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IAAP/7420/2007 5/ 5 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
PETN.
UNDER ARBITRATION ACT No. 74 of 2007
For
Approval and Signature:
HONOURABLE
MR.JUSTICE M.R. SHAH
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1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge?
=========================================================
QALLABHBHAI
HIMANTBHAI PATEL - Petitioner(s)
Versus
BHAGWANBHAI
NARANBHAI PATEL & 4 - Respondent(s)
=========================================================
Appearance :
MR
MK VAKHARIA for Petitioner(s) : 1,
MR DP
KINARIWALA for Respondent(s) : 1,
DELETED for Respondent(s) : 2 -
5.
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE M.R. SHAH
Date
: 20/03/2009
ORAL
JUDGMENT
1. Present
application has been preferred by the petitioner herein one of
the defendant of Civil Suit No.68 of 2005 pending in the Court of
learned Civil Judge (S.D.), Bhavnagar under Section 11 of the
Arbitration and Conciliation Act, 1996 to appoint one Shri Odhavji
Ravjibhai Monpara and/or to appoint any other arbitrator with respect
to the dispute between the parties as related to dispute i.e.
specific performance vis-a-vis the contract involved i.e. agreement
to sale dated 10.11.2004
2. It
is not in dispute that for the very agreement to sale dated
10.11.2004 respondent herein has filed Civil Suit in the Court for
specific performance of said agreement to sale in which the
petitioner is also one of the defendant. Therefore, it is not in
dispute that in the said suit there are other defendants also who are
partners of partnership firm Bapasitaram Company of which the
petitioner is also one of the partner. Therefore, in the said suit
subject matter is disputed agreement to sale of which specific
performance is sought. It is not in dispute that other defendants
are not party to the arbitration agreement. It is true that earlier
when the application was submitted for appointment of arbitrator, all
the defendants were joined but subsequently all those other
defendants were deleted and only the applicant came to be continued
in the arbitration proceedings. Therefore, the subject matter of the
dispute which is sought to be referred to the arbitrator is subject
matter of aforesaid Civil Suit. In view of the fact that it is
alleged that some of the defendants to the aforesaid Civil Suit are
not party to the arbitration agreement and/or agreement to sale,
entire dispute is not capable of being referred to the arbitrator for
arbitration.
3. Identical
question came to be considered by the Hon’ble Supreme Court in the
case of Sukanya Holdings Pvt.Ltd. v/s. Jayesh H.Pandya
reported in AIR 2003 SC 2252 (relevant para 7,14
and 15). Aforesaid decision of the Hon’ble Supreme Court further came
to be considered by the Hon’ble Supreme Court in another subsequent
decision in the case of Atul Singh & Ors. v/s. Sunil
Kumar Singh & Ors. reported in 2008 AIR SCW
570. In the case of Sukanya Holdings Pvt.Ltd.
(supra), the Hon’ble Supreme Court in para 7, 14, 15 and 16
has observed and held as under :
7.
The High Court by its judgment and order dated 18-9-2001 rejected
application under S. 8 of the Act. The Court arrived at the
conclusion that in the suit apart from the relief of dissolution and
accounts, plaintiff has prayed for other reliefs. All the defendants
to the suit are not parties or partners in the partnership firm and
the terms of the partnership deed including the arbitration clause
are not binding to them. Only part of the subject matter could at the
most be referred to the arbitration. Further, there is no power
conferred on the Court to add parties who are not parties to the
agreement in the arbitration proceedings. The Court also negatived
the alternative prayer for referring part of the subject matter in
respect of those parties who are parties to the partnership agreement
which contains arbitral clause. The Court arrived at the conclusion
that such procedure is not contemplated under the Act. The object and
purpose of the Act is to avoid multiplicity of the proceedings and
not to allow two forums simultaneously to proceed with the matter.
That judgment and order is challenged in this appeal.
Xxxx-xxx-xxxx
14.
Thirdly, there is no provision – as to what is required to be done in
a case where some parties to the suit are not parties to the
arbitration agreement. As against this, under S. 24 of the
Arbitration Act, 1940, some of the parties to a suit could apply that
the matters in difference between them be referred to arbitration and
the Court may refer the same to arbitration provided that the same
can be separated from the rest of the subject matter of the suit.
Section also provided that the suit would continue so far as it
related to parties who have not joined in such application.
15.
The relevant language used in S. 8 is – “in a matter which is
the subject matter of an arbitration agreement.” Court is
required to refer the parties to arbitration. Therefore, the suit
should be in respect of “a matter” which the parties have
agreed to refer and which comes within the ambit of arbitration
agreement. Where, however, a suit is commenced – “as to a
matter” which lies outside the arbitration agreement and is also
between some of the parties who are not parties to the arbitration
agreement, there is no question of application of S. 8. The words ‘a
matter’ indicates entire subject matter of the suit should be subject
to arbitration agreement.
16.
The next question which requires consideration is – even if there is
no provision for partly referring the dispute to arbitration, whether
such a course is possible under Section 8 of the Act? In our view, it
would be difficult to give an interpretation to Section 8 under which
bifurcation of the cause of action that is to say the subject matter
of the suit or in some cases bifurcation of the suit between parties
who are parties to the arbitration agreement and others is possible.
This would be laying down a totally new procedure not contemplated
under the Act. If bifurcation of the subject matter of a suit was
contemplated, the legislature would have used appropriate language to
permit such a course. Since there is no such indication in the
language, it follows that bifurcation of the subject matter of an
action brought before a judicial authority is not allowed.
4. Mr.K.G.Vakhariya,
learned Senior Advocate appearing on behalf of the petitioner is not
in a position to show any contrary judgment and decision of the
Hon’ble Supreme Court. In view of above and when the dispute which is
sought to be referred to the Arbitrator is subject matter of Civil
Suit No.68 of 2005 and considering aforesaid decisions of the Hon’ble
Supreme Court prayer of the petitioner to refer the dispute with
respect to specific performance of agreement to sale dated 10.11.2004
cannot be accepted and said dispute is not required to be referred to
Arbitration and the Arbitrator cannot be appointed.
5. For
the reasons stated above, the application deserves to be dismissed
and accordingly it is dismissed.
[M.R.Shah,J.]
satish
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