Case Note & Summary
The petitioner, M/s. Arihant Agrotech, a partnership firm, entered into an agreement dated 29/6/2008 with the respondents, Birla Cotsyn (I) Limited, for ginning and pressing work. The petitioner alleged that the respondents failed to provide the requisite work, causing a huge monetary loss. After a notice demanding Rs.62,21,256/- was not complied with, the petitioner filed Special Civil Suit No. 28/2010 for recovery of over Rs.1 crore. In the suit, the respondents filed an application (Exh. 16) under Section 8 of the Arbitration and Conciliation Act, 1996, contending that Annexure 'A' to the agreement contained an arbitration clause. The petitioner opposed the application, arguing that the arbitration clause was not part of the agreement. The learned Civil Judge, Senior Division (Ad hoc), Malkapur, allowed the application by order dated 21/12/2010, relegating the parties to arbitration. The petitioner challenged this order by way of a writ petition under Articles 226 and 227 of the Constitution of India. The High Court examined the agreement and found that the arbitration clause was indeed contained in Annexure 'A', which was appended to the agreement and signed by both parties. The Court held that for the purpose of Section 8, the court need only prima facie satisfy itself of the existence of an arbitration agreement. Since the arbitration clause was part of the agreement, the Civil Judge was justified in allowing the application. The High Court dismissed the petition, upholding the order of the Civil Judge.
Headnote
A) Arbitration Law - Section 8 of Arbitration and Conciliation Act, 1996 - Relegation to Arbitration - The petitioner filed a suit for recovery of money; the respondents filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 contending that the agreement dated 29/6/2008 contained an arbitration clause in Annexure 'A'. The Civil Judge allowed the application and relegated parties to arbitration. The High Court upheld the order, holding that the arbitration clause in the annexure formed part of the agreement and the court need only prima facie satisfy itself of the existence of an arbitration agreement. (Paras 2-6)
B) Civil Procedure - Articles 226 and 227 of Constitution of India - Writ Jurisdiction - The petitioner challenged the order of the Civil Judge under Articles 226 and 227. The High Court found no error in the impugned order and dismissed the petition, as the Civil Judge had correctly applied Section 8 of the Arbitration and Conciliation Act, 1996. (Paras 1, 7)
Issue of Consideration
Whether the Civil Judge was justified in allowing the application under Section 8 of the Arbitration and Conciliation Act, 1996 and relegating the parties to arbitration despite the petitioner's contention that the arbitration clause was not part of the agreement.
Final Decision
The High Court dismissed the writ petition, upholding the order dated 21/12/2010 passed by the Civil Judge, Senior Division (Ad hoc), Malkapur, which allowed the application under Section 8 of the Arbitration and Conciliation Act, 1996 and relegated the parties to arbitration.
Law Points
- Arbitration clause in annexure to agreement is binding
- Section 8 of Arbitration and Conciliation Act
- 1996
- Relegation to arbitration when suit is filed
- Prima facie existence of arbitration agreement
Case Details
2011 LawText (BOM) (06) 107
Writ Petition No.730 of 2011
S.V. Manohar for petitioner; A.M. Gordey (Senior Advocate) assisted by A. Kukde for respondents
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Nature of Litigation
Writ petition under Articles 226 and 227 of Constitution of India challenging order allowing application under Section 8 of Arbitration and Conciliation Act, 1996.
Remedy Sought
Petitioner sought to set aside the order dated 21/12/2010 passed by Civil Judge, Senior Division (Ad hoc), Malkapur, which allowed the respondents' application under Section 8 of the Arbitration and Conciliation Act, 1996 and relegated parties to arbitration.
Filing Reason
Petitioner filed suit for recovery of money; respondents filed application under Section 8 of Arbitration and Conciliation Act, 1996 contending existence of arbitration clause in Annexure 'A' to agreement dated 29/6/2008.
Previous Decisions
Civil Judge, Senior Division (Ad hoc), Malkapur allowed application (Exh. 16) under Section 8 of Arbitration and Conciliation Act, 1996 on 21/12/2010, relegating parties to arbitration.
Issues
Whether the Civil Judge was justified in allowing the application under Section 8 of the Arbitration and Conciliation Act, 1996 and relegating the parties to arbitration despite the petitioner's contention that the arbitration clause was not part of the agreement.
Submissions/Arguments
Petitioner argued that the arbitration clause was not part of the agreement dated 29/6/2008 and that the Civil Judge erred in allowing the application.
Respondents contended that Annexure 'A' containing the arbitration clause was appended to the agreement and signed by both parties, thus forming part of the agreement.
Ratio Decidendi
For the purpose of Section 8 of the Arbitration and Conciliation Act, 1996, the court need only prima facie satisfy itself of the existence of an arbitration agreement. The arbitration clause contained in Annexure 'A' to the agreement dated 29/6/2008, being signed by both parties, formed part of the agreement, and therefore the Civil Judge was justified in allowing the application and relegating the parties to arbitration.
Judgment Excerpts
By the above petition filed under Articles 226 and 227 of the Constitution of India, the petitioner takes exception to the order dated 21/12/2010 passed by the learned Civil Judge, Senior Division (Ad hoc), Malkapur whereby the application (Exh. 16) under Section 8 of the Arbitration and Conciliation Act, 1996 filed by the respondents herein, came to be allowed and the parties were relegated to arbitration in respect of disputes/differences that had arisen between them.
In the said suit, an application (Exh. 16) came to be filed by the respondents invoking Section 8 of the said Act contending that in Annexure `A’, which is appended to the agreement dated 29/6/2008, there is an arbitration clause.
The learned Judge has in the impugned order held that the arbitration clause is contained in Annexure `A’ which is appended to the agreement and the same is signed by both the parties.
Procedural History
Petitioner filed Special Civil Suit No. 28/2010 for recovery of money. Respondents filed application (Exh. 16) under Section 8 of Arbitration and Conciliation Act, 1996. Civil Judge allowed application on 21/12/2010. Petitioner filed Writ Petition No.730/2011 under Articles 226 and 227 of Constitution of India challenging the order. High Court dismissed the petition on 21/6/2011.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 8
- Constitution of India: Articles 226, 227
