Case Note & Summary
The Petitioner, Cogent Enterprises Pvt. Ltd., filed an Arbitration Petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator to adjudicate disputes arising out of a Memorandum of Understanding (MOU) dated 6 July 2011. The MOU was executed between the Petitioner and the Respondent, Shri Vijay Kumar Jagdishray Chawla, for the purchase of two villas for a total consideration of Rs. 1.5 Crores. The Respondent paid only Rs. 1 Crore and failed to make further payments. Subsequently, on 18 December 2013, the Respondent allegedly invited one of the Petitioner's Directors, Shri Girimon P.T., to his residence on the pretext of settlement, where the Director was assaulted and forced to sign cheques and documents. The Respondent then filed a Special Summary Suit under Order XXXVII of the Code of Civil Procedure, 1908, in the Court of Civil Judge, Senior Division, Pune, against the Petitioner and its Directors, claiming Rs. 1,65,81,000/- based on the cheques and the MOU. The Petitioner contended that the Respondent ignored the arbitration clause in the MOU. The trial court allowed the Petitioner's application for leave to defend. The Petitioner then filed the present petition under Section 11 of the Arbitration Act. The Respondent opposed the petition, arguing that the filing of the summary suit amounted to a waiver of the arbitration clause. The court, after considering the submissions, held that the arbitration clause survives the filing of the suit and that the existence of the arbitration agreement is not disputed. The court appointed a sole arbitrator to adjudicate the disputes between the parties, noting that the disputes fall within the scope of the arbitration agreement. The court also clarified that the arbitrator would be at liberty to decide all issues, including the validity of the MOU and the alleged coercion.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11 of Arbitration and Conciliation Act, 1996 - Survival of Arbitration Clause - The court considered whether the filing of a summary suit under Order XXXVII CPC by the Respondent precludes the Petitioner from invoking the arbitration clause contained in the MOU dated 6 July 2011. The court held that the arbitration clause survives the filing of the suit and the Petitioner is entitled to seek appointment of an arbitrator under Section 11 of the Act, as the existence of the arbitration agreement is not disputed and the disputes fall within its scope. (Paras 1-6) B) Civil Procedure - Summary Suit - Order XXXVII CPC - Effect on Arbitration Agreement - The court examined the interplay between a summary suit under Order XXXVII CPC and an arbitration agreement. It held that the mere filing of a summary suit does not extinguish the arbitration clause, and the party seeking arbitration can still approach the court under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator. (Paras 4-6)
Issue of Consideration
Whether the filing of a summary suit under Order XXXVII CPC by the Respondent bars the Petitioner from seeking appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, based on the same arbitration agreement.
Final Decision
The court allowed the Arbitration Petition and appointed a sole arbitrator to adjudicate the disputes between the parties. The arbitrator is at liberty to decide all issues, including the validity of the MOU and allegations of coercion.
Law Points
- Arbitration clause survives filing of summary suit
- Section 11 petition maintainable despite pending civil suit
- Existence of arbitration agreement not disputed
- Court to appoint arbitrator when dispute falls within arbitration clause
