M/S Haldiram Manufacturing ... vs M/S Dlf Commercial Complexes ...
2012 Latest Caselaw 2425 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI


+                      IA No. 3363/2011 in CS(OS) 2288/2010

                                 Judgment delivered on: 16.4.2012



M/s Halidram Manufacturing Company Pvt. Ltd.         ..... Plaintiff
                          Through Mr. Anil Sapra, Sr. Adv. with
                                    Ms. Snigdha Sharma &
                                    Ms. Praneeta Vij, Advs.

                       versus



M/s DLF Commercial Complexes Limited           ..... Defendants
                         Through Mr. H.L. Tikku, Sr. Adv. with
                                     Ms. Yashmeet Kaur &
                                     Ms. Mandeep Kaur, Advs.

CORAM:
HON'BLE MR. JUSTICE KAILASH GAMBHIR:


KAILASH GAMBHIR, J.

1. This order will dispose of an application filed by the

defendant under Section 5 and 8 of the Arbitration and

Conciliation Act, 1996 read with Order 7 Rule 11 and Section

151 Code of Civil Procedure, 1908.

2. Brief facts of the case that have led to the filing of the

present suit by the plaintiff are that the plaintiff in response to

the advertisement given by the defendant in various newspapers

and also via published brochures and other publicity material

had made a request to the defendant to book 8000-10000 sq.ft.

commercial space in the DLF towers at Okhla, New Delhi vide its

letter dated 25.2.2008. The plaintiff had also sent a cheque of

Rs. 50 lakhs vide cheque bearing No. 454109 dated 25.2.2008

drawn on State Bank of India, Nehru Place Branch, New Delhi as

an initial token amount for the booking of the said space in the

said commercial complex. After making the payment of Rs. 50

lakhs, the plaintiff made various requests/ representations to the

defendant to sign and execute the Space Buyers Agreement so

that the terms and conditions of the contract are agreed

between the parties, but the defendant kept on avoiding the

issue on one pretext or the other and instead sent the notices

dated 22.5.2008, 4.7.2008 and 8.7.2008 calling upon the plaintiff

to make the balance payments in terms of the payment schedule.

The plaintiff consequently made a further payment of Rs. 50

lakhs vide cheque bearing No. 454134 dated 12th July, 2008 on

the assurance given by the defendant to execute the Space

Buyers Agreement but even after the receipt of the second

installment of Rs. 50 lakhs the defendant did not execute the

Space Buyers Agreement and yet again sent a reminder dated

31st July, 2008 to the plaintiff to pay the balance amount in terms

of the payment schedule. Constrained by the delay on the part of

the defendant in executing the Space Buyers Agreement, the

plaintiff approached the defendant with the request to refund

Rs. 1 crore along with interest but instead the defendant sent a

cancellation letter dated 5.8.2008 thereby cancelling the

allotment of property bearing No. DOB603 in DLF Towers, Okhla

Phase-I, New Delhi. Terming the cancellation letter dated

5.8.2008 and the decision of the defendant to forfeit the said

advance amount of Rs. 1 crore as illegal, perverse and contrary

to the provisions of Indian Contract Act the plaintiff through

legal notice dated 1.6.2009 called upon the defendant to refund

the said amount of Rs. 1 crore along with interest @ 18% p.a.

and on the failure of the defendant to pay the said amount the

plaintiff has filed the present suit for the recovery of Rs.

1,30,75,000/-.

3. Challenging the maintainability of the present suit in the

above application, the defendant has taken a stand that the

disputes between the parties are subject to arbitration in terms

of clause 34 of the application form dated 25.2.2008, which as

per the defendant forms part of the agreement governing the

parties. The defendant has also taken a stand that the plaintiff

has intentionally withheld the said vital document and the fact of

the existence of the arbitration clause and such an act of the

plaintiff is an abuse of the process of the Court. The defendant

has further taken a stand that the application form was duly

signed by Mr. Manohar Lal Agarwal, Chairman and Managing

Director of the plaintiff company and, therefore, the plaintiff

cannot wriggle out from the terms of the said application form

especially Clause 34 of the same. The defendant has further

submitted that there exists a valid and legal arbitration

agreement in terms of Section 7 of the A&C Act, therefore, the

present suit filed by the plaintiff, which forms part of the subject

matter of the arbitration agreement in terms of clause 34 of the

application is not legally maintainable. Based on these

averments, the defendant has prayed that the plaint presented

by the plaintiff to recover the suit amount deserves rejection in

terms of Order 7 Rule 11 CPC.

