G T C LIMITED Vs. ROYAL CONSULTING

JUDGEMENT

(1.) BY consent heard forthwith. The questions for determination in this appeal from order arise from two agreements. The first agreement was between the appellant and the Respondent no. 1 dated 9. 11. 2000 and the arbitral agreement dated 9/12/2000. The second agreement is dated 18. 1. 2001 between the Petitioner and Respondent No. 2. Both the agreements contain arbitral clauses. In the agreement between appellant and Respondent No. l the arbitral clause reads as under:

(2.) THE Plaintiffs have filed a suit before the Civil Judge, Senior Division, Thane being Special Civil Suit No. 50 of 2002 against the respondents. The main reliefs sought in the suit read as under : (a) that this Hon'ble Court declare that the said agreements dated 9/11/2000 and 18/01/2001 and the arbitration agreements contained in them are all illegal, null and void ab initio, or inoperative and/or incapable of being performed. (c) That this Hon'ble court be pleased to grant a perpetual order and injunction restraining the Defendants from in any manner implementing and/or acting upon and /or in furtherance of the agreements dated 9/11/2000 (as amended by the agreement dated 9/12/2000) and 18/01/2001 and the arbitration clauses contained in them and from initiating any proceedings arising out of the agreement. (d) Without prejudice to prayers (a) to (c) this Hon'ble Court be pleased to declare that the 2nd Defendant is not entitled to proceed with the arbitration under the Agreement dated 18/01/2001 unless and until the arbitration between the Plaintiff and the 1st Defendants is finally concluded and the award therein finally executed and enforced in accordance with law. " plaintiffs had taken out a Notice of Motion, and sought reliefs which substantially are to restrain defendants from in any manner commencing and or proceeding with and or participating in any manner in any proceedings in a court of law and or arbitration against the Plaintiffs under the agreements dated 9. 11. 2000 as amended by agreement dated 9. 12. 2000 and 18. 1. 2001. The Application came to be dismissed by order dated 13. 8. 2001. The cause of action as pleaded in the suit by the Plaintiffs, is that the agreements were entered into by misrepresentation to the Appellant/plaintiffs by the Defendant/ Respondent, by suppressing material facts which were to the knowledge of the defendants and thus defendants played fraud on the Plaintiffs. The agreements with Respondent No. l and 2 were executed by the appellants under the mistaken belief induced by the respondents, that the same were forming part of one agreement and as such there was no consensus ad idem. In the circumstances, it is contended that the agreements were void ab initio and in fact no consent in law and as such are not enforceable as the defendants ha ve no legal right. Inspite of the arbitral clause, it is the case of the Plaintiffs, that they are entitled to maintain the suit with the reliefs as sought.

(3.) THE main contention urged by the learned counsel is that inspite of the arbitral agreement and even invocation of the arbitral clauses, there is no ouster of jurisdiction of the Civil Court. Civil Court it is contended, will retain jurisdiction to decide all issues including issue as to the invalidity of the contract considering Section 9 of C. P. C. The issue involves interpretation of sections 8, 16 and 45 of the Arbitration and Conciliation act, 1996, read with the other provisions of the Act of 1996. Let us therefore, examine the various provisions in the Act under which in the case of existence of an arbitral clause, the judicial authority can direct parties to arbitration. Section 45 of the Arbitration and Conciliation Act, 1996 is a power in the Judicial authority to direct parties to proceed to arbitration if there be an arbitral clause in the agreement between the parties. If that power is not invoked, the civil courts retain jurisdiction. Section 45 reads as under: