the original copy of the judgement