RUBBER BOARD Vs. ROSIN CONSTRUCTIONS

JUDGEMENT

(1.) Does the mere inclusion of an arbitration clause in the agreement automatically bar jurisdiction or cause to ouster jurisdiction of the civil court, rendering the decree, if passed, null and void What are the reasons which make a decree null and void These are the questions that emerge for consideration in this Writ Petition (Civil). The petitioner is the decree holder in E.P. No. 352/2004 and the respondents in E.A. No. 278/09 filed therein by the judgment debtor, who is the 1st respondent herein. The above E.P. was filed for realisation of an amount of Rs. 1,42,563/- with 6% interest per annum. In the suit, the respondents filed an application as I.A. No. 2365/1998 under S. 8 of the Arbitration and Conciliation Act, 1996, to refer the matter for arbitration. But, after filing the above application, the respondents did not turn up for contesting the matter on merits. Accordingly, the court below set the respondents ex parte and passed Ext. P1 judgment and Ext. P2 decree. By virtue of Exts. P1 and P2, the petitioner was allowed to realise a sum of Rs. 1,42,563/- with interest @ 6% per annum from the date of suit till the realisation together with cost. The petitioner filed the above Execution Petition before the Sub Court, Kottayam, for executing Ext. P2 decree. The Sub Court issued notice to the respondents in the Execution Petition and the 2nd respondent entered appearance and filed Ext. P4 objection. In Ext. P4 objection, the 2nd respondent challenged the maintainability of the E.P., contending that the decree passed in the suit is not an executable one. As per clause 17 of the agreement, the dispute between the petitioner and the respondent has to be resolved through arbitration proceedings. Therefore, in short, the decree passed in violation of the arbitration clause is null and void. The respondents filed E.A. No. 278/2009 under S. 47 of the Code of Civil Procedure, praying to drop the execution proceedings as the E.P. is not maintainable for the above said reasons. After considering the objection raised by the 2nd respondent, the Execution Court passed Ext. P6 order accepting the objection raised by the respondents and dismissed the Execution Petition. The legality, propriety and correctness of the said order are under challenge in this Writ Petition.

(2.) Sri. Joseph Markos, the learned senior counsel for the petitioner advanced arguments assailing the findings of the court below that the decree sought to be executed is a nullity. According to him, the matter involved in the suit is not a subject matter of the arbitration clause in the agreement entered into between the plaintiff and the defendants. The learned counsel for the petitioner further drew my attention to S. 8 of the Law of Arbitration and Conciliation Act 1996 and pointed out that whether the matter in issue involved in the suit would be a subject of an arbitration agreement is also a disputed and debatable issue, when the petitioner opposes the reference to arbitration. It is a question of fact, for which the application of mind of the court is required under S. 8 of the Arbitration and Conciliation Act 1996. No reference to Arbitrator can be made unless the pre-requisite conditions provided under S. 8 of the said Act are satisfied. The learned senior counsel cited decision in Branch Manager, Magma Leasing and Finance Limited and Another v. Potluri Madhavilata and Another, 2009 10 SCC 103 to fortify the above point. So, mere inclusion of the arbitration clause does not bar the jurisdiction of the civil court and, it cannot be held that the decree is null and void due to the lack of inherent jurisdiction. But, the court below went wrong and found that the decree sought to be executed is a nullity in view of the mere inclusion of the arbitration clause in the agreement entered into between the plaintiff and defendants. Though the 2nd defendant had entered appearance and filed an objection raising the contentions, he was set ex parte in his absence and the decree sought to be executed was an ex parte decree. The 2nd defendant who was set ex parte at the trial stage cannot turn round and come to the Execution Court, contending that the decree sought to be executed is null and void.

(3.) Per contra, the learned counsel for the respondents advanced arguments justifying the impugned order. According to him, mere inclusion of the arbitration clause in the agreement automatically bars jurisdiction of the Civil Court Consequently, the decree passed in violation of the arbitration clause is null and void, and that would render the judgment unenforceable. Thus, the Execution Petition is not maintainable under law. The learned counsel further cited the decision in Hindustan Petroleum Corporation Ltd. v. Pinkcity Midway Petroleums, 2003 AIR(SC) 2881 to fortify his argument. According to him, where there is an arbitration clause, the civil court has no option, other than referring the matter for arbitration. So, inclusion of arbitration clause is sufficient to cause ouster of jurisdiction of the Civil Court.