4. A detailed reply to this application has been filed by the

plaintiff. Putting precisely, the plaintiff has denied the existence

of any arbitration agreement between the parties in terms of

Section 7 of the Arbitration and Conciliation Act and has also

denied that any agreement was ever signed by the parties as

alleged by the defendant. The plaintiff however has not denied

the fact that the application form for provisional allotment for

the space in the said commercial complex was filled by the

plaintiff and the same was submitted to the defendant on 28 th

March, 2008, but as per the plaintiff the terms and conditions

contained in the application form were only draft terms and

conditions, which were to be finally incorporated in the

commercial Space Buyers Agreement, which was to be executed

between the parties at a subsequent stage. The plaintiff has also

taken a stand that the said terms and conditions were never

signed by the defendant and, therefore, there was no final or

concluded contract which came into existence between the

parties. The plaintiff has further taken a stand that the said

application form was only a unilateral document and, therefore,

the arbitration clause contained in the said application form will

have no relevance in the absence of there being any mutual

consent between the parties.

5. Arguing for the defendant/applicant, Mr. H.L. Tiku, Sr.

Adv. submitted that the plaintiff, through its director Mr.

Manohar Lal Agarwal, had fully gone through the terms of the

contract duly contained in the application form, more

particularly Clause-34 of the same which contains the

Arbitration Clause and had consequently agreed to abide by the

terms and the conditions of the said application including the

terms relating to the payment of the sale price and other

charges. Counsel further submitted that the application as

submitted by the plaintiff was duly accepted by the office of the

defendant on 28th March, 2008 and through the said Application

Form, both the parties entered into an agreement and thus the

terms and conditions contained in the application form are fully

binding upon both the parties. Counsel also submitted that the

plaintiff had booked the commercial space of 8000-10,000 sq. ft.

based on the terms and conditions contained in the Application

Form and had paid a booking amount of Rs.50 lacs initially as

per the terms and conditions contained in the said application.

6. The contention raised by the counsel for the defendant was

that the plaintiff cannot be said to have selectively accepted

some of the terms and conditions of the said Application Form

while ignoring the other terms and conditions. Counsel for the

defendant has drawn attention of this Court to the receipt dated

29.3.08 issued by the defendant wherein some of the conditions

incorporated in the Application Form were reproduced and one

of them being that "till the Property Buyers Agreement is

executed you shall be governed solely by the terms and

conditions stated in the application submitted by you." Counsel

also submitted that even in the final notice dated 4 th August,

2008 sent by the defendant to the plaintiff whereby the plaintiff

was called upon to remit the outstanding amount, the said

demand was also made by the defendant strictly in accordance

with terms and conditions contained in the Application Form.

Counsel further submitted that even the cancellation letter dated

5th August, 2008 was issued by the defendant whereby the

allotment was cancelled was also based on the terms and

conditions contained in the said Application Form.

7. Counsel further urged that the plaintiff cannot selectively

pick the terms of the said Application Form and resile from the

elected mode of resolution of dispute i.e., Arbitration in terms of

Clause-34 of the said application form. Placing reliance on

Clause 7 of the Arbitration and Conciliation Act, 1996, the

counsel submitted that Clause 34 of the said application

constitutes the arbitration agreement between the parties and

therefore, having agreed for the said judicial forum the plaintiff

cannot maintain the present suit before this Court. Counsel also

submitted that the definition of the Arbitration Agreement as

defined under Section 7 of the said Act is of wide amplitude and

such an agreement may not be signed by both the parties but yet

will be binding on the parties if the same is exchanged between

the parties through letters, telegrams and other

telecommunications which provide a record of the agreement.

