EVEREST ELECTRIC WORKS Vs. HIMACHAL FUTURISTICS COMMUNICATIONS LTD

JUDGEMENT

(1.) THE QUESTION TO BE ANSWERED AT THIS JUNCTURE IS WHETHER A PARTY IS PRECLUDED AND BARRED FROM FILING AN APPLICATION UNDER SECTION 8 OF THE ARBITRATION AND CONCILIATION ACT, 1996 (HEREINAFTER REFERRED TO AS THE '1996 ACT') AFTER HAVING PRAYED FOR AND OBTAINED SEVERAL ADJOURNMENTS IN THE SUIT FOR THE PURPOSES OF FILING A WRITTEN STATEMENT.

(2.) THE UBIQUITOUS VIEW OF THE HIGH COURT APPEARS TO BE THAT EVEN IN CIRCUMSTANCES WHERE ADJOURNMENTS HAVE BEEN REPEATEDLY GRANTED FOR THE PURPOSE OF FILING A WRITTEN STATEMENT THE RIGHTS OF A PARTY WHO IS PRIVY TO AN ARBITRATION CLAUSE, ARE NOT OUSTED OR ALIENATED BY SUCH CONDUCT. IN VIJAY ANAND & ASSOCIATES PVT. LTD. VS. ASHRAF & CO. PVT. LTD. & ANR., 2001 VII AD (DELHI) 862 A LEARNED SINGLE JUDGE OF THIS COURT HAD HIGHLIGHTED THE DISTINCTION IN THE LANGUAGE BETWEEN SECTION 8 OF THE 1996 ACT AND THE ERSTWHILE SECTION 34 OF THE ARBITRATION ACT, 1940, IN ARRIVING AT THE CONCLUSION THAT THE PARTY SEEKING TO ENFORCE THE ARBITRATION CLAUSE IS NOT STOPPED FROM MAKING THIS PLEA. THE SAME APPROACH AND VIEW HAS BEEN FOLLOWED BY THE HIGH COURT OF GUJARAT IN VARUN SEACON LTD. VS. BHARAT BIJLEE LTD., 1997 (SUPPL.) ARB. LR 559. INDEPENDENT OF COMPARISON BETWEEN SECTION 8 OF THE 1996 ACT AND SECTION 34 OF THE 1940 ACT THE PUNJAB AND HARYANA HIGH COURT HAS OBSERVED IN UNION OF INDIA VS. LAJWANT KAUR, 2003(2) ARB. LR 539 THAT SUCH A PLEA CAN BE RAISED AT ANY TIME BEFORE MAKING THE FIRST STATEMENT ON THE SUBSTANCE OF A DISPUTE, THAT IS, THE FILING OF A WRITTEN STATEMENT. IN AJIT SINGH VS. SHRI MATA VAISHNO DEVI SHRINE BOARD, 2003(1) ARB. LR 137 THE HIGH COURT OF JAMMU AND KASHMIR HAS PREFERRED THE SAME VIEW (SEE ALSO SPORTS AUTHORITY OF INDIA VS. PRIVATE EYE INVESTIGATION SECURITY SERVICES, 2001 AIR - KANT.H.C.R. 2805). THE MATTER, HOWEVER, IS NO LONGER RES INTEGRA AFTER THE OBSERVATIONS MADE BY THE HON'BLE SUPREME COURT IN SMT. KALPANA KOTHARI VS. SMT. SUDHA YADAV AND OTHERS, AIR 2002 SC 404. THE COURT OPINED THAT - "IN STRIKING CONTRAST TO THE SAID SCHEME UNDERLYING THE PROVISIONS OF THE 1940 ACT, IN THE NEW 1996 ACT, THERE IS NO PROVISION CORRESPONDING TO SECTION 34 OF THE OLD ACT AND SECTION 8 OF THE 1996 ACT MANDATES THAT THE JUDICIAL AUTHORITY BEFORE WHICH AN ACTION HAS BEEN BROUGHT IN RESPECT OF A MATTER, WHICH IS THE SUBJECT-MATTER OF AN ARBITRATION AGREEMENT, SHALL REFER THE PARTIES TO ARBITRATION IF A PARTY TO SUCH AN AGREEMENT APPLIES NOT LATER THAN WHEN SUBMITTING HIS FIRST STATEMENT. ....... SIMILARLY, HAVING REGARD TO THE DISTINCT PURPOSES, SCOPE AND OBJECT OF THE RESPECTIVE PROVISIONS OF LAW IN THESE TWO ACTS, THE PLEA OF ESTOPPEL CAN HAVE NO APPLICATION TO DEPRIVE THE APPELLANTS OF THE LEGITIMATE RIGHT TO INVOKE AN ALL COMPREHENSIVE PROVISION OF MANDATORY CHARACTER LIKE SECTION 8 OF THE 1996 ACT TO HAVE THE MATTER RELATING TO THE DISPUTES REFERRED TO ARBITRATION, IN TERMS OF THE ARBITRATION AGREEMENT". THE COURT HAD ADVERTED TO ITS EARLIER DECISION IN P. ANAND GAJAPATHI RAJU AND OTHERS VS. P.V.G. RAJU (DEAD) AND OTHERS, 2000(4)SCC 539 IN OBSERVING THAT THERE IS NO BAR TO REFERRAL UNDER SECTION 8 OF THE 1996 ACT EVEN WHERE SUCH AN APPLICATION HAD BEEN FILED AFTER THE FIRST STATEMENT (WRITTEN STATEMENT) ON THE SUBSTANCE OF THE DISPUTE, ON THE PLAINTIFF NOT OBJECTING THERETO.

(3.) THE OBJECT OF THE ACT IS TO ENSURE THAT WHERE PARTIES CAN AGREE TO RESOLVE THEIR DIFFERENCES THROUGH RECOURSE OF ARBITRAL PROCEEDINGS, EVERY ENDEAVOUR SHOULD BE MADE TO MAKE THEM TO TRAVERSE THIS AVENUE RATHER THAN KNOCK AT THE DOORS OF THE COURTS. IN ALL SUCH CASES IT IS DIFFICULT TO APPRECIATE WHY THE PLAINTIFF HAS FILED A SUIT WHEN IT WAS AWARE OF THE EXISTENCE OF AN ARBITRATION CLAUSE. IN THE EVENT OF THE PLAINTIFF'S IGNORANCE OF THIS POSITION, NO PREJUDICE WOULD BE CAUSED TO IT IF THE PARTIES ARE REFERRED TO ARBITRATION NO SOONER THE POSITION IS LEARNT OF.