Case Note & Summary
The Plaintiff, M/s Railsys Engineers Private Ltd., filed a commercial summary suit against the Defendants, Overseas Infrastructure Alliance Pvt. Ltd. and another, seeking recovery of outstanding invoices under a consultancy contract dated 21st October 2011 for rail-related infrastructure development services. The Defendants filed an Interim Application seeking rejection/dismissal of the suit as not maintainable under Section 8 of the Arbitration and Conciliation Act, 1996, citing Clauses 19.2 and 19.3 of the contract which contain an arbitration clause. The Plaintiff argued that the suit was maintainable as the arbitration clause was not invoked and the claim was for a liquidated sum. The Court, after hearing both sides, found that the dispute clearly arises out of the contract and the arbitration clause is broad enough to cover all disputes. The Court held that the suit is not maintainable and allowed the application, referring the parties to arbitration. The Court also noted that the Plaintiff's reliance on the fact that the arbitration clause was not invoked was irrelevant, as Section 8 of the Act mandates referral when a valid arbitration agreement exists. The Court dismissed the suit as not maintainable and directed the parties to resolve their disputes through arbitration.
Headnote
A) Arbitration Law - Section 8 of Arbitration and Conciliation Act, 1996 - Referral to Arbitration - The suit was filed for recovery of outstanding invoices under a consultancy contract containing an arbitration clause (Clauses 19.2 and 19.3). The Defendants applied for rejection of the suit as not maintainable. The Court held that since the dispute arises out of the contract and the arbitration clause covers all disputes, the suit is not maintainable and the matter must be referred to arbitration. (Paras 1-6)
Issue of Consideration
Whether the commercial summary suit is maintainable in view of the arbitration clause contained in the contract between the parties, and whether the dispute should be referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.
Final Decision
The Court allowed the Interim Application, dismissed the suit as not maintainable, and referred the parties to arbitration in accordance with the arbitration clause in the contract.
Law Points
- Section 8 of the Arbitration and Conciliation Act
- 1996
- arbitration clause
- maintainability of suit
- referral to arbitration
Case Details
2023 LawText (BOM) (12) 96
Interim Application (L) No. 33664 of 2022 in Summons for Judgment No. 68 of 2021 in Commercial Summary Suit No. 86 of 2021
Ms. Shyamli Hajela i/b H and M Legal Associates for Plaintiff, Mr. P. G. Sabnis for Defendants
Overseas Infrastructure Alliance Pvt. Ltd. & Anr.
M/s Railsys Engineers Private Ltd.
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Nature of Litigation
Commercial summary suit for recovery of outstanding invoices under a consultancy contract, with an application by defendants to reject the suit due to an arbitration clause.
Remedy Sought
Defendants sought rejection/dismissal of the suit as not maintainable and referral of the dispute to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.
Filing Reason
The Defendants argued that the suit is not maintainable because the contract between the parties contains an arbitration clause (Clauses 19.2 and 19.3) that covers all disputes arising out of the contract.
Issues
Whether the commercial summary suit is maintainable in view of the arbitration clause in the contract.
Whether the dispute should be referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.
Submissions/Arguments
Defendants submitted that the suit is not maintainable due to Clauses 19.2 and 19.3 of the contract, which provide for arbitration of all disputes.
Plaintiff argued that the suit is maintainable as the arbitration clause was not invoked and the claim is for a liquidated sum.
Ratio Decidendi
When a valid arbitration agreement exists between the parties covering the subject matter of the dispute, a civil suit is not maintainable and the court must refer the parties to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996, regardless of whether the arbitration clause has been invoked by either party.
Judgment Excerpts
This is an application filed by the Defendants in the summons for judgment in the commercial summary suit seeking rejection/dismissal of the suit as not maintainable in view of Section 8 of the Arbitration and Conciliation Act, 1996.
Learned Counsel draws the attention of this Court to paragraph 4 of the plaint and submits that it is an admitted position that the Plaintiff and Defendant No.1 had entered into a contract agreement dated 21st October, 2011...
Procedural History
The Plaintiff filed a commercial summary suit (Commercial Summary Suit No. 86 of 2021) for recovery of outstanding invoices. The Defendants filed Summons for Judgment No. 68 of 2021 and an Interim Application (L) No. 33664 of 2022 seeking rejection of the suit due to an arbitration clause. The Court heard both sides and passed the order on 13th December 2023.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 8
