Bombay High Court
Mr. Chandrashekhar S. Nagral vs Abhikalp Infrastructure Pvt. Ltd. Thr. ... on 28 November, 2023
2023:BHC-AUG:24953
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
ARBITRATION APPEAL NO. 40 OF 2022
WITH
CIVIL APPLICATION NO. 16378 OF 2022
Mr. Chandrashekhar S. Nagral,
Age : 62 years, Occu : Business,
Sole Propreitor of
M/s. C.S. Construction,
R/o. K-21, Bharatnagar,
Amravati Road, Nagpur. ...Petitioner
Versus
Abhikalp Infrastructure Pvt. Ltd.
A Private Limited Company
having its corporate identity No.
U-45200PN2009PTC134114 and its office at:-
101, Pushkar Complex, Near Yashodanagar,
Pipeline Road, Ahmednagar - 414 003
Maharashtra, Through its
Managing Director,
Mr. Jambeshwar R. Patnaik,
Age : 50 years, Occupation : Business,
R/o. : 101, Pushkar Complex,
Near Yashodanagar, Pipeline Road,
Ahmednagar - 414 003. ...Respondents
Advocate for Application : Mr. Vinod B. Jadhav
Advocate for Respondent : Mr. Yuvraj S. Choudhari
CORAM : SHAILESH P. BRAHME, J.
Judgment reserved on : 10th November, 2023
Judgment pronounced on : 28th November, 2023
JUDGMENT :
1. Heard learned counsel for both the sides finally at the
admission stage.
2. Being aggrieved by order dated 23.03.2022, passed below
exhibit 10 in Special Civil Suit No. 127 of 2020 by learned Civil Judge
Senior Division, Ahmednagar, the appellant has preferred this Appeal.
The application of the appellant exhibit 10 for returning the plaint and
referring matter to the arbitration in view of arbitral clause in an
agreement between the parties has been rejected. The appellant is
defendant and the respondent is original plaintiff.
3. The appellant was allotted work of construction by the
Central Railway. The respondent was a subcontractor of the appellant.
On 20.06.2014, memorandum of understanding was executed between
the parties. The following is the provision for arbitration :
"7.1. If any case any issue
dispute or any illegal issue made by
Central railway for said project and
AIIPL will take interest to go for
arbitration then CSC will be
authorize the power of attorney to
AIIPL for appoint the arbitrator.
Any loss or profit with Central
Railway against shall be account of
AIIPL with the royalty of CSC.
7.2 Any dispute between CSC and
AIIPL connection with the execution
of work shall be resolved amicably
by the representatives of both the
parties, failing which, the matter
shall be referred as per provision
of arbitration and conciliation act
of 1996. The place of arbitration
shall be at Nagpur."
4. There arose dispute between the parties over the payment of
money. Respondent preferred Special Civil Suit No. 127 of 2020, for
recovery of an amount of Rs. 2,90,44,326/- against the appellant in the
Court of Civil Judge Senior Division, Ahmednagar. The claim is founded
on the terms and conditions of the agreement which is evident from
paragraph no. 4 of the plaint. The cause of action is also founded on the
memorandum of understanding.
5. The appellant appeared before the Trial Court and submitted
application exhibit 10 under Section 9 A, under Order VII Rule 11 (d) of
Code of Civil Procedure, and under Section 8 of Arbitration and
Conciliation Act, 1996. Referring to the clause no. 7.2 of the
memorandum of understanding, the appellant prayed to reject the plaint
as there is a valid provision for arbitration. The application is resisted by
the respondent by filing say at exhibit 11. The application exhibit 10 is
rejected by the impugned order holding that the arbitration clause
appearing in the memorandum of understanding is with regard to the
execution of work which had already been executed and not for the
recovery of amount. Being aggrieved the present appeal is preferred.
