Case Note & Summary
The petitioners, who are the trustees of Framjee Dinshaw Petit Parsee Sanitorium and owners of land on which a building for respondent No.1, a co-operative housing society, was constructed, filed an arbitration petition under Section 8 of the Arbitration and Conciliation Act, 1996. The petitioners sought to refer the disputes raised in Suit No.445 of 2008, filed by respondent No.1 and others, to arbitration. The suit involved disputes regarding the development agreement dated 1st October, 1985, which contained an arbitration clause. The petitioners argued that all parties, including the society and its members, were bound by the arbitration agreement. The respondents opposed the petition, contending that the arbitration clause was not applicable to all disputes. The court, after hearing the parties, held that the existence of an arbitration agreement was clear and that under Section 8 of the Act, the judicial authority must refer the parties to arbitration. The court noted that the disputes raised in the suit were covered by the arbitration clause and that the petitioners were entitled to the relief sought. Consequently, the court allowed the petition, referred the parties to arbitration, and stayed the proceedings in Suit No.445 of 2008 and Notice of Motion No.603 of 2008 pending arbitration.
Headnote
A) Arbitration Law - Reference to Arbitration - Section 8 of the Arbitration and Conciliation Act, 1996 - Mandatory Reference - Dispute between landowners and housing society regarding development agreement containing arbitration clause - Court held that once existence of arbitration agreement is established, judicial authority is bound to refer parties to arbitration, irrespective of pendency of suit - Held that the petitioners, as owners of land, are parties to the agreement and the disputes fall within the scope of the arbitration clause (Paras 1-5).
Issue of Consideration
Whether the disputes raised in Suit No.445 of 2008 between the petitioners (landowners) and respondent No.1 (Housing Society) are covered by the arbitration agreement contained in the Development Agreement dated 1st October, 1985, and whether the petitioners are entitled to have the parties referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.
Final Decision
The court allowed the petition, referred the parties to arbitration in respect of the disputes raised in Suit No.445 of 2008, and stayed the proceedings in Suit No.445 of 2008 and Notice of Motion No.603 of 2008 pending arbitration.
Law Points
- Section 8 of the Arbitration and Conciliation Act
- 1996
- mandatory reference to arbitration if arbitration agreement exists
- judicial authority to refer parties to arbitration
- scope of Section 8
- arbitration clause binding on parties and successors.
Case Details
2010 LawText (BOM) (11) 24
Arbitration Petition No.112 of 2008 in Suit No.445 of 2008
Mr. E. P. Bharucha, Senior Counsel with Mr. Sarosh Bharucha with Ms Ferzana Behram Kamdin i/b FZB and Associates for Petitioners; Mr. Snehal Shah a/w Deepti Panda i/b Raval Shah & Co for respondent Nos 1 & 2
A. B. K. Dubhash, F. N. Petit, Lady Laila Petit, D.S. Cambatta (Trustees of Framjee Dinshaw Petit Parsee Sanitorium)
Petit Towers Co-Operative Housing Society Limited, Pushpa C. Jain, Municipal Corporation of Greater Mumbai, Sir Dinshaw M. Petit, K. N. Suntook, Sir Cawasji Jehangir
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Nature of Litigation
Arbitration petition under Section 8 of the Arbitration and Conciliation Act, 1996 seeking reference of disputes to arbitration.
Remedy Sought
Petitioners (landowners) sought to refer the parties to arbitration in respect of disputes raised in Suit No.445 of 2008 and to stay the suit proceedings pending arbitration.
Filing Reason
Disputes arose between the petitioners (owners of land) and respondent No.1 (housing society) regarding the development agreement dated 1st October, 1985, which contained an arbitration clause. The respondents filed Suit No.445 of 2008, and the petitioners sought to invoke the arbitration clause.
Issues
Whether the disputes in Suit No.445 of 2008 are covered by the arbitration agreement in the Development Agreement dated 1st October, 1985.
Whether the petitioners are entitled to have the parties referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.
Submissions/Arguments
Petitioners argued that the Development Agreement contained an arbitration clause and all parties, including the society and its members, are bound by it.
Respondents opposed the petition, contending that the arbitration clause was not applicable to all disputes raised in the suit.
Ratio Decidendi
Under Section 8 of the Arbitration and Conciliation Act, 1996, if a party to an arbitration agreement brings a suit in respect of a matter covered by the agreement, the judicial authority shall refer the parties to arbitration. The existence of an arbitration clause in the Development Agreement mandates reference, and the court has no discretion to refuse.
Judgment Excerpts
By consent of the parties, Rule made returnable forthwith. Heard finally.
The petition is u/s 8 of the Arbitration and Conciliation Act, 1996 (for short 'the Act'), filed by the petitioners, who are the owners of the land on which a building for respondent No.1 a Housing Society (for short 'the Society'), has been constructed.
Procedural History
The petitioners filed Arbitration Petition No.112 of 2008 under Section 8 of the Arbitration and Conciliation Act, 1996, seeking reference of disputes to arbitration. The petition was heard by consent and disposed of finally on 19th November, 2010.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 8
