Case Note & Summary
The petitioner, Smt. Rashmi Solanki, filed writ petitions under Article 227 of the Constitution of India challenging two orders passed by the Senior Civil Judge & JMFC, Magadi, in O.S. No.55/2015. The first order dated 28.3.2015 granted an interim injunction restraining the petitioner from alienating the suit schedule property. The second order dated 22.6.2015 rejected I.A. No.3 filed by the petitioner under Section 8(1) of the Arbitration and Conciliation Act, 1996, seeking reference of the dispute to arbitration. The respondent, Sri B.S. Sham Sunder, had filed the suit for specific performance of an agreement of sale dated 5.12.2014. The agreement contained an arbitration clause (Clause 11) stating that all disputes arising out of the agreement shall be referred to arbitration. The petitioner contended that since the agreement contained an arbitration clause, the civil court had no jurisdiction to entertain the suit and that the application under Section 8(1) ought to have been allowed. The respondent argued that the arbitration clause was not valid and that the suit was maintainable. The High Court held that the arbitration clause was clear and binding, and that the trial court had erred in rejecting the application under Section 8(1) and in granting the interim injunction. The court observed that the suit was not maintainable in view of the arbitration agreement, and that the trial court lacked inherent jurisdiction to pass any interim orders. Accordingly, the High Court set aside both the impugned orders and directed the trial court to refer the parties to arbitration in accordance with Section 8(1) of the Act.
Headnote
A) Arbitration Law - Reference to Arbitration - Section 8(1) of Arbitration and Conciliation Act, 1996 - Mandatory Reference - Where a suit is filed in respect of a matter which is the subject of an arbitration agreement, the court shall refer the parties to arbitration if a party so applies before submitting its first statement on the substance of the dispute - Held that the trial court erred in rejecting the application under Section 8(1) and in granting interim injunction, as the arbitration clause was binding and the suit was not maintainable (Paras 1-10). B) Civil Procedure - Interim Injunction - Order 39 Rules 1 and 2 CPC - Grant of Injunction Despite Arbitration Clause - Where a suit is barred by law due to existence of an arbitration agreement, the court lacks inherent jurisdiction to grant any interim relief - Held that the trial court's order granting interim injunction was without jurisdiction and liable to be set aside (Paras 5-10).
Issue of Consideration
Whether the trial court was justified in granting an interim order of injunction and rejecting the application under Section 8(1) of the Arbitration and Conciliation Act, 1996, despite the existence of an arbitration clause in the agreement between the parties.
Final Decision
The High Court allowed the writ petitions, set aside the order dated 28.3.2015 granting interim injunction and the order dated 22.6.2015 rejecting I.A. No.3, and directed the trial court to refer the parties to arbitration in accordance with Section 8(1) of the Arbitration and Conciliation Act, 1996.
Law Points
- Arbitration agreement
- reference to arbitration
- civil suit not maintainable
- Section 8(1) Arbitration and Conciliation Act
- 1996
- first statement on substance of dispute
- judicial restraint
- inherent lack of jurisdiction
