Case Note & Summary
The petitioners, M/s TCI Infrastructure Limited and M/s Transport Corporation of India Limited, filed a suit before the 6th Joint Civil Judge, Senior Division, Nagpur, seeking recovery of amounts allegedly due from the respondents, M/s Kirby Building Systems (Uttaranchal) Private Limited and M/s Kirby Building Systems India Private Limited. The respondents filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, contending that there was an arbitration agreement between the parties as per invoices and purchase orders, and sought reference of the dispute to arbitration. The trial court allowed the application and also rejected the plaint under Order 7 Rule 11 of the Code of Civil Procedure, 1908. The petitioners challenged this order before the Bombay High Court, arguing that there was no arbitration agreement between them and the respondents, and that the trial court had erred in allowing the application. The High Court examined the material on record, including the invoices and purchase orders, and found that the trial court had correctly applied its mind to the existence of the arbitration agreement. The court held that the existence of an arbitration agreement is a jurisdictional fact, and the trial court had prima facie satisfied itself that such an agreement existed. The High Court upheld the order referring the parties to arbitration but set aside the rejection of the plaint, holding that the suit was not barred by law. The petition was partly allowed, and the parties were directed to appear before the arbitrator.
Headnote
A) Arbitration Law - Section 8 of the Arbitration and Conciliation Act, 1996 - Existence of Arbitration Agreement - Jurisdictional Fact - The trial court, while deciding an application under Section 8 of the Act, must prima facie satisfy itself about the existence of an arbitration agreement between the parties. The court held that the existence of an arbitration agreement is a jurisdictional fact, and the trial court had correctly applied its mind to the material on record, including the invoices and purchase orders, to conclude that there was an arbitration agreement between the petitioners and the respondents. (Paras 2-10) B) Arbitration Law - Section 8 of the Arbitration and Conciliation Act, 1996 - Non-Signatory to Arbitration Agreement - The contention that the petitioners were not signatories to the arbitration agreement was rejected as the trial court found that the invoices and purchase orders containing the arbitration clause were acted upon by the parties, indicating mutual acceptance. The court upheld the trial court's finding that the arbitration agreement existed between the parties. (Paras 5-10) C) Civil Procedure - Order 7 Rule 11 of the Code of Civil Procedure, 1908 - Rejection of Plaint - The trial court had also rejected the plaint under Order 7 Rule 11 CPC, but the High Court set aside that part of the order, holding that the rejection of plaint was not justified as the suit was not barred by law in view of the arbitration agreement. However, the reference to arbitration under Section 8 was upheld. (Paras 11-12)
Issue of Consideration
Whether the trial court was justified in allowing the application under Section 8 of the Arbitration and Conciliation Act, 1996 and referring the parties to arbitration, when the petitioners contended that there was no arbitration agreement between them and the respondents.
Final Decision
The High Court partly allowed the writ petition. The order of the trial court allowing the application under Section 8 of the Arbitration and Conciliation Act, 1996 was upheld, and the parties were directed to appear before the arbitrator. However, the order rejecting the plaint under Order 7 Rule 11 CPC was set aside.
Law Points
- Section 8 of the Arbitration and Conciliation Act
- 1996
- existence of arbitration agreement
- jurisdictional fact
- prima facie satisfaction
- reference to arbitration
