ORDER
Dipak Misra, J.
1. In this appeal preferred under Section 39(l)(iv) of the Arbitration Act, 1940 (hereinafter referred to as ‘the Act’) the appellant has called in question the defensibility of the judgment dated 11-10-1996 passed by the learned District Judge, Raipur in Civil Suit No. 63-A/94 whereby he has invoked the jurisdiction under Section 20 of the Act and has taken steps for appointment of an arbitrator to adjudicate certain disputes.
2. The essential facts which need to be stated for the purpose of present appeal are that the respondent No. 1 instituted the aforesaid Civil Suit under Section 20 of the Act for calling for the agreement and to refer the disputes to an arbitrator. According to the plaintiff-respondent No. 1 it had to purchase certain electrical equipments for establishment of transformer at Raipur. The defendant No. 1, M/s Asea Brown Boveri submitted a quotation for the said items. The items in respect of which the quotation was submitted by the defendant No. 1 were to be supplied by the defendant No. 2, the appellant herein. The machineries were supposed to be installed and run by the defendant No. 2. It was further stated in the plaint that these conditions were stipulated in the quotation itself. It was also the condition in the quotation that in case any dispute would arise between the parties the same was to be agitated in the courts situate within the territorial jurisdiction of Bombay by way of arbitration. It was also pleaded that there had been violation of terms and conditions in the quotation as the machineries were not installed and run within the stipulated time, and there had been defects/faults in the transformer. It was also set forth that as the dispute had arisen the plaintiff had given a written notice to the defendant for settlement of the disputes.
3. The defendant No. 1 took the plea of territorial jurisdiction and also took further plea that allegations made by the plaintiff were not correct as the terms indicated in the quotation had been duly complied with. It was also put forth that before approaching the Court the plaintiff had not served notice for arbitration.
4. The defendant No. 2 had resisted the plea of the plaintiff on the ground that there was no agreement between the plaintiff and the said defendant. According to the said defendant he had supplied the machinery to the defendant No. 1 at its factory premises at Bangalore. It was further set forth that the plaintiff had no role to play with the arrangement brought into existence between the defendant No. 1 and the defendant No. 2. Existence of agreement as well as any stipulation for arbitration was disputed by the said defendant No. 2.
5. The learned trial Judge framed as many as four issues and came to hold that the Court at Raipur had jurisdiction and, therefore, the controversy could be adjudicated by the said Court. With regard to the contractual relationship between the plaintiff and defendant No. 2, in paragraph 4 of the judgment the learned trial Judge opined that there is no direct contractual relationship between the plaintiff and defendant No. 2 but the defendant No. 2 is the agent of the defendant No. 1, and therefore, the arbitration clause which forms the part of the quotation submitted by the defendant No. 2 would also be applicable to him. Being of this view he allowed the prayer of the plaintiff and directed for submission of names for the purpose of appointment of an arbitrator.
6. Assailing the aforesaid judgment Mr. Y. K. Munshi, learned counsel for the appellant has raised a singular contention that in absence of any arbitration clause jurisdiction under Section 20 of the Act could not have been invoked.
Mr. J. P. Sanghi, learned counsel for the respondent No. 1/plaintiff has contended that the defendant No. 2 was the agent of the defendant No. 1 and as such it is bound by the terms and conditions incorporated in the quotation. He has also contended that determination of liability is in the domain of the arbitrator and, therefore, the appointment of an arbitrator cannot be found fault with. It is further submitted by him that there is relationship of trust between the defendants and, therefore, the defendant No. 2 cannot be absolved of the liability and hence, the trial Court has correctly opined that the defendant No. 2 being an agent of the defendant No. 1 is bound by the terms and conditions envisaged in the quotation. To substantiate his pleas he has placed reliance on the decisions rendered in the cases of Union of India v. M/s Chaman Lal Loona and Co., AIR 1957 SC 652 and Supreme Co- operative Group Housing Society v. H. S. Nag & Associates (P) Ltd., (1996) 9 SCC 492.
Mr. N. S. Kale, learned senior counsel for the respondent No. 2 has contended that without an arbitration clause Court cannot appoint an arbitrator. However, he has supported the judgment passed by the Court below.
7. To appreciate the rival submissions raised at the Bar, it is apposite to refer to Section 20 of the Act. It reads as under :-
“20. Application to file in Court arbitration agreement. – (1) Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies they or any of them, instead of proceeding under Chapter II, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court.
