ANIL AGARWAL Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) The matter was heard on March 3, 1997. A mortgage suit was filed by the State Bank of India before the Civil Judge, Meerut, which was registered as Suit No. 453 of 1995 for recovery of Rs. 94,00,000 (rupees ninety-four lakhs) odd. The defendants, including the present revisionist, appeared in the suit and an application was moved before the court below under Sections 8 and 9 of the Arbitration and Conciliation Act, 1996, praying therein that the court may refer the parties to arbitration and may stay further proceedings in the suit. The court below had considered the application, perused the agreement between the plaintiff and Rico Rubbers of which the revisionist is a partner, and rejected the prayer for reference to arbitration holding that the agreement in question was not an arbitration agreement and hence no reference to arbitration could be made.

(2.) The relevant clause on which learned counsel for the revisionist as also learned counsel for the caveator bank drew my attention was Clause 4 in the agreement for cash credit between the State Bank of India and Rico Rubbers. This clause may be quoted for the point in dispute as under :

(3.) Section 7 of the Arbitration and Conciliation Act of 1996 says what is an arbitration agreement. Under this section, an arbitration agreement means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a definite legal relationship whether contractual or not. Section 8 authorises a judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement to refer the parties to arbitration on the application of either party provided the application is made not later than the date of submission of the first statement of that party on the substance of the dispute. Section 9 speaks of power of a court to take interim measures before, during or after the making of an arbitral award.