UNION OF INDIA Vs. BUILDERS ENTERPRISES

JUDGEMENT

(1.) This appeal filed by the defendant/appellant is directed against the order dated 24.1.1997 passed by Sub-Judge IV at Ranchi in money suit No. 11 of 1993 whereby he has allowed the prayer of the plaintiffs/respondents and granted interim injunction restraining the defendant to proceed with the notice and refer the dispute to the arbitration by appointing Arbitrator

(2.) It appears that plaintiff/respondent M/s Builders Enterprises being the partnership firm entered into a contract with the defendant/Union of India for the purpose of undertaking construction work. Although plaintiff commenced the construction work but because of some reasons the contract could not be completed. Plaintiffs' case was that because of default on the part of the defendant, the plaintiffs suffered huge loss to the extent of Rs 8,25,000/-. Consequently, the aforementioned suit was filed by the plaintiff for a decree of Rs. 8,74,500/- The defendant/ appellant contested the suit by filing written statement stating inter alia that the suit is not maintainable inasmuch as there is specific clause namely, arbitration clause i e Clause 70 in the Agreement which provides that all disputes relating to the contract work is to be decided by appointment of Arbitrator. The defendant also denied and disputed the claim of the plaintiffs.

(3.) During the pendency of the suit the defendant filed a petition on 17.11.1994 praying to the Court to decide the issue of maintainability of the suit as preliminary issue It was contended that as per arbitration clause contained in the agreement the suit is not maintainable because all dispufes "are to be decided by the Arbitrator. The learned Court below after hearing the parties in terms of order dated 23.1.1996 held that the suit is maintainable even if there is Arbitration clause in the agreement. However, it was observed in the said order that if the defendants are ready to get the disputes settled as per Arbitration clause they can take steps and serve notice to the plaintiff. Consequent upon the aforesaid order, defendant served a notice upon the plaintiff and invoked the arbitration clause contained in the agreement and sought to refer the matter to the Arbitrator named in the agreement. On receipt of the notice plaintiff filed a petition on 18.4.1996 in the aforesaid suit and made a prayer to restrain the defendant by an order of interim injunction not to proceed with the said notice and not to refer the matter to the authority for arbitration. The Court below by the impugned order allowed the application and restrained the defendant/appellant from proceeding with the arbitration.