6. Learned counsel for the appellant has produced on record
copy of memorandum of understanding and my attention is invited to
clause no. 7. He would submit that the claim for recovery of amount
against the appellant is arising out of the execution of work which is
regulated by the memorandum of understanding. He submits that learned
Judge has committed perversity when there is an unequivocal and valid
agreement between the parties to refer any dispute to the arbitration. He
would submit that the Civil Court has no jurisdiction to entertain the suit
and prays to allow the Appeal.
7. The learned counsel for the appellant has placed reliance on
the following judgment :
a) Bharat Sewa Sansthan Versus U.P. Electronics Corpn. Ltd., (2007) 7
Supreme Court Cases 737 ;
b) Noorul Huda English Medium School Lucknow Road Fatehpur and
others Versus Sohel Ahmad Siddiqui and others, judgment passed by
Allahabad High Court, in Matters Under Article 227 No. 5252 of 2022 ;
c) A. Ayyarsami Versus A. Paramasivam and others, (2016) 10 Supreme
Court Cases 386 ;
d) Sundaram Finance Limited and another Versus T. Thankam, (2015)
14 Supreme Court Cases 444 ;
e) P. Anand Gajapathi Raju and others Versus P.V.G. Raju (Dead) and
others, (2000) 4 Supreme Court Cases 539 ;
f) Hindustan Petroleum Corpn. Ltd. Versus Pinkcity Midway Petroleums,
(2003) 6 Supreme Court Cases 503 ;
g) N.N. Global Mercantile Private Limited Versus Indo Unique Flame
Limited and others, (2021) 4 Supreme Court Cases 379 ;
8. Learned counsel for the respondent has repelled the
submissions of the petitioner. It is submitted that there is non compliance
of Section 8 (2) of Arbitration and Conciliation Act. The appellant has
not placed original or certified copy of the memorandum of
understanding. He would further submit that the suit is on the verge of
completion and the next date is kept on 01.12.2023. It proceeded in the
absence of the appellant and it would not be proper to refer the dispute to
the arbitration. Learned counsel relies upon the judgment rendered by
the Supreme Court in the matter of N. Radhakrishnan Versus Maestro
Engineers and others, (2010) 1 Supreme Court Cases 72 and Atul
Singh and others Versus Sunil Kumar Singh and others, 2008 ALL
SCR 800.
9. I have considered rival submissions of the parties. The
appellant is called upon to satisfy the maintainability of Arbitration
Appeal. Learned counsel has referred to Section 8 (1) which refers to a
judicial authority before whom an action is brought. The Civil Court
who is seized of the matter is judicial authority. Therefore, the order
passed by the Civil Court can be questioned by preferring Arbitration
Appeal. He has relied upon the judgment rendered by the Supreme Court
in the matter of N.N. Global Mercantile Private Limited (supra). In that
matter the objection was raised on the basis of arbitral clause in a
commercial suit. The submissions of the learned counsel for the
petitioner has merit and arbitration appeal is entertainable.
10. The litigating parties are ad idem on the memorandum of
understanding and the clause no. 7. Clause no. 7.2 has been reproduced
earlier. It refers to any dispute between appellant and the respondent in
connection with the execution of the work shall be resolved amicably
and by referring to the arbitration. The suit is for the recovery of amount
pertaining to the work executed under the Contract between the parties. I
am of the considered view that there is a arbitration agreement.
11. The suit for recovery is founded on the terms of conditions
of the memorandum of understanding. The plaint is produced on record.
Its para no. 4 and the cause of action unequivocally refers to the terms of
agreement. The arbitral clause is valid. The respondent has not brought
anything on record to demonstrate that the said agreement is void or not
binding between the parties.
12. The learned counsel for the respondent has raised strong
objection for non compliance of Section 8 (2) of the Arbitration and
Conciliation Act. The controversy between the parties is arising out of
contract and it is purely civil in nature. During the course of the
argument also the learned counsel for the respondent has not disputed the
arbitration clause. When the parties are ad idem over arbitration clause,
the requirement to produce on record certified copy or original copy is a
mere formality. The Civil Court does not have jurisdiction when there is
clear cut arbitration clause and arbitrability cannot be halted because of
the non compliance of Section 8 (2) of the Act.
