Case Note & Summary
The Petitioner, Suman Baburao Thapa, was the defendant in Special Civil Suit No.566 of 2011 filed by Respondent Nos.1 and 2 (Jigar K. Mehta and Anand Pawar) for specific performance of an Agreement of Sale dated 4th July 2010. The agreement pertained to a plot of land allotted by CIDCO (Respondent No.3). The agreement contained an arbitration clause (Clause No.9). Upon appearance, the Petitioner filed an application at Exhibit-19 under Section 8 of the Arbitration and Conciliation Act, 1996, seeking referral of the dispute to arbitration. The Trial Court (Joint Civil Judge, Senior Division, Panvel) rejected the application by order dated 17th November 2017, holding that the dispute was not arbitrable because it involved adjudication of rights of CIDCO, a third party not party to the arbitration agreement. The Petitioner challenged this order under Article 227 of the Constitution of India. The High Court analyzed the scope of Section 8, noting that the provision is mandatory when an arbitration agreement exists and the subject matter is arbitrable. The Court distinguished the facts from cases where third-party rights are inextricably intertwined, observing that here the suit was essentially between the parties to the agreement, and CIDCO's involvement was only as a confirming party. The Court held that the dispute was arbitrable and that the Trial Court erred in rejecting the application. Consequently, the High Court allowed the writ petition, set aside the impugned order, and directed the Trial Court to refer the parties to arbitration in accordance with the arbitration clause.
Headnote
A) Arbitration Law - Referral to Arbitration - Section 8 of Arbitration and Conciliation Act, 1996 - Agreement of Sale containing arbitration clause - Suit for specific performance filed by plaintiffs - Defendant filed application under Section 8 for referral - Trial Court rejected application holding that dispute is not arbitrable as it involves adjudication of rights of third party (CIDCO) - High Court held that mere presence of a third party does not render dispute non-arbitrable; the arbitration clause is binding between parties and the dispute can be referred - Held that the application under Section 8 ought to have been allowed (Paras 1-10).
Issue of Consideration
Whether the dispute in a suit for specific performance of an agreement of sale containing an arbitration clause should be referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.
Final Decision
The High Court allowed the writ petition, set aside the impugned order dated 17th November 2017, and directed the Trial Court to refer the parties to arbitration in accordance with Clause (9) of the Agreement of Sale.
Law Points
- Section 8 of Arbitration and Conciliation Act
- 1996
- Arbitration agreement
- Referral to arbitration
- Specific performance of contract
- Arbitrability of subject matter
Case Details
2018 LawText (BOM) (03) 61
Civil Writ Petition (Stamp) No.35221 of 2017
Dr. Shalini Phansalkar-Joshi, J.
Mr. Rafeeq Peermohideen, a/w. Mr. Suresh M. Sabrad, Ms. Preetam Gupta and Mr. Amey Sawant, i/by Mr. Jeetendra Sachdev, for the Petitioner. Mr. Bhushan Walimbe, i/by Mr. Amol B. Jadhav, for Respondent Nos.1 and 2.
Jigar K. Mehta, Anand Pawar, Chief Land and Survey Officer, CIDCO
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Nature of Litigation
Writ Petition under Article 227 challenging order rejecting application under Section 8 of Arbitration and Conciliation Act, 1996 for referral to arbitration.
Remedy Sought
Petitioner sought setting aside of Trial Court order and referral of dispute to arbitration.
Filing Reason
Trial Court rejected application under Section 8 on ground that dispute involving third party (CIDCO) is not arbitrable.
Previous Decisions
Joint Civil Judge, Senior Division, Panvel, by order dated 17th November 2017, rejected Exhibit-19 application.
Issues
Whether the dispute in a suit for specific performance of an agreement containing an arbitration clause should be referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.
Whether the presence of a third party (CIDCO) renders the dispute non-arbitrable.
Submissions/Arguments
Petitioner argued that the arbitration clause is binding and Section 8 mandates referral.
Respondents contended that the dispute involves rights of CIDCO, a non-signatory, and thus is not arbitrable.
Ratio Decidendi
Section 8 of the Arbitration and Conciliation Act, 1996 is mandatory and requires the court to refer parties to arbitration when an arbitration agreement exists and the subject matter is arbitrable. The mere presence of a third party does not render the dispute non-arbitrable if the dispute is essentially between the parties to the agreement.
Judgment Excerpts
By this Writ Petition, filed under Article 227 of the Constitution of India, the Petitioner is challenging the order dated 17th November 2017 passed by the Joint Civil Judge, Senior Division, Panvel, below the application at 'Exhibit-19' in Special Civil Suit No.566 of 2011.
The application at 'Exhibit-19' was preferred by the present Petitioner, who is Defendant No.1 before the Trial Court, for referring the dispute to the Arbitrator, under Section 8 of the Arbitration and Conciliation Act, 1996.
Procedural History
Respondent Nos.1 and 2 filed Special Civil Suit No.566 of 2011 for specific performance of Agreement of Sale dated 4th July 2010. Petitioner appeared and filed application at Exhibit-19 under Section 8 of Arbitration Act for referral to arbitration. Trial Court rejected the application on 17th November 2017. Petitioner filed Civil Writ Petition (Stamp) No.35221 of 2017 under Article 227 before the High Court.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 8
- Constitution of India: Article 227
