Case Note & Summary
The case involves a Civil Revision Application filed by Sesa Sterlite Limited (formerly Sterlite Industries (India) Ltd.) against M/s. BLR Logistiks (I) Ltd. The dispute arose from a contract dated 01/10/2010 for outbound logistical services. The contract contained an arbitration clause. The respondent filed a suit in the City Civil Court, Mumbai, and the applicant/defendant filed a Notice of Motion under Section 8 of the Arbitration and Conciliation Act, 1996 seeking reference to arbitration. The trial court rejected the motion on 31/07/2014. The applicant challenged this order in the High Court. The High Court admitted the revision application and, by consent of parties, heard it forthwith. The court found that the contract contained a valid arbitration clause and that the trial court had erred in rejecting the Section 8 application. The High Court allowed the revision application, set aside the trial court's order, and referred the parties to arbitration. The court directed the parties to appoint an arbitrator within four weeks and stay the civil suit proceedings.
Headnote
A) Arbitration Law - Section 8 of the Arbitration and Conciliation Act, 1996 - Mandatory Reference to Arbitration - The trial court rejected the defendant's application under Section 8 to refer the parties to arbitration, despite the contract containing an arbitration clause. The High Court held that the rejection was erroneous as the arbitration clause was valid and the court was bound to refer the parties to arbitration. (Paras 1-3)
Issue of Consideration
Whether the trial court was justified in rejecting the application under Section 8 of the Arbitration and Conciliation Act, 1996 for referring the parties to arbitration despite the existence of an arbitration clause in the contract.
Final Decision
The High Court allowed the Civil Revision Application, set aside the order dated 31/07/2014 passed by the learned Judge, City Civil Court, Mumbai, and allowed the Notice of Motion filed by the applicant/defendant under Section 8 of the Arbitration and Conciliation Act, 1996. The parties were directed to appoint an arbitrator within four weeks from the date of the order. The civil suit was stayed.
Law Points
- Section 8 of the Arbitration and Conciliation Act
- 1996
- mandatory reference to arbitration if arbitration agreement exists
- court's duty to refer parties to arbitration
- existence of arbitration clause in contract
- rejection of Section 8 application erroneous
Case Details
2015 LawText (BOM) (08) 62
Civil Revision Application No.952 of 2014
Miss Ambrn Saheed a/w Ms. Purvi Joshi i/by MDP Partners for the Applicant, Mr. Mukesh J Pabari for the Respondent
Sesa Sterlite Limited (formerly Sterlite Industries (India) Ltd.)
M/s. BLR Logistiks (I) Ltd.
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Nature of Litigation
Civil Revision Application against rejection of application under Section 8 of the Arbitration and Conciliation Act, 1996 for referring parties to arbitration.
Remedy Sought
The applicant (defendant) sought to set aside the trial court's order rejecting its Notice of Motion under Section 8 of the Arbitration and Conciliation Act, 1996 and to refer the parties to arbitration.
Filing Reason
The trial court rejected the defendant's application under Section 8 of the Arbitration and Conciliation Act, 1996 despite the existence of an arbitration clause in the contract.
Previous Decisions
The trial court (City Civil Court, Mumbai) rejected the Notice of Motion filed by the defendant under Section 8 of the Arbitration and Conciliation Act, 1996 on 31/07/2014.
Issues
Whether the trial court was justified in rejecting the application under Section 8 of the Arbitration and Conciliation Act, 1996 for referring the parties to arbitration despite the existence of an arbitration clause in the contract.
Submissions/Arguments
The applicant argued that the contract contained an arbitration clause and therefore the trial court should have referred the parties to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.
The respondent opposed the application, but the judgment does not specify the respondent's arguments.
Ratio Decidendi
When a contract contains an arbitration clause, the court is bound under Section 8 of the Arbitration and Conciliation Act, 1996 to refer the parties to arbitration. The trial court's rejection of such an application is erroneous and liable to be set aside.
Judgment Excerpts
The revisionary jurisdiction of this court is invoked against the order dated 31/07/2014 passed by the learned Judge, City Civil Court, Mumbai by which order the Notice of Motion filed by the Petitioner/Defendant for referring the parties to arbitration by invoking Section 8 of the Arbitration and Conciliation Act, 1996 came to be rejected.
The facts giving rise to filing of the above Civil Revision Application in brief can be stated thus : A contract was entered into between the Applicant and the Respondent in the matter of providing outbound logistical services to the Petitioner by the Respondent. The said contract is dated 01/10/2010.
Procedural History
The respondent filed a suit in the City Civil Court, Mumbai. The applicant/defendant filed a Notice of Motion under Section 8 of the Arbitration and Conciliation Act, 1996 seeking reference to arbitration. The trial court rejected the motion on 31/07/2014. The applicant filed Civil Revision Application No.952 of 2014 in the High Court of Judicature at Bombay. The High Court admitted the application and, by consent, heard it forthwith, allowing it on 31/08/2015.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 8