13. The learned counsel for the respondent has submitted that
the Civil Suit is on the verge of conclusion and the next date is kept on
01.12.2023 for the final hearing. Its an admitted position that the suit has
proceeded without written statement of the appellant. After the impugned
order, present appeal is preferred on 13.09.2022. The objection of the
appellant which is over ruled by the Civil Court goes to the root of the
matter. When its a question of jurisdiction, just because the suit is for
final hearing cannot be a ground to overlook the maintainability of the
proceedings. The laches on the part of appellant can be taken care of by
saddling appropriate costs on the appellant. Therefore, this submission
of the respondent does not commend me any further.
14. The learned counsel for the respondent has referred to
judgment rendered in the matter of N. Radhakrishnan (supra). My
attention is invited to paragraph No. 29. The facts and circumstances in
that matter were peculiar. There were allegations of mal practices and
misappropriation. Intricate questions were involved therefore, the request
to refer the dispute to the arbitration was rejected. Though in paragraph
no. 29 of the judgment the compliance of Section 8 (2) of the Act, has
been referred to but it cannot be said to be a ratio as proposed by the
respondent. Besides that, judgment in the matter of N. Radhakrishnan
(supra) has been further explained in the matter of A. Ayyasamy (supra).
Paragraph no. 19 and 45 are referred to and, therefore, it cannot be said
that N. Radhakrishnan (supra) is an authority for the proposition that for
non compliance of Section 8 (2) of the Act, the matter cannot be referred
to the arbitration.
15. Learned counsel for the respondent has further relied on the
judgment rendered in the matter of Atul Singh and others (supra), to
buttress the submission that compliance of Section 8 (2) of the Act is
mandatory. The discussion in paragraph no. 10 of the judgment may not
be applicable to the present case. In the present case the parties are ad
idem over the memorandum of understanding and the clause of
arbitration.
16. Learned counsel for the petitioner has relied upon the
judgment rendered in Bharat Sewa (supra). My attention is invited to
paragraph no. 23 and 24 to contend that a photocopy of agreement is also
sufficient to refer the dispute for the arbitration. As I have already
discussed, the respondent has not disputed the agreement, rather the
respondent is relying upon the self same agreement and has instituted a
suit. I am further fortified in my view by the judgment rendered by the
learned Single Judge of the Allahabad High Court in the matter of
Noorul Huda English Medium School (supra), specifically internal page
no. 9 of the said judgment.
17. The judgments rendered in the matter of Sundaram Finance
Limited (supra), P. Anand Gajpathi Raju (supra) and Hindustan
Petroleum Corpn. Ltd. (supra) are on the scope of Section 8 when there
is valid arbitral clause then there is no alternate than not to refer the
matter to the arbitration.
18. For the reasons discussed above, I am of the considered
view that impugned order is unsustainable and petition deserves to be
allowed. Hence, I pass following order :
i. The order dated 23.03.2022, below exhibit 10 in
Special Civil Suit no. 127 of 2020, passed by learned
Civil Judge Senior Division, Ahmednagar, is quashed
and set aside.
ii. Special Civil Suit no. 127 of 2020 filed by the
respondent shall be referred to arbitration by following
due procedure of law by returning the plaint to the
respondent.
iii. The petitioner shall pay costs of Rs. 10,000/- to
the respondent within a period of one week from today
either by depositing in the Trial Court or by directly
making payment.
iv. The Rule is made absolute in above terms.
v. Pending Civil Application stands disposed of.
[ SHAILESH P. BRAHME, J. ]
LATER ON :
19. After pronouncement of judgment in this matter, learned
counsel for the respondent prays to stay operation and execution of this
order.
20. Learned counsel for the appellant opposes the prayer.
21. By reasoned judgment, I have held that there is arbitral
clause between the parties. The suit is almost three years old. I do not
deem it fit to grant stay. The prayer is rejected.
[ SHAILESH P. BRAHME, J. ]
spc/
