In the High Court of Judicature at Madras Dated: 22.12.2008 Coram The Honourable Mr.JUSTICE S.RAJESWARAN C.R.P.(PD).No.2096 of 2008 and M.P.No.1 of 2008 A.A.Cotton Mills represented by its Proprietor A.Athiayanan, Mekkaddu, Sankari West. .... Petitioner Vs. Sri Rajeshwari Mills Ltd., by its Office Manager, R.S.Road, Guidyattam. .... Respondents Civil Revision Petition filed under Article 227 of the Constitution of India against the order passed in I.A.No.875/2005 in O.S.No.361/2005 dated 20.2.2008 by the learned District Munsif, Gudiyatham, Vellore District For Petitioner : Mr.R.Shankaranarayanan For Respondent : Mr.S.Thiruvenkataswami ***** O R D E R
The defendant in the suit in O.S.No.361/2005 is the revision petitioner before this Court.
2. O.S.No.361/2005 has been filed by the respondent/plaintiff for grant of permanent injunction restraining the defendant, his agent and others from initiating any action of recovery against the plaintiff except with the consent of BIFR till the disposal of the proceedings pending before BIFR.
3. Pending suit, an application in I.A.No.875/2005 was filed by the petitioner/defendant under Section 8 of the Arbitration Act of 26/1996 to refer the subject suit to Arbitration in accordance with the Arbitration Clause under the Hire Purchase Agreement dated 5.12.2003. The said application was resisted by the respondent/plaintiff by filing a counter.
4. The trial Court, by order dated 20.2.2008, dismissed the application. Aggrieved by the same, the above civil revision petition has been filed by the defendant.
5. This Court, on 2.7.2008, ordered notice and granted interim stay. The respondent/plaintiff has entered appearance through counsel.
6. I have heard the learned counsel for the petitioner/defendant and the learned counsel for the respondent/plaintiff. I have also gone through the documents filed in support of the submissions.
7. The learned counsel for the petitioner/defendant submits that the suit has been filed by the respondent/plaintiff for permanent injunction restraining the defendant/petitioner herein from initiating any action of recovery against the plaintiff except with the consent of BIFR.
8. The learned counsel further pointed out that the defendant entered into an agreement for conversion with the respondent/ plaintiff on 5.12.2003. Clause 36 of the agreement specifically mentions that in the event of any dispute arising out of the agreement, both the parties shall appoint an arbitrator each and both the arbitrators will settle the issue. Without resorting to clause 36, the respondent/plaintiff filed the suit and obtained an order of injunction. Hence, the petitioner/defendant filed I.A.No.875 of 2005 under Sec.8 of the Arbitration Act to refer the matter for arbitration. According to the learned counsel for the petitioner/defendant, the trial court has wrongly concluded that it has jurisdiction to entertain the suit and the subject matter of the suit is not the subject matter of the agreement. The learned counsel contends that the findings of the trial court are erroneous and the same is liable to be set aside.
9. Per contra, the learned counsel for the respondent/plaintiff would submit that since the petitioner/defendant took steps for recovery by illegal means by sending goondas to threaten them and their men, the suit has been filed. According to him, the suit filed by them does not involve the dispute contemplated under the agreement.
10. According to the learned counsel for the respondent/ plaintiff, the subject matter of the suit is not the subject matter of the Arbitration Agreement, agreed to between the parties. Hence, he adds that Section 8 of the Arbitration and Conciliation Act, 1996 would not be applied and the trial Court has rightly dismissed the application filed by the petitioner/defendant. According to him, the Civl Revision Petition has to be dismissed as devoid of merits.
11. I am unable to accept the submissions made by the learned counsel for the respondent/plaintiff.
12. It is a case where the respondent/plaintiff and the petitioner/defendant have agreed to convert certain items as per the agreement dated 5.12.2003. As per the agreement, there is a clause namely Clause 36 of the agreement which specifically mentions that in the event of any dispute and doubt or difficulties in the implementation of any other matter or arising out of the agreement, both the parties will appoint an arbitrator each and both the arbitrators will settle the issue. When that being the specific agreement between the parties to refer any dispute arising between the parties or any other matter arising out of the agreement to arbitration and to settle the issue, in my opinion, the plaintiff ought not to have filed the suit and should have resorted to arbitration proceedings as per clause 36 of the agreement.
13. Hence, the order dated 20.2.2008 passed by the Court below has to be dismissed and the application filed by the petitioner/defendant in I.A.No.875/2005 has to be allowed. Therefore, the order dated 20.2.2008 passed by the court below in I.A.No.875/2005 is set aside and consequently I.A.No.875 of 2005 is allowed. However, it is open to the parties to take out appropriate application before the appropriate forum to protect their interest.
17. Accordingly, the civil revision petition is allowed. No costs. Consequently, connected M.P.No.1 of 2008 is closed.
vsi/vaan
To
The District Munsif, Gudiyatham,
Vellore District