Ml Ravikrishna & Anr vs Suneja Sons
2011 Latest Caselaw 2814 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                            Date of Judgment:25.05.2012

+     C.R.P. 95/2011 & CM No. 13492/2011

      ML RAVIKRISHNA & ANR                ..... Petitioner
                     Through Mr. Chandra Prakash, Adv.
              versus

      SUNEJA SONS                                 ..... Respondent
                           Through     Mr. Vikas Dutta, Adv.

      CORAM:
      HON'BLE MS. JUSTICE INDERMEET KAUR

INDERMEET KAUR, J. (Oral)

1 Impugned order is dated 09.03.2011; the application filed by the

petitioner/defendant under Section 8 of the Arbitration and Conciliation

Act, 1996 (hereinafter referred to as the 'said Act') seeking a stay of the

suit had been dismissed.

2 Record shows that the present suit has been filed for recovery of

Rs.14,18,038/-; a sum of Rs. 11,62,327/- is the principal amount.

Contention is that the defendant had failed to pay these amounts which

were due and payable to the plaintiff. In the course of the proceedings,

the present application under Section 8 of the said Act was filed;

attention has been drawn to invoice dated 17.03.2009 (page 40 of the

paper book); clause 3 & 4 have been highlighted; clause 4 which is

relevant reads herein as under:-

"In case of any dispute, the judgment of the arbitrator or tribunal appointed by the Paper Merchants Association Delhi will be final and finding on both the parties as governed by the rules of the association."

3 Contention of the petitioner being that this was an arbitration

clause which had been entered into between the parties and as such the

present suit was not maintainable.

4 This submission was repelled by the impugned order and rightly

so. The suit amount as noted supra is a principal amount of

Rs.11,62,327/- and even presuming that this payment is covered by the

arbitration clause, it is only the amount of Rs.6,62,327/-; the balance

amount of Rs.5,00,000/- which has been claimed by the plaintiff in his

plaint relates to a security amount which had been paid by the plaintiff

to the defendant which amount was initially Rs.10,00,000/- of which

Rs.5,00,000/- have been refunded but the balance sum was yet to be

paid and this has been specifically mentioned in para 10 of the plaint.

Admittedly this amount is not encompassed in this document at page 40

of the paper book. Even presuming that document at page 40 contains an

arbitration clause since this dispute would be outside the scope of this

clause in view of the judgment of the Apex Court reported as AIR 2003

SC 252 Sukanya Holdings Pvt. Ltd. Vs. Jayesh H. Pandya and Another.

It is clear that the two claims cannot be bifurcated and as such Section 8

of the said Act would not be attracted. Unless the entire subject matter

of the suit is the subject matter of the arbitration agreement, Section 8

would not be attracted.

5 That apart, the second submission of the learned counsel for the

respondent also has force. He has placed reliance upon a judgment of

the Apex Court reported in (2011) 7 SCC 406 State of Orissa and

Others Vs. Bhagyadhar Dash to support his submission that the clause

relied upon and referred to supra is not really an arbitration clause; it is

only an intent to make reference of the dispute to the arbitration and this

submission is amply fortified by the fact that the parties had agreed that

in case of any dispute, they will appear before the Arbitrator to be

appointed by Paper Merchants Association according to the rules of the

said Association.

6 In this background, the observations of the Apex Court in the

judgment of Bhagyadhar Dash (supra) are relevant; they read as under:-

"(iv) But mere use of the word 'arbitration' or 'arbitrator' in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration. For example, use of words such as "parties can, if they so desire, refer their disputes to arbitration" or "in the event of any dispute, the parties may also agree to refer the same to arbitration" or "if any disputes arise between the parties, they should consider settlement by arbitration" in a clause relating to settlement of disputes, indicate that the clause is not intended to be an arbitration agreement. Similarly, a clause which states that "if the parties so decide, the disputes shall be referred to arbitration" or "any disputes between parties, if they so agree, shall be referred to arbitration" is not an arbitration agreement. Such clauses merely indicate a desire or hope to have the disputes settled by arbitration, or a tentative arrangement to explore arbitration as a mode of settlement if and when a dispute arises. Such clauses require the parties to arrive at a further agreement to go to arbitration, as and when the disputes arise. Any agreement or clause in an agreement requiring or contemplating a further consent or consensus before a reference to arbitration, is not an arbitration agreement, but an agreement to enter into an arbitration agreement in future."

7 Thus on both scores the submissions of the petitioner were rightly

rejected. Petition is without any merit. Dismissed.

                                                              INDERMEET KAUR, J
MAY            25, 2012
A