CENTURION BANK OF PUNJAB Vs. MAHESH LAL

JUDGEMENT

(1.) PETITIONER is aggrieved by order dated 6.1.2006 passed by Civil Judge (Junior Divn.), Jalandhar whereby, application filed by the petitioner -bank under Sections 8 and 11 of the Arbitration and Conciliation Act, 1996 (for short the 'Act') has been rejected on the ground that arbitration agreement is vague.

(2.) BRIEFLY stated, the facts as emerge from the record reveal that the respondent filed a suit for mandatory and permanent injunction seeking a direction for return of the vehicle which was seized by the petitioner -bank for non -payment of loan amount During the pendency of the suit, the petitioner bank, defendant in the suit made an application under Sections 8 and 11 of the Act for a prayer to refer the parties to the Arbitration in view of the arbitration Clause in the agreement executed between the parties with regard to the transaction in question. The agreement is a loan -cum -hypothecation agreement and Clause 24 of the agreement contains the arbitration Clause (Annexure P -1). Clause 24 of the agreement reads as under:

(3.) IN view of the fact, that Clause 24 itself clearly provides for adjudication by arbitration, and all kinds of disputes and differences fall within the scope and ambit of arbitration clause, it was obligatory upon the trial court to have referred the parties to arbitration leaving the parties to approach in terms of Section 11 for nomination/ appointment of arbitrator. The impugned order is not sustainable in law and is liable to be set aside. I order accordingly. Application of the petitioner for reference under Sections 8 and 11 of the Act is allowed only to the extent that parties are referred to the arbitration and liberty is granted to them to resort to recourse as provided under Section 11 of the Act for appointment/nomination of the arbitrator.