The contention raised by the counsel for the defendant was that

even if the said application form is considered as a unilateral

agreement, even then the plaintiff at no stage has denied the

existence of the same and rather through the exchange of the

letters, has accepted and acknowledged the same. In support of

his arguments, learned counsel for the defendant placed reliance

on the following judgments:-

1. M/S Unissi (India) Private Ltd. vs. PGI 2008(13)SCALE11

2. Sharad Dogra vs. Sahara Airlines Ltd. & Ors 2007VIIIAD(Delhi)20

3. Sri Narayan Prasad Jalan vs. Sri Chetan P.S Chauhan & Anr. 123(2005)DLT270

4. Orchid Electronic vs. Vintech Electronics Pvt. Ltd. 2007 VIAD(Delhi)

8. Opposing the present application, Mr. Anil Sapra, learned

Senior counsel for the plaintiff argued that the said application

form was not signed by both the parties and therefore, the

signing of the said unilateral application form by the plaintiff

cannot constitute an Arbitration agreement between the parties.

Counsel further submitted that that to determine the existence

of an Arbitration Agreement there has to be a bilateral act of the

parties giving their express consent for referring their disputes

to the Judicial Forum of Arbitration to the exclusion of the

remedy of a Civil Court and in the absence of the said clear

intention, the jurisdiction of the Civil Courts cannot be ousted.

9. Inviting the attention of this Court to page 18 of the

Application Form, counsel submitted that the same does not

carry proper acceptance of the terms and conditions as

contained in the Application Form through an authorized

signatory of the defendant except the fact that the said

Application Form was accepted by some office clerk mainly for

the purpose of accepting the form and not for accepting the

terms and conditions of the said Application Form. Counsel also

submitted that such Application Form is signed by the plaintiff

through its director on all the pages but no such signatures of

the defendant can be seen on any of the pages of such

Application Form. Counsel further submitted that even if it is

taken that the plaintiff has agreed to the terms and conditions of

the Application Form including the Clause containing the

Arbitration Clause but clearly there was no such acceptance of

the said terms and conditions by the defendant in the absence of

any signatures of any authorized officer of the defendant on the

said Application Form. Counsel further submitted that the

present application has been moved by the defendant just with

an oblique motive to cause delay in the matter and the same

merits outright rejection. In support of his arguments, counsel

for the plaintiff place reliance on the following judgments:-

1. State Of Goa vs. Praveen Enterprises 2011(7)SCALE 131

2. Pramod Chimanbai Patel vs. Lalit Constructions & Anr.2002(6)BomCR72

10. I have heard learned counsel for the parties at

considerable length and given my thoughtful consideration to

the arguments advanced by them.

11. Before I proceed to deal with the rival contentions of the

parties, it would be useful to reproduce Section 7 and 8 of the

Arbitration and Conciliation Act, 1996 as under:-

7. Arbitration agreement.--

(1) In this Part, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in--

(a) a document signed by the parties;

(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or

(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.

8. Power to refer parties to arbitration where there is an arbitration agreement.--

(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.

(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.

(3) Notwithstanding that an application has been made under sub- section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.

12. In K.K. Modi Vs. K.N. Modi 1998(3)SCC573, the

Hon'ble Apex Court enumerated the following attributes of a

valid arbitration agreement:-

"(1) The arbitration agreement must contemplate that the decision of the tribunal will be binding on the parties to the agreement,

(2) That the jurisdiction of the tribunal to decide the rights of parties must derive either from the consent of the parties or from an order of the Court or from a statute, the terms of which make it clear that the process is to be an arbitration,

(3) The agreement must contemplate that substantive rights of parties will be determined by the agreed tribunal, (4) That the tribunal will determine the rights of the parties in an impartial and judicial manner with the tribunal owing an equal obligation of fairness towards both sides, (5) That the judgment of the parties to refer their disputes to the decision of the tribunal must be intended to be enforceable in law and lastly, (6) The agreement must contemplate that the tribunal will make a decision upon a dispute which is already formulated at the time when a reference is made to the tribunal."

Following K.K. Modi (Supra) in Bihar State Mineral

Development Corporation Vs. Encon Builders (IP) Ltd.

2003(7)SCC418, the Apex Court listed the following as the

essential elements of an arbitration agreement:

"(1) There must be a present or a future difference in connection with some contemplated affair.

(2) There must be the intention of the parties to settle such difference by a private tribunal.

(3) The parties must agree in writing to be bound by the decision of such tribunal.

(4) The parties must be ad idem."

In Jagdish Chander vs. Ramesh Chander and Ors.

(2007)5SCC719 the Hon'ble Apex Court while referring to the

above cited two decisions further set out the following principles

to determine as to what constitutes an arbitration agreement:

"(i) The intention of the parties to enter into an arbitration agreement shall have to be gathered from the terms of the agreement. If the terms of the agreement clearly indicate an intention on the part of the parties to the agreement to refer their disputes to a private tribunal for adjudication and a willingness to be bound by the decision of such tribunal on such disputes, it is arbitration agreement. While there is no specific form of an arbitration agreement, the words used should disclose a determination and obligation to go to arbitration and not merely contemplate the possibility of going for arbitration. Where there is merely a possibility of the parties agreeing to arbitration in future, as contrasted from an obligation to refer disputes to arbitration, there is no valid and binding arbitration agreement.

(ii) Even if the words 'arbitration' and 'arbitral tribunal (or arbitrator)' are not used with reference to the process of settlement or with reference to the private tribunal which has to adjudicate upon the disputes, in a clause relating to settlement of disputes, it does not detract from the clause being an arbitration agreement if it has the attributes or elements of an arbitration agreement. They are : (a) The agreement should be in writing. (b) The parties should have agreed to refer any disputes (present or future) between them to the decision of a private tribunal. (c) The private tribunal should be empowered to adjudicate upon the disputes in an impartial manner, giving due opportunity to the parties to put forth their case before it. (d) The parties should have agreed that the decision of the Private Tribunal in respect of the disputes will be binding on them.

(iii) Where the clause provides that in the event of disputes arising between the parties, the disputes shall be referred to Arbitration, it is an arbitration agreement. Where there is a specific and direct expression of intent to have the disputes settled by arbitration, it is not necessary to set out the attributes of an arbitration agreement to make it an arbitration agreement. But where the clause relating to settlement of disputes, contains words which specifically excludes any of the attributes of an arbitration agreement or

contains anything that detracts from an arbitration agreement, it will not be an arbitration agreement. For example, where an agreement requires or permits an authority to decide a claim or dispute without hearing, or requires the authority to act in the interests of only one of the parties, or provides that the decision of the Authority will not be final and binding on the parties, or that if either party is not satisfied with the decision of the Authority, he may file a civil suit seeking relief, it cannot be termed as an arbitration agreement.

(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."

In State of Orissa and Ors. Vs. Bhagyadhar Dash

(2011)7SCC406, the Hon'ble Supreme Court after placing

reliance on various judgments gave detailed reasons as to under

what circumstances a particular clause and agreement can

constitute an arbitration agreement. The relevant para of the

same is referred as under:

"10. We may next refer to the three decisions of this Court relied on by the Respondents, where on interpretation, clauses though not described as 'arbitration clauses', were held to be arbitration clauses, by applying the tests as to what constitute an arbitration agreement. In Rukmanibai Gupta v. Collector, Jabalpur 1980 (4) SCC 566, this Court considered whether the following clause amounted to an arbitration agreement:

15. Whenever any doubt, difference or dispute shall hereafter arise touching the construction of these presents or anything herein contained or any matter or things connected with the said lands or the working or non-working thereof or the amount or payment of any rent or royalty reserved or made payable hereunder the matter in difference shall be decided by the lessor whose decision shall be final.

This Court held that Arbitration agreement is not required to be in any particular form. What is required to be ascertained is whether the parties have agreed that if disputes arise between them in respect of the subject-matter of contract such dispute shall be referred to arbitration; and if the answer was in the affirmative, then such an arrangement would spell out an arbitration agreement. Applying the said test, this Court held that the aforesaid clause is an arbitration agreement, as it (a) made a provision for referring any doubt, difference or dispute to a specified authority for decision and

(b) it made the "decision" of such authority final. While we respectfully agree with the principle stated, we have our doubts as to whether the clause considered would be an arbitration agreement if the principles mentioned in the said decision and the tests mentioned in the subsequent decision of a larger bench in Damodar Das are applied. Be that as it may. In fact the larger bench in Damodar Das clearly held that the decision in Rukmanibai Gupta was decided on the special wording of the clause considered therein. "The ratio in Rukmanibai Gupta v. Collector does not assist the Respondent. From the language therein this Court inferred, by implication, existence of a dispute or difference for arbitration."

In the light of the above settled essential features of an

arbitration agreement, Clause-34 of the said Application Form

has to be evaluated. For better appreciation the same is

reproduced as under:-

"All or any disputes arising out or touching upon or in relation to the terms of this application and/or Commercial Space Buyers' Agreement including the interpretation and validity of the terms thereof and the respective rights and obligations of the parties shall be settled amicably by mutual discussion failing which the same shall be settled through arbitration. The arbitration proceedings shall be governed by the Arbitration and Conciliation Act, 1996 or any statutory amendments/modifications thereof for the time being in force. The arbitration proceedings shall be final and binding upon the parties. The Intending Allottee hereby confirms that he/she/it shall have no objection to this appointment even if the person so appointed, as Arbitrator is an employee or advocate of the Company or is otherwise connected to the company and the Intending Allotee confirms that notwithstanding such relationship/connection, the Intending Allottee shall have no doubts as to the independence or impartiality of the said Arbitrator. The District Courts and High Court at Delhi alone shall have the jurisdiction in all matters arising out of/touching and/or concerning this Agreement regardless of the place of execution of this agreement."

It would be pertinent here to refer to the judgment of the Apex

Court in M/S Unissi (India) Pvt. Ltd. vs. PGI

(2009)1SCC107, relied upon by the counsel for the defendant

that whether in the facts of the case, the arbitration agreement

would be binding on the parties in the light of the contention of

the plaintiff that it was not signed by any authorized signatory.

The relevant para of the said judgment is reproduced as under:

"13. We have carefully examined the provisions made under Section 7 of the Act which deals with arbitration agreement. In Smita Conductors Ltd. v. Euro Alloys Ltd.2 Article II Para 2 of the New York Convention came up for consideration before this Court. The provisions of Article II Para 2 of the New York Convention is in pari materia to the aforequoted provisions of Section 7 of the Act. The provisions of Article II Para 2 of the New York Convention * is being quoted hereinnow. Para 2 runs as under:

"2. The term „agreement in writing‟ shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams." This Court, while interpreting the aforequoted Para 2 of the New York Convention held in para 6 at SCC pp. 734-35 in Smita Conductors2 the following:

"6. What needs to be understood in this context is that the agreement to submit to arbitration must be in writing. What is an agreement in writing is explained by Para 2 of Article II. If we break down Para 2 into elementary parts, it consists of four aspects. It includes an arbitral clause (1) in a contract containing an arbitration clause signed by the parties, (2) an arbitration agreement signed by the parties, (3) an arbitral clause in a contract contained in exchange of letters or telegrams, and (4) an arbitral agreement contained in exchange of letters or telegrams. If an arbitration clause falls in any one of these four categories, it must be treated as an agreement in writing. In the present case, we may advert to the fact that there is no letter or telegram confirming the contract as such but there is certain correspondence which indicates a reference to the contract in opening the letters of credit addressed to the bank which we shall presently refer to. There is no correspondence between the parties either disagreeing with the terms of the contract or arbitration clause. Apart from opening the letters of credit pursuant to the two contracts, the appellant also addressed a telex message on 23-4- 1990 in which there is a reference to two contracts bearing Nos. S- 142 and S-336 in which they stated that they want to invoke force majeure and the arbitration clauses in both the contracts which are set forth successively and thus it is clear that the appellant had these contracts in mind while opening the letters of credit in the bank and in addressing the letters to the bank in this regard. Maybe, the appellant may not have addressed letters to the respondent in this regard but once they state that they are acting in respect of the contracts pursuant to which letters of credit had been opened and they are invoking the force majeure clause in these two contracts, it obviously means that they had in mind only these two contracts which stood affirmed by reason of these letters of credit. If the two contracts stood affirmed by reason of their conduct as indicated in

the letters exchanged, it must be held that there is an agreement in writing between the parties in this regard."

14. Again in Nimet Resources Inc. v. Essar Steels Ltd.3 this Court observed as follows: (SCC p. 500, para 5) "5. ... If the contract is in writing and the reference is made to a document containing arbitration clause as part of the transaction [, which] would mean that the arbitration agreement is part of the contract. Therefore, in a matter where there has been some transaction between the parties and the existence of the arbitration agreement is in challenge, the proper course for the parties is to thrash out such question under Section 16 of the Act and not under Section 11 of the Act."

13. On a plain reading of the clause 34 contained in the

application form and the legal position discussed herein above,

this court is of the considered view that it cannot be said that

the parties had not agreed to the terms and conditions of eth

said Application Form. The said Application Form, in fact, has

been issued and printed by the defendant itself and therefore,

the plaintiff cannot be heard to say that the application form

constituted a unilateral agreement and not a bilateral one. The

application form is duly signed by the Chairman of the plaintiff

and the said form has been duly attested by the defendant. In

fact the payments were being made by the plaintiff in

accordance with the terms contained in the application form.

Moreover no dispute has even been raised by the plaintiff to

challenge any of the terms and conditions contained in the

application form. To this extent, therefore, this Court does not

subscribe to the arguments advanced by the learned counsel for

the plaintiff that the said Application Form constitutes a

unilateral agreement and not bilateral one.

14. The controversy in hand does not come to an end here as

the arbitration clause under consideration has another

dimension. It would be manifest on perusal of the above

arbitration clause that the disputes arising between the parties

at the first instance were to be mandatorily settled amicably by

mutual discussion as the word used is shall in the clause and it is

only on the failure of any settlement arrived at between the

parties after the mutual discussion, the other alternative was the

settlement of the disputes through arbitration. Hence, clearly

the first step stipulated in the said clause is the settlement of

disputes through mutual discussion and second step is the

settlement through arbitration. The Forum of Arbitration was,

therefore, made dependent on the outcome of the first step that

is of mutual settlement.

15. Indisputably, no mutual discussion between the parties has

taken place, prior to the filing of the present suit. Surprisingly,

the defendant in their reply dated 14th August, 2009, to the legal

notice of the plaintiff dated 13th July, 2009 had neither called

upon the plaintiff for such mutual discussions as envisaged in

Clause-34 of the application form and nor had specifically

reminded the plaintiff of the Clause for adjudication of the

disputes through arbitration.

16. On a holistic reading of the said arbitration clause, it is

decipherable that the first option given by the defendant to the

plaintiff is for settlement of the disputes through mutual

discussion and the option of arbitration would come at the

second stage. The defendant has admittedly not called upon the

plaintiff for any mutual discussion and therefore, the defendant

itself has ignored Clause-34 of the said application form and

having ignored the said clause itself, this Court does not find the

defendant has any right to move the present application to seek

rejection of the present plaint based on the alleged arbitration

agreement. The defendant cannot be allowed to rely on the said

clause for invoking arbitration proceedings and at the same time

ignore the course of action of `mutual discussion' contrived in

the said clause. The conduct of the defendant clearly is contrary

to the mandate of the said clause and thus the stage to invoke

arbitration proceedings before exhausting the first stage of

mutual discussion does not arise. However, at this stage the

defendant cannot be allowed to take shelter under the said

clause for invoking the arbitration proceedings when it has

retracted from the same. The defendant cannot be allowed to

approbate and reprobate and thus in the facts of the case at

hand is not entitled to relief.

17. The judgments cited by the counsel for the defendant

would not be attracted o the facts of the case at hand as they

pertain to defining "reference to arbitration" which is not the

question to be decided in the case at hand.

18. In the light of above discussion, the Court does not find any

merit in the present application and the same is therefore,

dismissed.

KAILASH GAMBHIR, J April 16, 2012