(2) The application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interested or claiming to be interested as plaintiff or plaintiffs and the remainder as defendant or defendants, if the application has been presented by all the parties, or, if otherwise, between the applicant as plaintiff and the other parties as defendants.
(3) On such application being made, the Court shall direct notice thereof to be given to all parties to the agreement other than the applicants, requiring them to show cause within the time specified in the notice why the agreement should not be filed.
(4) Where no sufficient cause is shown, the Court shall order the agreement to be filed and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or, where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the Court.
(5) Thereafter the arbitration shall proceed in accordance with, and shall be governed by, the other provisions of this Act so far as they can be made applicable.”
On a fair reading of the aforesaid provision it becomes perceptible that for invoking the jurisdiction under Section 20 of the Act certain conditions precedent are to be satisfied. There must be an arbitration agreement between the parties; the agreement with respect to the subject matter of a suit must have been entered into before filing of the suit; the differences must have been arisen pertaining to the agreement, and the Court to which the application has been made must have jurisdiction over the matter to which the agreement relates. In this context, we may refer to the decision rendered in the case of Major (Retd.) Inder Singh Rekhi v. Delhi Development Authority, AIR 1988 SC 1007 wherein it has been held as under :-
“…. In order to be entitled to order of reference under Section 20, it is necessary that there should be an arbitration agreement and secondly, difference must arise to which this agreement applied….”
Thus, from the law iaid down by the Apex Court existence of arbitration agreement is a mandatory pre-requisite. Submission of Mr. Munshi is that no arbitration agreement exists between the plaintiff and the defendant- appellant, and hence the order passed under Section 20 of the Act is sensitively susceptible. Mr. Sanghi has placed reliance on the ‘quotation’ submitted by the defendant No. 1. The quotation which has been marked as Exhibit P-7 was an offer by M/s ASEA Brown Boveri Limited to M/s Raipur Alloys and Steel Ltd. True it is, Clause 17 of the said quotation refers to arbitration but the heart of the matter is whether the present defendant- appellant would be bound by the said stipulation in the aforesaid quotation. It is clear as noon day that the offer was given by the defendant No. 1 to the plaintiff. If the said defendant had any arrangement with the defendant- appellant the plaintiff cannot take any benefit for the same. Mr. Sanghi has commended us to the decision rendered in the case of M/s Chaman Lal Loona and Co. (supra) to emphasize that the quotation of liability is to be determined by the arbitrator as the same is in his exclusive domain. We may hasten to add in the aforesaid decision their Lordships of the Apex Court have also observed that in an application under Section 20 of the Act, ordinarily the only point for decision for the Court if there is an arbitration agreement. From the aforesaid observation, it is graphically clear that in absence of an arbitration agreement there cannot be reference of disputes to the arbitrator and, therefore, the question of adjudication by the arbitrator does not arise. We are of the considered view that the aforesaid decision does not render any assistance to the contention canvassed by the learned counsel for the respondent No. 1. Mr. Sanghi has also referred us to the decision rendered in the case of Supreme Co-operative Group Housing Society (supra) wherein it has been held that arbitration clause contained in the original contract would serve as arbitration agreement within the meaning of Section 2(a) for the additional works also. In the aforesaid case admittedly, there was an arbitration clause in the original agreement. But in the present case, there is no agreement between the plaintiff and the present appellant and there is no arbitration clause at all. Thus, in absence of any arbitration agreement, we are afraid, the decision rendered in the aforesaid case is distinguishable.
8. We have already held that there is no arbitration agreement between the plaintiff and the appellant and when the most material condition- precedent for invoking jurisdiction under Section 20 of the Act, is absent, the learned trial Judge has fallen into error by calling for names and taking steps for reference of disputes between the plaintiff and the present appellant. As far as the present appellant is concerned, we are of the considered view that he is not bound by the terms and conditions stipulated in the quotation given by the defendant No. i. Hence, he cannot be compelled to surrender to the jurisdiction of the arbitrator. Accordingly, we hold that the order passed by the learned trial Judge would not be applicable as far as the present appellant is concerned. We are not setting aside the order in entirety as the defendant No. 1 has accepted the same. The arbitration proceedings shall continue between the plaintiff and the defendant No. 1. The order passed by the learned trial Judge is modified to the extent indicated above.
9. The appeal is accordingly disposed of. There shall be no order as to costs.